Himachal Pradesh High Court
M/S Himachal Air Products Pvt. Ltd vs M/S Jyoti Batteries And Ors on 13 October, 2023
Author: Satyen Vaidya
Bench: Satyen Vaidya
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA RFA No. : 67 of 2000 Reserved on : 14.09.2023 .
Decided on : 13.10.2023 M/s Himachal Air Products Pvt. Ltd. ....Appellant.
Versus M/s Jyoti Batteries and Ors. ...Respondents.
Coram of The Hon'ble Mr. Justice Satyen Vaidya, Judge. Whether approved for reporting?1 Yes rt For the appellant : Mr. Suneet Goel, Advocate.
For the respondents : Mr. Dinesh K. Sharma and Mr. Y. Paul, Advocates, for respondents No. 1 and 9.
: Respondent No.2, is ex-parte.
: Respondent No. 3, stands
deleted vide order dated
30.05.2019.
:
Respondents No. 4 to 8 are
ex-parte, vide order dated
22.02.2022.
_______________________________________________________ Satyen Vaidya, Judge By way of instant appeal, appellant has assailed the judgment and decree dated 20.11.1999, passed by learned Additional District Judge, Solan, Camp Court at Nalagarh, in Civil Suit No. 8/NL/1 of 1 Whether reporters of the local papers may be allowed to see the judgment?
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 21995/89, whereby the suit of the appellant has been dismissed.
.
2. The case as set up by the plaintiff was that it was manufacturing industrial and medical gas. Amongst others, defendants were also its customers. Originally two defendants were impleaded in the suit. M/S Jyoti of Batteries as defendant No.1 and Shri Y.D. Sharma as defendant No.2. It was alleged that Shri Y.D. Sharma was rt the proprietor of defendant No.1 and he had business dealings with plaintiff as proprietor of defendant No.1 and his personal capacity also. During pendency of the suit Shri Y.D. Sharma died and was substituted by his legal representatives who are respondents 2 to 9 in instant appeal.
3. Parties hereafter shall be referred to by the same status which they held before learned Trial Court.
For the sake of convenience respondent 2 to 9 herein will be jointly referred to as defendant No.2.
4. Plaintiff filed a suit for recovery of Rs. 4,77,949.70/- against defendants. It was alleged that a sum of Rs. 1,17,517.78/- and a sum of Rs.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 37,543.35/- was due to the plaintiff from defendants No. 1 and 2 respectively on account of unpaid price of gas.
.
Plaintiff also claimed Rs. 70,330.33 and Rs. 55,072.72/-
on account of interest @ 18 % per annum with quarterly rests, respectively, from defendants No. 1 and 2 on the unpaid price of gas. In addition, the sum of of Rs. 2,105.02/- was claimed, on account of sale taxes liability borne by the plaintiff for default of defendants rt in not providing of 'D' Form.
5. It was further alleged by the plaintiff that the defendants had not returned 277 numbers of cylinders and thus, were liable to pay Rs. One per day per cylinder as rent. On this count, a sum of Rs. 2,40,331/- and Rs.
34,620/- was claimed against defendants No. 1 and 2, respectively. Above all, an amount of Rs.230 was claimed as cost of notices issue to defendants by the plaintiff before filing the suit. Plaintiff also sought a decree of mandatory injunction against defendants seeking return of empty cylinders.
6. Plaintiff claimed to have opened a current mutual running account with defendants and on its ::: Downloaded on - 16/10/2023 20:34:57 :::CIS 4 basis, the suit was claimed to be within a period of limitation.
.
7. Defendants contested the suit. Objections as to maintainability of suit was taken on the ground that before filing the suit i.e on 09.03.1988, plaintiff-Company had been taken over by H.P. State Financial Corporation of (HPFC) in exercise of powers under Section 29 of the State Financial Corporations, Act, 1951(for short, 'the rt Act') and as per Section 29(5) of the Act ibid, Corporation was deemed to be owner of the plaintiff-Company. It was only the HPFC., which could file the suit in the name of the plaintiff-Company.
7. The suit was also alleged to be beyond limitation. As regards, the non-return of 277 cylinders, it was submitted that in Company Petition No. 1 of 1985 defendant No. 2 had clearly denied the alleged liability in the year 1985 and as such, the claim was clearly time barred.
8. On merits, defendants denied the liability to pay the suit amount to the plaintiff.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 59. On the pleadings of the parties, learned Trial Court had framed the following issues:-
.
