High Court · 2007

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 19.06.2007CORAM :THE HON’BLE MRS. JUSTICE PRABHA SRIDEVANA.S.No.560 of 1993M/s. M.Ramasamy andCompany represented byits Partner M.Ramasamy80, Thalaippan Street,Virudhunagar,Kamarajar District. .... Appellant/PlaintiffVs.The Javadhu HillsHill Tribes, Large sizedMulti purpose Co-operativeSociety Limited, representedby its Special Officer,Jamunamarathy (via)North Arcot District. .... Respondent/DefendentAppeal filed against the Judgment and Decree, dated 26.04.1993rendered in O.S.No.48 of 1988 on the file of the Subordinate Judge,Tirupattur, North Arcot District. 1.For Appellant: Mr.S.SubbiahFor Respondent: Mr.V.RaghavachariJ U D G M E N T The plaintiff is the appellant. The plaintiff is a registered firm,dealing inter alia in botanical crude drugs. According to the plaintiff,the defendant agreed to supply mavali kilangu (dried) of 5 mts before31.01.1987 and its Special Officer received Rs.22,000/- by way of DemandDraft drawn on Canara Bank, Tirupattur and in acknowledgement of receiptof the same as advance, a letter was given by the Special Officer on21.01.1987, Ex.A.2. The plaintiff had handed over 126 empty gunny bags tothe defendant to effect the said supply. The defendant did not supply theproducts in spite of several letters written by the plaintiff. Because ofthe non-supply, the plaintiff incurred loss in the business. A legalnotice was sent and thereafter, the suit was filed. The defendant in the https://hcservices.ecourts.gov.in/hcservices/ written statement submits that there was no contract between the plaintiffand the defendant, the defendant society did not receive any Demand Draftfor Rs.22,000/-, there was no contract to supply mavali kilangu. Itappears that the plaintiff had entered into some dealing with theerstwhile Special Officer of the defendant society one K.P.Muthu. TheDemand Draft was not drawn in favour of the defendant society, nor was itcredited in their account, the entire correspondence between the plaintiffand the defendant appears to have been addressed to the aforesaid Muthu athis residence. He was suspended from service on 06.08.1987, the defendantsociety is not liable to pay the amount. It came to know of all thetransactions, only after the suit summons was received. The 126 gunny bagsreferred to in the plaint was not received by the defendant society. Theletters mentioned in the plaint has having been addressed to the plaintiffon behalf of the defendant society were not on behalf of the society andtherefore, the suit should be dismissed.2. Before the trial court, 12 documents were marked by the plaintiff,who examined himself as P.W.1. On behalf of the defendant 5 documents weremarked and the then Secretary was examined as D.W.1.3. The learned counsel for the plaintiff submitted that Ex.A.2, whichis the receipt for a sum of Rs.22,000/- towards advance has been issued inthe letter head of the defendant society and the signature of K.P.Muthu,who was the then Special Officer has also been admitted by D.W.1.Therefore, this establishes the contract. Once the contract is establishedand the supply of the goods, as per the contract is not effected, then thedefendant is liable to refund the advance. The learned counsel submittedthat it is not as if the plaintiff is relying on only Ex.A.2, there areother documents to support his case. Ex.A.3, dated 23.02.1987 is writtenby the same Special Officer to the plaintiff, promising to send theconsignment. Ex.A.4 is another letter addressed by the same person,promising to supply 103 bags of mavali kilangu, again Ex.A.5 is theassurance by the same person for delivery of 126 bags of the said produce.Ex.A.6 is the legal notice, Ex.A.7 is an extract of the accounts of theplaintiff, which shows the amounts due from the defendant. Ex.A.8 andEx.A.9 are acknowledgement cards. Ex.A.10 is the way bill to show thedespatch of gunny bags. Ex.A.11 and Ex.A.12 are grievance addressed by theplaintiff to the Chief Minister grievance cell.4. The learned counsel for the appellant submitted that if thedefendant has to escape his liability, they should have produced theiraccount books to show that the proceeds from the Demand Draft were notcredited to their account. The plaintiff had only been dealing withK.P.Muthu, as the Special Officer of the defendant society and therefore,any loss incurred by the plaintiff in the transaction with the saidSpecial Officer, the society is bound to make good. The learned counselsubmitted that once a contract is established, it is for the defendant toshow that there is in fact no contract, otherwise he is liable to refundthe advance. https://hcservices.ecourts.gov.in/hcservices/

