Andhra HC (Pre-Telangana)
Network Inc. vs K.R. Mohan Reddy on 20 September, 2006
Equivalent citations: 2007(1)ALD304, 2007(1)ALT17, AIR 2007 (NOC) 148 (A. P.), 2007 (2) AJHAR (NOC) 470 (A. P.)
JUDGMENT D.S.R. Varma, J.
1. Though the matter is listed under the caption "interlocutory", since the matter has been heard at length, with consent of the learned Counsel appearing for both sides, the main appeal itself is being disposed of by this common judgment.
2. The application CCCAMP No. 239 of 2006 is filed under Order XLI Rule 27 of the Code of Civil Procedure (for brevity UCPC"), seeking to receive the documents as additional evidence on record and to mark the same on behalf of the petitioner.
3. The petitioner in CCCAMP No. 239 of 2006 and the appellant in CCCA No. 253 of 2004 is the plaintiff and the respondent in both the application in CCCAMP No. 239 of 2006 and CCCA No. 253 of 2004 is the defendant in the suit.
4. For the sake of convenience, in this common judgment, the parties will be referred to as per their array in the suit.
5. The plaintiff is a registered firm. The suit is filed by the plaintiff for recovery of money based on certain works undertaken by it. The defendant is a registered contractor.
6. The case of the plaintiff is that the defendant was admitted as a partner in the firm; that after procuring contracts, the defendant used to get the works executed through the plaintiff and for the said services, the defendant had to retain 10 per cent of the profits and return the balance. During the subsistence of the said relationship, the plaintiff had undertaken two works-one at Vijayawada and the other at Khammam. The works were successfully completed.
7. It is the further case of the plaintiff that the defendant had retired from the partnership of the firm in the year 2000 without giving possession of certain receipts.
8. However, it is the further case of the plaintiff that on 14.2.2001 a cheque for a sum Rs. 34,82,000/- was drawn by the defendant in favour of the plaintiff and the plaintiff has acknowledged the same by way of a receipt. The cheque was marked as Ex. A3. When the cheque was presented for encashment in a bank, the same was not honoured, which resulted in filing of the present suit.
9. The main contention of the defendant in the written statement is that the cheque, in fact, was signed but the same had been passed on to the plaintiff through some other source. The defendant denied that any amount has been mentioned in that cheque. Therefore, in one word, it can be said that issuance of cheque is denied.
10. At this juncture itself, it would be appropriate to note that there was no pleading by the defendant to the effect that the cheque in dispute was forged.
11. It is the further contention of the defendant that execution of works was partial in nature.
12. Basing on the abovementioned pleadings, the Court below has framed the following issues for trial:
1. Whether the plaintiff is entitled to the suit amount along with interest at 24% per annum as prayed for?
2. To what relief?
13. Now, it is the contention of the learned Counsel appearing for the plaintiff that while dismissing the suit, the Court below held that the suit, in fact, was filed on the basis of accounts and that is was imperative for the plaintiff to produce the accounts in order to establish its claim and that since the accounts were-not placed before the Court, it is difficult to hold that the defendant was at an obligation to pay the disputed amount of Rs. 34,00,000/- to the plaintiff.
14. It is further contended by the learned Counsel appearing for the plaintiff that the Court below went wrong in holding that the basis of the suit ought to be the accounts but not the cheque and that the said observation of the Court below was contrary to the principles laid down under Section 118 of the Negotiable Instruments Act, 1881 (for brevity "the NI Act").
15. In other words, it is the contention of the learned Counsel appearing for the plaintiff that an appropriate issue ought to have been framed by the Court below as regards the application of Section 118 of the NI Act while deciding the matter.
16. In order to substantiate this submission, the learned Counsel appearing for the plaintiff has taken this Counsel to Section 118 of the NI Act, which deals with "presumptions as to negotiable instruments". The other particulars in our considered view, are not necessary to be referred, inasmuch as the main issue to be gone into and decided is something else.
17. However, it is the further contention of the learned Counsel appearing for the plaintiff that since the Court below had made an observation that the basis of the suit ought to be treated as the accounts of the firm, the failure on the part of the plaintiff in producing the said accounts, which are more relevant, renders the suit claim unsustainable.
