Case: R. Ramachandran Ayyar Vs. Ramalingam Chettiar

2. It appears that there was a partnership between appellant No. 1 Ramachandra Iyer, his father-in-law V. Kuppuswami Ayyar who was the father of appellant No. 2 Vanchinatha Ayyar, Rama Ayyar and Lakshmanan Chettiar. This partnership worked two mills in Kasba Chidambaram. Lakshmanan Chettiar is the father of respondent No. 1, the plaintiff, and respondent No. 2, defendant No. 3. After the death of V. V. Kuppuswami Ayyar the second appellant took his place in the partnership. Rama Ayyar retired from the partnership in September, 1936. Lakshmanan Chettiar died on the 10th June, 1936, so that after the retirement of Rama Ayyar the partnership continued to be managed by the two appellants as partners. On the 26th September, 1938, defendant No. 3 executed a release deed in favour of the two appellants. Under this document, Rs.9,165 were agreed to be paid by the appellants in lieu of the amount due to the share of Lakshmanan Chettiar. Out of this amount, Rs. 8,165 were paid to respondent No. 2 on the date when the document was executed and Rs. 1,000 were kept with the appellants in order to be paid to respondent No. 1 who is the present plaintiff, on his attaining majority. Respondent No. 2 had attained majority on August 12, 1938, whereas respondent No. 1 attained majority on January 17, 1947. It appears that on June 30, 1944, the balance of Rs. 1,000 which was kept with the appellants to be paid to respondent No. 1 on his attaining majority, was paid by them to respondent No. 2 on his furnishing security. After respondent No. 1 attained majority, he gave notice to the appellants calling upon them to satisfy him about the correctness and bona fide character of the transaction of settlement reached between them and his brother, respondent No. 2, and in that connection, he demanded an inspection of the relevant books of account. The appellants turned down his request for the inspection of the account-books and so, on January 9, 1950, i.e., within three years after his attaining majority, respondent No. 1 filed the present suit.3. In his suit, respondent No. 1 alleged that at the time when his elder brother, respondent No. 2, executed a release deed in favour of the appellants, he (respondent No. 2) had just attained majority and at the time of the said transaction, he had no independent advice and was literally imposed upon. "The plaint further alleged that the said release deed was executed for a wholly inadequate consideration, without full knowledge by the second respondent of the real facts of the situation and only as a provisional arrangement. According to respondent No.1, the arrangement was no more than tentative and it was not binding against him. It is mainly on these allegations that he alleged that the release deed could not have "validly bartered away his share in the profits due to his deceased father as a partner of the firm" and he claimed a declaration that the said release deed was not binding on him; that he was entitled to have an account rendered by the appellants in regard to the profits and assets of the partnership as on June 10, 1936, the date on which his father died, and that the share allotted to his father should be ascertained and the appellants directed to Pay him 1/2 of the same. In the plaint, respondent No. 1 also claimed that he was entitled to recover a share of the profits of the two mills up to the date of the suit, proportionate to the sum found due to him.4. The material allegations made by respondent No. 1 in his plaint in regard to the settlement deed were disputed by the appellants by their written statement. They urged that the said settlement had been arrived at between respondent No. 2 and themselves as a result of the intervention of respectable people two of whom were closely related to the family of respondents 1 and 2. Their uncle, Canthanam Chettiar, and Chokka Chettiar; who is the son of the sister of their fathers mother, took active part in the settlement of the dispute and these two gentlemen consulted Sama Ayyar, a respectable merchant of the place in whom all the parties had full confidence, and it was virtually as a result of the advice tended by Sama Ayyar that the terms of the release deed were settled. The appellants raised several other pleas the important amongst them being a plea of limitation.5. On these