Madras High Court
M/S.Windor Foods Pvt vs Lunkar Enterprises on 6 August, 2008
Author: A.C.Arumugaperumal Adityan
Bench: A.C.Arumugaperumal Adityan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06.08.2008
CORAM:
THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN
A.S.Nos.198 of 2003
M/s.Windor Foods Pvt., Ltd.,
(in liquidation)
NHW.No.8, Makarpura,
Vadodra-390 014,
rep by
Official Liquidator Ahmedabad .. Appellant / 2nd respondent
-vs-
1.Lunkar Enterprises, .. 1st respondent / plaintiff
34, Veerapa Street,
Sowearpet,
Chennai-600 079.
2.Mrs.Sudha Mohan,
Proprietrix,
M/s.Seshadri Associates,
30/1, North Boag Road,
P.B.NO.4976, T.Nagar,
Chennai-17. .. 2nd Respondent / D1
(Cause title amended
vide order of the Court
dt 22.7.2008 made in
CMP.1207/08)
Prayer:- This Appeal has been filed under Section 96 of CPC against the judgment and decree dated 28.06.2002 passed in O.S.No.3763 of 1996 on the file of the IV Additional Judge, City Civil Court, Cehnnai.
For appellant : Mr.T.K.Sheashadri, Senior Counsel
for Mr.J.James, Adovate
For respondents : Mr.V.R.Sridharan, Advocate (For R1)
R2 - Exparte
JUDGMENT
This appeal has been directed against the decree and judgment in O.S.No.3763 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai. The second defendant in O.S.No.3763 of 1996 is the appellant herein.
2.The averments in the plaint sans irrelevant particulars are as follows:-
The plaintiff was appointed as the agent for distribution of D2's products viz., biscuits for a part of Tamil Nadu through D1-marketing agent of the second defendant for the entire Tamil Nadu, Kerala and Andhra Pradesh. This appointment was confirmed by the second defendant vide its letter dated 3.3.1984 to Canara Bank, Audiappa Naicken Street, Chennai-1. With the connivance of D1, D2 has terminated the agency of the plaintiff, without assigning any reason vide its letter dated 19.09.1984. Plaintiff in its letter dated 24.09.1984 has explained to D2 that the above said termination was illegal and unjust. But D2 has confirmed the termination of agency through a telegram dated 28.4.1984. Due to the above said illegal termination the plaintiff has suffered heavy loss in the business for the period of three months. During the said period the expected minimum profit will be Rs.98,860/02. The Stockists, who were appointed by the 1st defendant, to whom the plaintiff has supplied goods, which were purchased from the 2nd defendant for which the plaintiff has settled the entire amount with the defendants. The dealers/stockists who were appointed by the 1st defendant were directly under the control of the defendants and only to them the plaintiff could supply the products of the 2nd defendant. Now the plaintiff could not collect the dues from the dealers/stockists. The value of those goods comes to Rs.8,89,959/57. Defendants are liable to reimburse this amount to the plaintiff. The goods taken by the plaintiff from the 2nd defendant, which could not be delivered to the dealers/stockists, are lying at the godown of the plaintiff. At the request of the 2nd defendant these unsold goods were returned to the 1st defendant on 6.10.1984, who took possession of the some on behalf of the 2nd defendant. The value of the said returned goods comes to Rs.2,10,962/55. The said amount was not paid by the defendants to the plaintiff. Before the termination of agency goods valued at Rs.91,485/27 were returned by the plaintiff to the defendants at the request of the defendants on 9.7.1984, 11.08.1984 & 13.08.1984. The stock worth about Rs.30,724/65 were received back from Trichy. After giving credit to this, Rs.30,724/65, the defendants are liable to pay the plaintiff Rs.60,760/62. On 25.09.1984 the 1st defendant wrote a letter to the plaintiff promising to clear all the market outstanding and pay the same to the plaintiff by 20.10.1984. The 1st defendant undertook to pay the entire balance amount. The first defendant requested the plaintiff to despatch the remaining stocks with the plaintiff, promising to pay by 20.10.1984. The 1st defendant also assured that the entire amount due to the plaintiff would be settled before Deepavali of 1984. But, in spite of several assurances the defendants have not come forward to settle the claim till date, though the first defendant, has been collecting the dues from the dealers/stockists. The defendants are also liable to pay lorry freight, free goods supplied, Bank charges, travelling expenses which comes to Rs.1,00,485/13, as per the details given below:-
a)Lorry Freigh to be reimbursed Rs.38,529.70
b)Amount Exess paid Rs. 5,456.42
c)Free Goods supplied to parties In July Rs.4,543.42 In August Rs.2,096.06 In September Rs. 146.06 ___________ Rs. 6,785.54
d)Bank Charges Rs.16,113.52
