-1- IN THE HIGH COURT OF BOMBAY AT GOA FIRST APPEAL NO. 268 OF 2003 1. M/s. Azrencar Tubes, having its office at “Aparna”, Ansabhatta, Mapusa, Goa. 2. Shri, Sandeep Venkatesh Azrencar, residing at “Aparna”, Ansabhatta, Mapusa, Goa. 3. Shri Pradeep Venkatesh Azrencar, residing at “Aparna”, Ansabhatta, Mapusa, Goa. …... Appellants V e r s u s 1. Classic Extrusions Pvt. Ltd., a Company incorporated under the companies Act, 1956, and having its registered office at Kare House, Near Metropole Cinema, Margao, Goa. 2. Shri Ramnath Govind Kare, residing at 67, Abade Faria Road, Margao, Goa. …... Respondents Mr. S. D. Lotlikar, Senior Advocate with Mr. H. Kankonkar, Advocate for the Appellants. Mr. J. E. Coelho Pereira, Senior Advocate with Mr. P. P. Singh and Mr. S. Karpe, Advocate for the Respondents. Coram :- A. S. OKA F. M. REIS, JJ. Judgment Reserved on : 13 th July, 2010. Judgment Pronounced on : 18 th August, 2010. JUDGMENT : (Per F. M. Reis, J.) The above Appeal challenges the Judgment and Decree dated 24th December, 2002, passed by learned Civil Judge, Senior Division, at Mapusa, in -2- Special Civil Suit no. 31/96/B, whereby the suit filed by the Respondents came to be partly decreed. 2. The parties shall be referred in the manner as they appear in the cause title of the impugned Judgment. 3. The Plaintiffs filed the suit on the ground that the Defendant no.1 was facing competition from newcomers in the field of manufacturing Aluminium Collapsible tubes and this was coupled with the steep increase in the price of raw materials such as alluminium slugs, printing and coating inks, etc. The business activity of the Defendant no.1 was greatly affected and as such after mutual discussions, a written Agreement dated 27th February, 1991, was executed with the Defendants for getting the printed collapsible tubes manufactured at the Defendants' work place at Tivim. Pursuant to the said Agreement, it is the case of the Plaintiffs that the Defendants found the working of their establishment uneconomical and, therefore, father of Defendant nos. 2 and 3 late Venkatesh Azrencar proposed to the second Plaintiff to join them so that the second Plaintiff could bring in the finance, required to run the establishment. It is further the case of the Plaintiffs that by a written Agreement dated 1st January, 1992, the second Plaintiff entered into an Agreement with the Defendants for running their establishment. The said Agreement, inter alia, provided that it would continue for a period of six months and that a private limited company would be formed as a prospective partner of the first Defendant. The Plaintiffs further contended that one Mr. John Mendes, agreed to become another shareholder in the private limited -3- company to be formed in accordance with the said Agreement. It is further their case that on the execution of the Agreement dated 1st January, 1992, the second Plaintiffs were put in charge of the Defendants’ establishment at Tivim and necessary powers were given to him to manage the affairs of the establishment under a General Power of Attorney. It is further their contention that the Agreement dated 1st January, 1992, was extended on 1st July, 1992 and thereafter on 1st January, 1993, 1st July, 1993 and 1st January, 1994 for further period of six months. It is further their case that under letter dated 21st March, 1994, the second Plaintiff intimated the Defendants that though the market value of the assets of first Defendant is Rs.37,00,000/-, the Plaintiffs would take over the liabilities worth Rs.63,00,000/- and the remaining liability should be taken over by the second Defendant, third Defendant and their late father Venkatesh who was also a partner at that time. It is further their case that the Defendants did not accept the contention in the said letter but in the last week of June, 1994, the second Defendant refused to abide by the understandings and arrangements arrived at under the Agreement dated 1st January, 1992, and unilaterally and wrongfully put an end to the same from 15th March, 1995. In breach of the said Agreement, the establishments were transferred to a third party in August, 1995. It is further their case, that throughout the period from 1st January, 1992 to 15th March, 1995, the first Defendant was carrying out the business activities on job-work basis and during the aforesaid period, the Plaintiffs made substantial investments of funds to the tune of Rs.21.88,000/- free of interest for the settlement of the creditors of the Defendants, towards