AI Structured Summary
Not yet generated for this judgment
Judgment
V.D. Gyani, J.—These two appeals arise out of judgment dated 4.4.88 and decree dated 25.5.88 passed by the Assistant District Judge No. 1, Guwahati in Money Suit No. 27/82 and Money Suit No. 11/82 thereby declaring the suit with cost and interest in favour of the Plaintiff Respondent.
Aggrieved by the said judgment the Appellants Uttar Pradesh Sugar Corporation Ltd., for short "Sugar Corporation" in both these appeals preferred these appeals which were disposed of by a Division Bench, vide judgment dated 26.6.96 allowing both the appeals and setting aside the judgment and decree passed in Money Suit Nos. 11/82 and 27/82.
Aggrieved by the same, the Plaintiff Respondent preferred Civil Appeal Nos. 3057 and 3058/97 and the Hon''ble Supreme Court by order dated 25th April/97 set aside the judgment and order dated 26th June/96 as passed by this Court in these appeals and remanded the matter with the direction to dispose of the same in accordance with law, preferably within a period of 3 months. Since a very vital question had been raised by the learned Counsel for the Appellant sugar Corporation as regards the maintainability of the suit we are reproducing the order passed by the Hon''ble Supreme Court:
The Appellant filed two separate suits against the Respondent in the Court of the Assistant District Judge, Guwahati, for recovery of certain sums of money. One of the common grounds on which the Respondents Defendant the suits was that the Appellant being not a registered partnership firm the suits were not maintainable in view of Section 69 of the Partnership Act. The trial Court decided all the issues raised in the suits, including the above one, in favour of the Appellant and passed decrees accordingly. However, in appeals preferred by the Respondents the High Court dismissed the suits by a common judgment solely on the ground that the suits were not maintainable as the Appellant was not a registered partnership firm. The above judgment of the High Court is under challenge in this appeal.
On perusal of the records we are constrained to say that the High Court was not at all justified in recording a finding that the suits were hit by Section 69 of the Partnership Act. Apart from the oral evidence adduced on behalf of the Appellant the original certificate showing registration of the firm was produced before the trial Court and it recorded a categorical finding to that effect. We, therefore, allow these appeals, set aside the impugned judgment of the High Court and direct it to dispose of the appeals filed by the Respondent in accordance with law. Since the suits were filed as far back as in 1982, the High Court is requested to dispose of the appeals as expeditiously as possible - preferably within a period of three months from the communication of this order. There shall be no order as to costs.
Mr. Choudhury, learned Counsel appearing for the Appellants contended that in view of the specific direction for disposal of appeals in accordance with law, as made above by the Apex Court the point that suits were hit by Section 69(2) of the Partnership Act is still open while Mr. Bhati, learned Counsel for the Plaintiff-Respondent argued that the Supreme Court having disposed of the appeals on this very ground, it is no longer open and available to the Defendant Appellants to contend that the suits were not maintainable. To be on the safer side we have allowed the Appellants to argue on the point as indeed Mr. Choudhury has addressed on the point at full length.
Before proceeding any further, it would be better and pertinent to note the basic facts, which are common and similar in nature to both these appeals. Arising out of two suits decreed in favour of the Plaintiff Respondent. The suits were filed for damages on account of breach of contract, non-delivery of goods and refund of advance money with interest. The case of the Plaintiff-Respondent, inter alia, was it is a registered partnership firm carrying on its business in wholesale business of food grains and other essential commodities including sugar. The Plaintiff Respondent had long standing business dealings and relations with Defendant No. 2 Maheswari Khetan Sugar Mills Pvt. Ltd., Ramkola, District Deoria (UP) which used to sell sugar to the Plaintiff Respondent through its agents M/s. Moolchand Rameshwarlal of Kanpur. The Defendant No. 3 Sugar Mill was taken over by the Defendant No. 1 , U.P. State Sugar Corporation by an Ordinance subsequently replaced by Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971, for short "the Act". By virtue of this Act, the sugar mill stood transferred to and vested in the said Corporation w.e.f. 3.7.71. The Respondent No. 2 is a unit of Respondent No. 1, who own and manage the Defendant No. 2 Maheswari Khetan Sugar Mills. It may be noted here that the possession of the aforesaid Maheswari Sugar Mill was delivered to the Collector of Deoria and an official receiver was appointed to look after its day-to-day operation.
It was the Plaintiff''s pleaded case that the Defendant No. 3 Maheswari Khetan Sugar Mills agreed to sell 2400 bags of D-29 Grade sugar to the Plaintiff through its agents M/s. Malchand Rameswarlal ofKanpur@ Rs. 171/- under certain condition that the Plaintiff firm deposited Rs. 15,000/- as advance by bank draft No. 722742 dt. 3.2.79 drawn on Punjab National Bank. Receipt was granted by the Chief Accountant of the Defendant No. 3 on 10.2.79 clearly showing it as advance against cost of sugar alongwith acknowledgement of receipt of Anr. bank draft for Rs. 75,000/-as indeed the Defendant placed indents for 15 (fifteen) railway wagons at Ramkola station on 3.2.79 for despatching sugar to the Plaintiff firm or its nominees as per advice. Five wagons each for Silchar, New Guwahati and New Bongaigaon were indented out of which two wagons were loaded for Silchar and five for New Bongaigaon on 7.2.79. The total quantity of sugar so loaded and despatched was 1129 bags.
