Calcutta High Court
Ravi Udyog Private Limited vs S.G. Projects Ltd on 18 August, 2016
Equivalent citations: AIR 2017 (NOC) 979 (CAL.)
Author: I.P. Mukerji
Bench: I.P. Mukerji
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
C.S. No. 295 of 2010
Ravi Udyog Private Limited
Vs.
S.G. Projects Ltd.
For the Plaintiff:- Mr. Dhruba Ghosh, Sr. Adv.
Ms. Ahana Sikdar, Adv.
Mr. Kaushik Banerjee, Adv.
Ms. Nilanjana Adhya
Ms. Rashmita Halder,Adv.
For the Defendant: - Mr. Jishnu Saha, Sr. Adv.
Mr. Hasnuhana Chakraborty, Adv.
Mr. D.Manna, Adv.
Mr. S. Karmakar, Adv.
Mr. P. Ghosh, Adv.
Judgement On: - 18th August, 2016
I.P. MUKERJI, J.
The reference to the defendant, in this judgement, will mean and include Jai Mangala Coal Pvt. Ltd. the former name of the defendant. If you want to advance money to someone, with the expectation of getting it back with interest, you should be very careful. It is not enough that you remit the amount to the other person by cheque. You must have documents evidencing this agreement between yourselves. In other words, the documents must show that the money was tendered as a loan. Otherwise you might well not get the money back. When you file a suit for its recovery, a defence may be well taken that there was a joint venture by the parties in which this money was utilised and nothing is payable to you. Or you might expect a defence that the money was repaid in cash.
This is what has happened to the plaintiff in this case. It is only because of the able and tenacious advocacy of Mr. Jishnu Saha, senior Advocate for the defendant that this court heard the defendant for a number of days.
There is no dispute whatsoever that between 1st April, 2003 and 15th July 2003 the plaintiff issued several account payee cheques in favour of the defendant, which they encashed, aggregating to a sum of Rs. 1 crore. In fact, in the written statement, the defendant has not denied receipt and encashment of the above cheques. According to the plaintiff this sum was lent and advanced by them to the defendant and had to be repaid with interest @ 18% per annum.
The defendant has taken two material points in defence. First, there was a joint venture between the parties in which the money was invested. Secondly, the money was repaid in cash.
Mr. Ghosh, senior Advocate for the plaintiff made straightforward and simple submissions. He relied on the admitted fact that these cheques for Rs. 1 crore had been encashed by the defendant. He showed their balance sheets which are exhibit-C collectively, that in the financial years ending 31st March, 2008 and 31st march, 2009, the years immediately preceding the year of filing of the suit and consistently in the previous financial years, they had admitted receipt of an unsecured loan of Rs. 1 crore from the plaintiff. This loan was shown in the balance sheets under the head "Sources of Fund" and was explained in schedule "C" thereof as having been obtained from the plaintiff.
He said that on 14th September, 2010 a notice was issued by the plaintiff to the defendant claiming 18% per annum interest on this amount. This document is exhibit-B at pg. 468 of the Judges Brief of documents. This had to be taken as a notice demanding interest under the interest Act, 1978. Learned counsel said that in a suit filed by Citi Corp. in this court the plaintiff was the defendant and had suffered a decree. Execution proceedings were started by Citi Corp Finance Ltd. (G.A. No. 1450 of 2009 and E.C. No. 4 of 2009). In this execution proceeding, the defendant herein, as a debtor of the defendant in that suit (the plaintiff herein) was noticed as a garnishee. The defendant as a garnishee paid in court Rs. 37,52,989.75 to Citi Corp. without prejudice to its rights and contentions, as recorded in the order dated 19th January, 2011. He added that in the present suit the plaintiff made two application, one for judgement upon admission (G.A. 100 of 2011) and the other for attachment before judgement ( G.A. 401 of 2011). In the final order dated 8th May, 2011 passed in those applications, this court held that the judgement upon admission application was liable to be dismissed. The defendant had volunteered to deposit Rs. 64 lacs with the Registrar Original Side. In default of making the deposit a decree for Rs. 64 lacs would follow, it was ordered.
He also submitted that the defendant gave no reply to the notice of demand for interest dated 14th September, 2010 relying on Xn 24 to 28 of the evidence of Mr. Deepak Kumar Loyalka, giving evidence for the plaintiff.
Furthermore, the breakup of the total loans and advances made by the plaintiff for the financial years 2004-2005 onwards shown under Schedule-10 of each balance sheet, included an entry of Rs. 1 crore as loan/advance in favour of the defendant. Explanatory sheets showing these entries were signed by the director of the plaintiff and also by Ghosal and Company their Chartered Accountants and tendered in evidence as exhibits D & E. (see questions 41 to 60 of Xn of the said witness of the plaintiff and also question 182 to 224 in XXn). Learned Counsel also drew this court's attention to questions 23 to 28 of the XXn of Veenay Kumar Shaw on behalf of the defendant who deposed that a substantial part of Rs. 1 crore was repaid to the plaintiff "in cash". He submitted that this evidence was inconsistent with the defence of the defendant in the written statement that this money was paid by the plaintiff as its contribution towards a " joint venture project between the plaintiff and defendant."