payment of arrears of wages of employees of the Defendants and towards payment of provident fund dues and other statutory dues by putting the establishment in the right stead with proper management and thereafter by -4- adopting all measures for up keeping the said establishment as a going concern at all times. As a result thereof, the said establishment of the Defendants became very productive to manufacture alluminium collapsible tubes. It is further their case that the Defendants gained wrongful advantage by transferring the establishment to the third party. The Plaintiffs further stated that all the investments made by them were with the full knowledge of Defendants and have been shown in their balance sheets. In view of the wrongful termination of the Agreement, the Plaintiffs are entitled for refund of amount of Rs.21.88,000/- with interest at the rate of 20% per annum from the institution of the suit till realization. 4. The Defendants filed their written statement disputing the claim of the Plaintiffs. It was denied that the second Plaintiff was put in charge and possession of the first Defendant's establishment at Tivim. It is submitted that though the said Agreement dated 1st January, 1992 was executed and a Power of Attorney was issued, the Defendants, particularly Defendant no.2, were managing the affairs of the establishment. It is further their contention that the duration of the Agreement dated 1st January, 1992, was extended on 1st July, 1992, and the same came to an end on 31st March, 1993, and further there was no more renewal of the said Agreement as falsely alleged by the Plaintiffs. It was denied that the Agreement was in force as on 1st July, 1993 and 1st January, 1994, for a further period of six months. It was further submitted that the liability of Rs.63,00,000/- was inflated liability and such liability was initiated to demoralize the Defendants. It was contended that the relations between parties in terms of said Agreement dated 1st January, 1992, came to an end on 31st March, 1993, and the Defendants restored to their original position and were entitled to deal with their affairs in the manner -5- they like. 5. It was further their case that the liability was increasing day by day on account of the intervention and interference of the plaintiffs. It is further their case that the investment in the form of capital by the plaintiffs was to the tune of Rs.4.75,000/- which reflects clearly in the letter dated 21st March, 1994, addressed by the Plaintiff no. 2 to the Defendant no.1. The Defendants also filed a Counter Claim claiming an amount of Rs.38,23,406.36 with interest at the rate of 20% per annum. 6. After framing the issues and recording of evidence, the learned Civil Judge, Senior Division, at Mapusa, by impugned Judgment and Decree dated 24th December, 2002, partly decreed the suit and the Defendants were ordered to pay to the Plaintiffs a sum of Rs.21.88,000/-, with 9 percent interest from the date of the institution of the suit till realization of the principle amount of Rs.21.88,000/-. The Counter Claim came to be dismissed. 7. Being aggrieved by the said Judgment and Decree, the present Appeal has been filed by the Defendants. 8. Shri S. D.Lotlikar, the learned Senior Counsel appearing for the Defendants, has submitted that the learned Trial Judge has totally misdirected himself in passing the impugned Judgment. He further submitted that the Plaintiffs have failed to establish that the Defendants were liable to pay a sum of Rs.21.88,000/- as decreed by the impugned Judgment. He further took us through -6- the evidence on record and submitted that after 31st March, 1993, there was no renewal of the original Agreement and, as such, the question of claiming that any amount of having been invested by the Plaintiffs during the subsequent period, would not arise at all. He, however, took us through the evidence on record and pointed out that the Plaintiffs have claimed to have invested different amount at different stages in the correspondence addressed to the Defendants. The learned Senior Counsel has further submitted that the Plaintiffs have failed to adduce any evidence about the alleged investments carried out by them during the course of the Management of the establishment of the Defendants and, as such, it cannot be said that the Plaintiffs have established about such investment in the establishment of the Defendants. He further pointed out that there is no evidence adduced as to how said investment have been effected by the