1. Whether the plaintiff has no locus standi to institute the suit as alleged ?OPD.
2. Whether the suit is not within limitation as alleged? OPD.
3. Whether the suit is not maintainable for the relief of of mandatory injunction as alleged? OPD.
4. Whether the plaintiff supplied gas cylinders out of rt which 277 empty cylinders were not returned to the plaintiff as alleged? OPP.
5. Whether the plaintiff is entitled to the outstanding dues of Rs. 1,17,517.78/- P towards the supply of the gas and Rs. 7, 543.35/- P from defendant No. 2 as alleged ? OPP.
6. Whether the plaintiff is entitled to sales tax amounting to Rs. 2,105.02 P from the defendant No.1, as alleged? OPP.
7. Whether the plaintiff is entitled to the restoration of Rs. 277 empty cylinders from the defendants as alleged ?OPP.
8. Whether the plaintiff is entitled to the relief of mandatory injunction against the defendants as alleged in paras 9 and 10 of the plaint? OPP.
9. Whether the plaintiff is entitled to recover the rent vis-à-vis the aforesaid cylinders as alleged?
OPP.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 610. Whether the plaintiff is entitled to interest at the commercial rate? If so from whom? OPP.
11. Whether the plaintiff is entitled to recover the suit .
amount or any other amount from the
defendants? OPP.
Additional issue was also framed on
28.02.1997
11-A Whether the defendants No. 2(a) to 2(i) who
of
have become LRS of deceased Y.D. Sharma are not liable to pay the liability of the deceased if at all adjudged against the deceased defendant?
rt OPD.
12. Relief.
10. Issues No. 1 to 3 and 11-A were decided in
affirmative. Rest of the issues were decided in negative and the suit of the plaintiff was dismissed.
11. Learned Trial Court held the suit to be not maintainable in light of the provisions of Section 29 (5) of the State Financial Corporation, Act. Further, the suit was held to be beyond limitation on the ground that in 1985 itself, defendant No.2 had denied the liability in respect of 227 cylinders and the limitation had started running against the plaintiff from said date. Further the claim of the plaintiff on merits was held to be not proved only on the basis of account books.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 712. I have heard learned counsel for the parties and have also gone through the record of the case .
carefully.
13. The findings returned and conclusions drawn by learned trial court have been assailed on the grounds, firstly that the suit was within limitation as per Article-1 of of the Limitation Act as plaintiff had proved the existence of open mutual running account with the rt defendants, secondly that the action of HPFC in taking over the assets and management of plaintiff-Company was not legal as the plaintiff-Company was already a Sick Industrial Company and the proceedings before BIFR were already pending and lastly that learned Trial Court had not discussed the effect of proof of entries in account books produced by the plaintiff either on the merits of the claim of the plaintiff or on the issue of limitation. In addition, the impugned judgment has been alleged to be lacking in reasons.
14. The objection as to lack of reasons in support of findings recorded by learned trial court is not wholly unjustified in so far as some of the issues are concerned, ::: Downloaded on - 16/10/2023 20:34:57 :::CIS 8 nonetheless, being first Court of appeal, this Court can revisit the entire material on record to re-assess whether .
the findings on material issues can be different ?
15. As regards issue No.1, no fault can be found with the findings returned by learned Trial Court. The findings so returned are supported by reasons. Section of 29(5) of the State Financial Corporations Act, 1951, reads as under: -
rt "29(5) Where the Financial Corporation has taken any action against an industrial concern] under the provisions of sub-
section (1), the Financial Corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of the concern."
16. It is an admitted fact that the HPFC had taken over plaintiff-Company under Section 29 of the Act on 09.03.1988. That being so, under sub-Section 5 of Section 29 of the Act, the HPFC had to be deemed as the owner of the plaintiff-Company for the purposes of suing or being sued. The suit was filed on 28.06.1989 and admittedly the HPFC was not involved, therefore, the suit has rightly been held to be not maintainable.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 917. Further, plaintiff has not been able to establish the pendency of any proceedings against it .
before the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and its legal impact on the action of HPFC under section 29(5) of the Act.
18. As regards issue No.2 on the question of of limitation, it is evident from the contents of the plaint that the details as to the dates/period(s) of alleged rt transactions which were said to have been basis for cause of action for plaintiff were completely missing.
