chunnilal vs ghanshyamdas and ors. on 15 september, 1970

Rajasthan High CourtChunnilal vs Ghanshyamdas And Ors. on 15 September, 1970Equivalent citations: AIR 1971 Raj 286, 1970 (3) WLN 792Author: C LodhaBench: C Lodha

JUDGMENT C.M. Lodha, J.

1. This is a defendant's second appeal arising out of a money suit.

2. Briefly stated, the case of the plaintiff-respondent Ghanshyamdas is that defendants Nos. 1 to 3Chunilal. Nemichand and Mitha Lal were working as commission agents in partnership under thename and style of firm. Jairoop Chunnilal at Jodhpur in connection with sale and purchase of goldand silver bars and Ganeshmal defendant No. 4 transacted business in sold and silver through theagency of defendants Nos. 1 to 3 in Section 2001 and Section 2002. It was further alleged in theplaint that Ganesh Mal had also money dealings with defendants Nos. 1 to 3 who used to maintainaccounts of all the dealings of Ganeshmal of cash as well as of gold and silver. It was averred that onSrawan Bad 9, Section 2002, Ranulal the Munim of firm Jairoop Chunnilal sent an account toGaneshmal marked Ex. 1 showing an amount of Rs. 29,780/14/3 to the credit of Ganeshmal and Rs.22,422/12/6 on the debit side. Thus according to this account a sum of Rs. 73555/1/9 was due toG a n e s h m a l f r o m t h e a p p e l l a n t t o w a r d s w h i c h R s . 1 , 0 0 0 / - w e r e p a i d l a t e r o n b ydefendant-respondent Nemichand to Ganeshmal through a Hundi and thus a sum of Rs. 6358/1/9remained outstanding in favour of Ganeshmal against the defendant-appellant. The plaintiff's caseis that this debt was assigned by Ganeshmal to him by a deed of assignment dated Chet Sudi. 7Section 2006, notice of which was also given to the defendants Nos. 1 to 3. The plaintiff, therefore,filed the present suit in the Court of Civil Judge. Jodhpur on 26-7-1951 against the firm JairoopChunnilal through its partners defendants Nos. 1 to 3 for recovery of Rupees 6358/1/9 as principaland Rs. 2352/14/3 as interest, total Rs. 8711/-. The assignor of the debt viz. Ganeshmal was alsoimpleaded as a defendant in the suit and it was prayed that in case it is held that defendants Nos. 1to 3 are not liable for the suit amount a decree for the same be passed against Ganeshmal.

3. The defendants Nemichand, Mithalal and Ganeshmal did not appear in spite of service, andconsequently they were proceeded against ex parte. The appellant Chunnilal filed his writtenstatement and denied the plaintiff's suit. He admitted that defendants Nos. 1 to 3 used to carry onbusiness as 'Adativa' in partnership in gold and silver under the name. Firm Jairoop Chunnilal inSection 2001 and closed the same on Asad Sudi 15. Section 2002. However, he denied knowledgeabout Ganeshmal's doing any business through firm Jairoop Chunnilal and pleaded ignorance as tothe amounts deposited by Ganeshmal and the resultant profits and losses in the alleged transactionsof gold and silver. He denied that Ranulal had any authority as Munim to sign accounts on behalf ofFirm Jairoop Chunnilal and that any amount was due to Ganeshmal from the said firm. He alsopleaded that the account Ex. 1 cannot be the basis of the suit and in any case the suit is barred bylimitation. He took certain other pleas but it is not necessary to refer to them as they are not beingrelied upon now.

Chunnilal vs Ghanshyamdas And Ors. on 15 September, 1970

Indian Kanoon - http://indiankanoon.org/doc/1251398/ 1

4. After recording the evidence produced by the parties, the learned Civil Judge, Jodhpur by hisjudgment dated 8-5-1958 decreed the plaintiff's claim for the principal sum Rs. 6358/1/9 and alsoawarded pendente lite and future interest on this amount, but rejected the plaintiff's claim forinterest prior to the date of the suit.