e)Excess Investment Interest June to October 84 Rs.16,700.00
f)Penal Interest as on 22.8.1984 Rs.12,179.50
g)Trichy Cheque collection charges Rs. 575.50
h)Travelling expenses and sundry expenses Rs. 1,144.95
---------------
Rs.1,00,485.13
---------------
The plaintiff has received the followings amounts from the marketing agents and also from other parties:-
a)Amount received through marketing agent Rs.5,87,000.00
b)Amount received from parties Rs.2,94,460.00
-----------------
Rs.8,81,460.68
-----------------
The defendants are liable to pay Rs.8,89,959/57, being the value of outstanding goods, Rs.2,10,962/55 towards the value of the returned goods, Rs.60,760/62 being the value of the returned stocks and Rs.1,00,485/13 towards lorry freight, excess paid amount, bank charges traveling expenses, etc as mentioned above. After giving credit to the above referred RS.8,81,46/68 the defendants are liable to pay the plaintiff Rs.3,80,707/19. For the said sum of Rs.3,80,707/19 the plaintiff has claimed 24% interest from 12.10.1984 to 22.9.1986 which comes to Rs.2,18,537/20, besides a sum of Rs.98,860/02 towards damages under the suit with 18% interest and costs.
3.The first defendant remained exparte. The second defendant in its written statement would contend that D2 is not aware of Sri.Mohanchand, the alleged partner of the plaintiff-partnership firm, representing the plaintiff. The second defendant is the company incorporated having its registered office at Baroda. D1 is the marketing agent of D2. D1, who is the marketing agent of D2 is not empowered to assist the plaintiff as the agent for D2 to distribute the products of D2 viz., biscuits for part of Tamil Nadu State through D1. The plaintiff is not the agent of D2, but was a dealer of D2 selling D2/s products as a dealer. Under the dealership transaction, all the transactions with the plaintiff by D1 as Proprietrix of M/s.Seshadri Associates were direct sales to the dealer by the 2nd defendant and the 2nd defendant/s liability seized as soon as the sale transactions were completed. The 2nd defendant's liability did not exist in any way subsequent to the sale to the dealer. The plaintiff was not obliged to maintain account on behalf of the 2nd defendant. The plaintiff was not performing any transactions with the 3rd parties on behalf of the 2nd defendant and was not answerable to the 2nd defendant company for it sale to the parties. The 2nd defendant terminated only the dealership of the plaintiff and not the agency. Due to the termination of the dealership the plaintiff has not incurred any loss. The plaintiff never acted as an agent of the 2nd defendant. Even though the plaintiff was a dealer of the 2nd defendant there was no agreement of dealership entered into between the plaintiff and 2nd defendant. The plaintiff had no privity of contract or any part of agency with the defendant. The plaintiff was never answerable to the 2nd defendant for his sale to the third parties and accordingly was not accountable also. The plaintiff is not entitled to claim any damages much less Rs.98,860/02 towards the minimum loss of profit for three months from the 2nd defendant. The plaintiff cannot recover the money which is due from the dealers / stockists from the 2nd defendant. The plaintiff as the dealer had paid to the 2nd defendant on the sale of goods. The stockists / dealers were not under the direct control of the 2nd defendant to whom the plaintiff was supplying the products of the 2nd defendant. The 2nd defendant is not liable to reimburse Rs.8,89,956/57 being the amount due from stockits / dealers. The 2nd defendant's liability seized as soon as the sale was completed. The 2nd defendant's company is in no way responsible or liable for the credit extended by the plaintiff to the 3rd parties. The 2nd defendant is in no way liable for the wrong committed by the sub-agents to the plaintiff in default of payment and for the stocks which have not been delivered to the dealer/stockist, and which are lying at the godown. The plaintiff had purchased the goods from the 2nd defendant and as soon as the sale was completed the 2nd defendant is in no way liable for the goods of the plaintiff wherever it lies and for whatever manner they are being dealt with. The unsold goods were not returned to the 1st defendant as alleged in the plaint on 6.10.1984. The 2nd defendant is not aware whether the 1st defendant had received unsold goods worth Rs.2,30,962/55. The 2nd defendant is not liable for the sum of Rs.2,10,962/55. Before the termination of agency goods worth Rs.91,488/27 were not returned by the plaintiff to the defendants at the request of the defendants on 9.7.1984, 11.8.1984 & 13.8.1984. The goods worth Rs.30,724/65 were also not received back from