That in the meantime the price of sugar increased by Rs. 30/- to Rs. 40/- per quintal and it was Plaintiffs'' pleaded case that the Defendants-Appellants with a view to make unlawful gain committed breach of contract and neglected to deliver the balance of 1280 bags of sugar to the Plaintiff firm and the official receiver on behalf of the Appellants subsequently withdrew the indent for balance wagons. As a result of this deliberate wrongful action of the Defendant Appellant in not delivering sugar to the Plaintiff firm in order to make wrongful gain the Plaintiff firm suffered huge loss. Hence the suits.
The suits were contested by the Defendant-Appellants 1 and 2. It was their pleaded case that the scheduled undertaking earlier belonging to Maheswari Khetan Sugar Mills was actually taken over by the Appellant U.P. Sugar Corporation on 23rd May ''79, as could not be legally fastened with any liability incurred by Maheswari Khetan Sugar Mills prior to the taking over of the scheduled undertaking. The Plaintiffs claim was denounced and denied as bad in law and barred by limitation. The suit itself was not maintainable because the Plaintiff was not a registered firm.
On the basis of pleadings trial Court framed as many as 8 issues and on conclusion of trial, decreed the suits with interest at the rate of 9% per annum. Hence these appeals.
Now coming to the first point as raised by the learned Counsel for the Appellant whether the Plaintiff Respondent was a registered partnership firm and whether the suit as filed was hit by Section 69(2) of the Partnership Act. Placing reliance on the judgment of the Supreme Court as reported in Shreeram Finance Corporation Vs. Yasin Khan and Others, learned Counsel strenuously urged that the suit was liable to be dismissed for want of proof of registration. Section 69(2) reads as follows:
No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
It would not be out of place to quote the specific plea taken by the Defendant Appellant in their written statement. The Plaintiff Respondent in paragraph 1 of the plaint has specifically averred and pleaded that it is a registered partnership firm having its head office and Principal place of business at Murlidhar Sharma Road, Fancy Bazar, Gauhati. The Plaintiff firm carries on whole-sale business of food grains and other essential commodities including sugar. The Defendant Appellants in their written statements have pleaded that "para 1 of the plaint is not concerned to us." The Plaintiffs pleaded case is that it is a registered partnership. The Defendant Appellants have not even controverted the above fact in their written statement in reply to the paragraph 1 of the plaint. However, in paragraph 17 under the heading ''additional pleas'', it is stated that Plaintiff is not a registered partnership firm and allegation, contrary to it are baseless and wrong. Notwithstanding with this denial, it is Appellants own case that the registration certificate of the firm was sown to the Court. P. W. 2, Nauratanmal Kothari who is one of the partners of the Plaintiff Respondent firm has categorically stated that the Plaintiff is a registered partnership firm and the trial Court while recording the deposition has noted it as a fact that the certificate of registration was shown to the Court. The relevant portion of his statement is reproduced below:
I am one of the partners of the Plaintiff firm M/s. Mahalchand Motilal Kothari. The Plaintiff is a registered partnership firm (Certificate of Registration shown to Court). This firm is carrying business in wholesale dealings in essential commodities like sugar, oil, venaspati etc.
Now this witness P.W. 2 who has been cross-examined by the Appellants was not put a single question about the registration of the firm and the certificate shown to the Court. The trial Court on issue No. 2 which relates to the registration of the firm, in view of the evidence as noted above has held:
The Plaintiff avers in para 1 of the plaint that it is a registered partnership firm. This was denied by the Defendant in para 17 of the written statement. P.W. 2 Nauratanmal Kothari, a partner of the Plaintiff firm is a registered firm and produced the certificate of registration to the Court. Accordingly, I accept the contention of the Plaintiff and hold that the Plaintiff is a registered partnership firm. The issue is decided in favour of the Plaintiff.
In face of the evidence available on record where the Defendant Appellant does not even challenge the fact of registration as deposed to by the witness and the registration certificate is actually produced by him. What is wrong with the finding recorded by the trial Court and what else could be the finding in face of this evidence. In M/s. Shreeram Finance (supra) so heavily relied upon by the learned Counsel for the Appellant, it was found as a fact that the persons suing, namely the current partners as on the date of the suit were not shown as partners in the registration of firms. The inevitable result was that the suit was not maintainable in view of Sub-section (2) of Section 69 of the Act. Here one of the partners who entered the witness box and produced the registration certificate was not even put a single question about the current partners who were registered as such on the date of filing of the suit. Thus this case (M/s. Shreeram Finance) has no application to the facts of the case at hand. There can be no quarrel with the principle laid down by the Supreme Court in Seth Loonkaran Sethiya and Others Vs. Mr. Ivan E. John and Others, , no doubt Section 69 is mandatory in character. A partner of an unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69, In the instant case it has been proved as a fact, both by oral as well as documentary evidence that the Plaintiff firm is a registered partnership firm.
