THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 18.06.2008 CORAM THE HONOURABLE MR.JUSTICE A.C.ARUMUGAPERUMAL ADITYAN A.S.No.752 of 1997 1.M/s.H.K.M. & Co., No.1, Mefuskhan Garden Street, Madras-600 001. 2.Sikandhar, 3.Illias .. Appellants / Defendants Vs. M/s.Dhakshinamoorthy & sons, Registered Partnership Firm, Rep. by Partner M.Dhakshinamoorthy No.148/149, Sengalaneer Odai Street, Kancheepuram-2. .. Respondent / Plaintiff Prayer :- This appeal has been preferred under Section 96 r/w Order XLI Rule 1 of CPC against the judgment and decree dated 24.12.1996 in O.S.No.8546 of 1996 on the file of the IV Additional Judge, City Civil Court, chennai. For Appellants : Mrs.Padmaja Mohan, Advocate For Respondent : Mr.T.Rajamohan, Advocate JUDGMENT This appeal has been directed against the decree and judgment in O.S.No.8546 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai. The defendants in the suit are the appellants herein. 2.The averments in the plaint sans irrelevant particulars are as follows:- The plaintiff is a wholesale trader in pulses and grains, having its principal place of business at Kancheepuram. The plaintiff used to import onsignments of Pulses, Sugar and Grains from Northern State to Madras through Railway Transport and sell the goods at Madras as well as at Kancheepuram. D2 and D3 are the partners of D1-firm, which acted as Commission Agent for the https://hcservices.ecourts.gov.in/hcservices/ plaintiff at Madras. As per the terms and conditions of the Commission Agency, the goods are to be sold by D1 in the Account of the plaintiff and after deducting the expenses of the sale and the Commission payable, the net sale proceeds are to be paid to the plaintiff. The defendants are liable to furnish the sales statement (pattial) in order to get exemption of the sales tax. Agreed rate of interest for the transaction was 18% per annum. Apart from the commission sales transactions, the plaintiff had also sold to D1 and several consignments by way of outright sale. The plaintiff had also purchased several consignments of pulses from D1. A regular account has been maintained by the plaintiff commencing from 10.08.1990 till 31.03.1991. During February- 1991, five consignments of Gramdhall were entrusted by the plaintiff to D1-concern. In respect of the first two consignments, the plaintiff had paid the entire value to the Bankers and obtained the Railway receipt and handed over the goods to D1. In respect of the remaining three consignments, the Bank intimation in the name of the plaintiff were handed over to D1 and the payment was made by D1 in the account and name of the plaintiff and the goods were subsequently taken delivery by D1. For the sale effected by D1 during February-1991, he had neither issued the sales statement (pattial) nor paid the sale proceeds realised. He had failed to furnish Form 'F' for the said five transactions, which resulted the plaintiff paying 10% sale tax to the Sale Tax Department from out of the sale turnover of the said five consignments. Apart from the above said five consignments entrusted to D1, the plaintiff had also sold and delivered to D1 92 bags of Gramdhall by way of outright sale under Credit Bill No.29, dated 16.2.1991 for Rs.79,079.50. As per the agreed terms of the Sale, as well as for the Commission sales transaction, the first defendant concern is liable to pay interest at the rate of 12% per annum on the outstanding due. As per the running accounts the first defendant is liable to pay Rs.2,78,574.65 for the suit transaction, which took place between 10.8.1990 and 30.3.1991. The first defendant is also liable to pay interest for the said principal amount of Rs.2,78,574.65 at the rate of 18% pa. Hence, the plaintiff has filed the suit for recovery of a sum of Rs.3,13,366/- with future interest at the rate of 18% pa on the principal sum of Rs.2,78,574.65 with costs. 