Trichy. The 2nd defendant is not liable to pay Rs.60,760/62 to the plaintiff. The transaction between the plaintiff and the 1st defendant is a separate transaction, for which there is no privity of any contract with the 2nd defendant. The plaintiff was never authorized by the 2nd defendant to represent the 2nd defendant with the third parties. The allegation in the plaint that on 25.09.1984 the 1st defendant wrote a letter to the plaintiff promising to clear all the market outstanding and pay the same to the plaintiff by 20.10.1984 are not admitted. Any arrangement made between the 1st defendant and the 2nd defendant in respect of the sale of goods ie., biscuits purchased from the plaintiff will not bind the 2nd defendant. The 2nd defendant is not aware whether the 1st defendant has assured the plaintiff to settle the dues before Dipavali of 1984. The 2nd defendant is not liable to pay any amount much less Rs.1,00,485.13 towards lorry freight, excess supply, bank charges & travelling expenses etc. The 2nd defendant is not liable to pay the plaintiff the amount mentioned at para 11 of the plaint. The amount of discharge pleaded by the plaintiff at para 12 of the plaint is also denied by the 2nd defendant. The 2nd defendant is not liable to pay Rs.3,80,707.19 with interest as claimed in the plaint much less the damages asked for in the plaint. Hence, the suit is liable to be dismissed with costs of the 2nd defendant.
4.On the above pleadings the learned trial Judge has framed as many as nine issues for trial. Before the learned trial Judge the partner of the plaintiff-firm was examined as P.W.1 and Ex.A.1 to Ex.A.49 were marked. On the side of the defendants, Executive Director of the 2nd defendant was examined as D.W.1. NO documentary evidence was marked on the side of the defendants. After scanning the evidence both oral and documentary the learned trial Judge has come to the conclusion that the plaintiff is entitled to the relief asked for in the plaint and accordingly, decreed the suit with 9% interest from the date of suit till the date of decree and with future interest at the rate of 6% per annum from the date of decree till the date of realization with proportionate costs, which necessitated the 2nd defendant to approach this court with this appeal.
5.The points for determination in this appeal are as follows:-
1)Whether the plaintiff is entitled to a sum of Rs.98,860/02 towards damages from the 2nd defendant?
2)Whether the 2nd defendant, appellant herein, is jointly and severally liable with the 1st defendant for the suit claim of Rs.3,80,707/10 with interest as awarded by the trial Court?
3)Whether the decree and judgment in O.S.No.3763 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai, is liable to be set aside for the reasons stated in the memoradum of appeal?
6.Point No.1 :- The learned counsel for the plaintiff submits that the plaintiff on the basis of Ex.A.6- notice of termination of agency, according to him an illegal one, had suffered heavy loss and three months' expected minimum profit alone comes to Rs.98,860/02, has claimed that the 2nd defendant is liable to pay the said sum of Rs.98,860/02 towards damages. The learned counsel for the plaintiff would contend that Ex.A.6-notice dated 19.9.1984 reads that it came into effect forthwith. But such a termination is illegal in lieu of Section 206 of the Indian Contract Act, 1872 because reasonable notice must by given to the agent by the principal before any termination of agency. Section 206 of the Indian Contract Act, 1872, reads as follows:-
"Reasonable notice must be given of such revocation or renunciation; otherwise the damage thereby resulting to the principal or the agency, as the case may be, must be made good to the one by the other."
Since no reasonable notice was given under Ex.A.6, the claim of damages on the basis of Ex.A.6 by the plaintiff is not maintainable. The validity or otherwise of Ex.A.6 Notice was not been considered by the learned Trial Judge. Since this curt is of the view that without reasonable time given under Ex.A.6-notice, the termination of the agency by D2 against the plaintiff under Ex.A.6 cannot be maintainable and there is absolutely no material placed before the Trial Court by the plaintiff to show that in lieu of Ex.A.6-notice he had incurred a loss much less Rs.98,860/02. P.W.1 has not deposed anything about the heavy loss incurred by him due to Ex.A.6-notice. Under such circumstances, the trial Court finding that the plaintiff is entitled to claim damages to the tune of Rs.98,860/02 is liable to be set aside and the same is hereby set aside. Hence, I hold on Point No.1 that the plaintiff is not entitled to Rs.98,860/02 towards the damages from the 2nd defendant.
