THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO A.S.835 OF 2001 JUDGMENT: The defendants 1 to 3 in O.S.56 of 1992 on the file of the court of Subordinate Judge, Eluru are the appellants herein. The suit was filed for recovery of Rs.1,89,677-88 paise. The allegations in the plaint goes to show that the first defendant was appointed as his commission agent at Marteru centre in July 1987 for sale of the commodities supplied to the farmers and the procedure is that the first defendant shall sell the commodities and in turn credit the same to the Corporation. Commission will be paid to the first defendant for such transaction. The defendant Nos.2 and 3 who are wife and mother-in-law of the first defendant stood as guarantors and executed a surety bond and deposited their title deeds. The stocks were insured with the fourth defendant. On 21-03-1989 at about 5.00 P.M the Marketing Officer and Senior Assistant visited the Sevakendra at Marteru and the closing balance showed 377 bags of BHC 10% dust. The first defendant was directed to transfer five (5) tons of BHC to Siddhantham and five (5) tons to Acahanta and the first defendant represented that workers are not available and they will be sent on the next day. On 22-03-1989 the first defendant did not open the premises and on 23-03-1989 when the first defendant was questioned he gave a letter in writing stating that the stock is not available though it was shown in the registers as it was sold away to the ryots and he will remit the value before 28-03-1989. Thereafter, a physical verification of stocks of all varieties were done and there was a short fall of various commodities to a total of Rs.65,000/-. The first defendant has not remitted the said amount and on 12-04-1989 the first defendant came to the Regional Office brought by the Marketing Officer Y.Venkateswarlu and the first defendant left without verification of the records. After verification of the entire records, it was found that the stock discrepancy worth Rs.72,542/- besides short fall of cash balance of Rs.20,000/-. Again on 21-04-1989 the Marketing Officer visited the premises and made physical verification and found short fall of various commodities worth Rs.7,542/-in addition to the shortages found on 23-03-1989. The total shortage of commodities was worth Rs.93,823-50 paise and shortage of remission of cash is Rs.18,026/-. Therefore, the first defendant has cheated the plaintiff to a tune of Rs.1,11,849-50p.s. Thereafter, a police complaint was filed and investigated and a charge sheet was filed in C.C.23 of 1991. On 15-11- 1989 defendant Nos.2 and 3 gave a notice disputing the surety bond as a forged one to avoid any action. The plaintiff is also issued notice to the 4th defendant for realisation of the loss, but, the 4th defendant has not indemnified the loss. The plaintiff is entitled for the interest @ 18% and hence the suit. The first defendant filed a written statement denying that defendant Nos.2 and 3 executed the surety bond. According to him, he alone signed on the surety bond. The visit of the employees of the plaintiff on 23-03-1989 is correct but the other allegations are not correct. The letter said to have been given by the first defendant to make good the loss of Rs.65,000/- is also disputed. The first defendant was forcibly taken on 06-04-1989 to the Regional Office and obtained the signatures forcibly on several papers. The criminal complaint is a falsified. The plaintiff is not entitled to the interest claimed. Therefore, the suit is liable to be dismissed. The defendant Nos.2 and 3 filed a written statement contending that they never stood as sureties for the first defendant and they did not sign on the surety bond. The alleged deposit of title deeds is false. The signatures are forged. The suit is liable to be dismissed and it is barred by time. The defendant No.4 filed a written statement contending that there is no liability to indemnify in case of fraud or misappropriation and therefore in view of the allegations in the plaint, the claim is beyond the scope of the insurance policy and is not sustainable. The plaintiff is also did not act properly and hence the defendant No.4 cannot be made liable. On the basis of the above pleadings, the following issues and additional issue have been framed for trial:- 1. Whether the plaintiff is entitled to recover suit amount from defendants? 2. To that relief? Additional issue:- Whether the surety bond dated 27-06-1987 is forged one relating to the defendant Nos.2 and 3 and whether it is not legal, valid and not enforceable? On behalf of the plaintiff PWs.1 to 4 are examined and marked Exs.A-1 to A-31. On behalf of the defendants DWs.1 to 6 were examined and marked Exs.B-1 to B-13. After considering the evidence on record, the learned Senior Civil Judge decreed the suit of the plaintiff against the defendant Nos.1 to 3 and aggrieved by the said judgment, the present appeal is filed. Now the points that arise for consideration are:- 1. Whether the claim of the plaintiff with regard to fraud and misappropriation committed by the first defendant is true? 2. Whether defendant Nos.2 and 3 stood as sureties for the first defendant? 