Mr. Saha made a most interesting argument. He said that the said judgement of this court dismissing the judgment upon admission application was res judicata. It was res judicata to the extent that the plaintiff had been unable to prove that it was entitled to a judgement on the basis of the admissions pleaded. Therefore, they had to adduce further evidence to prove their case. They had been unable to do so. The plaintiff was trying to secure a judgement on the self-same evidence. This interlocutory determination of this court was final and conclusive, following the ratio in Shah Babulal Khimji v. Jayaben D. Kania and another reported in (1981) 4 SCC 8 paragraphs 113 to 151, Liverpool & London S.P. & I Association Ltd. v. M.V. Sea Success I and Another reported in (2004) 9 SCC 512 paragraphs 120 to 131. He also submitted that there could be res judicata at various stages of a proceeding citing Y.B Patil and others v. Y.L. Patil reported in AIR 1977 SC 392 para 4 and Satyadhan Ghosal and others v. Smt. Deorajin Debi and another reported in AIR 1960 SC 941 paras 7 and
8. I would like to deal with this point at the outset. Order XII of the Code of Civil Procedure deals with admission. Order XII rule 6 is in the following terms:
"Judgment on admissions.- (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the court may at any stage of the suit, either on the application of a party or of its own motion and without waiting for the determination of any other question between the parties, make such Order or give such judgment as it may think fit, having regard to such admissions.
(2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced."
It is trite that to get a judgement upon admission, the admission has to be such that it would leave no doubt in the mind of the court with regard to the admission made. The admission must be without any condition. It should not be capable of being explained away by other evidence. It should be clear and unconditional. The moment there is doubt in the mind of the court with regard to the admission, the court does not accept it and asks the plaintiff to prove his case more substantially at the trial. This was the situation when this court dismissed the judgement upon admission application on 18th May, 2011. When an application for judgement upon admission application is dismissed, there is no finding of fact which can be called final and no decision constituting res judicata between the parties. The suit is thrown wide open to be decided at the trial.
If on the contrary, the court passed a judgement upon admission, it is a final decree at the interlocutory stage of the suit. If it is with regard to the whole amount claimed it is the final decree in the suit, otherwise the judgement results in a part decree, final and conclusive between the parties.
The next point urged by Mr. Saha was that the entry in his client's balance sheet, showing Rs. 1 crore as loan was by mistake. This defence has been taken in the written statement. Their witness repeated this. The loan was repaid in cash. The balance sheets were not rectified (Xn 24-37 XXn 114-116 of the evidence of Sanjit Kumar Singh). Furthermore, he tried to say that there were discrepancies in the plaintiff's balance sheet for the relevant years. In the balance sheet of the plaintiff for the year ending on 31st March, 2005 and also for the year ending 31st March, 2006, loan to others was shown as Rs. 1,23,21,577. In the balance sheet as on 31st March, 2007 loan to others was shown to be Rs. 14,21,000 whereas advances were shown as Rs. 9,65,40,452. Mr. Saha would make this court believe that the loan fund was reduced because it was repaid.
Mr. Saha referred to the averments in the plaint of another suit filed by the plaintiff. He showed me some pleadings in that suit. It was stated therein that the plaintiff had lent a sum of Rs. 4.6 crores to the defendant in that suit. But this did not match with the balance sheet. Therefore, these entries in the balance sheet are not to be believed. The pleadings in the other suits were admissible in evidence by virtue of Ranganayakamma and Another v. K.S. Prakash ( dead) By Lrs. And Others reported in (2008) 15 SCC 673 paragraph 29, Vimal Chand Ghevarchand Jain and Others v. Ramakant Eknath Jadoo reported in 2009 (5) SCC 713 paragraph 25.
He also said that Deepak Kumar Loyalka, the director of the plaintiff, who had deposed for them, was not competent to depose on its accounts. The plaintiff was required to call his chartered accountant. The burden of proof had not shifted to the defendant and had remained with the plaintiff. They were unable to discharge their burden of proof. Learned Counsel showed me Rangammal v. Kuppuswami and Another reported in (2011) 12 SCC 220 paragraphs 20,27,28. He also said that plaintiff was required to prove its case citing Balraj Taneja and Another v. Sunil Madan and Another reported in (1999) 8 SCC 396 paragraph 29. He made a very novel submission. He draw this court's attention to Section 34 of the Indian Evidence Act, 1872.
It is in the following terms:
"34. [Entries in books of accounts including those maintained in an electronic form], when relevant.------ [Entries in books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."
He argued that the books of accounts could not be taken as proof of the plaintiff's case. He cited The State of Andhra Pradesh v. Cheemalapati Ganeswara Rao and another reported in AIR 1963 SC 1850 paragraphs 43 and 44, Chandradhar Goswami and ors. v. The Gauhati Bank Ltd. reported in AIR 1967 SC 1058, Central Bureau of Investigation v. V.C. Shukla & Ors. reported in AIR 1998 SC 1406. Next Mr. Saha cited M/s Kamakshi Builders v. M/s Ambedkar Educational Society & Ors. reported in AIR 2007 SC 2191 and Gopal Krishnaji Ketkar v. Mohaded Haji Latif and Others reported in AIR 1968 SC 1413, arguing that the plaintiff had not led the best evidence and in fact had withheld it. It was for the plaintiff to have proved the loan by proving the necessary documents like an agreement, cheques, their deposit into the defendant's bank account, the corresponding debit in the plaintiff's bank account and so on.