Plaintiffs. He highlighted the cross examination whereby a question was put to the Plaintiffs as to which Agreement empowered him to effect the payment of Rs.21.88,000/-, at which he replied that the correspondence between the parties and the Power of Attorney gave him such powers and that the quantification is depicted in the accounts. He further pointed out that no clause of the Agreement entered into between the parties permitted the Plaintiffs to effect any such payment and, as such, there were no contractual obligations between the Plaintiffs and the Defendants which would entitle the Plaintiffs to claim the said amount. He further pointed out that the Defendants were entitled for the claim put forward in the Counter Claim as there was evidence on record to substantiate such payment by the Plaintiffs. He further pointed out that there is no liability on the part of the Defendants to pay any amount which could be manifested from the correspondence entered into between the parties. He took us through the written statement and submitted that the understanding in the -7- Agreement was that 35,000 tubes would be manufactured per day at the cost of Rs.100/- per one thousand tubes and that the remaining tubes would be charged at Rs.120/- per one thousand tubes and that, in good faith, no escalation clause regarding increase in price was mentioned in the Agreement and, consequently, the Defendants were entitled for the said amount claimed. He, accordingly, submitted that the impugned Judgment deserves to be quashed and set aside and the suit of the Plaintiffs deserves to be dismissed and the Counter Claim be allowed. 9. On the other hand, Shri J. E. Coelho Pereira, the learned Senior Counsel appearing for the Plaintiffs has disputed the contentions of the Defendants. He submitted that irrespective of the fact as to whether an Agreement to effect the payments could be curled out from the Agreement between the parties, nevertheless, in view of Section 70 of the Contract Act, the Plaintiffs were entitled to claim the amount from the Defendants in view of the fact that benefits have been accrued to the Defendants in view of the payments effected by the Plaintiffs. He further submitted that there was unjust enrichment on the part of the Defendants in view of the payments effected by the Plaintiffs which the Defendants are liable to refund irrespective as to whether there was privity of contract or not. He further submitted that the payments were affected by the Plaintiff no.1 wherein the Plaintiff no.2 had a major stack and, as such, the Plaintiffs are entitled to recover the said amount claimed. He further pointed out that the Statement of Accounts maintained by the Defendants itself confirmed that the said amount was paid by the Plaintiffs which itself was sufficient for the Trial Court to come to the conclusion that the Defendants are liable to pay the said amount. He relied upon the Judgment of this -8- Court reported in AIR 1991 Bombay 44 in the case of R. Sureshchandra & Co. vs. M/s. Vadnere Chemicals Works & Ors. He further took us through the evidence of the Defendants and pointed out that he had admitted about the existence of the account books wherein the liability of the Plaintiffs was disclosed. He also relied upon the Judgment reported in AIR 1953 S.C. 225 in the case of Hiralal vs. Badkulal. 10. Having heard the learned Counsel and on perusal of the record, the following points arise for determination in the present Appeal : POINT FOR DETERMINATION (1) Whether the learned Trial Judge was justified to partly decree the suit and direct payment of a sum of Rs.21.88,000/- by the Defendants ? (2) Whether the Trial Judge was justified to dismiss the Counter Claim ? 11. Dealing with the first point for determination, we find that the learned Judge, on the basis of the Statement of Accounts of the Defendants, relied upon by the Plaintiffs, has come to the conclusion that as per the said Statement of Accounts, the Defendants admitted that a sum of Rs.16,87,127.93 was payable as on 31st March, 1994. The learned Judge further held that besides the said amount, the Defendants had admitted about the receipt of the sum of Rs.4,75,000/- and, consequently, decreed the suit for a sum of Rs.21,88,000/-. Dealing with the first -9- submission of the learned Senior counsel appearing for the Defendants to the effect that there is no privity of contract between the parties to effect the said payments pursuant to the Agreement executed between the parties, we find that the learned Senior