Except for mentioning of existence of mutual open running account with defendants, the necessary ingredients as prescribed under law were neither pleaded nor proved.
19. In Hindustan Forest Company Vs. Lal Chand and others AIR 1959 Supreme Court 1349, the Hon'ble Supreme Court has held as under:
"7. "The question what is a mutual account, has been considered by the courts frequently and the test to determine it is well settled. The case of the Tea Financing Syndicate Ltd. v. Chandrakamal, ILR 58 Cal, 649 :( AIR 1931 Cal 359), may be referred to. There a company had been advancing monies by way of loans to the proprietor of a tea estate and ::: Downloaded on - 16/10/2023 20:34:57 :::CIS 10 the proprietor had been sending tea to the company for sale and realisation of the price. In a suit brought by the company against the proprietor of the tea estate for recovery of the .
balance of the advances made after giving credit for the price realised from the sale of tea, the question arose as to whether the case was one of reciprocal demands resulting in the account between the parties being mutual so as to be governed by Art 15 of the Indian Limitation Act. Rankin, C.J., laid down at p. 668 (of ILR Cal): a p. 368 of AIR), the test, to be applied for deciding the question in these words:
of " There can, I think, be no doubt that the requirement of reciprocal demands involves, as all the Indian cases have decided following Halloway, A.C.J., rt transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side, those on the other being merely complete or partial discharges of such obligations. It is further clear that goods as well as money may be sent by way of payment. We have therefore to see whether under the deed the tea, sent by the defendant to the plaintiff for sale, was sent merely by way of discharge of the defendant's debt or whether it was sent in the course of dealings designed to create a credit to the defendant as the owner of the tea sold, which credit when brought into the account would operate by way of set-off to reduce the defendant's liability."
8. The observation of Rankin, C.J., has never been dissented from in our courts and we think it lays down the law correctly. The learned Judges of the appellate bench of the High Court also appear to have applied the same test as that laid down by Rankin, C.J. They however came to the conclusion that the account between' the parties was mutual for the following reasons:-
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 11" The point then reduces itself to the fact that the defendant company had advanced a certain amount of money to the plaintiffs for the supply of grains. This .
excludes the, question of monthly payments being made to the plaintiffs. The plaintiffs having received a certain amount of money, they became debtors to the defendant company to this extent, and when the supplies exceeded Rs.13,000 the defendant company became debtors to the plaintiff and later on when again the plaintiff 's supplies exceeded the amount of paid to them, the defendants again became the debtors. This would show that there were reciprocity of dealings and transactions on each side creating rt
9. independent obligations on the other."
The reasoning is clearly erroneous. On the facts stated by the learned Judges there was no reciprocity of dealings; there were no independent obligations. What in fact had happened was that the sellers had undertaken to make delivery of goods and the buyer had agreed to pay for them and had in part made the payment in advance. There can be no question that in - so far as the payments had been made after the goods had been delivered, they had been made towards the price due. Such payments were in discharge of the obligation created in the buyer by the deliveries made to it to pay the price of the goods delivered and did not create any obligation on the sellers in favour of the buyer. The learned Judges do not appear to have taken a contrary view of the result of these payments."
20. Similarly, in Kesharichand Jaisukhalal Vs. Shillong Banking Corporation Ltd. Shillong AIR 1965 Supreme Court 1711, the Hon'ble Supreme Court has held as under:
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 12"9. The next point in issue is whether the proceedings are governed by Art. 85 of the Indian Limitation Act, 1908, and if so, whether the suit is barred by limitation. The argument .
before us proceeded on the footing that an application under s. 45(D) of the Banking Companies Act is governed by the Indian Limitation Act, and we must decide this case on that footing. But we express no opinion one way or the other on the question of the applicability of the Indian Limitation Act to an application under s. 45(D). Now, Art. 85 of the Indian Limitation Act, 1908 provides that the period of limitation for of the balance due on a mutual, open and current account, where there have been reciprocal demands between the parties is three years from the close of the year in which the rt last item admitted or proved is entered in the account; such year to be computed as in the account. It is not disputed that the account between the parties was at all times an open and current one. The dispute is whether it was mutual during the relevant period.
10. Now in the leading case of Hirada Basappa v. Gadigi Muddappa, 6 Mad. H.C. 142 at p.144, Holloway, Acting C. J. observed:
"To be mutual there must be transactions on each side creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations."
