Majeti Ramachandrayya vs Mamidi Buchayya

Venkatasubba Rao, J.—The question raised is as regards the right to discovery and inspection. The plaintiff is the commission agent of the

defendant and sues him on a promissory note said to have been executed in pursuance of a settlement of account. The dealings consisted in the

defendant sending the plaintiff timber for sale on commission and monies being advanced by the plaintiff to the defendant. The defendant pleads

that the plaintiff, while professing to sell the timber to third parties, sold it on various occasions to himself and that owing to such and other acts of

fraud on his part, he, the defendant, is not bound by the settlement. On a previous application by the defendant, inspection was ordered of the

plaintiff''s ledger and fair day-books. The discovery now sought relates to certain other books such as the plaintiff''s rough day-books and shop-

books. The question is whether the defendant''s request should be granted.

There are at least three English cases bearing directly on this point. In each of them there was a settled account an3 the question was raised by

the principal as against his agent. In Whyte v. Ahrens (1884) 26 Ch. Dn. 717 Bacon V.C. points out that the right to discovery arises from the

relation of principal and agent and that the settled account is no answer to that right. From his order for production of accounts the defendants

appealed. Cotton, L.J. observes that according to the old practice in the Court of Chancery, production would have been ordered even in the

absence of specific charges of fraud. Then comes the question, has the law been altered? Referring to Order 31, Rule 20 of the Rules of the

Supreme Court (corresponding to Order 11, Rule 20 of the Civil Procedure Code) which says that if the right to the discovery sought depends on

the determination of any issue, the Court may order that such issue be determined first and reserve to a later stage the question as to the discovery,

the learned Lord Justice goes on to observe, ""Is there a plea that should be settled first which bars the discovery?"" For determining the very issue

of the settled account, the production of the documents is essential and therefore that rule does not operate as a bar. There were two applications

in that case, one by the agent for particulars and the other by the principal for discovery; the former application was ordered to stand over till the

production of the books.

In Leitch v. Abbott (1886) 31 Ch. D. 374 Bewen, L.J. explains, as did Bacon,. V.C. in the previous case, that the plaintiff''s right to discovery

arises not out of fraud but out of the relation of principal and agent. He further points out that the very fact that the principal is unable to plead

except in general terms, is in many cases the most cogent reason why he should have discovery from the other party.'' Referring to Order 31, Rule

20, he observes that the discovery is wanted for the determination of the very issue relating to the settled account.

In Sachs v. Speilman (1887) 37 Ch. Dn. 295 the statement of claim in an action by the principal against his stock-brokers to open settled

accounts, alleged fraud but the plaintiff was unable to give particulars before discovery. On an application by the defendants for particulars, North,

J., observes that the particulars in question are all in the knowledge of the defendants and the plaintiff must have the opportunity of knowing what

the facts are, in order to enable him to furnish particulars if necessary.

In Millar v. Harper (1888) 38 Ch. Dn. 110 the same rule was applied, although the action was not between a principal and his agent. The

question generally arises in this form, namely, whether particulars should precede discovery or discovery should precede particulars. In Waynes

Merthyr Co. v. D. Radford & Co. (1896) 1 Ch. Dn. 29 it was contended that except in cases where a fiduciary relationship exists, particulars

always precede discovery. This contention was repelled by Chitty, J., who held that although generally in actions where fraud is alleged against an

agent, discovery precedes particulars, that procedure is not confined to cases of fiduciary relationship alone but is adopted wherever one party has

means of knowledge not equally accessible to the other party.

If two conditions are satisfied, discovery may precede particulars first where the information required is necessarily within the opponent''s

knowledge; secondly the Court is satisfied that no unfair attempt to fish out a case is being made. When these conditions are satisfied, discovery

may precede particulars even where the object of the action is to re-open settled accounts. Daniel''s Chancery Practice (1914) 8th Edn. Vol. I,

pp. 329 and 569.

In Ramakrishniah v. Satyanandam I.L.R.(1931) 5 Mad. 704 : 6 M.L.J. 226 Curgenven, J., after citing some of the cases above referred to,

ordered discovery in circumstances such as exist in the present case.

For the plaintiff it is urged that the defendant should not under the pretence of inspection be allowed to rove through his books. The lower Court

will, I have no doubt, impose sufficient safeguards to ensure that the defendant does not abuse the right.

I understand that there is a similar application since filed by the defendant, now pending before the lower Court. In view of the Order I have

here made, the defendant''s Counsel undertakes not to press that application.

I need hardly add that the plaintiff will be entitled on his application to particulars, provided he makes it after the defendant has had a

reasonable opportunity to inspect; but that is a matter which must be left to the lower Court.

In the result, the lower Court''s order is set aside and the Civil Revision Petition is allowed but in the circumstances without costs.