7.Point No. 2:- Ex.A.1 is the letter written by D2 to D1, under which D2 has appointed D1 as the marketing agent for D2. Further, under Ex.A.1, D2 has authorized D1 to appoint C&F agent and dealer in Tamil Nadu, Kerala and Andhrapradesh, with a rider clause that the responsibility for such appointment of C&F agent by D1 lies only with him. Ex.A.2 is the sanction letter addressed by D2 to Manager, Canara Bank, dated 3.3.1984 under which D2 has authorized the plaintiff as their C&F agent for part of Tamil Nadu. Ex.A.3 is the letter written by D1 to plaintiff, under Clause-3, D1 has given an undertaking to the plaintiff to stand as a guarantor for C&F agent appointed of D1 on behalf of D2. The case of the plaintiff in a nutshell is that they have purchased goods (biscuits) produced by D2 and that they have distributed the goods through stockists / sub-agents appointed by D1, who is the agent of D2. The plaintiff has filed the suit for the recovery of dues from the sub-agents appointed by D1 on behalf of D2, for the supply of goods purchased by him from D2. In the plaint under several heads the plaintiff claimed a sum of Rs.3,80,707/19. The learned Senior Counsel Mr.T.K.Sheashadri appearing for the appellant / D2 in his submission would contend that since the plaintiff-company have not produced the relevant account books for the claim made under the plaint, the suit itself is not maintainable. Now we have to see from the available materials whether the plaintiff's claim is substantiated by documentary evidence. Under paragraph 8 of the plaint the plaintiff would claim that the goods purchased by him from the 2nd defendant under Ex.A.15 and Ex.A.20 could not be delivered to the dealers / stockist and those unsold goods were returned to the 1st defendant on 6.10.1984 and the value of those goods comes to Rs.2,10,962/55. Ex.A.19 is the relevant document produced by the plaintiff for the above said claim of Rs.2,10,962/55. Ex.A.19 is the letter written by the plaintiff to the 2nd defendant informing that as per the stock liquidation programme they have returned the goods ie., 1356 tins of various products of D2 and 760 tins of various products of D2 to the value of Rs.1,27,907/65 plus Rs.83,054/90 = Rs.2,10,962/55. The delivered goods were received by the 1st defendant on behalf of the 2nd defendant. This document was produced by P.W.1. D.W.1 in the cross-examination would state that as per Ex.A.19 he has not received any goods from the plaintiff and he would state that he is not aware who has signed in Ex.A.19 on behalf of the 1st defendant. But there are rubber stamps of both D1 & D2 found in Ex.A.19. The 2nd defendant has not taken any steps to send the disputed signature in Ex.A.19 to a hand writing expert to get a report to prove that it does not contain the signature of the 1st defendant. Safely the 1st defendant remained exparte in this case. The 1st defendant has not comeforward to deny his signature contained in Ex.A.19. Under such circumstance, the 2nd defendant owes the amount under Ex.A.19 to the plaintiff. So as per Ex.A.19 the plaintiff is entitled to Rs.2,10,962/55.
7(a)The next claim of the plaintiff at paragraph 9 of the plaint is Rs.60,760/62. To substantiate the said claim of Rs.60,760/62 the plaintiff states that it is the value of the stock of goods returned by the plaintiff to the 2nd defendant on 9.7.1984, 11.8.1984 & 13.8.1984. Ex.A.14 was filed by P.W.1. Ex.A.14 is dated 9.7.1984 authored by the plaintiff and addressed to the 2nd defendant, which was also received by the 1st defendant. Both the rubber stamps of D1 & D2 are found in Ex.A.14. As per Ex.A.14 plaintiff has returned about 7 goods dealt under Ex.A.14. About 146 tins plus 5 cases of goods of various items of biscuits were returned by the plaintiff to the 2nd defendant. Even though in Ex.A.14 the prices for the goods mentioned under Ex.A.14 were not stated therein, on the basis of Ex.A.15 invoices the value of the goods returned under Ex.A.14 were calculated as follows:-
S.No. Product Details Quantity Rate per Tin Value 1 MandrainATP(Tins) 25 62.60 1565.00 2 Punch ATP (Tins) 25 62.60 1565.00 3 Beats ATP(Tins) 25 66.61 1665.25 4 Dues ATP (Tins) 30 62.06 1861.80 5 Alladin 21 57.07 1198.47 6 Punch ATC (Cases) 5 157.46 7 DayBreck ATP(Tin) 20 47.60 952.00 Total 8,807.52 Trade discount ( - ) 15% 1,321.13
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7,486.39
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For the claims of 5 cases of Punch ATC there is no material available in Ex.A.15 to calculate the value. As per the above said calculation excluding the 15% trade discount, the amount due to the plaintiff comes to Rs.7,486/39 only. There is no other material placed by the plaintiff to show for the value of the goods returned on 11.8.1984 and 13.08.1984. So under Ex.A.14 the plaintiff is entitled to a sum of Rs.7,486/36 only and the remaining claim to the tune of Rs.53,274/23 is to be rejected.