5. Aggrieved by the judgment and decree of the trial court Chunnilal filed appeal in the Court ofDistrict Judge, Jodhpur and the plaintiff also filed cross-objection for interest upto the date of thesuit. The learned District Judge dismissed the appeal as well as the cross-objection. Consequently,the defendant Chunnilal has come in second appeal to this Court, and the plaintiff has also filedcross-objection regarding interest upto the date of the suit.

6. Learned counsel for the appellant has urged only the following points in support of the appeal:

(1) The account Ex. 1 is a mere acknowledgment which cannot form the basis of the suit.

(2) Ranulal, who has signed the account Ex. 1 had no authority to do so on behalf of thedefendant-firm Jairoop Chunnilal and consequently the defendants Nos. 1 to 3 are not bound by thesame.

(3) The learned District Judge has erred in law in applying Article 62 of the Marwar Limitation Act(which was in force at the relevant time). Article 89 is the only appropriate Article applicable to thefacts and circumstances of the case, and since this Article prescribes a period of three years, the suitis beyond limitation, and must be dismissed as such.

(4) The plaintiff has failed to prove that the defendant Ganeshmal transacted business in gold andsilver in the agency of defendants Nos. 1 to 3, as a result of which the suit amount remained due todefendant No. 4 from defendants Nos. 1 to 3.

(5) In any case the plaintiff has failed to prove that the Samwat Year used to change from KartikSudi 1, in the account books of defendants Nos. 1 to 3, and consequently the suit would be beyondlimitation even If six years' period is applied.

7. I would first take up points Nos. 1 and 4 as in my opinion they can be conveniently disposed oftogether. The lower court has held that Ex. 1 is not an account stated inasmuch as no balance hasbeen struck in it. This position is not contested by any of the parties. In Tarachand v. Mst. Dhapu,1957 Raj LW 365 (AIR 1957 Raj 110) it was held that:

"Striking of a balance is essential for a real "account stated" because unless that is done, it cannot besaid that the defendant agreed to set off his payments towards the earlier items of the plaintiff orthat he had admitted that a certain sum was due from him and to pay the same."

8. Learned counsel for the respondent, however, submits that there is an unconditional promisecontained in Ex. 1 to pay the amount. It is stated therein that the amount due on the account will bepaid in instalments. The contention of the learned counsel is that even though Ex. 1 is not an



'account stated' yet it is an acknowledgment containing an unconditional promise to pay, andtherefore, the suit can be based on it. In the alternative he has submitted that the plaintiff has notbased his suit merely on Ex. 1 but has alleged in para No. 7 of the plaint that the cause of actionarose when transactions took place between the defendant No. 4 Ganeshmal and the firm JairoopChunnilal from Section 2002 Srawan Bad 9 to Section 2006 Chet Sudi 7. In this connection he hasinvited my attention to issue No. 1, which reads as under:

"1. Whether defendant No. 4 transacted the business of silver bars, gold Mohars and cash in the'adat' of the firm of defendants Nos. 1 to 3 and Rupees 6352/1/9 remained due against defendantsNos. 1 to 3 in that business."

9. It is also argued on behalf of the plaintiff-respondent that the defendant had not raised any suchspecific plea in the written statement that the suit cannot be based on Ex. 1. and the only objectionin this connection was that Ex. 1 was a mere acknowledgment and hence not admissible in evidencebeing unstamped, which was the subject matter of issue No. 7.