pleadings, the learned trial Judge framed seven substantive issues. The first issue was whether the document of the 26th September, 1958, executed by the second respondent was a release, or an alienation, or a discharge? The second issue was in regard to limitation and the third issue was whether as an alienation, the said document would bind respondent No.1? By issue No. 4, the question raised was whether respondent No. 1 was entitled to question the release deed ? All the issues thus framed were answered by the trail Judge in favour of respondent No. 1, and against the appellants. In the result, the suit filed by respondent No. 1 was decreed and a Commissioner was appointed to take accounts.6. It appears that the learned trial Judge held that at the time when the release deed was executed, the appellants had suppressed material books from respondent No. 2 and his advisers, and the trial Court was indignant at the conduct of the appellants in not producing the said books even at the trial. It then proceeded to examine the evidence adduced before it by the respective parties and came to the conclusion that the release deed "was brought about under fraudulent and mistaken circumstances without looking into all relevant accounts; that it was not effected for the benefit of the family and hence, it was not binding on the plaintiff." It would be noticed that the principal dispute between the parties at the trial was whether the two mills which were operated by the partnership formed part of the assets of the partnership itself, or whether they belonged to the appellants alone. The trial Court has expressly stated that it did not propose to make any finding on that issue; but, curiously enough, it has left the decision of that question to the Commissioner whom it appointed to take accounts.7. Against this decree, the appellants preferred an appeal in the District Court at South Arcot. The lower appellate Court examined the relevant evidence surrounding the execution of the release deed and took into account the admissions made by respondent No. 2. It held that all the circumstances proved in the case show beyond doubt that the settlement was not done in a hurry or haste and that there was no intention on the part of the appellants to defraud respondent No. 2 and his brother. The learned Judge also held, in the alternative, that the suit filed by respondent No. 1 would be barred by limitation. In his opinion, S. 7 of the Limitation Act was a bar to the maintainability of the suit. We have already noticed that the lower appellate Court has made a definite finding that the discharge given by respondent No. 2 was binding on respondent No. 1. The result of these findings was that the decree passed by the trial Court was set aside and respondent No. 1s suit was ordered to be dismissed. It appears that in the appellate Court, respondent No. 1 filed certain cross-objections and had also made an application for the amendment of the plaint. Both these applications were dismissed.8. The dismissal of his suit took respondent No. 1 to the High Court in second appeal and the High Court has allowed the appeal, because it was disposed to accept the finding of the trial Court that the impugned transaction was not binding against respondent No. 1. It appears that the learned Judge who heard the second appeal was taken through the evidence and though he has not recorded his findings on the evidence as such, he has indicated his concurrence with the conclusions of the trial Court. He has referred to the dispute about the two mills and to the fact that Sama Ayyar had not been examined. He thought the uncle of the respondents was a respectable witness and that there was no reason to disbelieve his evidence and he held that accounts had not been examined at the time when the impugned settlement was reached. It is on these broad grounds that he allowed the appeal and restored the decree passed by the trial Court, on the question of limitation, the learned Judge held that S. 7 of the Limitation Act was not a bar to the suit, because by his present action respondent No. I was not in terms asking for accounts as such, but he was claiming a declaration that the document executed by respondent No. 2 was not binding on him. It is this decree which is challenged before us by Mr. Viswanath Sastri on behalf of the appellants in the present appeal.