7(b) Under paragraph 11 of the plaint the plaintiff would claim reimbursement of lorry freight to the tune of Rs.38,529/70. Ex.A.13 is the lorry way bills. The learned counsel for the plaintiff has filed an abstract for Ex.A.13 bills to show that the lorry way bill charges produced by him under Ex.A.13 come to Rs.38,529/70. Under Ex.A.15, the plaintiff would claim Rs.5,456/42 being the amount paid in excess to the 2nd defendant. Even though the learned senior counsel appearing for the 2nd defendant would contend that there is no acknowledgment produced by the 2nd defendant for having received the above said excess amount, Ex.A.15 was also produced by P.W.1 before the trial Court. But there was no question challenging the credibility of Ex.A.15 was put to P.W.1 in the cross-examination by D2. On the other hand P.W.1 in the cross-examination would depose that the details contained in Ex.A.15 are reflected in his accounts. Even though the learned senior counsel for the 2nd defendant would contend that the plaintiff has failed to produce his account books, the 2nd defendant has not filed any application before the trial Court directing the plaintiff to produce the account books. On the other hand along with Ex.A.15 break up details were enclosed with the invoices for the goods purchased by the plaintiff from the 2nd defendant.
7(c)The next head of claim is a sum of Rs.6,785/54 being the free goods supplied to the parties by the plaintiff in the months of July Rs.4,543/42, in August Rs.2,096/06, & in September Rs.146/06. To substantiate this claim the plaintiff has produced Ex.A.16. But in Ex.A.16 the details of free goods supplied in the month of July-1984, and August-1984 alone are available. No particulars in this regard for the month of September-1984 is not available. So the plaintiff is not entitled to claim Rs.146/06 under Ex.A.16.
7(d)Under the head Bank Charges on the basis of Ex.A.17, the plaintiff would claim Rs.19,113/52. Ex.A.17- Bank advices have been produced by P.W.1. Except the suggestion that D1 alone is liable for the amount claimed under Ex.A.17, in the cross-examination of P.W.1, there is no other material produced by the contesting defendant No.2 to show that the 2nd defendant is not liable to pay Ex.A.17 amount to the plaintiiff. Even D.W.1 has not repudiated the claim under Ex.A.17 by the plaintiff in his chief-examination. So as per Ex.A.17 the plaintiff is entitled to Rs.19,113/52. Under Ex.A.9 the plaintiff would claim excess investement interest for the period from June to October 1984. Under Ex.A.9, the plaintiff has informed D2 that a sum of Rs.4.5 lakhs is the operating capital of D2 for the business, he had with D2 and subsequently in the month of June, the operating capital was enhanced to Rs.6.10 lakhs and in July it was further enhanced to Rs.6.15 lakhs and in August it was enhanced to Rs.6.20 lakhs and that it has been informed to D2 by the plaintiff under Ex.A.9 that on behalf of D1 its Executive Manager Mr.Mohan had assured to pay 2% penal interest for the delayed payment for more than 45 days. So for the month of June for the operating capital of Rs.1.60 lakh for five months the penal interest comes to Rs.16,000/-, for Rs.5 thousand operating interest in the month of July at the rate of 2% interest for 4 months it comes to Rs.400/-, for the month of August for the operating capital of Rs.5 thousand at the rate of 2% interest for 3 months it comes to Rs.300/- (Total Rs.16,000/- + Rs.400/- + Rs.300/- = Rs.16,700/-). Under Ex.A.42, D1 has given an undertaking to the plaintiff to pay the outstandings before 20th October-1984, even though the said letter is dated 25th September-1984. Under such circumstance, the penal interest under Ex.A.9 from the month of June 1984 is to be calculated for 5 months for the operating capital of Rs.1.60 lakh and for 4 months for the operating capital of Rs.5 thousand from July 1984 and for operating capital of Rs.5 thousand from August-1984 for a period of three months at the rate of 2% interest. The contention of the learned Senior counsel that the penal interest should be calculated only up to the month of September-1984 and not upto October-1984 cannot hold any water.