10. I have considered the rival contentions of the parties. In Jeevrai v. Lalchand. AIR 1969 Raj 192(FB) it was held (per majority) that an acknowledgment if it implied a promise to pay can give rise toa fresh cause of action, and can be made the basis of a suit It was observed that a mereacknowledgment in order to form the basis of a suit must be an agreement under which thedefendant has to pay a particular sum of money to the plaintiff. A distinction was however, broughtout between an acknowledgment under Section 19 of the Limitation Act 1908 which may beunilateral transaction and a document bilateral in nature, Bhandari J. (Tyagi J., agreeing with him)observed as follows:

"I do not mean to say that in all cases an unconditional acknowledgment could form the basis of thesuit. As I have already pointed out in the opening part of my judgment that an acknowledgementunder Section 19 may be a unilateral act and such an acknowledgment may not be sufficient to formthe basis of the suit. Unless there are bilateral acts which give rise to an agreement enforceable atlaw under the provisions of the Indian Contract Act, there can be no question of a unilateraltransaction forming the basis of a suit."

11. In the present case the document Ex. 1 undoubtedly evidences a unilateral act of the defendantsNos. 1 to 3. It is not a bilateral document. It is an account sent by the defendants Nos. 1 to 3 toGaneshmal agreeing to pay what may be due. Ex. 1 does not contain a promise to pay any amount inexpress terms. It is only an acknowledgment by a unilateral act of the defendants and according tothe majority view expressed in Jeevrajs case AIR 1969 Raj 192 (FB) (supra), it cannot form the basisof their suit.

12. However, while deciding issue No. 1 the trial court has found on the basis of the evidence of P. W.1 Ganeshmal. P. W. 3 Kedarnath, and P. W. 5 Ghanshyam, and the previous accounts Ex. 6 & Ex. 7corroborated by the letters Ex. 8. Ex. 10, Ex. 11. Ex. 13 and Ex. 14 to Ex. 17 that the defendantGaneshmal did business of sale and purchase of gold and silver bars through the firm of thedefendants Nos. 1 to 3 as a result of which a sum of Rs. 6358/1/9 remained outstanding against the



defendants' firm Jairoop Chunnilal. This finding was not assailed before the learned District Judge,and all that was contended before him in this connection was that Ex. 1 was merely anacknowledgment. Even in this Court the learned counsel for the appellant made no attempt to showhow the finding arrived at by the learned trial court that the amount of Rs. 6358/1/9 was due toGaneshmal from defendants Nos. 1 to 3 is erroneous? The defendants Nos. 1 to 3 have not producedtheir account books. I am consequently of the opinion that the suit is not based on Ex. 1 alone andthat the plaintiff has succeeded in proving that the defendant No. 4 Ganeshmal did business of saleand purchase of gold and silver bars through the agency of the defendants Nos. 1 to 3 as a result ofwhich a sum of Rs. 6358/1/9 remained outstanding against the defendants Nos. 1 to 3.

13. The next contention that Ranulal had no authority on behalf of defendants Nos. 1 to 3 to sign theaccount Ex. 1 involves a pure finding of fact based on pure appreciation of evidence. It is in theevidence of Ganeshmal, Shrigopal, Kedarnath and Jugal Kishore that Ranulal was working as aMunim and Karinda at the firm of Jairoop Chunnilal. The only argument advanced by the learnedcounsel for the appellant in this connection is that there is no evidence to show that Ranulal hadexecuted similar other documents. In my opinion the contention raised on behalf of the appellant inthis connection has no substance in view of the overwhelming evidence produced from the side ofthe plaintiff that Ranulal was acting as a Munim and Karinda at the defendants firm, and hadauthority to send the accounts, signed by him on their behalf.

14. This brings me to the question of limitation. It has been strenuously argued on behalf of theappellant that Article 89 of the Marwar Limitation Act which prescribes a period of three yearsapplies in the present case. Article 89 reads as under:--

"89. By a principal against his agent for movable property received by the latter and not accountedfor :

Three years.

When the account is, during the continuance of the agency, demanded and refused or, where nosuch demand is made, when the agency terminates."

