RSA No.243 of 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH RSA No.243 of 2006 Date of Decision: 05.02.2010 Sh. M. S. Bansal and another .……Appellants Versus M/s Vam Organic Chemicals Ltd. ……Respondent Coram:- HON’BLE MR. JUSTICE L. N. MITTAL. Present: Mr. S. K. Sandhir, Advocate for the appellants. Mr. Aseem Aggarwal, Advocate for the respondent. L. N. MITTAL, J (ORAL) This is second appeal by defendants, who have remained unsuccessful in both the Courts below. Respondent-M/s Vam Organic Chemicals Ltd. filed suit for recovery of Rs.5,52,527.82p against the defendants. Defendant No.2/appellant No.1 is proprietor of defendant No.1/appellant No.2. Defendants purchased goods worth Rs.3,45,155.54p from the plaintiff between 31.08.1990 till 23.11.1990. However, goods worth Rs.6,845.31p were returned leaving balance amount of Rs.3,38,310.23p. The defendants failed to pay the said amount and are, therefore, liable to pay it along with interest at the agreed rate of 22% per annum. The interest amount till filing of the suit came to Rs.2,14,217.59p. The defendants also failed to furnish requisite S.T- XXII Forms of Sales Tax for the goods purchased by them from the plaintiff and for this reason, the plaintiff has to pay sales tax at the rate of 8.80% on the value of the goods. The defendants are liable to RSA No.243 of 2006 -2- compensate the plaintiff for the said amount, but the same has not been claimed in the instant suit, reserving right to agitate the same when cause of action would arise. Defendants alleged that they never purchased any goods from the plaintiff nor any amount is due from them nor they are liable to pay interest. Defendant No.2 was running his business as proprietor of defendant No.1 and his monthly turn over was Rs.7,000/- to 8,000/- per month only. It was also pleaded that firm- defendant No.1 was wound up on 29.01.1991 and its sales tax licence was surrendered to the Authorities on 30.04.1991. Learned Civil Judge (Senior Division), Ludhiana vide judgment and decree dated 23.04.2001 partly decreed the suit of the plaintiff for recovery of Rs.3,38,310.23p as principal amount and Rs.1,35,324.10p as interest for pre-suit period at the rate of 15% per annum i.e total amount of Rs.4,73,334.33p with further interest on the principal amount at the same rate of 15% per annum from the date of institution of the suit till recovery. First appeal preferred by the defendants stands dismissed by learned District Judge, Ludhiana vide judgment and decree dated 17.09.2005. Feeling aggrieved, the instant second appeal has been preferred by the defendants. I have heard learned counsel for the parties and perused the case file including records of the trial Court. The plaintiff examined three witnesses to prove its case. They stated about booking of orders by the defendants for the goods and supply thereof by the defendants to the plaintiff. The person who delivered the goods to the defendants has also been examined. Invoices Ex.P1 to P-7 regarding supply of the goods have also been RSA No.243 of 2006 -3- proved, besides other documents. On the other hand, defendant No.2 himself appeared in the witness box and simply denied the allegations of the plaintiff. Learned counsel for the appellants vehemently contended that the orders allegedly placed by the defendants on the plaintiff for supply of goods have not been produced in evidence. However, this contention although apparently attractive cannot be accepted because the orders had not been signed by the defendants. Unsigned orders even if produced would have been liable to rejection because such orders could be prepared at any time by anybody. Learned counsel for the appellants next contended that invoice Ex.P-6 has not even been signed by defendant No.2, although the other invoices Ex.P-1 to Ex.P-5 and Ex.P-7 purport to have been signed by defendant No.2, although defendant No.2 had denied the same. Learned counsel for the plaintiff could not advance any meaningful argument regarding claim of the plaintiff on the basis of invoice Ex.P-6 which has not been signed by defendant No.2. There is no satisfactory explanation as to why signatures of defendant No.2 were not obtained on this invoice while his signatures had been obtained on all other invoices. Consequently, finding of the Courts below regarding amount of invoice Ex.P-6 can be said to be perverse and illegal and liable to be set aside. The appellants are entitled to succeed to this extent. Learned counsel for the appellants contended that alleged signatures of defendant No.2 on the remaining invoices are also not proved. This contention cannot be accepted because the plaintiff has led sufficient evidence to prove the same. On the other RSA No.243 of 2006 -4- hand, the defendant in his examination-in-chief did not even specifically state that he had not signed the invoices Ex.P-1 to Ex.P-5 and Ex.P-7. Learned counsel for the appellants contended that defendant No.1 did not even know to affix signatures in English. The contention is devoid of substance because it is not substantiated by any pleading or evidence. Even defendant No.2 himself did not state that he does not know to affix his signature in English. The defendant has also not led any other evidence to depict that invoices Ex.P-1 to Ex.P-5 and Ex.P-7 did not bear his signatures. Defendant No.2 generally stated that the documents produced by plaintiff do not bear his signatures, but did not specifically state that invoices Ex.P-1 to Ex.P-7 do not