Although Mr. Bhati, learned Counsel appearing for the Plaintiff-Respondent has argued that the Hon''ble Supreme Court had finally and conclusively decided that the Respondent No. 1 produced the certificate of registration before the trial Court, and the trial Court recorded categorical finding to that effect. He referred to us the following portion of the judgment dated 25.4.1997 as delivered by the Apex Court in Civil Appals No. 23146 and 23147 of 1996:
... On perusal of the record, we are constrained to say that the High Court was not at all justified in recording a finding that the suits were hit by Section 69 of the Partnership Act. Apart from the oral evidence adduced on behalf of the Appellant, the original certificate showing registration of the firm was produced before the trial Court and it recorded a categorical finding to that effect.
As already noted above, we have given full opportunity to the learned Counsel appearing for the Appellant who argued this point at full length and it is for this reason, that we have considered every aspect - the pleadings, the issues, the evidence and the finding recorded by the trial Court and the authority cited in the case i.e. M/s. Shreeram Finance (supra) relied upon by the Appellant. On overall consideration, we have no hesitation in holding that the suit was filed were not hit by Sub-section (2) of Section 69 of the Act and they were maintainable.
Referring to Section 3 which relates to vesting of scheduled undertaking under the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971, for short ''U.P. Act'', learned Counsel appearing for the Appellant placing reliance on a judgment of the Supreme Court as reported in Maharaj Singh Vs. State of Uttar Pradesh and Others, submitted that the scheduled undertaking, namely, M.K. Sugar Mills was taken over by the Corporation on 23.5.79 by virtue of the order passed by the Hon''ble High Court at Allahabad. The Plaintiff-Respondents have in paragraph 2 of the plaint specifically pleaded that Defendant No. 3 Maheswari Khetan Sugar Mills (Pvt.) Limited, Ramkola, District Deoria used to sell sugar to the Plaintiff firm through its various agents and the firm proforma Defendant No. 4 was one of such agents who used to procure orders from the Plaintiff firm on behalf of the Mills (Defendant No. 3). The aforesaid Mill was taken over by Defendant No. 1, by an ordinance which was later on replaced by an Act i.e. by the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971 w.e.f. 3.7.71. The Sugar Mills by virtue of the said Act "stand and be deemed to have stood transferred to and vest and deemed to have vested in the Corporation" w.e.f. 3.7.71. The Corporation as defined by Section 2(c) of the said Act is Uttar Pradesh State Sugar Corporation Ltd. a Govt. Company within the meaning of Section 617 of the Companies Act, 1956. The Defendant No. 2 is a Unit of the aforesaid Corporation and the Mills is under the control of this Unit. The Defendant No. 3 is owned and managed by Defendant No. 1 and 2, to which the Defendant Appellants have simply stated that paragraph 2 of the plaint is not admitted. But in the pleadings, as contained in paragraphs 18 and 19 of the written statement, the Appellants have stated that Maheswari Khetan Sugar Mills was an undertaking which stands vested in the Uttar Pradesh State Sugar Corporation under the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971 and by virtue of the aforesaid Act, Maheswari Khetan Sugar Mills stood and be deemed to have stood transferred and vested in the Corporation free from any debt, mortgage, charge or other encumbrance or lien, trust or similar obligation attaching to the undertaking and that the State Govt. by a notification in the Gazette appointed prescribed authority and the Plaintiff should have to file the suit before the prescribed authority, and it is on the basis of these pleadings and that M/s. M.K. Sugar Mills was taken over by the U.P. State Sugar Corporation on 23.5.79 under the order of the High Court that the liability incurred on vesting of scheduled undertaking, is soughrto be avoided.
Let us now examine the legal position of Section 3 of the U.P. Act reads as follows:
On the appointed day, every scheduled undertaking shall, by virtue of this Act, stand and be deemed to have stood transferred to and vest and be deemed to have vested in the Corporation free from any debt, mortgage, charge or other encumbrance or lien, trust or similar obligation (excepting any lien or other obligation in respect of any advance on the security of any sugar stock or other stock-in-trade) attaching to the undertaking:
Provided that any such debt, mortgage, charge or other encumbrance or lien, trust or similar obligation shall attach to the compensation referred to in Section 7, in accordance with the provisions of that section, in substitution for the undertaking:
provided further that a debt, mortgage, charge or other encumbrance or lien trust or similar obligation created after the scheduled undertaking or any property or asset comprised therein had been attached, or a receiver appointed over it, in any proceedings for realisation of any tax or cess or other dues recoverable as arrears of revenue shall be void as against all claims for dues recoverable as arrears of revenue.
Section 2(h) defines ''scheduled undertaking'' and M/s. Maheswari Khetan Sugar Mills (Pvt.) Limited at S1. No. 4 of the Schedule, is one such scheduled undertaking which vested in the Corporation free from any debt, mortgage, charge or other encumbrances.
