Bangalore District Court
M/S Hmt Watches Limited vs M/S . Meena Marketing Agencies on 6 November, 2019
1
Com.OS.No.4089/2009
IN THE COURT OF LXXXII ADDL.CITY CIVIL & SESSIONS
JUDGE,BANGALORE CITY.(CCH.83)
Dated, this the 6th day of November 2019.
PRESENT : Sri. Jagadeeswara.M.,B.Com,LL.B.,
LXXXII Addl.City Civil & Sessions Judge,
Bangalore.
Com.OS.No.4089/2009
PLAINTIFF M/s HMT Watches Limited, A Company
registered under the Companies Act,1956
having its registered Office at "HMT Bhavan",
59, Bellary Road, Bangalore -560 032, and its
Watch Marketing Division at Ground Floor,
"HMT Bhavan", No.59, Bellary Road,
Bangalore -32, represented by its Authorised
representative & Accounts Officer
Mr. Amaresh Chandra Datta
(By M/s Cariappa & Co.- Advocates)
VS
DEFENDANTs 1. M/s . Meena Marketing Agencies, A
Proprietary concern, at House No.29,
R.K.Choudhary Road, Opp. Goenka Nursing
Home, Bharalumukh, Guwahati - 781 009,
represented by its Proprietor Mr. Arun
Harlalka.
2. Mr. Arun Harlalka, S/o Dr. Shyam Sunder
Harlalka, aged about 39 years
House No.29, R.K.Chousdhary Road, Opp.
Goenka Nursing Home, Bharalumukh,
Guwahati - 781 009.
(By Sri.B.S.-Advocate)
2
Com.OS.No.4089/2009
Date of institution of the suit : 24.6.2009
Nature of the suit (suit on Suit for recovery of money
pronote, suit for declaration
and possession suit for
injunction,etc) :
Date of the commencement 5.9.2011
of recording of the evidence
Date on which the Judgment 6.11.2019
was pronounced
Total duration Year/s Month/s Day/s
10 04 13
(Jagadeeswara.M.)
LXXXII Addl.City Civil & Sessions Judge,
Bangalore.
JUDGMENT
This suit is filed by the plaintiff for judgment and decree against the defendants directing them jointly and severally to pay a sum of Rs.1,31,74,623/- together with interest at the rate of 24% p.a., from the date of suit till realisation.
2. The brief facts of the plaintiff's case are as under:
2(a). The plaintiff is a 'Government Company' registered under the provisions of the Companies Act, 1956, and is engaged in manufacture and sale of watches and watch components. Prior to 31.3.2001, plaintiff was part of M/s HMT Ltd., Watch Directorate and pursuant to turnaround plan approved by the Government of India, the plaintiff company was demerged from the said M/s HMT Ltd.
2(b). It is further contended in the plaint that in the year 1995, the 3 Com.OS.No.4089/2009 first defendant represented by the 2nd defendant approached the plaintiff to be appointed as Re-distribution Stockist for the watches and watch components & watch spare parts manufactured by the plaintiff and accordingly the defendants were appointed as Re-Distribution Stockist (RDS), for the territories of Assam, Meghalaya and Arunachal Pradesh by an agreement dated 27.3.1995. As per the terms of the Agreement, the RDS was for a period of two years and could be renewed from time to time. Subsequently, vide letter dated 13.1.1998 the agreement was renewed on the same terms and conditions of the agreement dated 27.3.1995. It is further stated that the accounts of the defendants being a running account, whatever payments made by the defendants are being adjusted towards the outstanding amounts due and at the end of every financial year i.e., on 31st March, the balance outstanding was informed to the defendants at regular intervals. The watches, watch components and spare parts were supplied to the defendants under various invoices till March 2005. Subsequently in the financial years 2005-06 and 2006-07, the defendants have made various payments by demand drafts and cash, which amounts have been adjusted towards the outstanding dues of the defendants. The defendants had also issued three cheques in the month of June 2006, for Rs.20,00,000/-, Rs.15,64,665/- and Rs.14,63,862/- totaling to a sum of Rs.50,28,527/-. It is further stated that said cheques on presentation to the bank for encashment, were returned dishonoured. Being 4 Com.OS.No.4089/2009 aggrieved by the dishonour of cheques, the plaintiff has preferred a criminal case and the same is pending adjudication.