3.The 3rd defendant has filed written statement adopted by D1 & D2 as follows:- In first defendant-firm, D2 & D3 are the partners. D1 is the Commission Agent of the plaintiff in the business of sales of pulses, sugar and grains. Apart from the Commissions Agency and sales, there was also outright sales and credit sales and transactions between the plaintiff and the defendants. As per the terms agreed upon, the plaintiff has to clear the goods being imported from Northern States and delivered the same to the https://hcservices.ecourts.gov.in/hcservices/ defendants for being sold in the market and at times it was also in practice that the first defendant-firm has to clear the goods by paying the amount to the bank and take delivery of the goods and after selling the same in the market the first defendant and its partners viz., D2 and D3 used to settle the accounts between the plaintiff and the defendants by debiting and crediting the amounts due both in the Commission business and in the outright sales and credit sales transactions. On many occasions the plaintiff has not paid the amounts and cleared the goods, but only the defendants have paid the amounts and cleared the goods. As per the terms of agreement between the parties if any loss is incurred by the defendants in the Commission Sales the loss has to be borne by the plaintiff only and it is the duty and liability of the plaintiff to bear the expenditures, loss, interest and loss of commission amount. There are two accounts being maintained between the plaintiff and the defendants ie., one for the outright sales business and one for the commission sales business and in both these accounts the amounts due and payable by either parties were adjusted by crediting and debiting. The plaintiff alone is liable to make payment to the defendants and no amount is due from the defendants to the plaintiff. For the goods sold and purchased by either parties in the credit sales business and also for the goods sold by the defendants in the market in the Commission sales business lot of amounts are due from the plaintiff to the defendants but not otherwise. During February-1991 five consignments of gramdhall were cleared by the defendants by making the payment of their own money and it is not correct to state that with respect to two consignments the plaintiff had paid the entire value to the bankers and obtained the Railway Receipt and handed over the goods to the first defendants. In fact, the defendants have paid the amounts to the bankers and obtained the Railway Receipt and cleared the goods and in support of this, the defendants are having vouchers namely payment receipts and letters issued by the plaintiff himself. The plaintiff never cleared the two consignments as claimed in the plaint. The defendants after clearing the goods with respect to five consignments sold the same in the market, but the defendants could not secure appropriate and profitable price of value per bag of 100 kgs as the goods delivered by the plaintiff are of inferior quality and as a consequence of it, the defendants had to incur loss in the business and the loss is also liable to be borne by the plaintiff. Because a lot of amount was due both in credit-sales business and commission sales business from the plaintiff to the defendants as per the accounts maintained by the defendants, the defendants could not submit the Form 'F' and the statements (pattials) to the plaintiff. Infact, the defendants have cleared seven consignments through their own money and all the seven consignments have been sold in the market as per the prevailing market value and since the materials and goods were of inferior https://hcservices.ecourts.gov.in/hcservices/ quality the goods could not secure profit. On account of commission sales and as per the account maintained by the defendants a total sum of Rs.99,275-15 which represents the loss of sum of Rs.73,991.15 incurred by the defendants in the Commission Sales, a sum of Rs.24,000/- which includes Commission and interest approximately and a sum of Rs.1,284/- representing godown rent and brokerage charge. A sum of Rs.99,275.15 as on 31.3.1991 is due from the plaintiff to the defendants and for the said amount a sum of Rs.45,000/- has got to be added towards interest from 31.3.1991 upto date. Thus a sum of Rs.1,44,275.15 is due from the plaintiff to the defendants. It is the fact that 92 bags of gramdhall was purchased by the defendants under Credit Bill No.29 dated 16.2.1991 for Rs.79,079.50 but this is not the only transaction between the plaintiff and the defendants in the outright and credit sales business. A series of sales and purchases have taken place between the plaintiff and the defendants and the plaintiff has purchased from the defendants goods worth about Rs.4,19,231.30 and the defendants have purchased from the plaintiff goods worth about Rs.3,19,954.44 which includes a sum of Rs.79,079.50. As on 16.2.1991 a sum of Rs.1,12,580.86 is due to the defendant from the plaintiff along with interest of Rs.57,600/-. The statement of accounts furnished by the plaintiff alongwith the plaint is incorrect and false. Hence, the suit is liable to be dismissed. 