These observations were followed and applied in Tea Financing Syndicate Ltd. v. Chandrakamal H.R. 58, Cal 649:
(AIR 1931, Cal. 359) and Monotosh K. Chatterjee v. Central Calcutta Bank Ltd. 91 Cal. LJ 16, and the first mentioned Calcutta case was approved by this Court in Hindustan Forest Company v. Lal Chand 1960-1 SCR 563: (AIR 1959 SC 1349), Holloway, Acting C. J. laid down the test of ::: Downloaded on - 16/10/2023 20:34:57 :::CIS 13 mutuality on a construction of S. 8 of Act XIV of 1859, though that section did' not contain the words "where there have been reciprocal demands, between the parties". The addition .
of those words in the corresponding Art. 87 of Act IX of 1871, Art. 85 of Act XV of 1877 and Art. 85 of the Act of 1908 adopts and emphasises the test of mutuality laid down in the Madras case.
11. In the instant case, there were mutual dealings between the parties. The respondent Bank gave loans on overdrafts, and the appellant made deposits. The of loans by the respondent created obligations on the appellant to repay them. The respondent was under independent obligations to repay the amount of the cash deposits and to rt account for the cheques, hundis and drafts deposited for collection. There were thus transactions on each side creating independent obligations on the other, and both sets of transactions were entered in the same account. The deposits made by the appellant were not merely complete or partial discharges of its obligations to the respondent. There were shifting balances; on many occasions the balance was in favour of the appellant and on many other occasions. the balance was in favour of the respondent. There were reciprocal demands between the parties, and the account was mutual. This mutual account was fairly active up to June 25, 1947. It is not shown that the account ceased to be mutual thereafter. The parties contemplated the possibility of mutual dealings in future. The mutual account continued until December 29, 1950 when the last entry in the account was made. It is conceded on behalf of the appellant that if the account was mutual and continued to be so until December 29, 1950, the suit is not barred by limitation, having regard to S. 45 (O) of the Banking Companies Act. The Courts below, therefore, rightly answered issue No. 1 in the negative."::: Downloaded on - 16/10/2023 20:34:57 :::CIS 14
21. Thus, it is well settled that to be mutual there must be transaction on each side creating independent .
obligation on the other side, and not merely transaction which create obligation on one side alone. The proof of reciprocity of obligations is the sine-qua-non for seeking benefit under Article 1 of the Limitation Act, 1963 which of provides for commencement of period of limitation from the start of that financial year in which the last entry in rt respect of mutual running account is carried. In the present case, there was neither any pleading or proof regarding mutuality or reciprocity of transactions between the parties so as to make it mutual running account. In absence of the proof of mutual running account, plaintiff could not derive the benefit of Article 1 of the Limitation Act. The case of the plaintiff would be governed under Article 18 of the Limitation Act, wherein each of the transaction on the basis of which the suit amount was sought was required to be proved to have taken place within three years immediately preceding the date of filing of suit.
::: Downloaded on - 16/10/2023 20:34:57 :::CIS 1522. Plaintiff had filed the suit on the basis of account books. Admittedly, there was no compliance of .
Rule 17 of Order 7 of the Code of Civil Procedure. In the case in hand, the original account books were not produced by the plaintiff on the ground that same had been destroyed by termites. However, some photocopies of were produced. Later certain original ledgers were also produced by alleging that the same could not be traced rt earlier and were later found in the office of the Advocate for plaintiff. However, there was no reasonable explanation as to why such account books could not be produced at the time of filing the suit to show compliance with order 7 rule 17 of the Code. Hence, placing reliance on such documents cannot be safe for determining civil liabilities of the parties.
23. Further, the production of books of account by itself would not have been sufficient, its entries were required to be proved especially when the defendants had denied the liability to pay the suit amount. Thus, there is no difficulty in holding that the evidence has remained totally deficient. None of the witnesses could prove the ::: Downloaded on - 16/10/2023 20:34:57 :::CIS 16 entries in the account books in accordance with law and in such view of the matter, the findings of learned Trial .
Court on issues No. 3 to11 needs to be upheld though for different reasons.
24. As regards findings on issue No. 11-A same also cannot be said to be illegal or perverse in view of the of material on record.
25. In light of above discussion, I find no merit in rt this appeal and the same is dismissed. Decree sheet be accordingly prepared. All pending miscellaneous application(s), if any, shall also stand disposed of.
(Satyen Vaidya)
13th October, 2023 Judge
(sushma)
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