Court's reasoning:
12. It is necessary to remember that S. 100(1)(c) refers to a substantial error or defect in the procedure. The defect or error must be substantial -- that is one fact to remember; and the substantial error or defect should be such as may possibly have produced error or defect in the decision of the case upon the merits - that is another fact to be borne in mind. The error or defect in the procedure to which the clause refers is, as the clause clearly and unambiguously indicates, an error or defect connected with, or relating to, the procedure; it is not an error or defect in the appreciation of evidence adduced by the parties on the merits. That is why, even if the appreciation of evidence made by the lower appellate Court is patently erroneous and the finding of fact recorded in consequence is grossly erroneous, that cannot be said to introduce a substantial error or defect in the procedure. On the other hand, if in dealing with a question of fact, the lower appellate Court has placed the onus on a wrong party and its finding of fact is the result, substantially, of this wrong approach, that may be regarded as a defect in procedure; if in dealing with questions of fact, the lower appellate Court discards evidence on the ground that it is inadmissible and the High Court is satisfied that the evidence was admissible, that may introduce an error or defect in procedure. if the lower appellate Court fails to consider an issue which had been tried and found upon by the trial Court and proceeds to reverse the trial Courts decision without the consideration of such an issue, that may be regarded as an error or defect in procedure; if the lower appellate Court allows a new point of fact to be raised for the first time before it, or permits a party to adopt a new plea of fact, or makes out a new case for a party, that may in some cases, be said to amount to a defect or error in procedure. But the High Court cannot interfere with the conclusions of fact recorded by the lower appellate Court, however erroneous the said conclusions may appear to be to the High Court, because, as the Privy Council has observed, however gross or inexcusable the error may seem to be, there is no jurisdiction under S. 100 to correct thatis true that in dealing with this point, Sir Richard Couch has observed that "When the judgments come to be looked at, it appears that he (the first appellate Court) has reversed the decree of the first Court in the absence of any evidence -- certainly in the absence of any evidence upon which he might reasonably come to the conclusion that the deed of compromise was not for the benefit of the adopted son." With respect, we may point out that this observation should not be literally construed to mean that wherever the High Court thinks that the evidence accepted by the lower appellate Court could not have been reasonably accepted, the High Court would be justified in interfering with the decision of the lower appellate Court. All that the said observation means is that it should be a case where the evidence, which is accepted by the lower appellate Court, no reasonable person could have accepted and that really amounts to saying that there is no evidence at all. It is in this sense that the said observation should be construed and then it would be consistent with the Privy Councils decision in the case of Mst. Durga Choudhrain, 17 Ind App 122 (PC). Therefore, we are inclined to treat this decision as supporting the proposition that the High Court can interfere with the conclusion of fact recorded by the lower appellate Court if the said conclusion is not supported by anyobservations, no doubt, support Mr. Chatterjee in contending that the High Court was justified in reversing the finding of fact recorded by the lower appellate Court in this case. In our opinion, however, the broad observations made in the judgment do not correctly represent the true legal position about the limits of the High Courts jurisdiction in dealing with second appeals under S. 100. This decision shows that the learned Judge thought that the lower appellate Court was bound not to go against the opinion of the trial Judge who had an opportunity of having the witnesses before him, in deciding upon the credibility of the oral evidence; and he has added that unless good reasons are given, any interference with the conclusion of the trial Judge on matters of this kind must be deemed to be erroneous in Law. It is plain that this statement of the law is inconsistent with the provisions of S. 100.We must, therefore, hold that Mr. Chatterjee is not right in contending that because the judgment of the lower appellate Court was not as elaborate as that of the trial Judge, or because some of the reasons given by the trial Judge had not been expressly reversed by the lower appellate Court, the High Court was entitled to interfere with the conclusions of the lower appellate Court. The question which arose for the decision of the Courts of fact, was a simple question of fact -- Was the release deed executed by respondent No. 2 in favour of the appellants justified by adequate consideration? Had respondent No. 2 independent advice at the time when he signed the said document? Did he act bona fide, or was he imposed upon? - these were the points that arose between he parties on their pleadings. It would be noticed that these points present pure questions of fact and their decision depended in the present case on appreciating the oral evidence adduced in support of the rival contentions, documents produced by the parties, their conduct and surrounding circumstances.In other words what the Courts of fact were called upon to consider and decide were questions of fact in the light of all relevant evidence. That being so, we do not think the High Court was justified in interfering