3. Whether the judgment and decree passed by the learned Senior Civil Judge is legal and sustainable? 4. To what relief? POINTS:- The learned counsel for the appellant strongly contends that there is no proof of misappropriation and the documents relied on by the plaintiff are not true and in fact in the cross examination of PW.2 and PW.4 there were admissions to show that there was delivery of stocks and as such the decree cannot be sustained. Before that it is to be considered whether the plea of the defendants that the surety bond-Ex.A-3 is a fabricated one. The second defendant was examined and third defendant was not examined. Even first defendant supports the claim of defendant Nos.2 and 3 that they did not execute the surety bond. Evidently, when the first defendant was appointed as a dealer, which was admitted by him, naturally a guarantee bond will be taken. As can be seen from Ex.A-1 the first defendant agreed to obey the conditions and regulations of the plaintiff. The first defendant was appointed as an agent for doing business at Marteru. The surety bond-Ex.A-3 evidently was given consequent on the appointment of the first defendant as an agent. It is common knowledge that whenever any agent was appointed, security will be taken and defendant Nos.2 and 3 are no other than the close relatives of the first defendant and their title deeds were with the plaintiff. In fact, even in the chief examination the first defendant claims as DW.1 that he has handed over title deeds of second defendant. The evidence of first defendant that he gave the title deeds for verification cannot be accepted. DW.4 is no other than the father of the first defendant. He claims that he signed on Ex.A-3 which was blank and defendant Nos.2 and 3 did not sign in his presence. The fact that the first defendant was appointed as an agent is also not disputed. According to him, first defendant came along with PW.3 and asked him to attest Ex.A-3. He did not make any enquiry about it. DW.3 is no other than second defendant and wife of the first defendant. She also denies to have signed on Ex.A-3. As against this evidence, the evidence of PW.1 shows that defendant Nos.2 and 3 stood as sureties and executed the guarantee bond and the stocks were supplied to the first defendant and he did business on behalf of the plaintiff. PW.3 is the Senior Marketing Officer who also spoke about the guarantee bond executed by the defendant Nos.1 to 3 and the attestation of the same by DW.4. In the cross examination of these witnesses, nothing could be shown as to how they are interested in fabricating Ex.A-3 and as such the finding of the lower court that Ex.A-3 was executed by all the defendants cannot be faulted and the probability and necessity of giving a surety bond when the first defendant was appointed as an agent cannot be ignored. The question before the court is whether the misappropriation and short remission of the amount by the defendants is true and established. In order to substantiate this contention, the plaintiff relies upon the factum of physical verification statement-Ex.A-8 and Ex.A-9 letter dated 23-03-1989 and also Ex.A-11 letter addressed by first defendant to the Regional Manager. Ex.A-31 is another letter addressed by first defendant to the plaintiff. As can be seen from the evidence of defendants as DW.1 the fact that there was an inspection of the shop is not in dispute. In chief examination itself he stated on 21-03-1989 when Marketing Officer- Y.Venkateswarlu came for the inspection, there was no deficit stock but he claims that Marketing Officer took his signatures on blank papers and when he asked the Marketing Officer to return the blank papers he was informed that they will be returned only if he supplies the deficit stock and therefore he purchased the stock from private persons and supplied the same to the dealers as per his instructions. He says letter addressed by him to the Achanta sales counter about the supply of the stock as per the instructions in Ex.B-1. So also, he also claims to have sent the stock to Penumantra sales counter and Ex.B-4 is the letter and Ex.B-5 is the acknowledgment. According to him on 23-03-1989 all his books were taken by the Marketing Officer. The stock verification under Ex.A-29 does not contain his signature. He denied the several documents. He admits his signature on Ex.A-8 which is the physical verification report on 23-03-1989 by Y.Venkateswarlu and PW.2 about the shortages. He also admits his signature in Ex.A-11 but denies the contents therein. He also admits that after 23-03-1989 he did not credit any amount to the plaintiff. He also admits his signature on Ex.A-31. Therefore, from his own showing, it is quite clear that there was some inspection of the shop and he signed on the verification reports and also letters about