Gauhati High Court
Ajit Chandra Bagchi And Ors. vs Harishpur Tea Company (P) Ltd. on 25 July, 1990
Equivalent citations: AIR 1991 GAUHATI 92, (1991) 1 GAU LR 180, (1990) 2 BANKLJ 376, (1990) 3 CURCC 209
JUDGMENT B.P. Saraf, J.
1. This first appeal of the defendants is against the judgment and decree of the Assistant District Judge, Dibrugarh decreeing the suit of the plaintiff for recovery of a sum of Rs. 29,463,92.
2. The facts of the case, in brief, are as follows: The plaintiff is a private limited company incorporated under the Indian Companies Act, 1913. In course of business the plaintiff company used to lend money to the tea estates, namely, Nepaphoo Tea Estate and Rangmala Tea Estate. These two tea estates were owned by a Hindu Undivided Family (H.U.F.) governed by Dayabhaga School of Hindu Law. Late Suresh Chandra Bagchi, Late Dinesh Chandra Bagchi and defendants 1 to 8, who were heirs of late Bipin Chandra Bagchi, were members of the said H.U.F. The said H.U.F. also held shares of the plaintiff company and another private limited company. As some disputes arose between the members of the family, a partition suit was filed. The said suit was later compromised and a compromise decree was passed on 7-6-65. In terms of the compromise, Nepaphoo tea estate including Rangmala tea estate (hereinafter referred to as 'the Tea Estate') fell into the share of the defendants who took over the same with all the assets and liabilities. As certain sums of money which had been borrowed by the aforesaid Tea Estate from the plaintiff company remained outstanding, a suit was filed by the plaintiff company against the defendants for recovery of the said amount. The suit was contested by the defendants on the ground, inter alia, that it was barred by limitation. The defendants denied the transactions in question and contended in their written statement that the accounts of the plaintiff company were fabricated and manufactured for the purpose of the suit. The alleged transactions during the years 1963 and 1964 were also categorically denied. The suit was tried by the Assistant District Judge, Dibrugarh. The plaintiff examined one Shyamal Chandra Bagchi (P.W. 1) who produced the copies of the audit reports for the years 1963 and 1964 which showed the amount due from the Tea Estate. In cross-examination it was admitted by P.W. 1 that the debt belonged to the period from 1957 to 1962. Another witness examined by the plaintiff was, Sachindra Kumar Ganguli (P.W. 2) who was a part-time accountant of the plaintiff company. He had been appointed in the year 1960. He produced the accounts of the company for the years 1961, 1962, 1963 and 1964 and exhibited the entries therein showing the amount outstanding against the Tea Estate. From the accounts shown it appeared that the plaintiff company advanced money to the Tea Estate of the defendants from time to time. Repayments were also made by the Tea Estate. From the, entries in the books of the account produced before the court it appears that a sum of Rs. 29,433,92 was due from the Tea Estate of the defendants to the plaintiff company at the end of the calendar year 1962. No repayment whatsoever was made against the aforesaid amount of loan by the defendants since then. The accounts of the years 1963 and 1964 showed a further loan of Rs. 20/- and Rs. 10/-respectively to the Tea Estate. The suit was decreed by the learned Assistant District Judge. So far as the question of limitation is concerned, it was held that by taking over the tea estates with all the assets and liability in pursuance of the compromise, the defendants acknowledged the amount due from the Tea Estate to the plaintiff company, and in that view of the matter the suit was not barred by limitation. So far as the amount claimed is concerned, the learned trial court relied on the entries in the accounts of the plaintiff and the balance sheets and on that basis held that the defendants were liable to pay the balance outstanding therein. In view of the aforesaid findings, the suit was decreed against the defendants. The defendants have come in appeal before this court against the said judgment and decree.
3. Mr. D. P. Chaliha, the learned counsel for the appellants, challenged the judgment and decree of the trial court on two grounds. First, the suit is barred by limitation. The counsel submitted that taking over of the assets and liabilities of the Tea Estate by the defendants in a family settlement wherein the plaintiff company was not even a party, cannot amount to acknowledgment of the liability within the meaning of Section 18 of the Limitation Act to provide an extended period of limitation to the plaintiff. Secondly, that the defendants having denied the liability and having categorically stated that the accounts of the plaintiff were fabricated and manufactured for the purpose of the suit, it was incumbent on the part of the plaintiff to prove the amount due from the defendants in accordance with law, which the plaintiff failed to do.
4. I have considered the submissions of Mr. Chaliha. Also heard Mr. D. N. Barua, the learned counsel for the plaintiff-respondent.
5. I shall first deal with the question of limitation. The case of the plaintiff is that it used to advance money to the Tea Estate of the defendants from time to time and the Tea Estate used to repay the same. The amount due at the end of the calendar year 1961 stood at Rs. 35,937,33. In the year 1962 some further sums were taken on credit by the Tea Estate and some payments were also made towards the dues to the plaintiff. After adjustment of all such advances and payments, the amount outstanding against the defendants as on 31-12-62 stood at Rupees 29,433.92. The admitted position is that since then, no payment was made by the defendants to the plaintiff in repayment of the said amount. The plaintiffs further case is that besides the aforesaid amounts a sum of Rs. 20/- was advanced to defendants in the year 1963 and a sum of Rs. 10/- in the year 1964. The total amount due to the plaintiff as on 31-12-64 was thus raised by Rs. 30/- to Rs. 29,463,92.