4.On the above pleadings the learned trial Judge has framed five issues for trial. On behalf of the plaintiff-firm Mr.Dhakshnamoorthy, one of the partners, was examined as P.W.1 and Ex.A.1 to Ex.A.41 were marked. On the side of the defendants D3 has examined himself as D.W.1 and Ex.B.1 to Ex.B.8 were marked. After scanning the evidence both oral and documentary, the learned trial Judge has come to the conclusion that the plaintiff has proved his claim and accordingly, decreed the suit as prayed for with costs, which necessitated the defendants to approach this Court by way of this appeal. 5.Now the point for determination in this appeal are as follows:- 1)Whether the defendants have cleared any of the consignment from out of their own money, which was failed to be given credit to in the accounts maintained by the plaintiff for the suit transaction? 2)Whether the judgment and decree in O.S.No.8546 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai, is liable to be set aside for the reasons stated in the memorandum of appeal? 6.Point No.1:- 6(a) The admitted case of the plaintiff is that the plaintiff is doing wholesale business in pulses and grains and D1- https://hcservices.ecourts.gov.in/hcservices/ firm, in which D2 & D3 are partners, was the Commission Agent for the plaintiff for selling the goods supplied by the plaintiff on commission basis. It is the case of the plaintiff that during February-1991, five consignments of gramdhall were entrusted to the first defendant-concern for sale on commission basis, but the first defendant had paid the entire value in respect of 2 consignments only to the bankers and obtained the railway receipts and in respect of the remaining 3 consignments, according to the plaintiff, banker intimations were handedover to the first defendant and the payment was made by the first defendant in the account in the name of the plaintiff after deducting the delivery of the goods by the first defendants has failed to repay the value of the goods to the plaintiff. 6(b)Per contra, it is the case of the defendants that D1 had taken delivery of five consignments by his money and that the plaintiff owes to D1 a sum of Rs.1,44,275.15 and out of the consignments supplied to D1, 92 bags of gramdhall were of inferior quality and could not be sold in the market which resulted in heavy loss to the defendants. Even though in the written statement the defendants would claim that the plaintiff owes Rs.1,44,275.15 there is no counter claim made on payment of necessary Court fees. 6(c)Heard the learned counsel for the appellants as well as the learned counsel for the respondant. 6(d)Ex.A.30 is the ledger book produced by the plaintiff in respect of the suit transaction. Relevant entry in Ex.A.30 at page 99 is Ex.A.31 and entry at page 114 is Ex.A.32. Ex.A.33 is the relevant day book. Ex.A.34 is the relevant day book entries for the suit transaction. The plaintiff as P.W.1 in the cross- examination (dated 3.10.1996 at page 11) would admit that out of the five consignments, three consignments were cleared by the first defendant. Even though there is a clear admission and exhibits like Ex.B.1, Ex.B.2, Ex.B.4 to Ex.P.6 were produced by the first defendant in respect of their contention that they have cleared three consignments, the learned trial Judge without considering the same has decreed the suit in toto. According to the defendant, he had cleared 5 consignments. A perusal of Ex.B.2 and Ex.B.5 will go to show that the consignments cleared under Ex.B.2 and Ex.B.5 were duly given credit to by the plaintiff in Ex.A.32 on 21.2.1991 (Ex.B.5) and on 23.2.1991 (Ex.B.2). Exs.B.1, 4 & 6 were also produced by the defendants to show that the first defendant had cleared three consignments out of his own money, but the same was not given credit to in Ex.A.30-ledger either under in Ex.A.31 entry or under Ex.A.32-entries. The learned counsel appearing for the respondent would contend that the payment for the consignments under Exs.B.1, 4 & 6 were paid by the plaintiff after obtaining the railway receipts and connected documents were sent to the first defendant with a request to take https://hcservices.ecourts.gov.in/hcservices/ delivery of the goods from the railway goods yard. But a reading of the letter dated 4.2.1991 contained in Ex.B.1-documents will go to show that the plaintiff had requested the first defendant to honour the Invoice No.1914 dated 18.1.1991 for the goods sent in