7(e)The plaintiff has claimed Rs.12,179/50 towards penal interest and for the said claim the plaintiff produced Ex.A.9, which gives detail for the penal interest for the outstandings including the particulars of invoices and the names of the parties and the details regarding the delayed payment and the rate of penal interest for Rs.3,96,975/35, which comes to Rs.12,179/50.
7(f)For the Trichy Cheque collection charges Rs.575/50 and Travelling expenses & Sundry expenses Rs.1,144/95 were also claimed by the plaintiff. But there is absolutely no material placed before the trial Court in support of those claims. So the above said two claims of Rs.575/50 & Rs.1,144/95 are to be rejected and the same are hereby rejected.
7(g)According to the plaintiff the total amount due from the defendants comes to Rs.8,89,959/57. The plaintiff has produced Ex.A.11- letter addressed by the plaintiff to the 2nd defendant with enclosure to show that a sum of Rs.9,30,100/19 (Rs.8,46,953/58 + Rs.83,146/61 = Rs.9,30,100/19) is the amount outstanding from the dealers appointed by the Marketing Agent (D1) by D2. The learned Senior Counsel for the 2nd defendant would contend that as per Ex.A.11, the outstanding comes to Rs.9,30,100/19, but in the plaint the plaintiff has claimed the outstanding as Rs.8,89,959/57 and hence, the claim of the plaintiff is to be rejected. But Ex.A.11 was received by the 2nd defendant under Ex.A.12 acknowledgment. The 2nd defendant has not sent any reply to Ex.A.11-letter challenging the memo of calculation enclosed along with Ex.A.11. P.W.1 was not confronted that the amount mentioned in Ex.A.11 in the cross-examination by the 2nd defendant. Conveniently the 1st defendant, Marketing Agent of D2, remained exparte in the suit. The plaintiff after including a sum of Rs.No.2,10,962/55 + Rs.60,760.62 + Rs.1,00,485.13 (as stated at para 11 of the plaint) and after deducting a sum of Rs.8,81,460/68 being the admitted amount received from the Marketing Agents and from the parties as stated at para 12 of the plaint, claimed that the amount due to the plaintiff is Rs.3,80,707/19. But as I have sated earlier under Ex.A.14, the plaintiff cannot claim Rs.60,760/62, but the same is valid for Rs.7,486/39 only. Under Ex.A.16 the plaintiff is not entitled to claim Rs.146/06. Further the plaintiff is also not entitled to claim Rs.575/50 and Rs.1,144/95 under Trichy Cheque collection charges and Travelling expenses & Sundry expenses respectively. So the above said amount which comes to Rs.55,140/74, (Rs.53274/23 disallowed under Ex.A.14 + Rs.146/06 + Rs.575/50 + Rs.1,144/95) is to be deducted from the claim of Rs.3,80,707/19, which comes to Rs.3,25,566/45.
7(h)The learned Senior counsel appearing for the 2nd defendant would contend that it is the case of the plaintiff that only the sub-agents appointed by the 1st defendant have failed to pay the amount due to the plaintiff for the goods purchased from the plaintiff and that for the default committed by the sub-agent the 2nd defendant is not liable. But the learned counsel appearing for the plaintiff would focus the attention of this court to Section 194 of the Indian Contract Act, 1872 and would contend that admittedly the 1st defendant is the agent of the 2nd defendant and till today the said agency was not revoked or cancelled by the 2nd defendant and that whatever act the 1st defendant does on behalf of the 2nd defendant both D1 & D2 are jointly and severally liable. Section 194 of the Indian Contract runs as follows:-
"Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him."
Under Ex.A.1 the 2nd defendant has appointed D1 as his Marketing Agent. The 2nd defendant under Ex.A.2 has authorized the plaintiff has his C&F agent for Tamil Nadu and under Ex.A.3 the 1st defendant has given an undertaking to stand as a guarantor for the transactions entered into between the plaintiff and the sub-agent appointed by him. So under such circumstance, D2 is liable for the decree amount as that of D1 as per section 194 of the Indian Contract Act.
7(i)The learned Senior counsel appearing for the 2nd defendant relying on AIR 1930 Sind 247 (Mercantile Bank of India Ltd., vS. Chetumal Bulchand) would contend that mere authority to appoint a sub-agent does not ipso facto indicate that thereby privity of contract was established between sub-agents and principal. But the above ratio decidendi will not be applicable to the present facts of the case. Even under Ex.A.3 the 1st defendant has given undertaking to stand as guarantor for the transactions that entered into between the sub-agent and the plaintiff.