The case of Maharaj Singh v. State of U.P., relied upon by the Appellants counsel relates to Uttar Pradesh Zamindari Abolition and Land Reforms Act and deals with question of vesting u/s 4 of the Act and its further vesting in Gaon Sabha u/s 117(1). Section 4 of the U.P. Zamindari Abolition and Land Reforms Act deals with vesting of ''estates'' in the State whereas Section 117 relates to vesting of ''certain lands'' etc. in Gaon Sabha and other local authorities. Now these are two distinct and different stages as observed by the Supreme Court in paragraph 7 of the judgment that Chapter VII relates to Gaon Sabhas vesting by the State of resumed estates in them and the limitations and other conditions to which it is subject.
Now adverting to Section 3 of the U.P. Act as already quoted above, it is specifically provides that on the appointed date every scheduled undertaking shall by virtue of the above Act stand and be deemed to have stood transferred to and vest and be deemed to have vested in the Corporation free from any debt, mortgage, charge or other encumbrance. There is no such vesting of land, first in the State and thereafter its vesting in the Gaon Sabhas as in the U.P. Zamindari Abolition and Land Reforms Act. The appointed day has been defined u/s 2(a) and it is 3rd of July, 1971. Now, the oral evidence could not alter the legal position as regards vesting of scheduled undertaking in the Corporation. Even in Maharaj Singh''s case, the Supreme Court in paragraph 12 has very clearly and categorically held that "the estates first vest in the State. The fulfilment of the purpose of the Act, the setting in which the cornerstone for the statutory edifice is laid and the categorical language used, especially free from all encumbrances, leave no doubt in our minds, nor was it disputed before us, that this initial vesting is absolute and inaugurates the scheme of abolition. The consequences of vesting articulated by Section 6 only underscore this conclusion" and this initial vesting is absolute and the Supreme Court has further explained in paragraph 13 what ensues next, when the State Government, acting u/s 117(1) notifies a further vesting in a Gaon Sabha. Now no such notification is required under the U.P. Act. There is vesting of the scheduled undertaking in the Corporation itself. The analogy of Maharaj Singh (supra) cannot be introduced in the present case in face of clear and plain language of Section 3 of the U.P. Act.
Learned Counsel for the Appellant has referred to us the evidence of D.W. 1, the Law Officer of the Appellants. What is significant to be noted in his evidence is that even this Law Officer has also admitted that the affairs of the Defendant No. 3 (Maheswari Khetan Sugar Mills) were managed and controlled by "our official receiver". Appellants'' counsel, however, wants to use his evidence for the purpose that because of a stay order granted by the Allahabad High Court in a writ petition challenging validity of the aforesaid Act, the scheduled undertaking did not vest in the Corporation. Now this oral evidence cannot be accepted to dislodge the affect and operation of Section 3 of the U.P. Act as already noted above. Appellants want to avoid liability on the ground that this schedule unit was released from attachment by the Collector, Deoria by his order dated 23.5.79 when the attachment was withdrawn and actual possession was taken over by the Appellants.
Delivery of ''actual'' possession of the scheduled undertaking is neither have nor there, Section 3 of the U.P. Act does not contemplate delivery of possession of the scheduled undertaking. The effect of ''vesting'' u/s 3 of the Act is not contingent upon delivery of possession. The ''vesting'' in Corporation (i.e. the Appellant) is absolute on and from the appointed day i.e. 3.7.1971. Even if the evidence of D.W. 1 is accepted on its face value for whatever worth it is, yet it does not and cannot in law, dislodge the effect of and consequences ensuing from ''vesting''. The ingenuous argument of ''actual vesting'' of M.K. Sugar Mills on 23.5.79, apart from legal ''vesting'' on the appointed day 3.7.71 as advanced by the Appellants counsel has no legs to stand and must therefore fail, it is accordingly rejected. It may be noted here that the Appellants who so heavily rely upon High Court''s stay order for delivery of actual possession on 23.5.79 while placing the judgment, Ext.-B dismissing the petitions have not chosen to place the stay order on record which they so heavily rely upon.
Mr. Bhati, learned Counsel appearing for the Plaintiff-Respondent urged and argued and to my mind rightly so that the appointed day under the Act cannot be altered, varied or extended. The legal fiction and the deeming provision created by the Legislation u/s 3 of the U.P. Act as to transfer and vesting of the scheduled undertaking, there can be no manner of doubt that the undertaking in question vested in the corporation on the appointed day i.e. 3rd of July, 1971.
The consequences of vesting are numerated u/s 4 of the U.P. Act. They are on and from the appointed day i.e. 3.7.1971:
Notwithstanding anything contained in any other law for the time being in force, and save as otherwise provided in this Act, on and from the appointed day:
(a) every appointment of Receiver over any scheduled undertaking by any Court shall cease;
(b) every lease or other arrangement whereunder any scheduled undertaking or the management thereof has been transferred to any person shall cease to have effect;
(c) every attachment, injunction or any other order of a Court restricting or restraining the use of any scheduled undertaking or prescribing a scheme of management in respect thereof, howsoever described, shall cease to have effect.