Counsel appearing for the Plaintiffs is justified in relying upon Section 70 of the Contract Act. Section 70 of the Contract Act provides that where a person lawfully does anything for another person or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, latter is bound to make compensation to the former in respect of or to restore the thing so done or delivered. The Plaintiffs in their Plaint at para 13 have pleaded that through the period from 1st January, 1992 to 15th March, 1993, the first Defendant was carrying on the business activity on job work basis for the first Plaintiff on the terms and conditions which they agreed. It is further their case that during the aforesaid period, the Plaintiffs had made substantial investments of funds to the tune of Rs.21,88,000/- free of interest for the settlement of the creditors of the Defendants, towards payment of arrears of wages of employees of Defendants and towards payment of provident fund dues and other statutory claims at the Defendants' establishment at Tivim by putting the establishment in a right stead by proper management in the first instance and thereafter by adopting all measures for up keeping the said management. Dealing with the said contention at Para 13, the Defendants in their written statement contended that during the said period, the Plaintiffs did not contribute any amount towards payment of the liability of the Defendant no.1 and that the same was increasing day by day due to intervention and interference of the Plaintiffs. There was a denial that the Plaintiffs had effected the payment of Rs.21,88,000/- towards the settlement of the creditors of the Defendants towards payment of arrears of wages of the employees and that -10- the payments towards the provident fund and their statutory dues were effected by the Plaintiffs in respect of the establishment of the Defendants but it was their contention in the written statement that the total investment of the Plaintiffs was Rs.4,75,000/-, which is reflected in the correspondence. Thus, it can be seen that though the amount is disputed by the Defendants, the fact that amounts were paid on the respective heads by the Plaintiffs were not specifically denied. On perusal of the accounts maintained by the Defendants, we find that in exhibit P.w/1/G collectively, in the profit and loss account for year ending 31st March, 1993, the Plaintiff no.1 is shown as one of the sundry creditor in Schedule 'A' wherein an amount of Rs.10,58,000/- was shown payable. However, the said document is not signed by any Defendant. In the profit and loss account for the year ending on 31st March, 1994, the Plaintiff is shown as sundry creditor in Schedule 'A' wherein a sum of Rs.16,87,127.93 was stated to be payable. The said document was exhibited by Pw.1 in his evidence as Pw.1/G without any objection raised by the Defendants. The said statement of account is signed by Defendant no.2. The existence of the said document was also pleaded by the Plaintiffs in the plaint at para 13, wherein they had stated that the Defendants have shown in their balance sheets and profit and loss accounts till 1993-94 that the amounts were invested by the Plaintiffs. In the written statement, there was a plain denial. The said Statement of Accounts have not been disputed by the Defendants in their written statement nor have they been challenged in the written statement. The Defendants have also not pleaded any other circumstances as to how the said figure was figuring in their Statement of Accounts. In fact, in the examination in chief of Dw.1, no explanation is forthcoming to the effect that the figures disclosed in the said Statement of Accounts were not correct. As the Defendants have not disputed the -11- correctness and the existence of the said Statement of Accounts, we find that the Plaintiffs have established that the Defendants were liable to pay the sum of Rs.16,87.127.93 as disclosed in the said Statement of Accounts. The learned Trial Judge was as such justified in coming to the conclusion that on the basis of the said Statement of Accounts as on 31st March, 1994, the Defendants were liable to pay to the Plaintiffs the said sum of Rs.16,87.127.93. The learned Senior Counsel appearing for the Plaintiffs was as such justified in relying upon the Judgment of R. Sureshchandra & Co. (supra). The Statement of Accounts of the Defendants have not been disputed nor that the same was signed by Defendant no.2. As such, the Plaintiffs were entitled for the said sum as shown in the Statement of Accounts of the Defendants. With regard to the remaining claim of the Plaintiffs, we find that the Plaintiffs have failed to establish about such liability as being shown in the said Statement of Accounts. The Statement of Accounts for the year 1995 of the Defendants demonstrates that an amount was payable by the Plaintiffs. The Plaintiffs were seeking to rely on their ledger sheets to establish their claim for the balance amount. The said ledger sheets have not been proved by the Plaintiffs. The person who has prepared the said ledgers, have not been examined by the Plaintiffs. 