the shortages. If really the contention of the first defendant that there was no shortage is true, there is no reason as to why he should contribute his signatures on the Ex.A-8 verification report. Evidently, PW.1 was not concerned with the inspection and the particulars thereafter. He speaks only from the documents. The evidence of PW.2 is of importance and he claims to have inspected the premises on 21-03-1989 along with Y.Venkateswarlu and finding shortage of 373 bags of BHC and also the lack of stock. Then he claims to have visited on 23-03-1989 and claims to have noticed the shortages. In cross examination he stated that on 22- 03-1989 letter was written by Y.Venkateswarlu to the first defendant to supply the stocks to Achanta and also Penumantra. PW.4 is the Ex. Regional Manager of the plaintiff and he claims to have inspection done of the shop of the plaintiff and also the shortages. As can be seen from Ex.A-8 the physical verification was done with regard to registers and it is difficult to believe that the first defendant would have signed it, if it is really a falsified. All other stocks were found existing but BHC 10% dust of 373 bags is not available. Ex.A-9 also clearly shows that the first defendant has written about the non-availability of the stock though the registers shows the same and though he was asked to send the stocks to Achanta, Siddhantam he could not send it. Ex.A-10 is another letter showing the deposit of Rs.11,000/- and promising to pay the balance remittance shortly. Therefore, all these circumstances and also verification shown subsequently clearly goes to show that though on stock registers showed the 373 bags but on physical verification it was not found. There is no need for any officials of the plaintiff to fabricate the documents to implicate the first defendant. The learned counsel for the appellant strongly contends that the evidence of PW.2 clearly goes to show that the sales counter at Achanta gave the acknowledgment about the supply of stocks of 100 bags and PW.4 also admits the same and the above admissions were not taken into consideration by the learned judge and there is no fraud or misappropriation committed by the first defendant. In fact in the grounds of appeal also the contention of the appellant is that the dealers at Penumantra and Achanta have received the stocks and credited the same but was not accounted for. In fact in the written statement filed by the first defendant no such plea was taken. On the other hand, in Para.5 it was specifically pleaded by the first defendant that on 21-03-1989 the officials did not visit and did not ask him to send the stocks to Siddhantam and Achanta. In the written statement he did not state that as per the directions he supplied the stocks and the said amounts were remitted by the agents which was not given credit. When there was no such plea any amount of evidence from the dealers by the first defendant is not acceptable. Further more even from the own evidence of first defendant, it is quite clear that he was not having the stocks and he purchased the stock from private dealers and supplied the same to the sales counters as per his instructions. This is a development in the evidence of first defendant. The first defendant is not expected to make purchase from outside and this fact clearly goes to show that the stock was otherwise dealt by the first defendant. Therefore, his claim that the verification is incorrect and the amount was not misappropriated cannot be accepted. Though the defendants want to rely upon the fact that the dealers at Achanta and Penumantra received the amounts and credited the same, there is no record to show that for the supplies alleged to have been made by the first defendant, the amount was credited. DW.2 appears to be related to the first defendant though he denied but according to him he was receiving the stocks from the first defendant and making remittance to his account. Ex.B-5 does not show the particulars of the said remittances and it is dated 10-04-1989 and if really the supply was made on 22-03-1989 as per the directions there is no reason as to why the said receipt was not issued on the same day. Therefore, his evidence is not of much use to the first defendant. None of the documents filed by the defendant shows that the dealers at Achenta and Penumantra have credited the amount to the account of either plaintiff or the first defendant. Therefore, the claim of the first defendant cannot be accepted and even in the legal notice also it was not pleaded. The evidence of PWs.2 and 4 which was sought to be pressed into service by the first appellant cannot establish the case and the lower court has given sufficient reasons to disbelieve the claim of the appellant and I do not find any reasons to interfere with the judgment and decree passed by the lower court. Accordingly the points are answered. In the result, the Appeal Suit is dismissed with costs. _______________________ N.R.L.NAGESWARA RAO,J 17-06-2011 TSNR