A conjoint reading of Sections 3 and 4 of the U.P. Act establishes in unmistakable terms that from the appointed day the totality of right, title and interest of scheduled undertaking vests in the Corporation. Learned Counsel for the Appellants however tried to avoid the effect and operation of the consequences of vesting as enumerated above, with reference to oral evidence. It was argued that in view of the stay orders passed by the Allahabad High Court, in Writ petition No. 4170/71 possession of Sugar Mills in question could not be taken over till 23.5.1979, therefore, actual vestingtook place on 23.5.79. The Corporation, therefore, is not liable for any liability incurred prior to ''actual vesting'' on 23.5.79. The argument is wholly untenable in law, there is nothing like ''actual vesting'' in the U.P. Act and the effect and operation of Section 4 of the U.P. Act, which enumerates the consequences of vesting, cannot be arrested by oral evidence about Court''s order without producing a copy, let alone certified copy of the order.
Learned Counsel for the Appellants was highly critical of the evidence adduced by the Plaintiff-Respondent. It was urged and stressed by him that the Plaintiff Respondent has miserably failed to prove its case against the Defendant Appellants. Mounting a two pronged attack, on Plaintiff evidence, the first relating to taking over of possession of the undertaking of M.K. Sugar Mills by the Corporation on 23.5.79, which has already been discussed, while dealing with the question of ''vesting'' U/S 3 of the U.P. Act. A part of it has already been discussed and secondly the evidence, relating to the transaction itself- placing of order, depositing advance, and the price of sugar going up by Rs. 30-40 per quintal, and breach of contract by the Defendant Appellants. Before dealing with this evidence, it would be pertinent to note that it was the Appellants case that possession of M.K. Sugar Mills was taken over by the Appellants on 23.5.1979, the burden of proof lay on the Appellants to prove it. Let us see how far they have succeeded in discharging it?
D.W. 1 who is the ''Law Officer'' is the sole witness examined by the Appellants, has deposed:
I am the Law Officer of the Defendant Nos. l and 2. 1 joined as Law Officer of the Defendant No. 1 on 23.5.79. Before that I joined the Maheswari Khetan Sugar Mills as Law Officer. On 6.11.78,1 become an employee of the Defendant No. 1. as my services were transferred to the Defendant No. 1 as per Section 16 of the U.P. Sugar Undertaking (Acquisition) Act, 1971. The aforesaid Act was enacted by the Government of U.P. for taking over certain sugar mill including Defendant No. 3. Under the aforesaid Act the Sugar Mill (Defendant No. 3) ''was to vest'' as a scheduled undertaking, to Defendant No. 1 on 3.7.71. But the scheduled undertaking of Defendant No. 3 could not be taken over by Defendant No. 1 on 3.7.71 as the management of the Defendant No. 3 challenged the validly of the aforesaid Act in the Hon''ble Allahabad High Court and obtained a stay order staying the delivery of possession to the Defendant No. 1.
It is significant to note what the witness a Law Officer testifies "was to vest" as if vesting of the undertaking could be deferred or postponed, the effect and operation of Section 3 of the U.P. Act could be arrested by such oral evidence. This witness in his cross-examination has stated:
the appointed day is 3.7.71. The date of the appointed day was neither extended by the Government of U.P. or by the Hon''ble Allahabad High Court. Under the provisions of the U.P. Sugar Undertaking Acquisition Act, 1971, the delivery of possession to the Collector amounts to delivery of possession to the Corporation the Defendant No. 1. On 8.7.71 the possession of the Defendant No. 3 was with the Collector of Deoria. I have not submitted any copy of the writ petitions filed by the Defendant No. 3 in the Hon''ble Allahabad High Court challenging the validity of the aforesaid Act. I do not know the date on which the writ petition was filed in the Hon''ble Allahabad High Court challenging the validity of the aforesaid Act. I do not know the date on which the writ petition was filed in the Hon''ble Allahabad High Court. I have not filed any copy of the stay order passed by the Hon''ble Allahabad High Court in the aforesaid Writ petition. I do not remember the language and the contents of the stay order.
It is not for explaining the legal position that the above statement is reproduced, since no amount of oral evidence can alter or arrest the effect and operation of Section 3 of the U.P. Act. The statement is reproduced for the reason that the stay order passed by the High Court which is made basis of Appellants case of ''actual vesting'' of the undertaking 23.5.1979 as against the ''appointed day - 3.7.1971, itself is not produced. No amount of oral evidence can be a substitute for the stay order, or for that matter any order passed by the Court.
Coming now to the second line of attack relating to the transaction in question, before I take up the evidence which consists of three witnesses in total (2 for the Plaintiff and one for the Defendant-Appellants) and few documents I would I ike to reproduce the written statement filed by the Defendant Appellants as it would help to appreciate the criticism made by the learned Counsel how far such criticism is justified? In face of the Appellants own pleadings and proof thereof.
WRITTEN STATEMENT ON THE BEHALF OF DEFENDANTS No. 1 & 2.
That para 1 of the plaint is not concerned to us.
That para 2 of the plaint is not admitted.
That para 3 of the plaint is not admitted.
That para 4 of the plaint is not concerned to us.
That para 5 of the plaint is not concerned to us.
That para 6 of the plaint is not concerned to us.
That para 7 of the plaint is not concerned to us.
That para 8 of the plaint is not admitted.
That para 9 of the plaint is not admitted.
That para 10 of the plaint is not admitted.