2(c). It is further stated that based on the request of the defendants for issuance of credit notes with regard to the return of isolation and securitization watches, the plaintiff had approved credit note of Rs.23,48,019.12 during the financial year 2006-07 and again in the financial years 2007-08, 2008-09 the plaintiff had reversed certain credits given and had accordingly raised debit notes to the value of Rs.2,76,779.54. The plaintiff had also given certain credit notes to the defendants towards plaintiff's contribution for the glow sign and towards priya scheme which was approved and posted by the plaintiff company for a sum of Rs.38,002/- and Rs.1,87,648/- respectively, totaling to a sum of Rs.2,25,649/-. After taking into consideration the aforesaid credits and debits, the defendants are due and liable to pay a sum of Rs.52,92,770.99 being the principal amount towards supply of watches, watch components and spare parts and Rs.79,81,851.60 being the accrued interest for the period of non-payment during the running account and thus, the defendants are liable to pay a sum of Rs.1,32,72,622.59. The defendants at the time of executing agreement dated 27.3.1995, had paid a sum of Rs.1,00,000/- towards security deposit. The plaintiff has given credit to the said security deposit. Thus, the defendants are liable to pay a total sum of Rs.1,31,74,622.59 with interest at the rate of 24% per annum from the date 5 Com.OS.No.4089/2009 of suit till realisation. Accordingly plaintiff has requested to decree the suit.
3.The plaintiff has filed this suit against defendants No.1 & 2. It is shown in the plaint that defendant No.1 is a proprietary concern and defendant No.2 is its proprietor. Defendants No.2 appeared before the court and filed his written statement contending that the suit is false, frivolous vexatious and not maintainable in law and the same is barred by limitation. As per the agreement dated 27.3.1995, the defendant continued to receive the materials, components and watches of the plaintiff till 13.11.2003 as per their last Invoice No.26 for Rs.5,755/- and thereafter in view of lack of orders from he dealers and retailers, the business of the defendants came to stand still since December 2003. In view of the mounting pressure from the plaintiff for payments, the defendants issued 10 blank cheques without mentioning the amounts and dates in the month of December 2003. From the statement of accounts furnished by the plaintiff, the serial numbers of the cheques starting from 002536 upto 002539 drawn on ICICI Bank Ltd., Guwahati branch, produced by the plaintiff tallying with the other cheques already honoured which clearly indicates that the said cheques had been issued in the year 2003. However, only for the purpose of maintaining this suit, the plaintiff has manipulated and put the dates as 15.6.2006, 23.6.2006 and 19.6.2006 on three cheques and sought for cause of action. The cause of action arose to the present suit in the year 2003 and the same has been lapsed in the year 2006 itself 6 Com.OS.No.4089/2009 by virtue of law of limitation and hence, the about suit is not maintainable and liable to be dismissed.
3(a). It is further contended in the written statement that the average business concluded with the plaintiff during the entire 8 years of business between them that the average annual billing was in the range of Rs.One Crore and the defendants have always issued cheque for not more than Rs.2 lakhs at a time and hence, the question of issuance of cheques for Rs.20,00,000/- , Rs.14,63,862/- and Rs.15,64,665/- in the year 2006 does not arise. This clearly indicate that the plaintiff has put the date and amount in the blank cheques at their fun and fancy only to present this suit. Accordingly, defendants have requested to dismiss the suit.
4. From the above pleadings, the following issues are framed :
1. Whether the defendants prove that the cheques are issued as security only ?
2. Whether the the suit is barred by limitation ?
3. Whether the defendants prove that plaintiff has not properly maintained the accounts as stated in para- 8 of the written statement ?
4. Whether this court has no jurisdiction to try this suit ?
5. Whether the plaintiff proves that it is entitled for decree for the suit claim ?
6. To what decree or order ?7
Com.OS.No.4089/2009
5. In proof of suit claim, Accounts Officer of the plaintiff company got examined himself as PW.1 and got marked seventeen documents as Ex.P.1 to Ex.P.146. On the other hand, the defendant No.2 got examined himself as DW.1 and got examined the Chief Manager of UCO Bank, Sipukhuri branch, Guwahati as DW.2 and got marked the documents Exs.D.1 to D.11.