5. The learned counsel for the respondent, on the other hand, wouldsubmit that the defendant had not received the amount, for which Ex.A.2 issaid to have been issued. The Demand Draft was in fact endorsed not in thename of the defendant society, but in the name of the Special Officer, asseen from P.W.1's evidence. Ex.A.5 showing despatch of 126 gunny bags,does not actually prove anything because the way bill receipt does notbear the name of the consignee and it is the admission of P.W.1 that hehas not produced the bill for the discharge of 126 gunny bags. The learnedcounsel submitted that no adverse inference can be drawn on the groundthat the respondent did not produced the account book, since it was nevercalled upon to produce the same and for this purpose, relied on StandardChartered Bank vs. Andhra Bank Financial Services Ltd., (2006) 6 SCC 94.6. The learned counsel also submitted that the society cannot beheld to be liable for any criminal act of the Special Officer in hispersonal capacity. The learned counsel also pointed out that it is theadmission of P.W.1 that all the letters were addressed to the SpecialOfficer and not to the official address of the society. 7. The signature in Ex.A.2 is admitted as the signature of theSpecial Officer. It is on this ground that the appellant claims that he isentitled to the suit claim. In his evidence, as P.W.1, he has stated thatthe Demand Draft was not endorsed in favour of the society. In his chiefexamination, he has stated that his contract was not with K.P.Muthu in hispersonal capacity, but only as a Special Officer of the society. Accordingto him, Ex.A.2 contract was entered into in the residence of K.P.Muthu.The plaintiff does not know that the registered office of the defendantsociety is in Jamunamarathy. Several letters, which are mentioned inparagraph 5 of the plaint were marked. He has admitted that no notice wassent by him to the Registered Office of the society. He has also admittedthat he has not filed the receipt of discharge of 126 gunny bags and hehas denied the suggestion that he did not sent the gunny bags to thesociety. DW.1, of course has admitted the signature of Muthu in Ex.A.2and he has also stated that what ever the acts he had done on behalf ofthe society till 09.06.1987 would bind the society, but he has denied thatthe sum of Rs.22,000/- was credited to the account of the society. Thedefendant produced the sample receipt book and the sample suspense accountbook. D.W.1 has denied the receipt of 126 gunny bags for effecting supplyof mavali kilangu. 8. The plaintiff, while reiterating that his contract was only withthe defendant society, had chosen to endorse the Demand Draft in favour ofK.P.Muthu in his individual capacity, this is admitted by him. In view ofthis admission, the production of Ex.A.2 does not advance his case. It isno doubt true that the signature is admitted, it is also in the letterhead of the defendant society, but if we read the evidence of P.W.1, it isapparent that the plaintiff entered into contract at the residence ofK.P.Muthu, he endorsed the Demand Draft in favour of the same person. TheInland Letter, Ex.A.3 does not bear the stamp of the society. The legalnotices are sent not to the society, but addressed to K.P.Muthu. The https://hcservices.ecourts.gov.in/hcservices/ plaintiff admits that all the correspondence are addressed to Pachalvillage, where the Special Officer resided. Until the suit summons wasreceived by the defendant, they had no knowledge of this transaction. Theplaintiff has not produced any evidence to show that the society hadknowledge of this transaction or that ht brought to the knowledge of thesociety that there was a contract for supply of the forest produce.9. When the defendant in their written statement had stated clearlythat their accounts do not reflect the receipt of Rs.22,000/-, theplaintiff could have called upon them to produce the said account. This iswhat the Supreme Court says in this regard in Standard Chartered Bank vs.Andhra Bank Financial Services Ltd., (2006) 6 SCC 94." 51. This argument is met by learned counsel for SCB.An adverse inference is a presumption which the courtis entitled to draw under Section 114 of the EvidenceAct, 1872 read with illustration (g) thereto.Mr.Jethmalani contended that the weight of theauthorities would show that unless there are somespecial circumstances making it obligatory for a partyto produce evidence, no adverse inference can be drawnunless a party has been called upon to or ordered toproduce evidence and fails to do so. Mr.Jethmalanirelies on Bilas Kunvar v. Desraj Ranjit Singh, (AIR1915 PC 96), Ramrati Kuer v. Dwarika Prasad Singh,(AIR 1967 SC 1134, and Indira Kaur v. Sheo Lal Kapoor,(1998) 2 SCC 488. 