That para 11 of the plaint is not admitted.
That para 12 of the plaint is not admitted.
That para 13 of the plaint is not admitted.
That para 14 of the plaint is not admitted nor any relief is admitted.
It is in face of the above pleadings that the pavement criticism made by the Appellant''s counsel is to be seen, a bare reading of Rules 3, 4 and 5 of Order 8, CPC would reveal the inherent infirmity in the pleadings of a party like the Appellant, who has a law Officer in its employment. The matter does not rest here. There is Order 6 Rule 8 Code of Civil Procedure, which relates to denial of a contract. The Defendants Appellants in their special additional pleas have pleaded want of cause of action suit being under valued and insufficiency of Court fee paid. There pleas are not pressed nor is there any substance therein.
The other plea relates to want of registration of the firm which has already been dealt with above. So far as contract the transaction in question is concerned have pleaded:
That before 23.5.79 U.P. State Sugar Corporation is not liable for any liability as per provision of the U.P. Sugar Undertaking (Acq.) Act, 1971.
With the above pleadings howsoever liberally construed, it is denial of liability, under provisions of U.P. Act which has already been discussed above. There is no denial of contract as such, what the Appellant contended, is:
That the scheduled undertaking earlier belonging to Maheswari Khetan Sugar Mills "Pvt. Ltd., Ramkola (Deoria) has been taken over by the U.P. State Sugar Corporation Limited, by virtue of the order of the Hon''ble High Court at Allahabad on 23.5.79.
It is their pleaded case. It is solely with the purpose and object to deny the liability that a novel theory of ''actual vesting'' not contemplated by the U.P. Act is propounded, which as already held above has no legs to stand.
sargued that the transaction being prior to the date of actual vesting'' 23.5.79, the Appellant Corporation is not liable. It is all through denial of liability and not the contract as such.
The Supreme Court in Union of India (UOI) Vs. Surjit Singh Atwal, has clearly pointed out what Order 6 Rule 8 CPC provides is that where a contract is alleged in any pleading, a bare denial of the same by the opposite party shall be construed as denial in fact of express contract alleged or of the matters of fact from which the same may be implied and not as a denial of the legality or sufficiency in law of such contract. So, when Government only denies a contract the Govt. cannot raise the plea that although the contract existed it is hit by Section 175(3), Government of India Actor Article 299, Constitution of India.
Appellants pleaded case is avoidance of liability by operation of law, given the pleadings as they and the law as enunciated by the Apex Court, the question whether liability can be avoided, under the law, really speaking is purely a question of law, which does not admit of any oral evidence, it is all a matter of interpretation of Section 3, of the U.P. Act, vis-a-vis the Appellants plea of ''actual vesting'' of the undertaking on 23.5.79. As a matter of fact one need not go into the oral evidence regarding the transaction as it was not the Appellants case that the transaction had not taken place. They have not denied the existence of contract, on the other hand what the Defendants-Appellants have contended is that they are not liable as the transaction was prior to the date of actual vesting, yet the oral and documentary evidence as criticised is now being dealt with.
Before proceeding with the evidence, it may be noted as a certain significant fact that the Plaintiff-Respondent had served a notice, Exhibit-3 calling for production of following documents:
To
The Advocate of Defendants No. 1 and 2.
Take notice that you are hereby required to produce and show to the Court on the first hearing of this suit all books, papers, letters, copies of letters and other writings and documents in your custody, possession or power, containing any entry, memorandum or minute relating to the matters in question in this suit belonging to M/s. Maheswari Khetan Sugar Mills (P) Ltd., Ramkola (Defendant No. 3) take over and owned by the Defendant Nos. 1 and 2 relating to year 1979 (preferably from the month of February, 1979) and particularly the following documents:
Contracts entered into for sale of sugar for the year 1979 commencing from 1st January, 1979.
Sauda book of sugar for the year 1979 and onward.
Bill books relating to the sale of sugar for the year 1979.
Customer Ledger for the year 1978-79 and onward.
Cash book and respective ledgers for the years 1978-79 and 1979-80.
Stock Register of sugar from January, 1979 to June, 1979.
Copies of the correspondence made between the Plaintiff and the Defendant No. 3 from January, 1979 to June, 1979.
Copies of correspondence made between the Defendant No. 3 and Railway authorities of Ramkola Railway Station relating to registration of indents of wagons and withdrawal of such indents from January, 1979 to June 1979.
D.W. 1 in his evidence has stated:
I received a summons from this Hon''ble Court to produce some documents. We have produced all the documents except the documents mentioned in item Nos. 1, 7 and 8 of the summons, because they are not available with us.
It is these documents at item Nos. 1,7 and 8 as noted above. It is also these documents which are very important and certain and they are not produced. It is in the light of this non-production of the documents despite notice and no denial of existence of contract that the evidence adduced by the Plaintiff is to be viewed.