6. Heard the arguments of both sides.
7. My findings on the above issues are as follows: -
Issue Nos.1 to 3 : Affirmative Issue Nos.4 & 5 : Negative Issue No.6 : As per final order for the following:
REAS O NS
8. Issue Nos.1,3 & 5 : It is submission of learned advocate for plaintiff that it is admitted fact that plaintiff was manufacturer of HMT watches, watch components and watch spare parts and plaintiff appointed defendant No.1 represented by defendant No.2 as its Re-Distribution Stockist (RDS) through Agreement dated 27.3.1995 for the territories of Assam, Meghalaya and Arunachal Pradesh initially for a period of two years and subsequently the said Agreement was renewed from time to time and after expiry of the renewed period, plaintiff had continued supply of HMT watches, watch components and watch spare parts on the same terms and conditions of the Agreement. Accordingly as per the requirements of 8 Com.OS.No.4089/2009 the defendants and their retailers, plaintiff used to raise invoices to the defendants and their retailers, till almost March 2005. The transaction between the plaintiff and the defendants was that of running account and the amounts paid by the defendants were being adjusted towards the outstanding dues. Since it was running account, at the end of every financial year, i.e., 31st March of each calendar year, plaintiff used to inform the defendants relating to balance outstanding. Plaintiff has produced sufficient materials to show that it has maintained running account relating to transaction with the defendants and also to show defendants were due and liable to the plaintiff for a sum of Rs.52,92,770/- being the principal amount and interest thereon at 18% per annum amounting to Rs.79,81,851/- and thus defendants were due to a sum of Rs.1,32,72,622,59/- as on the date of suit. Defendants have made various payments by demand draft and cash in the financial years 2005-06 and 2006-07 and those amounts have been adjusted towards the outstanding dues. Further in the month of June 2006, defendants had issued three cheques for Rs.20 Lakhs, Rs.15,64,665/- and Rs.14,63,862/- in all Rs.50,28,527/- and those cheques were dishonoured in the month of June 2006 and as such, plaintiff initiated criminal proceedings against the defendants for the offences punishable under Sec.138 of NI Act. Defendants have failed to prove that cheques were issued as security and not towards discharge of outstanding dues. Further defendants have failed 9 Com.OS.No.4089/2009 to prove that plaintiff has not properly maintained the accounts. Accordingly it is submission of learned advocate for plaintiff that plaintiff is entitled to recover suit claim amount from the defendants. With this submission, learned advocate for plaintiff has requested to answer Issue Nos.1 & 3 in the negative and Issue No.5 in the affirmative.
9. On the other hand, it is argument of the learned advocate for defendants that plaintiff has not produced running account statement to show the amount due and outstanding as on the date of suit and further to show that it has properly and correctly maintained the accounts. It is the plaintiff who had maintained running account and therefore, it was incumbent upon the plaintiff to produce running account statement. In the absence of running account statement produced by the plaintiff, amount due and outstanding cannot be ascertained. Therefore, plaintiff is not entitled to recover suit claim amount. In fact transaction was done between the plaintiff and defendants till the year 2003. In the year 2003, plaintiff obtained 10 cheques from the defendants as security. Those cheques were not issued by the defendants towards discharge of any amount due and outstanding. In the absence of materials placed by the plaintiff to show amount due and outstanding as on the date of issuance of alleged three cheques referred to in the plaint, it cannot be held that defendants had issued alleged three cheques towards discharge of any ascertained sum due and outstanding. Accordingly learned advocate for 10 Com.OS.No.4089/2009 defendants has requested to answer Issue Nos.1 & 3 in the affirmative and Issue No.5 in the negative.
10. At this stage it is material to note that in this case admitted facts between the parties are that plaintiff was manufacturer of HMT watches, watch components and watch spare parts and plaintiff appointed the defendant No.1 represented by defendant No.2 as its Re-Distribution Stockist (RDS) through Agreement dated 27.3.1995 which is marked as Ex.P.4 in the territories of Assam, Meghalaya and Arunachal Pradesh, initially for a period of two years and subsequently the said agreement came to be renewed for a further period and after the expiry of the renewed period, plaintiff continued to supply HMT watches, watch components and watch spare parts to the defendants under the same terms and conditions of the first Agreement. Accordingly plaintiff used to supply HMT watches, watch components and watch spare parts to the defendants and their retailers and plaintiff used to raise invoices to the defendants and their retailers.
11. It is contention of plaintiff in para-7 of the plaint that defendants have made various payments by demand drafts and cash in the financial years 2005-06 and 2006-07 and these amounts have been adjusted towards the outstanding dues of the defendants. Defendants in their written statement at para-7 have admitted this contention of the plaintiff that they made payments by demand draft and cash for the financial years 2005-06 11 Com.OS.No.4089/2009 and 2006-07. But defendants have denied the issuance of three cheques towards discharge of any amount due and outstanding. It is the contention of the defendants that due to lack of orders from the dealers and retailers, their business came to a stand-still since December 2003 and plaintiff had put lot of persuasion and pressure on the defendants for payment of the outstanding dues by issuing blank cheques as security for the outstanding dues and due to this pressure, defendants had issued 10 blank cheques without mentioning the amounts and dates, in the month of December 2003. Those cheques were not issued in the year 2006 as contended by the plaintiff.
12.Burden lies upon the plaintiff to prove that exact ascertained sum was due and outstanding as on the date of issuance of three cheques by the defendants as stated in the plaint, and further to prove the exact amount due and outstanding as on the date of suit. Further burden lies upon the plaintiff to show that it has maintained proper and correct accounts relating to the transactions with the defendants. It is pleaded in para-6 of the plaint as under:
"6...........The plaintiff further submits that the transaction between the plaintiff and defendants was that of a running account and the amounts paid by the defendants were being adjusted towards the outstanding amounts due."