CONCLUSIONS:
The plaintiff pleaded in the plaint that Rs. 1 crore was paid into the account of the defendant on diverse dates between 1st April, 2003 and 15th July, 2003 by cheques. This receipt of money was not denied by the defendant in their written statement.
When money is advanced by one party to another, not in any close personal relationship, it is to be presumed, that it was not advanced gratuitously. It is upon the other party to prove in what circumstances he received the money.
Once this was the position, the plaintiff had discharged its initial burden of proof.
Immediately, the burden shifted to the defendant. No details of any joint venture were furnished by the defendant. Nothing was shown when this money was payable, how it was to be used. In fact, the evidence of the witness for the defendant Sanjit Kumar Singh that on certain occasions he paid cash to the plaintiff contradicts the joint venture defence.
The defendant had to show how it had received the money, on what terms, what they did with the money, whether they were obliged to return the money and if yes to what extent they had returned it. This burden of proof was not discharged by the defendant at all, in my opinion.
Now, this evidence has to be considered along with the admission of the defendant in their balance sheet, throughout the material period, as discussed above.
The transfer of the loan amount to advance in the balance sheets has been explained by Mr. Loyalka by furnishing and proving statements explaining Schedule-10 to the balance sheets for the year ending 31st March, 2007 onwards. They are also signed by the firm of chartered accountants Ghoshal & Co. This amount of Rs. 1 crore is part of Rs. 9,65,404,52/- of schedule-10 (see exhibits D & E). In my opinion in accounting there is hardly any difference between loan and advance. I do not find any discrepancy.
On one hand, the defendant has unconditionally acknowledged over years, having received a loan of Rs. 1 crore. Correspondingly the plaintiff's accounts also showed that this money was advanced to the defendant.
The defendant's so called defence of mistaken entries in the balance sheets, repayment by cash, utilisation of the money in a joint venture are plainly incredible.
The principle of law laid down in Razia Begum v. Sahebzadi Anwar Begum and others reported in AIR 1958 SC 886 and Balraj Taneja and Another v. Sunil Madan and Another reported in (1999) 8 SCC 396 cited by Mr. Saha are quite plain that a party should be given a chance to explain his admission and that in certain cases the court may ask for additional clear evidence. Very regrettably, the defendant has been unable to explain the admission made in their balance sheets. Even if it has tried to explain this admission, the other evidence of corresponding entries in the plaintiff's balance sheets the actual receipt the money by the defendant in their account and the contradictions in their defence, as pointed out above do not disprove the facts admitted by them in their balance sheets.
Section 34 of the Indian Evidence Act, 1872, should not be read in isolation. We are not concerned with a mere entry but an entry by the defendant which makes an admission of liability. This kind of an entry falls into an entirely different category. The above authorities cited by Mr. Saha tell us that the entries referred to in Section 34 refer to the plaintiff's entries and not the defendant's admissions in accounts. So, this point of Mr. Saha has no merit In my opinion, if a director is competent under the law to sign the balance sheet, he is also competent to give evidence of the entries therein.
The defendant has made a counter-claim.
It is framed in this way. Rs.37,52,989.72/- was paid by them as a garnishee to Citi Corp. Finance India Limited, in their said suit against the plaintiff. This payment was made without prejudice to their rights and contentions. They have checked up their records. They have discovered that this payment was made without checking them. No amount was payable by them to the plaintiff. Hence, they are entitled to recover this sum of Rs. 37,52,989.72/-.
Nobody has heard of any garnishee making payment without prejudice to his rights and contentions. The garnishee order is always like a decree, after adjudication of the debt of the garnishee towards the defendant/judgement debtor in a suit. This payment of Rs. 37,52,989.72/- was made by the defendant out of their volition. There was no adjudication by this Court. Nobody asked them to pay this amount. This recording in the order of this Court that the payment was made without prejudice to the rights and contentions of the defendant, really means nothing because the defendant did not have any right left once they decided to pay this amount in repayment of their debt to the plaintiff, to Citi Corp. Limited.
Hence this counter-claim is dismissed.
The plaintiff will be entitled to a decree for Rs.1 crore less Rs. 37,52,989.72/-, aggregating to Rs.62,47,010.28/- , against the defendant.
The payment of Rs. 37,52,989.72/- is recorded in an order dated 19th January, 2011.
The notice dated 14th September, 2010 claimed interest under the Interest Act, 1978 @ 18% per annum. From 15th September, 2010 till 18th January, 2011, the plaintiff will be entitled to interest @ 18% per annum simple interest on the whole sum of Rs. 1 crore. From 19th January, 2011 till payment, the plaintiff will be entitled to interest at the said rate on the decreetal amount of Rs.62,47,010.28/- till the date of payment.
The suit is decreed accordingly.
Urgent certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)