18. On the other hand, the learned Counsel appearing for the defendant contends that the Court below did not believe the version of the plaintiff and accordingly decided the suit against the plaintiff. The present material that is sought to be presented before this Court under Order XLI Rule 27 CPC, is not relevant when a clear finding had been recorded by the Court below as regards the suit claim. He further contends that the Court need not automatically accept the additional evidence at the appellate stage and that it is strictly girdled by the conditions mentioned in Order XLI Rule 27 of CPC.
19. Since the said conditions are not in existence in the present case, though it is a discretionary jurisdiction of the Court, as a matter of routine, this Court cannot receive the documents sought to be received as additional evidence in order to decide the present appeal.
20. Of course, the learned Counsel appearing for the defendant also brought to the notice of this Court certain excerpts from the evidence of PW 1 who spoke to the effect that the accounts were not furnished.
21. In this connection, it is contended by the learned Counsel appearing for the defendant that while considering the application filed under Order XLI Rule 27 CPC, it is absolutely imperative to explain to the satisfaction of the Court not only about the existence of the documents but also the reasons for not producing them during the trial.
22. In order to substantiate this submission, the learned Counsel appearing for the defendant relied on several judgments, which will be referred to at a later stage.
23. In view of the said rival contentions, the points that arise for consideration in this appeal are:
1. Whether the Court is justified in accepting the documents sought to be filed under Order XLI Rule 27 of CPC?
2. If so, what should follow?
24. Point No. 1: For better appreciation and ready reference, it is apposite to extract Order XLI Rule 27 of CPC:
27. Production of additional evidence in Appellate Court:-The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the Appellate Court. But if-
(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or (aa) the party seeking to produce additional evidence, establishes that notwithstanding the exercise of due diligence, such evidence was not within his knowledge or could not, after the exercise of due diligence, be produced by him at the time when the decree appealed against was passed, or
(b) the Appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the Appellate Court may allow such evidence or document to be produced, or witness to be examined.
(2) Wherever additional evidence is allowed to be produced by an Appellate Court, the Court shall record the reason for its admission.
25. A plain reading of Order XLI Rule 27 CPC would go to show that the said provision is subject to certain postulations. If the appellate Court is to accept an application for receiving additional evidence, Clause (aa) of Sub-rule (1) of Rule 27 of Order XLI CPC; envisages; firstly, due diligence had been exercised, secondly, such evidence was not within his knowledge, and thirdly, in spite of such knowledge that the evidence was available with him ands in spite of exercise of due diligence, the additional material could not be produced by him at the time when the decree appealed against him was passed.
26. Yet another provision, which is equally and in the present case more relevant, is Clause (b) of Sub-rule (1) of Rule 27 of Order XLI of CPC.
27. The said provision makes it abundantly clear that it is absolutely the discretionary jurisdiction of the appellate Court. From the very opening words of the said provision, it is explicitly clear that the appellate Court has discretionary jurisdiction and while exercising such jurisdiction, it can require any document to be produced or any witness to be examined to enable it to pronounce a right judgment or for any other substantial cause.
28. In other words, this is a provision, which makes the jurisdiction of the appellate Court insofar as receiving additional evidence is concerned, much wider. It can be perceived from the very language that "or for any other substantial cause."
29. Now, it is necessary to examine as to whether this Court can exercise its discretionary jurisdiction in the present set of facts or not, in order to allow the present interlocutory application CCCAMP No. 239 of 2006 filed under Order XLI Rule 27 of CPC.
30. While opposing the contentions of the learned Counsel appearing for the plaintiff, the learned Counsel appearing for the defendant relied on certain judgments;.
31. In Ashwinumar K. Patel v. Upendra J. Patel , Their Lordships of the Apex Court observed as under:
The basic principle of admission of additional evidence is that the person seeking the admission of additional evidence shoed be able to establish that with the best efforts such additional evidence could not have been adduced at the first instance. Secondly the party affected by the admission of additional evidence should have an opportunity to rebut such additional evidence. Thirdly, that additional evidence was relevant for the determination of the issue.
32. The above observations do deal with the pre-requisites while exercising the discretionary jurisdiction under Order XLI Rule 27 CPC. No doubt, these observations are unexceptionable in view of the specific language employed in Clause (aa) of Sub-rule (1) of Rule 27 of Order XLI CPC. But, we are of the view that the spectrum of Clause (b) of Sub-rule (1) of Rule 27 of Order XLI CPC is much wider than Clause (aa) thereof. It is rather cardinal principle of law that the ends of justice shall not be subjected to defeat and in that pursuit if any material is found to be imperatively considered by the appellate Court since not considered by the trial Court, the Courts are expected to be unhesitant. In this context, perhaps it is necessary to fall back upon the main facts, like the cause of action, deposition of PW 1, etc.