13. In the cross-examination it is evidence of PW.1 in page-10 and para-4 as under:
12Com.OS.No.4089/2009 "ಅಕಕಕಟಟಟ ಸಸಸಸಟಸಟಕಟಟಆಧಧರದ ಮಸಲಸ ಪಪತವಧದಯರಕದ ನಮಟ ಸಕಸಸಸಗಸ ಬಧಕ ಬರಬಸಸಕಧಗದಸ ಎಕದದ ದಧವಸಯಲಲ ತಳಸದಸದಸವಸ."
Thus, it is pleaded by the plaintiff that transaction between it and defendants was that of a running account and based on the running account statement, this suit is filed for recovery of amount that was due and outstanding. Since defendants have denied their liability to pay the suit claim amount to the plaintiff, plaintiff has to prove the liability of the defendants by producing running account statement maintained by it relating to the transaction done with the defendants. At this stage itself it is important to note that plaintiff has not produced running account statement maintained by it relating to the transaction done with the defendants. There is no explanation as to why it has not produced running account statement to show as to what was the amount due and outstanding as on the date of issuance of alleged three cheques as well as on the date of the suit. Intentionally and deliberately plaintiff has withheld the important and crucial record of running account statement, for the reasons best known to it.
14. Plaintiff has produced letter dated 24.5.2004 sent by the defendants relating to confirmation of outstanding and statement of accounts, in which Rs.24.50 Lakhs was shown as outstanding amount as on 24.5.2004. this letter at Ex.P.2 alone is not sufficient to hold that defendants were due to a sum of Rs.1,32,72,622.59 as on the date of suit 13 Com.OS.No.4089/2009 towards principal and also its interest, for the reasons that in the plaint itself it is stated by the plaintiff that subsequently defendants have made various payments by demand draft and cash in the year 2005-06 and 2006- 07 and those payments have been adjusted towards the outstanding dues of the defendants Further plaintiff has produced 116 invoices at Exs.P.14 to P.129, 13 debit notes at Exs.P.130 to P.142 and three credit notes at Exs.P.143 to P.145. Relating to 116 invoices produced by the plaintiff at Exs.P.14 to P.129, it is relevant to note that these invoices relate to the period 2001-02 only. From this type of invoices at Exs.P.14 to P.129, which relates to the year 2001-02, in the absence of running account statement produced by the plaintiff, the actual amount due and outstanding on the date of issuance of alleged cheques and as well as on the date of suit, cannot be ascertained.
15. Relating to 13 debit notes produced by the plaintiff at Exs.P.130 to P.142 is concerned, it is relevant to note that debit Note at Ex.P.130 is dated 30.4.2003 and it is stated in this debit note that amount of Rs.1,08,761.60 was debited to the account of the defendants relating to 207 watches delivered vide performance invoice No.3987 dated 4.1.2001. Debit Note at Ex.P.131 is dated 31.10.2003 and in this debit note, it is stated that Rs.73,279/- was debited to the account of defendants relating to invoice of watches being the invoice value of Rs.50,832.13 and interest of Rs.37,447/-. Debit Note at Ex.P.132 is dated 16.10.2007, in which it is 14 Com.OS.No.4089/2009 stated that Rs.40,028.37 was debited to the account of defendants being sales tax calculated on watches returned for the year 2002-03 amounting to Rs.1,73,378/- and the value of stock returned for the year 2002-03 of Rs.1,33,349.63 was deducted in it and balance Rs.40,028.37 was debited. Again Debit Note at Ex.P.133 is dated 16.10.2007, showing Rs.35,221/- was debited to the account of the defendants relating to the transaction of the year 2001-02. Debit note at Ex.P.134 is dated 16.10.2007 showing debit of Rs.9,837.75 relating to the transaction dated 31.3.2002. Debit note at Ex.P.135 is dated 16.10.2007 showing debit of Rs.22,495.62 to the account of defendants relating to the transaction of the year 2002. Debit Note at Ex.P.136 is dated 16.10.2007 showing debit of Rs.25,574.55 to the account of defendants relating to the return of watches for the year 2002. Debit Note at Ex.P.138 is dated 16.10.2007 showing debit of Rs.17,017/- to the account of defendants relating to the transaction of the year 2002. Debit note at Ex.P.139 is dated 16.10.2007 showing debit of Rs.1,556/- to the account of defendants relating to the transaction of the year 2002. Debit note at Ex.P.140 is dated 16.10.2007 showing debit of Rs.4,990/- to the account of defendants relating to the transaction of the year 2002. Ex.P.141 is dated 16.10.2007 showing debit of Rs.1,882.80 to the account of defendants relating to the transaction of the year 2002. Ex.P.142 is dated 16.10.2007 showing debit of Rs.14,700/- to the account of defendants relating to the transaction of the year 2002.