It is submitted that the view of the learned District Judge that this Article applies only to a suit inwhich accounts have to be taken and since in the present case the accounts had already beenrendered by the agent, this Article has no application, is erroneous. It is argued that the phrasemovable property used in Article 89 includes money. In support of his contention the learnedcounsel for the appellant has relied on Md. Amirul Islam v. Md. Abdul Hamid, AIR 1934 Cal 238;

Kashiram v. Santokhbai, AIR 1958 Madh Pra 91 and Thomman Thresia v. Pothen Chacko, AIR 1957Ker 155.

15. On the other hand learned counsel for the respondent has placed strong reliance on Jasrai v.Devichand. ILR (1952) 2 Raj 459 in support of his contention that Article 89 has no application. Ithas also been argued on behalf of the respondent that the appropriate Article applicable to the



present case is Article 85, which runs as under:

"85. For the balance due on a mutual open and current account where there have been reciprocaldemands between the parties.

six years.

The close of the year in which the last item admitted or proved is entered in the accounts such yearto be computed as ia the account."

In the alternative he submits that even if the case is taken to be covered by Article 62 the suit wouldbe within limitation. It may be necessary to mention here that under the Marwar Limitation Actwhich governs the present case the limitation under Articles 62 and 85 is six years, whereas thelimitation under Article 89 is three years and that accounts for the anxiety of the appellant to bringthe case within the purview of Article 89 so that he may succeed in defeating the plaintiff's claim onthe ground of limitation.

16. In AIR 1934 Cal 238 it was observed that the term 'movable property' in Article 89 includesmoney and therefore Article 89 applies to the suit for the recovery of money received by the agent onbehalf of the principal and not accounted for. Certain rulings were referred to in that case in supportof the contention that Article 89 is only applicable when the suit is for accounts. But the learnedJudges of the Calcutta High Court observed that Article 89 also applies to a claim for a balance ofaccount, but there is no reason to suppose that it is limited only to suits for account.

17. In AIR 1958 Madh Pra 91 it was observed that from the language of Article 89 it is manifest thatits applicability is not confined to suits for accounts and that it is applicable for the recovery of anymovable property which has been received by the agent and which has not been accounted for.

18. In AIR 1957 Ker 155 the plaintiff had entrusted to the defendant a sum of money for negotiatingand obtaining for him a sale from 'K' and on settlement of terms of the sale the defendant was to paythe amount entrusted as an advance towards the sale consideration. The defendant failed to do thesame and therefore the plaintiff took the sale from 'K' direct and paid the entire amount ofconsideration. Consequently, the plaintiff sued the defendant for recovery of the amount entrustedwithin three years from the date of execution of the sale deed in his favour. The question waswhether the suit was barred bv limitation? It was held that the legal relationship between theplaintiff and defendant was one of principal and agent and not merely of two persons one of whomhas received money belonging to the other, and therefore Article 62 did not apply. It was furtherheld that the retention of the money by the defendant without accounting for it would be eitherneglect or misconduct on the part of the agent, and therefore, Article 90 of the Limitation Act wasapplicable. The learned Judge also observed that Article 89 would also apply to such a case. Theapplicability of Article 89 was opposed on the ground that the suit contemplated in the first columnof this Article is a suit for movable property. This argument was repelled on the ground that theterm 'movable property' would include money also. In conclusion the learned Judge held that theperiod of limitation would be the same whether Article 89 or Article 90 is applied. It may be



observed that in this case there was no discussion on the point whether Article 89 applied to suitsfor accounts only.

19. Learned counsel for the respondent placed strong reliance on the following observation in aBench decision of this Court ILK (1952) 2 Raj 459:

"In our opinion, the ratio decidendi of the cases is that Article 89 would apply where the suit is bythe principal against his agent not only for accounts but also for recovery of money based on theaccounts."