Counsel for the Appellant contended that Exhibit 1 and 2 have not been duly proved. Counsel for the Appellant contended that the Exhibit -1, the letter dated 2.2.79 was issued by M/s. M.K. Sugar Mill and not the Corporation is also admitted by P.W. 1. What learned Counsel is omitting to notice is that this is the letter written by Official Receiver and there is no dispute about the fact that M/s. M.K. Sugar Mill was under the Receivership at the material time as is also borne out from the order dated 23.5.79 passed by the Collector, Deoria and filed as Exhibit-C by the Defendant-Appellant. It cannot be said therefore, that it was a transaction, it was some individual transaction, M.K. Sugar Mills had vested in the Corporation on the appointed day 3.3.1971. Learned Counsel referring to the statements made by Nauratanmal Kothari to the effect that the Defendant No. 3 had agreed to sell 2,400 bags of D-29 grade sugar to the Plaintiff submitted that it was not a contract with the Corporation. The learned Counsel is very conveniently omitting the statements made by this witness Nauratanmal about the vesting of M/s. Maheswari Khetan Sugar Mills with the Appellants Corporation on 3.7.1971 by virtue of the U.P. Act its being under the management of the Defendant Appellant No. 1 Now all these facts cannot be so conveniently omitted. A witness is not supposed to repeat that every sentence whenever MK Sugar Mill is referred having vested in the Corporation and it is having managed and controlled by the Corporation. This is no approach by the evidence of either party, the statement as a whole, its tenure and thin to be looked into and a stray sentence being picked up from here or there, a suggestion was thrown to Nauratanmal that Exhibits 1 and 2 are manufactured documents. That is not the pleaded case of the Appellants, as already noted above, their case is one of denial of liability by operation of law, the existence of a contract is a fact has not even been disputed or denied by the Appellants in their written statements. Their pleadings have already been discussed above, throwing a suggestion in the air that the documents are manufactured is either here or there. Now turn to own evidence as deposed to by D.W. 1. What has he to say about this contract:
I do not know about the business transactions of Defendant Nos. 1,2 and 3.I do not know what transactions took place between the Plaintiff and the Defendants at the relevant time. At the relevant time one Shri Raj Nath was the official Receiver of the Defendant No. 3. At the relevant time the Mill was under the possession and control of the said Receiver appointed by the Collector of Deoria.
It may be noted that this witness has admitted that Sri Rajnath was the official Receiver. Now for non-production of documents despite notice, this witness in his cross-examination said:
The documents pertaining to serial Nos. 1, 7 and 8 as listed in Ext. 3 could not be produced due to non-availability. I do not know whether these documents have been kept and maintained. I cannot say that all the documents were delivered by the Collector of Deoria at the time of delivery of possession.
Referring to the evidence of D.W. 1, it was argued that payment as per Exhibit-2 was not received and it does not bear the signature of the Chief Accountant. Now what is the Appellants pleaded case, did they plead that there was no contract. The evidence as adduced is without there being any pleading whatsoever. Still however if one reads the evidence of the Appellants own witness, the same witness in his cross-examination has admitted:
According to Ext. 1, the Defendants agreed to sell 2,400 bags of sugar. It is also written in Ext. 1 that the documents would be sent through the Punjab National Bank and the hundis for the bill amount of each consignment will be drawn on the consignee. In terms of Ext. 1, the money was also received by the Defendants by Ext. 2.
Placing reliance on the judgment of the Supreme Court as reported in Ramji Dayawala and Sons (P) Ltd. Vs. Invest Import, learned Counsel for the Appellant submitted that proof of hand-writing is not a proof of facts in a documents, this is a case which deals with the proof and appreciation of evidence of hand-writing vis-a-vis the contents of a documents. It is true that mere proof of hand-writing of a document would not tantamount to proof of all the contents or the facts stated in the document, but what the learned Counsel has missed is that the Apex Court has emphasised that if the truth of the facts stated in a document is an issue, then mere proof of hand-writing and execution of the document would not furnish evidence of the truth of the facts or contents of the document. In such a situation the Supreme Court has pointed out that truth or otherwise of the facts or contents so stated would have to be proved by admissible evidence i.e. by the evidence of those persons who can vouchsafe for the truth of the facts in issue. Once again adverting to the written statement filed by the Defendants Appellants no issue has been raised about the existence of the contract, the Plaintiff served notice to produce the documents, they are not produced. There is no pleading disputing the existence of a contract, the pleading is strictly confined to avoidance of liability under the contract by operation of law, by introducing a novel concept of ''actual vesting'' of undertaking on 23.5.1979 as against vesting of the undertaking on the appointed day i.e. 3.7.1971, denying the liability on the ground that the transaction being prior to actual vesting the Defendant Appellants were not liable to the Plaintiffs. As a matter of fact, the trial Court should not have allowed all these questions as it was not at all their pleaded case.
It is a well settled principle that where a party has failed to set up a case in his pleadings he is debarred from evidence in its support at the stage of trial. As a matter principle variance between pleading and proof is not permissible.
There is no force in the Appellants contention that the Plaintiff Respondents have failed to prove their case. We have no hesitation in holding that even on evidence the Plaintiffs have proved their case.