33. PW 1 in his cross-examination stated:
...we have maintained the accounts for the work in Vijayawada in the name of the defendant as the defendant has to pay the income tax and not the plaintiff....
It is further stated"- ...we are in possession of the accounts and income tax returns for the Khammam work....
It is further stated"- ...our accounts disclose the amounts covered by Ex. A4 letter. I did not file the copy of our accounts....
34. From the above, it is obvious that the plaintiff, in fact, has mustered his claim on the basis of the accounts. In fact, it can also be otherwise construed that the plaintiff, with the knowledge that the accounts were available, felt that presentation of such documents were not necessary inasmuch as institution of the suit was merely basing on the cheque, which was not honoured.
35. In this context, the observations of the Court below, while dismissing the suit, have to be seen, which are thus:
The plaintiff did not file its accounts to prove that it has executed that entire work in the Khamman Hospital, that the defendant has not executed any work, that it has received so much amount and that it has to get so much amount. The learned Counsel for the plaintiff argues that as there is no dispute about the amount already paid before completion and before the retirement, the account books are not filed into the Court, but it has to be seen that for the work done before the completion of the work and before the retirement of the defendant, the defendant is said to have received the amounts after retirement due to non-availability of funds earlier and the plaintiff is claiming the same. Had the plaintiff filed its accounts, we could have known how much amount they have spent and how much amount they have received towards principal and profit and how much was paid to the defendant towards his 10% share in the profit. The plaintiff did not file its accounts at all and so, an adverse inference has to be drawn against the plaintiff. The defendant also did not file his accounts....
...The burden is upon the plaintiff to prove that it is entitled to the suit amount. The plaintiff does not say how much the defendant received out of Rs. 5,04,57,303/- which is the total value of the work and before the completion of the work and before the retirement and how much he passed on to the plaintiff before the said dates....
36. The further observations of the Court below are thus:
There is a possibility of Rameshchcmdra Reddy handing over blank cheques signed by the defendant to the plaintiff after filing up the contents and both of them pressing them into service to make this claim. The plaintiff is unable to explain as to how the figures in Ex. A4 are arrived at, I, therefore, hold that Exs. A3 and A4 are not reliable documents.
37. From the aforementioned observations, it is clear that for the purpose of rejecting the suit claim, based on the cheque drawn by the defendant in favour of the plaintiff, the Court below had gone into other area i.e., accounts.
38. In other words, the Court below was not satisfied with mere presence of cheque in order to sustain the suit claim. Certain other material pertaining to the accounts was felt to be necessary and such other material, which was said to be very much within the possession and knowledge of the plaintiff, but were not filed. The evidence of PW .1, as referred to above, also is to the same effect.
39. But, what is to be seen is that whether the Court below has entered into an area, which was not expected by the plaintiff.
40. If we put it in a different way, the Court below had given totally a new dimension or entered into a new area of controversy, for which the plaintiff had no immediate answer, nor had the plaintiff an expectation that the suit claim would be rejected on this score.
41. Another factor is that no issue had been framed by the Court below in this regard. At least, had an issue been framed by the Court below, the plaintiff might have taken steps to adduce documentary evidence in order to meet the same. The observations of the Court below, while dismissing the suit, are rather bolt from the blue for the plaintiff. It is for the first time the plaintiff had realized, maybe the folly of himself, the need of producing documentary evidence before the appellate Court. Now, there is material placed before this Court along with the application filed under Order XLI Rule 27 of CPC.
42. It is rather difficult for this Court to examine each and every document and express any opinion either way inasmuch as all the material now made available before this Court ought to be marked before the Court below and subjected to scrutiny by the parties and the Court as well, and then only a logical conclusion could be arrived at.
43. In Jaipur Development Authority v. Kailashwati Devi , the Apex Court also deals with the jurisdiction of the Court that can be exercised by the appellate Court under Order XLI Rule 27 of CPC. Those observations are also unexceptionable.