20. In the present case it will be noticed that the suit is neither for accounts, nor for recovery ofmoney based on the accounts, the plaintiff has nowhere prayed for taking accounts and as sued for aspecific sum found to be due from the defendants. A perusal of the plaint would show that there isno prayer for rendition of accounts. The plaintiff has not challenged the correctness of the accountEx. 1 sent by the defendant to Ganeshmal. Put in other words, the plaintiff's case is that Ganeshmalwas entitled to recover the excess amount which he had paid to the defendants Nos. 1 to 3 of whatwas due to him from them. Thus in view of the clear pronouncement made in ILR (1952) 2 Raj 459 Iam of the opinion that Article 88 has no application to the present case.

21. Learned counsel for the respondent has urged that the suit would be governed by Article 85 ofthe Marwar Limitation Act. In support of his contention he has placed reliance on Phoolchand v.Tarachand, ILR (1955) 2 Raj 462 where the defendant carried on business of gold and silver throughthe agency of the plaintiff, who was his commission agent and who was to credit to the defendantwith the profits earned by him and debit to him the losses suffered, and the profit and losses wereintended to serve as set off against each other, it was held that it was not a case of single contractualrelationship like that of a borrower and a lender, but it was a case of dual contractual relationshipbetween the parties, and consequently, the suit filed by the commission agent against his principalon such an account is governed by Article 85.

22. The law seems to be well settled that where the dealings between the parties disclose twocontractual relationships between them, there may arise demands in favour of each side against theother. The real test to see whether there have been reciprocal demands in any particular case is tofind out whether there is a dual contractual relationship between the parties. In the present case, itappears that prior to Ex. 1 the defendant had sent the account Ex. 6 to Ganeshmal which showed Rs.5809/15/3 to the credit of Ganeshmal and Rupees 4578/3/6 were debited to him. Prior to Ex. 6 thedefendants had sent letter Ex. 7 containing their accounts with Ganeshanal according to which theaccounts between them stood cleared up. Ex. 1 further shows that two amounts of Rupees 5000/-and Rs. 13000/- were remitted to the defendants on Jeth Sudi 12, Section 2002. A close scrutiny ofthe account Ex. 1 further shows that on account of the advance of Rs. 18,000/- bv Ganeshmal onJeth Sudi 12, there stood a considerable balance in favour of Ganeshmal and thereafter certainamounts were debited to him on account of losses incurred by Ganeshmal in the transactionscarried out by him through the agency of the defendants Nos. 1 to 3. In view of this state of accountsit would not be incorrect to say that the dealings between the parties disclosed a dual contractualrelationship and there had been reciprocal demands. I am fortified in this view by the pleadings of



the parties. In para No 2 of the plaint, it is stated that Ganeshmal had money dealings with firmJairoop Chunnilal and also did business In gold and silver in the latter's 'adat' (agency). Thedefendant Chunnilal has not denied this fact, specifically in his written statement but has stated inreply to this para that he has no knowledge what transactions in gold and silver had been done byGaneshmal in the 'adat' of Firm Jairoop Chunnilal and how much money he had advanced in cash tothe said firm and what were the profits and losses of Ganeshmal? In his statement as a witness ofthe plaintiff. P. W. 1 Ganeshmal has also stated that he had money dealings with the defendant'sfirm Jairoop Chunnilal and also entered into transactions for sale and purchase of gold and silverbars through the aaency of the said firm. The defendant Chunnilal (appellant) has however deposedin his statement that he does not know Ganeshmal at all and he had not seen any Khata ofGaneshmal in the account books of Firm Jairoop Chunnilal. The defendants Nos. 1 to 3 havesuppressed the account books of their firm and Chunnilal has stated that the same were lost bydefendant Mithalal. But he is not able to state when they were lost. In his cross-examination hefurther states that they were lost at the Railway Station of Bombay but he was not present there atthat time. Mithalal has not come in the witness-box. The irresistible conclusion that flows from thepleadings and evidence of the parties is that there was a dual contractual relationship betweenGaneshmal and Firm Jairoop Chunnilal one as principal and agent and the other as lender andborrower.