7(j)Relying on a ratio in AIR 1958 PUNJAB 159 (Central Bank of India Ltd., Bombay, Branch Amritsar, Vs. Firm Rur Chand Kurra Mal), the learned Senior counsel appearing for the 2nd defendant would contend that the non-production of books of accounts will be fatal to the case of the plaintiff. But for each and every claim made in the plaint the plaintiff has produced the relevant documents which have been referred to in this judgment in the earlier paragraphs. The 2nd defendant after receiving Ex.A.11 letter with statement of accounts under Ex.A.12 has not asked the plaintiff to produce the relevant accounts for the statement of accounts furnished by the plaintiff under Ex.A.11. Ex.A.38 is the reply notice sent by the 2nd defendant to the counsel for the plaintiff dated 9.10.1985, wherein he would allege that about 273 grams of jewellery was taken by the plaintiff from the 2nd defendant and he has demanded only the value of the said jewellery amounting to Rs.53,375/33. Apart from this the 2nd defendant has not repudiated in the notice that the statement of accounts furnished by him under Ex.A.11 is not correct. Even before the trial Court on behalf of the 2nd defendant no application was filed before the Court for giving direction to the plaintiff to produce the accounts. Under such circumstance, it is not open to the learned senior counsel for the 2nd defendant to contend before this Court that non-production of books of accounts is fatal to the case of the plaintiff.
7(k)Relying on AIR 1961 ANDHARA PRADESH 143 (Purushotham Haridas and others Vs. M/s.Amruth Chee Co., Ltd., Tuntur and others) the learned senior counsel would contend that the principal is not liable for the acts committed by the sub-agents. Relevant observation at page 150 of the said judgment runs as follows:-
"The exchange of letters directly between the plaintiff and the 3rd defendant does not operate to discharge the 1st defendant from his liability to his principal. If a person is initially appointed as agent and if the latter engages his own sub-agent for carrying through certain transactions, the mere circumstance that the sub-agent corresponded not with his employer but with the main principal, does not divest the main agent of his character as such."
But in this case Exs.A.1 to A.3, the 1st defendant, Marketing Agent of D2, has not appointed sub-agent in his sole capacity. On the other hand it is seen from Ex.A.1 that D2 has authorized D1 to appoint C&F agent and dealers in Tamil Nadu, Kerala and Andhrapradesh. So it cannot be said that the 1st defendant alone is responsible for the wrong committed by the sub-agent appointed by the 1st defendant. It is seen from Ex.A.2 that the 2nd defendant has appointed the plaintiff as his C&F agent for Tamil Nadu. So the dictum in AIR 1961 ANDHARA PRADESH 143 (Purushotham Haridas and others Vs. M/s.Amruth Chee Co., Ltd., Tuntur and others) will not be applicable to the present facts of the case.
7(l)Relying on AIR 1968 SC 1413 (Gopal Krishnaji Ketkar, Vs. Mohamed Haji Latif and others) the learned senior counsel appearing for the 2nd defendant would contend that if a person who is in possession of evidence failed to produce the same before the Court then adverse inference against him under Section 114(g) of the Evidence Act to be drawn by the Court. The relevant observation in the said dictum runs as follows:-
"Mr.Gokhale, however, argued that it ws no part of the appellant's duty to produce the accounts unless he was called upon to do so and the onus was upon the respondents to prove the case and to show that the Dargah was the owner of plot No.134. We are unable to accept th argument as correct. Even if the burden of proof does not lie on a party the Court may draw an adverse inference if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court that best evidence which is in their possession which could throw light upon the issues. In controversy and to rely upon the abstract doctrine of onus of proof. In Murugesam Pilai Vs. Gnana Sambandha Pandara Sannadhi, 44 Ind App 98 at P.103 = (AIR 1917 PC 6 at p.8) Lord Shaw observed as follows:
"A practice has grown up in Indian procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing, accordingly, to furnish to the Courts the best material for its decision. With regard to third parties, this may be right enough they have no responsibility for the conduct of the suit, but with regard to the parties to the suit it is, in their Lordships' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the written evidence in their possession which would through light upon the proposition."