12. Section 34 of the Indian Evidence Act provides that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter into which a Court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability. The said Statement of Accounts of the Plaintiffs, which are at exhibit Pw.1/M, have not been duly proved as the person who has prepared the said statements have not been -12- examined by the Plaintiffs. No reliance can be placed on the said statement of accounts and the bills produced by the Plaintiffs as they have not been duly proved. Once the said documents were disputed by the Defendants, it was incumbent upon the Plaintiffs to prove the said documents in accordance with the Evidence Act. But, however, correctness of the Statement of Account of the Defendants have not been disputed by the Defendants and, as such, the learned Trial Judge was justified in coming to the conclusion that on the basis of the said Statement of Accounts, the Plaintiffs were entitled to recover a sum of Rs.16,87,127.93. With regard to the findings of the learned Trial Judge that the Defendants had admitted about the receipt of Rs.4,75,000/-, we find that there is no evidence on record to substantiate that the said amount of Rs.4,75,000/- was in addition to the liability as disclosed in the Statement of Accounts. Once the Plaintiffs have relied upon the Statement of Accounts of the Defendants which disclose that the Plaintiffs are entitled for a sum of Rs.16,87,127.93, the learned Trial Judge was not justified to hold that a further sum of Rs.4,75,000/- is recoverable in view of the expenditure incurred during the course of running the establishment of the Defendants by the Plaintiffs. This contention was not even part of the pleadings and the learned Judge was not justified in drawing such inferences on the basis of the correspondence. The claim in the Plaint for the further expenditure was on the basis of their own Statement of Accounts and the bills which were not duly proved by the Plaintiffs. To that extent, the Plaintiffs have failed to establish that besides the sum of Rs.16,87,127.93, the Plaintiffs are entitled to a further sum of Rs.4,75,000/- as sought to be claimed in the present suit. We, accordingly, hold that the Plaintiffs are entitled to a sum of Rs.16,87,127.93. The Plaintiffs are not entitled for the remaining amount as claimed for in the suit. The first point for -13- determination is answered accordingly. 13. With regard to the second point for determination, the learned Trial Judge whilst discussing the said matter and relying on the Judgments of this Court, has held that the documentary evidence sought to be adduced in support of the Counter Claim, were an afterthought on the part of the Defendants. The learned Judge further held that the Statement of Accounts produced by the Defendants do not demonstrate that any such amount was payable by the Plaintiffs. Considering that the Plaintiffs were disputing the recovery of said amount by the Defendants, the burden to establish that any such amount was payable was on the part of the Defendants. The Defendants failed to produce any evidence to substantiate their claim in the Counter Claim. The learned Senior Counsel for the Defendants was unable to show any evidence on record to substantiate his claim in the Counter Claim. The learned Trial Judge was as such justified in refusing the Counter Claim. The second point for determination is answered accordingly. 14. In view of the above, we pass the following : ORDER (i) The Appeal is partly allowed. (ii) The impugned Judgment and Decree dated 24th December, 2002 is modified and the Defendants are ordered and decreed to pay a sum of Rs.16,87,127.93 with further interest thereon at the rate of 9 percent per annum from the date of the institution of the suit upto actual payment. -14- 15. The Appeal stands disposed of accordingly with no Orders as to costs. Decree be drawn accordingly. A. S. OKA, J. F. M. REIS, J. arp/*