52. In Hiralal v. Badkulal, AIR 1953 SC 225 case, thisCourt reiterated the observations of the Privy Councilin Murugesan Pillai v. Manickavasaka Pandara, (AIR1917 PC 6), where the Privy Council laid down thegeneral rule of procedure that instead of relying onthe abstract doctrine of onus of proof a party to thesuit "desiring to rely upon a certain state of facts"ought not to withhold from the court the writtenevidence in his possession. In Gopal Krishnaji Ketkarv. Mohd. Haji Latif case, the observation in MurugesanPillai v. Manickavasaka Pandara, (AIR 1917 PC 6) wasreiterated and it was observed :(SCR p.866 F)" Even if the burden of proof does not lie on aparty the court may draw an adverse inference if hewithholds important documents in his possession whichcan throw light on the facts at issue. It is not, inour opinion, a sound practice for those desiring torely upon a certain state of facts to withhold fromthe court the best evidence which is in theirpossession which could throw light upon the issues incontroversy and to rely upon the abstract doctrine ofonus of proof." https://hcservices.ecourts.gov.in/hcservices/ S.P.Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1,was a situation of a fraudulent litigant basing hiscase on falsehood and withholding vital documents.Citibank N.A. v. Standard Chartered Bank, (2004) 1 SCC12, merely relied on the observations made inMurugesan Pillai v. Manickavasaka Pandara, AIR 1917 PC6 and Gopal Krishnaji Ketkar both of which say that itis not a sound practice for those "desiring to relyupon a certain state of facts to withhold from thecourt" the best evidence which is in their possession.53. On the other hand, the three authorities on whichMr.Jethmalani relied independently take the view thatunless a party is called upon to produce evidence orordered to do so by the court and fails to do so, noadverse inference can be drawn against such partyMr.Jethmalani distinguished the two apparentlycontradictory lines of authorities by pointing outthat in the authorities relied on by Mr.Kapadia thefacts showed that there was a special obligation uponthe party concerned to produce the relevant documentseven without being called upon or ordered to do so andthat the party had failed to produce them. Further, hepointed out that the observations of the Privy Counciloriginating from Murugesan Pillai which have beenreiterated in the subsequent cases including Citibankwould apply only if the party is "desiring to relyupon a certain state of facts." He rightly contendsthat the 15% arrangement was neither any part of SCB'scase, nor was SCB desiring to rely on the said stateof facts. In the circumstances, there was noobligation upon SCB to produce any documents to provethe case put forward by CMF; there was no situation inwhich adverse inference could be drawn against SCB.Finally, Mr.Jethmalani also urged that irrespective ofwhat the parties did, the Special Court could have, ifit was so minded, invoked its power under Section 165of the Evidence Act, 1872 and directed production ofall documents it considered relevant instead ofrelying on adverse inference which was doubtful in thecircumstances. This is particularly so with regard tothe argument of CMF that the computer spreadsheets hadnot been produced, as para 7 of the written statementof CMF indicates that CMF was aware of the existenceof such sheets and yet failed to call upon SCB toproduce it or seek an order for production thereoffrom the Special Court."10. The plaintiff also is unable to produce any evidence that the 126gunny bags, which was sent for discharge of the kilangu was received by https://hcservices.ecourts.gov.in/hcservices/ the society. The way bill does not prove anything, since this transactiontill then appears to have been only with the Special Officer in hisindividual capacity. To bind the society for any action of the SpecialOfficer, the plaintiff should show or should claim that he was all alongunder the impression that he was dealing only with the society. Of course,he has stated in his Chief Examination that the contract was not withK.P.Muthu in his individual capacity, but only as Special Officer of theSociety, but in his cross examination, he admits that he does not knowthat the registered office of the society is in Jamunamarathy. Thecontract was also as early as stated entered only in the residence of thesaid individual. Therefore, the plaintiff had not proved that he was underthe impression that he was dealing with the society. The plaintiff shouldhave proved this in view of the defence taken in the written statementthat none of the letters have been issued on behalf of the society, noletters said to have been addressed to the society, have in fact beenreceived by them and the advance has not been credited to the account.There does not appear to be any error in the judgment of the trial court.Hence, the appeal is dismissed. tsvnsd/-Asst.Registrar/true copy/Sub Asst.RegistrarTo1.The Subordinate Judge Tirupattur, North Arcot District.2. The Section Officer , V.R.Section, High court Madras.+ 1 cc to Mr.V.Raghavachari Advocate SR.NO.36059+ 1 cc to Mr.S.Subbiah Advocate SR.NO.36082ASM(CO)RD 21.8.07A.S.No.560 of 1993