15Com.OS.No.4089/2009
16. Out of the above noted debit notes at Exs.P.130 to P.142, debit notes at Exs.P.130 & P.131 were raised in the year 2003 and remaining debit notes at Exs.P.132 to P.142 were raised on 16.10.2007. As per the details shown in these debit notes, these debit notes were relating to the transaction of the year 2001-02. As could be seen from the materials on record, transaction between plaintiff and defendants came to be stopped in the year 2003 itself. Though it is contended by the plaintiff that it supplied materials to the defendants till the year 2005, but plaintiff has not produced reliable materials to show that it supplied materials to the defendants till the year 2005. It is contention of the defendants that plaintiff had supplied materials till the year 2003 only. Invoices produced by the plaintiff relates to the year 2001-02. There are no invoice or any other records produced by the plaintiff to show continuation of transaction with the defendants till the year 2005. It is stated by the plaintiff that on the basis of three cheques, said to have been issued by the defendants in the month of June 2006, it initiated criminal proceeding for the offence under Sec.138 of the NI Act against defendants in the year 2006 itself. This shows that there was no transaction of supply of materials by the plaintiff to the defendants in the year 2007 when alleged debit notes at Exs.P.130 to P.142 were raised by the plaintiff. The alleged credit notes raised by the plaintiff to the defendants at Exs.P.143 & P.144 relates to the year 2003. Credit note at Ex.P.145 relates to the year 2006. This credit note at Ex.P.145 was issued 16 Com.OS.No.4089/2009 relating to the transaction of the year 2003-04. From these materials it is clear that though transaction between plaintiff and defendants was stopped in the year 2003, but subsequently plaintiff went on raising such type of debit notes till the year 2007 for its convenience only relating to the transactions of the year 2001-02.
17. Plaintiff has produced three cheques said to have been issued by the defendants and endorsements of the bank for dishonour of cheques at Exs.P.5 to P.13. It is contention of plaintiff that in the month of June 2006, defendants had issued three cheques for sum of Rs.20,00,000/- , Rs.15,64,665/- and Rs.14,63,862/- respectively in all Rs.50,28,527/- and same were dishonoured in the month of June 2006 whereas it is the contention of the defendants that they received materials from the plaintiff till 13.11.2003 and thereafter in view of lack of orders from the dealers ad retailers, its business came to a stand still since December 2003 and subsequently in the month of December 2003, plaintiff by using persuasion and lot of pressure obtained 10 cheques as security to the outstanding dues and those cheques were not issued for the payment of outstanding dues. So far making payment is concerned, it used to issue cheques for not more than Rs.2 Lakhs at a time and hence, the question of issuing three cheques for such huge amount of Rs.20,00,000/-, Rs.14,63,862/- and Rs.15,64,665/- does not arise at all.
18. It is relevant to note that plaintiff has failed to prove prove the 17 Com.OS.No.4089/2009 exact sum which was due and outstanding as on the date of alleged cheques and also as on the date of filing of the suit for the reasons that there are no reliable materials placed by the plaintiff to show what was the exact amount due and outstanding as on the date of issuance of alleged cheques. As noted above, though it is pleaded by the plaintiff that the transaction between it with the defendants was that of a running account and the amounts paid by the defendants were being adjusted towards the outstanding dues, but intentionally and deliberately plaintiff has not produced running account statement to show details of transactions, payments made by the defendants and the outstanding dues from time to time. Though it is stated by the plaintiff that it has initiated criminal proceedings against the defendants in the year 2006 itself for the offence punishable under Sec.138 of the N.I. Act, but it is not disclosed as to what happened to the said criminal proceedings. It is evidence of DW.1 that the said criminal prosecution was closed due to lack of evidence. This means the said criminal proceeding was ended in the acquittal. Plaintiff has not placed material to show that the said criminal prosecution is not ended in acquittal. Therefore, on the basis of such type of cheques said to have been issued by the defendants, plaintiff cannot prove that defendants were due to the principal sum of Rs.52,92,770.99 and interest thereon at 18% amounting to Rs.79,81,851.60, in all Rs.1,32,72,622.59 as on the date of suit. Total amount of those three cheques at Exs.P.5, P.8 & P.11 comes to 18 Com.OS.No.4089/2009 Rs.50,28,527/-. As per the details appearing in those cheques, the dates thereon are 15.6.2009, 19.6.2009 and 23.6.2009. It is the contention of plaintiff that subsequently in the financial year 2005-06 and in the financial year 2006-07, defendants have made various payments by demand drafts and cash and those amounts have been adjusted towards the outstanding dues. There are no details furnished in the plaint relating to the dates of each payment and the quantum of the amount of each payment said to have been made by the defendants in the year 2005-06 and in the year 2006-07. As noted above, there are no reliable records produced by the plaintiff to show details of those payments made by the defendants in the year 2005- 06 and in the year 2006-07. As noted above, plaintiff has not produced running account statement to show details of the payments made by the defendants. It is not forthcoming as to whether defendants made those payments after alleged cheques at Exs.P.5, P.8 & P.11 were issued or prior to that. It is not forthcoming as to when last payment was made. No doubt, defendants in their written statement have admitted that they made payments in the financial year 2005-06 and in the year 2006-07. But details of the payments made are not furnished by the defendants also. It is evidence of DW.1 in para-5 of his chief examination affidavit that he had continued to pay the outstanding amount till 29.5.2006 and thereafter there was no payment or communications made between him and the plaintiff company. This statement made by DW.1 in his examination in chief has 19 Com.OS.No.4089/2009 not been controverted in his cross-examination. There is no effective cross- examination done relating to this statement is concerned. Therefore on the basis of cheques at Exs.P.5, P.8 & P.11, in the absence of other supportive materials produced by the plaintiff to show the details of the payments made and in the absence of running account statement produced by the plaintiff, it cannot be held that defendants were due to the sum as shown in the suit as on the date of suit.