6. Admittedly, the case of the plaintiff is that it used to lend money to the defendants' Tea Estate from time to time. For the purpose of limitation the case is, therefore, governed by Article 19 of the Limitation Act, 1963. Article 19 provides for a period of limitation of three years counted from the date when the loan is made. In the instant case, the balance due after adjusting repayments by the defendants, as on 31-12-1962 was Rs. 29,433.92. Admittedly no payment was made by the defendants since then. For suit filed for recovery of the aforesaid amount of Rupees 29,433.92 even if the limitation is computed from 31-12-1962, the suit filed on 1-6-66 will be beyond time and barred by limitation. The suit for recovery of the sum of Rs. 20/- claimed to have been advanced on 6-9-63 and Rs. 10/-on 7-1-64, however, will not be barred by limitation.
7. Mr. D. N. Barua, the learned counsel for the respondent, submits that taking over of the assets and liabilities of the Tea Estate by the defendants by virtue of the compromise decree passed on 7-6-65 amounted to acknowledgment of the liability and, as such, the period of limitation for the suit should be computed from the said date and if it is so computed, the suit will be within time. I have considered the submission but I find it difficult to accept the same. Taking over of a going concern with all its assets and liabilities, in my opinion, cannot be any stretch of imagination amount to "acknowledgment" within the meaning of Section 18 of the Limitation Act. Evidently the defendants in the instant case did not acknowledge the liability in respect of the amount claimed by the plaintiff in any manner. As such, the submission of Mr. Barua that there was an "acknowledgment" of the liability Under Section 18 of the Limitation Act cannot be accepted.
8. The alternate submission of Mr. Barua is that taking over of assets and liabilities of the Tea Estate by the defendants amounted to a 'promise' within the meaning of Section 25(3) of the Contract Act and as such, it shall have the effect of extending the period of limitation for filing the suit. On perusal of the provision of Section 25(3) of the Contract Act, I am of the opinion that this section has no application to the instant case. There is no promise by the defendants to pay any time barred debt to the plaintiff company. The compromise agreement is not between the plaintiff and the defendants. It is a compromise between the defendants and other members of the joint family. What was decided was the inter se rights and liabilities of the defendants and the other members. The taking over of the going concern, namely, the tea estates, with all their assets and liabilities only meant that liabilities in respect of the said business, which were hitherto joint, shall henceforth he the liabilities of the defendants. The effect of such a compromise is that if the other members of the joint family are saddled with any liability in respect of such a business, on the strength of the compromise they can shift it to the defendants and in the event of they being made to pay any amount, recover back the same from the defendants. There was no "promise to pay the sum claimed in the suit to the plaintiff company". In that view of the matter, there is no promise in the instant case within the meaning of Section 25(3) of the Contract Act. The submission of the learned counsel based on Section 25(3), therefore, has no force. In view of the aforesaid discussion, I am of the opinion that the suit of the plaintiff for recovery of a sum of Rs. 29,433,92, which admittedly is the amount lent on or before 31-12-62 and outstanding as on that date, is barred by limitation, the same having been filed after expiry of three years. So far as the suit relates to recovery of a sum of Rs. 20 and Rs. 10/- claimed to have been advanced of 6-9-63 and 7-1-64, it is within time.
9. I may now turn to the next submission of learned counsel for the appellants-defendants that the plaintiff failed to prove that the amounts in question were due from the defendants. The contention of the counsel is that the plaintiff simply produced before the court certain books of account and balance sheets. No effort was made even to prove the individual entries in the said books of account. The claim was sought to be established by the plaintiff simply on the basis of the balance appearing in the books of account of plaintiff itself as outstanding against the Tea Estates of the defendants. It was submitted that the books of account or the balance sheet showing the amount due from the defendants are not sufficient without other evidence to prove the debt. The learned counsel in this connection relied on Section 34 of the Evidence Act, which provides that even entries in the books of account regularly kept in the course of business, which are relevant, are alone not sufficient evidence to charge any person with liability. Learned counsel also relied on the Illustration given to the said section, which is as follows:
"A sues B for Rs. 1000, and shows entries in his account-books showing B to be indebted to him to this amount. The entries are relevant, but are not sufficient without other evidence to prove the debt."
On the basis of the aforesaid provision it was submitted that the entries in the books of account showing the defendants to be indebted to the plaintiff for certain amount might be relevant but are not sufficient to prove the debt. In the instant case, the learned counsel submitted, even the entries have not been proved. What is sought to be proved is the balance appearing in the accounts or in the balance sheet as due from the defendants. Such a course is not permissible except in a case of "accounts stated". Admittedly, the present case is not one of "accounts stated".
10. I have carefully considered the submissions. I find that neither the individual entries have been proved by the plaintiff nor there is any material whatsoever other than the books of account or the balance sheet to prove that the transactions in question in fact took place. No decree can, therefore, be obtained by the plaintiff merely on the basis of certain entries in the accounts books or the balance shown to be due at the end of the year in such accounts or in the balance sheets. The admitted position in the instant case is that no evidence has been adduced by the plaintiff to prove the transactions which had been categorically denied by the defendants in their written statement. In that view of the matter even on facts it has to be held that the plaintiffs failed to prove that the amount claimed in the suit was due from the defendants. In view of the aforesaid finding, I am of the opinion that the learned trial court was not justified in decreeing the suit. The suit was barred by limitation except in so far as it relates to recovery of a sum of Rs.30/-. Besides, the plaintiff also failed to prove the debt in accordance with law. Under the circumstances, the suit should have been dismissed.
11. Accordingly, the appeal of the defendants is allowed and the suit of the plaintiff is dismissed with costs all throughout.