bear his signatures. However, even if the aforesaid denial of defendant No.2 is taken to be qua these documents as well, even then the said self- serving denial is not sufficient to rebut the plaintiff's cogent evidence. In addition to the aforesaid, it is very significant to notice that defendants were holding sales tax licence for running their business. The said sales tax licence was surrendered in April, 1991 as per pleading and evidence of the defendants. The said licence was in operation when the goods were allegedly supplied by the plaintiff to the defendants. However, the defendants have not produced their account books to depict that no such goods had been supplied to them by the plaintiff. On the other hand, the defendants took the stand that they were not maintaining any account books. This stand is patently false because while holding sales tax licence, the defendants were supposed to maintain account book and to furnish periodical sales tax returns. Infact, defendant No.2 in the RSA No.243 of 2006 -5- witness box admitted that he was registered sales tax dealer and had been filing returns of sales tax till he surrendered his licence. It would depict that defendants were maintaining account books on the basis of which they were furnishing sales tax returns. However, the said account books have been withheld by the defendants by taking false plea that they were not maintaining any account books at all. Consequently, very strong adverse inference arises against the defendants and it can be safely concluded that the account books of the defendants if produced would have shown that the goods in question had been supplied to the defendants by the plaintiff. Learned counsel for the appellants also contended that invoices Ex.P-2 and Ex.P-4 have not even been signed by the person, who allegedly delivered the goods. However, that would not make any difference when the same have been signed by defendant No.2. Learned counsel for the appellants next contended that there is no documentary evidence to depict that the defendants had agreed to pay interest at the rate of 22% per annum as claimed by the plaintiff. However, interest has been allowed at the rate of 15% per annum only by the Courts below. Even in the absence of agreement regarding interest, Courts can allow interest at reasonable rate and rather at prevailing bank rate in case of commercial transaction. The goods were supplied in the year 1990 and rates of interest were very high in those days. The rates of interest fell after 1999 or 2000. Consequently, interest at the rate of 15% per annum as awarded by the Courts below for pre-suit period as well as pendente lite i.e till 23.04.2001, the date of decree of trial Court, RSA No.243 of 2006 -6- cannot be said to be excessive. However, future interest from the date of decree of trial Court till recovery requires some reduction and is accordingly reduced to 12% per annum. Learned counsel for the appellants next contended that it is improbable that the plaintiff had been supplying goods to the defendants without any payment being made by the defendants. This contention has no merit because the goods were supplied in a short span of less than three months only and it appears that since the defendants did not make any payment, the plaintiff did not supply any goods thereafter to the defendants. Learned counsel for the appellants next contended that the defendants could not be saddled with liability merely on the basis of account books of the plaintiff, as postulated by Section 34 of the Evidence Act. Reliance in support of this contention has been placed on two judgments of this Court namely M/s Shashi Addi-Chem Industries versus Punjab National Bank, 1995(2) Civil Court Cases 241 and M/s Hada Steel Products Limited (In Liquidation) versus M/s Emjay Engineering Enterprises, AIR 1995 Punjab and Haryana 327 and also a judgment of Andhra Pradesh High Court namely N. Satyanarayana Raju versus Chekuri Gopalakrishnaraju, 2004(3) RCR (Civil) 332. Although the legal proposition canvassed by learned counsel for the appellants is correct, but the same is not applicable to the instant case. Section 34 of the Evidence Act itself makes it abundantly clear that entries in account books alone shall not be sufficient to charge any person with liability. However, in the instant case, the claim of the plaintiff is not RSA No.243 of 2006 -7- based on its account books alone, but has been substantiated by other evidence including invoices Ex P-1 to Ex.P-7. Consequently, the plaintiff cannot be non-suited on the basis of the aforesaid contention. Both the Courts below have given concurrent finding of fact against the defendants. The said finding is not perverse or illegal so as to warrant interference in second appeal except to the extent indicated hereinabove. For the reasons recorded hereinabove, the instant second appeal is allowed partly and judgments and decrees of the Courts below are modified to the extent that the suit of the plaintiff- respondent shall stand decreed for recovery of Rs.3,38,310.23p less Rs.57,584.96p (the amount of invoice Ex.P-6) i.e. for Rs.280725.27p, along with interest thereon at the rate of 15% per annum since the date of invoices Ex.P-1 to Ex.P-5 and Ex.P-7 till 23.04.2001, the date of decree of the trial Court, and future interest at the rate of 12% per annum on the principal amount with effect from the date of decree of the trial Court till recovery. ( L. N. MITTAL ) JUDGE 05.02.2010 A.Kaundal