19. It is contention of defendants that they had returned 11,967 watches worth Rs.69,04,397/- during financial years 2002-03 and 2003-04 and acknowledgement of the receipt of the said watches have been confirmed by the plaintiff vide its letter dated 22.9.2004. However, with regard to the said amount of Rs.69,04,397.62, plaintiff has not issued credit notes to the defendants. Plaintiff has considered credit notes for sum of Rs.26,24,798.54 only. Defendants have produced letter dated 26.3.2004 sent by the plaintiff in which it is stated that Rs.50.31 Lakhs was due to the company in the month of March 2004. Ex.D.7 is another letter sent by the plaintiff to the defendants on 28.4.2004 stating that the actual due as on 31.3.2004 was Rs.156.06 lakhs and it was mistakenly shown as 50.31 lakhs in the letter dated 26.3.2004. Ex.D.8 is the letter of confirmation of outstanding and settlement of account dated 24.5.2004 issued by the defendants stating that Rs.24.50 Lakhs was due. This Ex.D.8 was sent on 25.4.2004. Ex.D.9 is the letter dated 22.9.2004 sent by the plaintiff to the 20 Com.OS.No.4089/2009 defendants instructing to submit valuation report invoicewise of the returned 11877 watches. Ex.D.10 is the letter dated 4.2.2005 issued by the defendants to the plaintiff in response to the letter at Ex.D.9 relating to the valuation of the returned watches. Ex.P.145 is the credit note dated 31.3.2006 raised by the plaintiff to the defendants crediting Rs.23,48,019.12 to the account of the defendants relating to the value of watches returned during the year 2003-04. Except this Ex.P.145, there are no other materials placed by the plaintiff to show that it considered the valuation of the returned watches shown by the defendants in Ex.D.10. As noted above, as per the details shown in Ex.D.9 issued by the plaintiff to the defendants, 4061 watches were returned in the year 2001-02, 3087 watches were returned in the year 2002-03 and 4729 watches were returned in the year 2003-04. But the credit note at Ex.P.145 relates to the valuation of the returned watches during the year 2003-04. There are no other materials placed by the plaintiff to show that it considered the valuation of the returned watches in the year 2001-02 and in the year 2002-03. Apart from that, as noted above, plaintiff has not produced running account statement to show details of the transactions, details of the amount paid by the defendants and the details of the outstanding dues for each month, each year etc. Due to non-production of running account statement, which is important document relating to the subject mater of dispute, adverse inference has to be drawn against the plaintiff. Therefore, 21 Com.OS.No.4089/2009 these materials clearly support the contention of the defendants that the plaintiff has not properly maintained the accounts. Further, these materials on record support the defence of the defendants that cheques were issued as security only. For the above discussed reasons and since plaintiff has not produced reliable materials to show the details of the payments made by the defendants and also details of the amounts outstanding as on the date of suit and since running account statement has not been produced to prove these facts, plaintiff is not entitled to recover suit claim from the defendants. For these reasons, Issue Nos.1 & 3 are answered in the Affirmative and Issue No.5 is answered in the Negative.
20. Issue No.2 : It is submission of learned advocate for plaintiff that RDS Agreement was entered into between plaintiff and defendants on 27.3.1995 and subsequently it was renewed for a further period and after expiry of the renewed period, transaction between the parties continued on the same terms and conditions of the original agreement and the transaction between the parties was that of a running account which was not closed prior to filing of the suit. The defendants made various payments through demand drafts and cash for the financial year 2005-06 and 2006-07 and those amounts were adjusted towards the outstanding dues of the defendants. Defendants in their written statement have admitted payments made in the financial years 2005-06 and 2006-07. Suit came to be filed on 24.6.2009 and therefore suit is well within time.