with the finding of fact recorded by the lower appellate Court in favour of the appellants.18. On this view of the matter, it would not be necessary to consider the further question as to whether the suit filed by respondent No. 1 was withinwould, therefore, very briefly indicate our conclusion on this point. We have already noticed that the deed of settlement was executed by respondent No. 2 with the advice of his uncle and another relative and Sama Ayyar, a respectable merchant of the locality, played an important part in the proceedings that led to the execution of the document. As was to be expected, respondent No. 2 who has signed the document has supported respondent. No.1s case and so has the uncle of the two respondents. But the evidence given by them clearly proves that the conduct of the appellants was not all unfair or dishonest. Sama Ayyar considered the matter and advised the uncle of the respondents. Respondent No. 2 was told to consult his mother who was looking after the family affairs. The mother was consulted and she agreed. In fact, it appears that there were certain amounts credited with the firm which were Anamat and Sama Ayyar told the parties that it was because the appellants were fair that they disclosed these amounts and were prepared to pay them to the respondents, and after taking into account the said amounts, Rs. 9, 165 and odd were agreed to be paid, and in fact the whole of it has been paid.20. In the document it is expressly stated that the two mills belonged to the appellants. The recital is made in the very fore-front of the document and yet the document has been signed by respondents. No. 2 and has been attested by his uncle and another witness. The trial Court has left this issue open, and had ordered that the Commissioner should try it. On the material as it stands, there does not appear to be any justification for the argument that the mills in fact belonged to the partnership, and it is extremely unlikely that if the mills bad belonged to the partnership, Sama Ayyar would not have known about, it and accounts of profitss of both the mills would not have been taken before the release deed was signed. The trial Court was impressed by the fact that all the account-books were not produced for the inspection of respondent No. 2 or his uncle at the time when the release deed was executed, and it has added that the books were not produced even at the trial. Why and under what circumstances the appellants refused to produce the books at the trial, it is unnecessary to enquire; but the assumption that the appellants suppressed the books from respondent No. 2 and his uncle at the time of the negotiations in 1938 seems to us to be contrary to the clear admissions made by the uncle of the respondents. Purushotham Chettiar, the uncle, is a man of substance. He is worth about Rs. 3 lakhs. He owns a number of houses and lands. He was a Municipal Councillor and an Honorary Magistrate. He was naturally interested in his nephews and so, he must have done all that was necessary to be done before he asked respondent No. 2 to sign the release deed. It is easy for him and respondent No. 2 to come forward now and make some vague allegations against the appellants in supporting the case set up by respondent No. 1. But even he clearly admitted that appellant No. 1 showed him the ledger in which the amounts due to the deceased father of the respondents were disclosed and said that the mills belonged to them and that he would give a letter if the witness wanted to see the books of account. It appears that the mills were worked at Chidambaram but the accounts were at Nannilam, and the specific and clear admission made by Purushotham Chettiar is that appellant No. 1 was prepared to give a letter to enable the witness to see all the accounts, and so, he has admitted that he had no suspicions against appellant No. 1 at that time. He, however, did not go to Nannilam or Kumbakonam to look into the account books. In other words these admissions clearly show that the appellants were prepared to allow respondent No. 2 and his uncle to inspect all the books of account, but they did not care to do so, and that is because Sama Ayyar was a trusted person and his decision was accepted by all the parties. Therefore, the main reason on which the trial Court based its conclusion and which presumably appeared to the High Court to be sound is patently inconsistent with the admissions made by the uncle of respondents 1 and 2.21. There is another point to which the High Court has referred and which apparently weighed even with the trial Court and that is that Sama Ayyar had not been examined. We were told that Sama Ayyar had been cited by respondent No. 1 and was not examined by him. But apart from this aspect of the matter, if respondent No. 1 challenged the validity and the binding character of the release deed executed by respondent No. 2, the onus was on him to prove his case and sustain the material allegation in support of it; and so, it inevitably follows that since Sama Ayyar was allive, it was for respondent No. 1 to cite him. That being so, the failure to examine Sama Ayyar can be legitimately treated as a ground against respondent No. 1 and cannot be treated as a ground against the appellants, and yet, that is precisely what the High Court appears to have done. It would thus be clear that the important question of fact on which the parties are at issue, was decided by the trial Court in favour of respondent No. 1 and by the lower appellate Court in favour of the appellants. As we have already indicated, the broad features of the evidence support the conclusion of the lower appellate Court and so, Mr. Chatterjee is not at all justified in contending that the finding of the lower appellate Court is perverse or is not supported by any evidence.