This passage was cited with approval by this Court in a recent decision Biltu Ram Vs. Jainandan Prasad, Civil Appeal No.941 of1965. D/- 15.4.1968 (SC). In that case, reliance was placed on behalf of the defendants upon the following passage from the decision of the Judicial Committee in Mt.Bilas Kunwar Vs. Desraj Ranjit Singh, 42 Ind App 202 at p.206 = (AIR 1915 PC 96 at p.98):-
"But it is open to a litigant to refrain from producing any documents that he considers irrelevant; if the other litigant is dissatisfied it is for him to apply for an affidavit of documents and he can obtain inspection and production of all that appears to him in such affidavit to be relevant and proper. If he fails so to do, neither he nor the Court at his suggestion is entitled to draw any inference as to the contents of any such documents."
But Shah, J, speaking for the Court, stated:
"The observations of the Judicial Committee do not support the proposition that unless a party is called upon expressly to make an affidavit of documents and inspection and production of documents is demanded, the Court cannot partly withholding evidence in his possession. Such a rule is inconsistent with illustration (g) of Section 114 of the Evidence Act, and also an impressive body of authority."
No doubt under Section 114 (g) of the Evidence Act the Court is bound to take adverse inference against a party who fails to produce the material documents relating to the case purposely withholding it. As I have already observed in the earlier paragraphs that absolutely the 2nd defendant has not raised any objection to the letter received from the plaintiff along with statement of accounts Ex.A.11. There is absolutely no material placed before the trial Court to show that in spite of the demand made by the defendants, the plaintiff has withheld the material documents relating to this case. Whatever documents available with him in respect of the claim made by the plaintiff in this suit, he has produced the same before the trial Court. Under such circumstance, as contended by the learned senior counsel appearing for the 2nd defendant adverse inference cannot be drawn against the plaintiff under Section 114(g) of the Evidence Act.
7(m)With regard to the interest even though the plaintiff has claimed 18% per annum interest in the plaint, the learned trial Judge has awarded interest at the rate of 9% per annum from 12.10.1984 to 22.9.1986 and future interest at the rate of 6% from the date of suit till the date of realisation. The learned senior counsel for the 2nd defendant would contend that the interest allowed by the trial Court before the date of filing of the suit cannot be allowed. For this proposition of law, the learned senior counsel would rely on the ratio decidendi in AIR 1996 SC 395 (Union of India Vs. W.P.Factories). The relevant observation in the said ratio runs as follows:-
"In the absence of any usage of contract, express or implied, or of any provision of law to justify the award of interest, interest by way of damages cannot be awarded. No interest could thus be awarded for the period upto the date of the suit. AIR 1938 PC 67; and (S) AIR 1955 SC 468 and AIR 1963 SC 1685 and AIR 1966 SC 275, .............
......... In view of these decisions no interest could be awarded for the period upto the date of the suit and the decretal amount in the two suits awarded have to be reduced by the amount of such interest awarded."
So as correctly pointed out by the learned senior counsel 9% per annum interest awarded by the learned trial Judge for the period before filing of the suit ie., 12.10.1984 to 22.09.1986 is to be set aside and the plaintiff is entitled to 9% per annum interest from the date of the suit till the date of the decree and 6% per annum interest from the date of decree till the date of realisation.
7(n)The dictum in AIR 1985 ANDHRA PRADESH 21 (Sri Srinivasa Co., Vs. Firm, Vitta Dodda hanumanthappa Anjayya Setti), is not appicable to the present facts of the case because in the said case there was an agreement to pay the interest, whereas in the case on hand there is no agreement to pay any interest. Under such circumstance, the proviso to section 34 of CPC alone will be applicable. Hence, I hold on point No.2 that the plaintiff is entitled to Rs.3,25,566/45 only from the defendants with interest at the rate of 9% per annum from the date of the suit till the date of decree and 6% per annum interest from the date of decree till the date of realization.
8.Point No.3 :- In view of my finding in Point Nos.1 & 2, I hold on point No.3 that the decree and judgment in O.S.No.3763 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai, is to be modified.
9.In fine, the appeal is allowed in part and suit is decreed in part and the plaintiff is entitled to a sum of Rs.3,25,566/45 only with 9% per annum interest from the date of the suit till the date of the decree and 6% per annum interest from the date of the decree till the date of realisation with proportionate costs. The suit against the claim of Rs.98,860/02 towards damages is hereby dismissed. It is pertinent to note that the 2nd defendant-company has been wound up as per the order in Company Application No.282 of 2007 in Company Petition No.243 of 2002 on the file of High Court, Gujarat at Ahmadebad. The plaintiff has to execute the decree against D2 through the Official Liquidator appointed by the Company Court in the above said Company application. Both D1 & D2 are jointly and severly liable for the decree amount.
ssv To The IV Additional Judge, City Civil Court, Chennai