22Com.OS.No.4089/2009 Accordingly learned advocate for plaintiff has requested to answer this Issue No.2 in the Affirmative. In support of this submission, learned advocate for plaintiff has placed citation AIR 1933 Bombay 450 (Karsondas Dhunjibhoy V. Surajbhan Ramrijpal & Ors.) wherein it is held that whether an account is mutual, open and current so as to attract the application of Article 85 is a pure question of fact and must depend upon the nature of the dealings between the parties, nature of the entries and other relevant circumstances. In order that an account should be mutual there must be dealings between the parties and such dealings must be capable of giving rise to independent obligations on each side of the account at any given period or stage. One test commonly applied is the possibility of shifting balances sometimes in favour of one party and sometimes in favour of the other. But as observed in several reported decisions that test is not decisive or conclusive of the matter. The real test is whether the dealings between the parties are of such a nature that the balance might so shift. An account current means a running account, that is an account which is continued and not stopped or closed. If the account is running, that is to say, if it is unclosed, then it is open and current. It is open either because the balance remains to be drawn or struck, or because it is to be carried forward because of some contemplated future dealings between the parties. If the account is not closed by settlement or otherwise, it is open.
21. Further the learned advocate for plaintiff has also placed another 23 Com.OS.No.4089/2009 citation in AIR 1997 Gujarat 24 (M/s Shivam Constructions Co., Ahmedabad and Ors. Vs. Vijaya Bank, Ahmedabad & Ors.), wherein it is held as under:
The suit came to be filed on 17-2-1984, the case of the Bank is that the suit is filed within the period of limitation of three years. Article 1 in the Schedule under the Limitation Act, 1963, is the relevant provision for filing a suit for recovery of a running account. According to the provision of Article 1 in the Schedule under the Limitation Act, 1963, three years' period is prescribed for filing a suit relating to accounts. Article 1 in Part I in the Schedule under the Limitation Act, 1963 reads as under:
Part I -- Suits Relating to Accounts.
Description of Period of Time from which period
Suit Limitation begins to run
1. For the balance due on a Three Years. The close of the year on
mutual, open and current which the last item
account, where there! have admitted or proved is
been reciprocal demands entered in the account;
between the parties. such year to be computed
as in the account.
16. It could very well be seen from the aforesaid provision that for running account the period of limitation is prescribed. According to Article 1 the Limitation Act, the period of limitation is three years which starts from the close of the year in which the last item admitted or proved in entered in the account. Such year is to be computed as in the account meaning thereby that in the year in which last entry is made would be excluded in computing the period of limitation and thereafter like that from the following month the limitation of three years would start. It is true that one sided payment is not sufficient. Mutual account involves a reciprocal demand, and payment or promise."
22. on the other hand, it is submission of learned advocate for defendants that transaction between the parties was closed in the month of 24 Com.OS.No.4089/2009 November 2003 itself. From the month of December 2003 till the date of filing of the suit, there was no any transaction between the parties as per the terms of agreement that was originally entered into. No doubt defendants in their written statement admitted that they made various payments by way of demand draft and cash in the financial year 2005-06 and 2006-07. But it is clear cut evidence of DW.1 that last payment was made on 29.5.2006 and thereafter there was no payment or communications made. Plaintiff has filed this suit after lapse of three years from the date of last payment. Plaintiff has filed this suit after lapse of about 6 years after the closure of transaction which was closed in the month of November 2003. Plaintiff has not produced records to show that transaction continued between the parties after December 2003. Plaintiff has not produced reliable materials and also running account statement to show that the last payment made by the defendants was within three years prior to the date of suit. Accordingly it is submission of learned advocate for defendants that suit is barred by limitation.