23. The phraseology of Article 85 is wide and comprehensive and does not exclude from its purviewthe case of a principal and an agent between whom a mutual, open and current account may exist.From the nature of the transactions carried on between the defendants Nos. 1 to 3 and Ganeshmal, itappears that Ganeshmal was advancing money to the defendants Nos. 1 to 3 and the defendantsNos. 1 to 3 were carrying on transactions on behalf of Ganeshmal as the letter's 'Adatiya.' In thisview of the matter. Article 85 applies to the present case and the suit is within time as the periodprescribed under this Article is 6 years from the close of the year in which the last item is admittedlyentered in the account according to the change of Samwat in the defendant's account books, namelyfrom Kartik Sudi 1.

24. The learned District Judge has held that Article 62 of the Limitation Act applies to the case eventhough he has given no reasons in support of his finding and has merely contented himself by sayingthat at least he has no doubt in this respect. This sort of dealing with a point of law by the learnedDistrict Judge is far from satisfactory. Article 62 of the Marwar Limitation Act runs as under:

"62. For money payable Six When theby the defendant to years, money isthe plaintiff for received."money received bythe defendant forthe plaintiff's use:

25. It may be noticed that in the present case Ganeshmal had paid Rupees 18,000/- to thedefendants on Jeth Sudi 12, Section 2002 (vide Ex. 1) and the latter was bound to pay back so muchportion of this money which remained due to Ganeshmal after adjusting the accounts, and after



deducting all legitimate expenses and allowances admissible to the defendants Nos. 1 to 3 as theagents of Ganeshmal. The third column of Article 62 mentions the starting point for limitation asthe date when the monev is received. In the present case it cannot be said that the liability of thedefendants to return Rs. 18,000/- or a portion thereof accrued when this amount was receivedthem. On the other hand this liability arose only when the accounts between the parties had beenfinally closed In this view of the matter. Article 62 is not an appropriate Article to be applied to thepresent case, and in my view as discussed above the present case is governed by Article 85,according to which the suit is undoubtedly within limitation.

26. Now. It remains to consider the last submission made on behalf of the appellant, viz., whetherthe plaintiff has succeeded in establishing that the Samwat Year in the defendants' Bahies changeson Kartik Sudi 1? The defendant appellant Chunnilal has admitted in his statement on oath in clearterms that in the account books of the Firm Jairoop Chunnilal the Samwat Year used to start fromKartik Sudi 1. Learned counsel for the appellant has, however, urged that no such allegation Wasmade by the plaintiff in the plaint. It may be pointed out that when defendant No. 1 in his writtenstatement pleaded that the firm Jairoop Chunnilal had closed its business on Asad Sudi 15, Section2002, the plaintiff in his replication stated in clear terms that in the Bahies of the firm JairoopChunnilal the Samwat Year used to be changed on Kartik Sudi 1. Thus this part of the case set up bythe plaintiff was admitted by the appellant Chunnilal in his own statement. Consequently, theappellant cannot be allowed to argue against his own admission. This point is completely devoid offorce and is to be stated only to be rejected.

27. The result is that I do not find any force in this appeal and dismiss it with costs.

28. Coming to the cross-objection, it is urged by the counsel for the respondent-plaintiff that theplaintiff should have been allowed interest upto the date of the suit. In para No. 6 of the plaint theplaintiff has claimed Rs. 2352/14/3 as interest upto the date of the suit on the basis of contract aswell as usage. There is no evidence in support of this assertion except the statement of P. W. 1Ganeshmal which has not been relied upon by the courts below and has also been found to be whollyinsufficient. The fact that the plaintiff has based his claim for interest on contract as well as usage,itself weakens his case. I am also in agreement with the lower court that neither contract nor usagefor payment of interest is proved. Consequently, I dismiss the cross-objection with costs.

29. The net result is that the appeal as well as cross-objection are dismissed with costs.




chunnilal vs ghanshyamdas and ors. on 15 september, 1970

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