44. In Natha Singh v. Financial Commissioner, Taxation Punjab , the Apex Court held thus:
So far as the application of the appellants for additional evidence is concerned, it cannot be allowed in view of the well settled principles of law that the discretion given to the appellate Court to receive and admit additional evidence is not an arbitrary one but is a judicial one circumscribed by the limitations specified in Order 41 Rule 27 of the Code of Civil Procedure. If the additional evidence is allowed to be adduced contrary to the principles governing the reception of such evidence, it will be a case of improper exercise of discretion and the additional evidence so brought on the record will have to be ignored. The true test to be applied in dealing with applications for additional evidence is whether the appellate Court is able to pronounce judgment on the materials before it, without taking into consideration the additional evidence sought to be adduced.
(Emphasis supplied by us).
45. The abovementioned observations abundantly make the situation clear. In our view, those observations are as contemplated under Clause (b) of Sub-rule (1) of Rule 27 of Order XLI of CPC.
46. Similar is the view taken by the Apex Court in Syed Abdul Khader v. Rami Reddy , wherein it was held thus:
Order 41 Rule 27 CPC, enables the appellate Court to admit additional evidence in the circumstances or situation therein mentioned, one such being where the appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment or for any other substantial cause. By a catena of decisions of this Court, it is well established that Order 41 Rule 27 CPC, does not confer a right on the party to produce additional evidence. But if the Court hearing the action requires any document so as to enable it to pronounce judgment, it has the jurisdiction to permit additional evidence to be produced.
47. In Municipal Corporation of Greater Bombay v. Lala Pancham and Ors. , the Apex Court held thus:
Though the appellate Court has the power to allow a document to be produced and a witness to be examined under Order XL1 Rule 27 CPC, the requirement of the said Court must be limited to those cases where it found it necessary to obtain such evidence for enabling it to pronounce judgment. This provision did not entitle the appellate Court to let in fresh evidence at the appellate stage where even without such evidence it can pronounce judgment in the case. It does not entitle the appellate Court to let in fresh evidence only for purposes of pronouncement of judgment in a particular way.
48. In State of Gujarat v. M.P. Desai , the Apex Court has reiterated the abovementioned observations;
49. The quintessence of the said judgments is that notwithstanding the parameters prescribed under Clause (aa) of Sub-rule (1) of Rule 27 of Order XLI CPC, the appellate Court has much wider power in order to render substantial justice.
50. We are of the further view that merely because of the existence of few lapses, the substantial justice cannot be denied by disallowing the application filed under Order XLI Rule 27 of CPC.
51. In other words, if there is likelihood of a different view being taken, notwithstanding any lapses or non-satisfaction of the conditions mentioned in Clause (aa) of Sub-rule (1) of Rule 27 of Order XLI of CPC, the Court has ample power to allow the application filed under Order XLI Rule 27 of CPC and examine the material placed before it. Of course, such examination is expediently has got to be done by the Court below.
52. Coming to the case on hand, it is seen that the relevant accounts, which were pointed out by the Court below, were not filed and such non-filing of accounts was treated as a major reason for nonsuiting the plaintiff.
53. Therefore, the accounts, cash books, ledgers, pass books, etc., produced before this Court, in our considered view, are relevant material to be examined by the Court below. Accordingly, Point No. 1 is answered in favour of the plaintiff.
54. Point No. 2: As already noticed and pointed out, when once the additional material is received by this Court, allowing the application filed under Order XLI Rule 27 of CPC as additional evidence, the same is expedient to be subjected to scrutiny by the Court below after giving due and reasonable opportunity to both parties. Accordingly, Point No. 2 is answered.
55. For the foregoing, the impugned judgment and decree, passed by the Court below, are liable to be set aside and are accordingly set aside.
56. In the result, the application CCCAMP No. 239 of 2006 is allowed and the matter is remitted back to the Court below with a direction to receive the documents filed along with the said application CCCAMP No. 239 of 2006 as additional evidence, subject to admissibility and proof, and record a finding on the said additional evidence, after giving due and reasonable opportunity to both parties to adduce oral evidence.
57. Consequently, the appeal is allowed, as indicated above. There shall be no order as to costs.
58. It shall not be understood that this Court has expressed any view on the merits of the case whatsoever in any manner.
59. However, it is clarified that the oral and documentary evidence already on record shall remain on record in tact.