23. Defendants have admitted the contention of the plaintiff that they made payments by demand drafts and cash in the financial year 2005-06 and 2006-07. But it is specific evidence of DW.1 in para-5 of his examination in chief affidavit that he has continued to pay outstanding amount till 29.5.2006 and thereafter there is no payment or communications made between him and plaintiff company. There is no 25 Com.OS.No.4089/2009 effective cross-examination of DW.1 relating to this portion of evidence deposed in examination in chief. There is no suggestion put to DW.1 to the effect that last payment made by the defendants to the plaintiff was within 3 years prior to filing of the suit. It is also specifically contended in the written statement that supply of materials by the plaintiff to the defendants came to be closed in the month of November 2003 and subsequently from the month of December 2003 there was no transaction. Various invoices produced by the plaintiff relates to the year 2001-02. Plaintiff has not produced reliable records to show that it continued to supply the materials to the defendants from December 2003 onwards also. Plaintiff has not produced reliable materials to show on which date last payment was made by the defendants. Ex.D.6 is the letter dated 26.3.2004 sent by the plaintiff to the defendants stating that Rs.50.31 was due. Ex.D.7 is another letter dated 28.4.2004 stating tht an amount of Rs.156.06 lakhs was due as on 31.3.2004 but it was mistakenly shown as 50.31 lakhs as due in the letter dated 26.3.2004. Ex.D.8 is the letter sent by the defendants to the plaintiff on 24.5.2004 stating that Rs.24.50 lakhs is due to be paid. Through letter dated 22.9.2004 at Ex.D.9 issued by the plaintiff to the defendants, plaintiff called upon to submit valuation report invoicewise of the returned watches quantity-11877 in all i.e., returned watches for the year 2001-02 quantity- 4061 returned watches for the year 2002-03 quantity-3087 and returned watches for the year 2003-04 quantity-4729 in all quantity-11877.
26Com.OS.No.4089/2009 Defendants submitted valuation report on 4.2.2005 as per Ex.D.10. Though defendants submitted valuation report on 4.2.2005, plaintiff issued credit note on 31.3.2006 as per Ex.P.145 for the portion of the quantity of returned watches for the year 2003-04 only amounting to Rs.23,48,019.12. As per the materials placed by the plaintiff, there was no transaction of supply of materials by the plaintiff to the defendants. Defendants from the month of December 2003 onwards. Though there was no transaction between the parties from December 2003 onwards, the plaintiff went on raising debit notes in the month of October 2007 for various amounts. Raising such type of debit notes in the month of October 2007 does not save the limitation. Because plaintiff has not produced records to show that there was transaction between the parties after December 2003. Plaintiff claimed outstanding dues by issuing letter Ex.D.7 dated 28.4.2004 stating that outstanding dues is Rs.156.06 lakhs. Defendants disputed said outstanding dues through their letter at Ex.D.8 dated 24.5.2004 stating that dues is Rs.24.50 Lacs. Therefore plaintiff ought to have filed suit within three years from 24.5.2004 which is the date of letter at Ex.D.8 under which defendants have disputed the outstanding dues, as per Article-1 in para-1 in the schedule under Limitation Act, 1963. Plaintiff has not produced reliable materials to show that suit is filed within three years from the date of last payment made by the defendants. Plaintiff has not produced running account statement to show what was the outstanding 27 Com.OS.No.4089/2009 dues as on the date of suit and further to show when last payment was made by the defendants. Therefore, when there are no materials to show that transaction continued between the parties after December 2003, it cannot be held that running account was open and suit is not barred by limitation. From these materials on record it is clear that suit of the plaintiff is barred by limitation since it was not filed within three years from the date of last payment made by the defendants. For these reasons, this Issue No.2 is answered in the 'Affirmative'.
24. Issue No.4 : Defendants have not shown as to why this court has no jurisdiction to try this suit. There are no materials to hold that court has no jurisdiction to try this suit. Hence, Issue No.4 is answered in the 'Negative'.
25. Issue No.6: For the above discussed reasons and my findings on the above issues, I proceed to pass the following:
ORDER Suit of the plaintiff is dismissed.
Both the parties shall bear their own cost.
(Dictated to the Judgment Writer, transcribed by her, corrected and then pronounced by me in open Court on this the 6th day of November, 2019).
(JAGADEESWARA.M.), LXXXII Addl. City Civil & Sessions Judge, Bangalore.28
Com.OS.No.4089/2009 ANNEXURE LIST OF WITNESSES EXAMINED FOR PLAINTIFF:
PW.1 Amaresh Chandra Datta
LIST OF DOCUMENTS MARKED FOR PLAINTIFF
Exs.P-1 Authorisation letter
" P-2 Letter
" P-3 Letter dated 24.5.2003
" P-4 Agreement
" P-5 Cheque
" P-6 & 7 Bank endorsements
" p.8 cheque
" p.9 & 10 Bank endorsements
" p.11 cheque
" p.12 & 13 Bank endorsements
" p.14 to 129 116 invoices
" p.130 to 142 Debit notes
" p.143 to 145 Credit notes
" p.146 Statement
LIST OF WITNESSES EXAMINED FOR DEFENDANTS:
DW.1 Arun Harlalka
LIST OF DOCUMENTS MARKED FOR DEFENDANTS
Exs.D-1 & D.2 Letters
" D-3 & D.4 Receipts
" D-5 to 11 Letters
(JAGADEESWARA.M.),
LXXXII Addl. City Civil & Sessions Judge,
Bangalore.
29
Com.OS.No.4089/2009