railway wagon No.81125 under RR.No.630580 in the plaintiff's account. The letter written by the first defendant to the plaintiff dated 4.2.1991 is also available in Ex.B.1, which reads that as per the instructions given by he plaintiff the first defendant had honoured documents pertaining to 92 bags of gramdhall despatched through railway Wagon No.81125 at Rayapuram Goods Shed by honouring the relevant bills. The bill amount for the 92 bags of gramdhall comes to Rs.81,010/- is also seen from the Bill No.1663 dated 19.1.1991 available with Ex.B.1, bunch of documents. Like that Ex.B.4 also contains the letter written by the plaintiff to D1 dated 8.2.1991 wherein also D1 was asked to honour the bills and clear the goods and keep the same in the account of the plaintiff. The reply dated 8.2.1991 by D1 to the plaintiff, which is also available in Ex.B.4, bunch of letters, reads that the hundies in respect of the goods despatched through Wagon No.30157 dated 25.1.1991 was also paid by the first defendant on behalf of the plaintiff. The bill amount under Ex.B.4 comes to Rs.79,675/-. Ex.B.6 is also similar to that of Ex.B.1 & Ex.B.4 documents, but without any correspondence between the plaintiff and the first defendant. Bill amount in Ex.B.6 comes to Rs.73,650/-. D1 has enclosed alongwith Exs.B.1, 4 & 6 – documents, relevant railway receipts and also the chellan, for the payment for the purpose of releasing the documents issued by the bank. If the plaintiff would have honoured those documents for the above said consignments, then there is no need for D1 to produce the bank challen honouring the documents relating to Exs.B.1, 4 & 6 consignments. But as far as Exs.B.1, 4 & 6 documents are concerned there is no corresponding entries made in Ex.A.30-ledger either under Ex.A.31 or under Ex.A.32 – entries. If the plaintiff would have cleared Exs.B.1, 4 & 6 - consignments then certainly the said amount figured under Exs.B.1, 4, & 6 would have been reflected under debit column of Ex.A.31 and Ex.A.32 – entries pertaining to the transaction between the plaintiff and D1. Under such circumstances, the amount paid by the first defendant under Exs.B.1, 4 & 6 for clearing the said three consignments are to be deducted from the suit claim. Ex.B.1 - bill is for Rs.81,010/-. Ex.B.4 – bill is for Rs.79,675/-. Ex.B.6 - bill is for Rs.73,650/-. Total amount under Ex.B.1, Ex.B.4 and Ex.B.6 comes to Rs.2,34,335. The suit claim (principal amount) is Rs.2,78,574.65. If Ex.B.1, Ex.B.4 and Ex.B.6 amount (Rs.2,34,335-) is deducted from the principal amount of Rs.2,78,574.65 the balance amount liable to be paid by the defendants to the plaintiff come to Rs.44,239/65 (Rs.2,78,574/65 - Rs.2,34,335/- = Rs.44,239/65). Eventhough the plaintiff claims 18% interest per annum at the prayer column of the plaint, https://hcservices.ecourts.gov.in/hcservices/ in the cause of action column the plaintiff has asked for 12% per annum interest alone. 6(d) Hence, I hold on point No.1 that the defendants are liable to pay to the plaintiff under the suit only a sum of Rs.44,239/65 with future interest at the rate of 12% per annum from the date of suit till the date of realization. 7.POINT No.2:- In view of my findings in the previous point I hold on point No.2 that the judgment and decree of the learned trial Judge in O.S.No.8546 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai, is liable to be modified, as here under. 8. In fine, the appeal is allowed and the decree and judgment of the trial Court in O.S.No.8546 of 1996 on the file of the IV Additional Judge, City Civil Court, Chennai, is modified and the suit is decreed only for a sum of Rs.44,239/65 with interest at the rate of 12% per annum from the date of the suit till the date of realization with proportionate costs. At this juncture the learned counsel appearing for the defendants would represent that the defendants had deposited 50% of the decree amount at the time of preferring the appeal before the trial Court. If any amount is left in the said deposit, appellants herein / defendants are entitled to withdraw the same after adjusting the decree amount as per the decree passed today. Ssv Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar To, 1. The IV Additional Judge, City Civil Court, Chennai. 2. The Registrar, City Civil Court, Chennai. • 1 cc to Mr. R. Thirugnanam, Advocate SR no. 30830 • 2 ccs to M/s. Ashok Mohan, Advocate SR No. 30610 RL(CO) SR/8.7.2008 A.S.No.752 of 1997 https://hcservices.ecourts.gov.in/hcservices/