Mr. Bhati, learned Counsel appearing for the Plaintiff Respondents submitted that P.W. 1 in his statement has categorically testified to the deposit of sum of Rs. 5000/- and Rs. 75,000/- respectively on 5.2.79 and 15.2.79 and shown as credited in favour of the Plaintiff. In Exhibit-F the customers'' ledger it is shown to have been received by the Plaintiffs as advance against supply of sugar. This entry affords sufficient corroboration to Exhibits 1 and 2. As already noted above even the Defendant Appellants'' witness D.W. 1 has admitted that at the relevant time Shri Raj Nath was the official receiver and it is under his signature that Ext. 1 has been issued. Nauratanmal has deposed to the fact that during the relevant time he was in the campus of the mills for carrying out the negotiations for purchase of sugar and this statement of being present in the mills for negotiating the deal has remained unshaken. It is in this backdrop of facts and events that withholding of documents despite notice, Ext. 3, assumes importance.
Mr. Bhati, learned Counsel appearing for the Plaintiff Respondents argued that the circumstances as proved in the case clearly point to the fact that Ext. 1 was signed by Raj Nath and 2 by the Chief Accountant and is duly proved within the meaning of Section 47 of the Evidence Act. Reliance has been placed on a judgment of the Supreme Court as reported in Mobarik Ali Ahmed Vs. The State of Bombay, and Sri Baru Ram Vs. Prasanni and Others, . Mobarak Ali, of course, was a criminal case but the underlying principle equally applies to the civil cases. In Baru Ram dealing with the question of proof of signature and its mode observed as follows:
even assuming that the signature of the Appellant can be legally held to be proved on circumstantial evidence the principle which governs the appreciation of such circumstantial evidence in case of this kind cannot be ignored. It is only if the Court is satisfied that the circumstantial evidence irresistibly leads to the inference that the Appellant must have signed the form that the Court can legitimately reach such a conclusion.
The circumstances established in the case may now be recapitulated. The Defendant Appellants have not denied the contract, what is denied is merely the liability. Their pleadings are most discrepant, defective and evasive.
According to the law of pleadings, the Defendant is bound to deal specifically with each allegation of fact, the truth of which is not admitted. If certain para in the plaint is merely not admitted but the facts therein are not specifically dealt with, it cannot be said that they are denied. Where the truth of the fact alleged in the plaint, though not specifically dealt with in the corresponding para of the written statement were dealt with in the additional pleading held, the allegation in the plaint must be considered to have been traversed. (See Sheikh Abdul Sattar v. Union of India AIR 1979 SC 479).
Utter lack of pleadings, no setting up of the case sought to be built up at the stage of evidence, non-production of documents despite notice, admission by Appellants'' own witness Kamal Ahmed DW 1 are but some of the clinching circumstances established in the case, unerringly pointing not only to the execution of but also the genuineness of Exts. 1 and 2.
Although Mr. Choudhury, learned Counsel challenging the admission made by DW 1 contended that the same is not binding on the Appellants. Let us first see the admission.
Ext. F is the customers'' ledger of the Maheswari Khetan Sugar Mills Pvt. Limited for the year 1978-79. At page 233 of Ext. F on account of the Plaintiff has been maintained. In the said account a sum of Rs. 5000/- (Rupees five thousand) is shown as credited in favour of the Plaintiff on 5.2.79, and a further sum of Rs. 75,000/- (seventy five thousand) only has been shown in the said account as credited on 15.2.79. It appears that the aforesaid sums of money were received as advance against the value of sugar. Ext. F( 1) is the account of the Plaintiff at page 233. Ext. 3 is the cash book of Maheswari Khetan Sugar Mills Pvt. Ltd. bearing book No. 2 of 1978-79. At page 461 of Ext. G under the beading "Customers Ledger Account" a sum of Rs. 5000/- (Rupees five thousand) is shown to have been received from the Plaintiff as advance for supply of sugar. Ext. G(1) is the relevant entry.
Again at page 479 of Ext. G a sum of Rs. 75,000/- (seventy five thousand) has been shown to have been received from the Plaintiff as advance against the supply of sugar. Ext. G(2) is the relevant entry. It appears from Exts. F and G that the Defendants received the advance.
Why the above admission is not binding? No reason. Kamal Warsi is their own witness, and not an ordinary witness, their own law officer who was even prior to vesting of the scheduled undertaking Maheswari Khetan Sugar Mills was serving as such. The documents have come from proper custody and source and above all there is implied admission in pleadings itself. The Plaintiff Respondent have very specifically pleaded about the above deposits in paras 4 and 5, and about the increase of price of sugar, the conduct of the Appellants in para 7, the loss suffered due to non-delivery of goods in para-10. Have a look at the written statement, paras 4, 5 and 7 "is not concerned to us" and paras 10 "not admitted". Is this traversing the Plaintiffs'' case? The law on the point has already been discussed above. It is all at the stage of evidence that a case not set up at all is sought to be built up, that too on quick sand. There is no force in the contention that Plaintiff Respondents have failed to make out their case. There is ample reliable evidence placed on record by the Plaintiffs. The findings recorded by the trial Court are not only well reasoned but also well-supported by evidence as well and cannot be legitimately be assailed as erroneous. The judgments and decree passed in both the suits, deserve to be affirmed and accordingly affirmed.
There is other side of the coin. The Appellant Corporation is an instrumentality of the State. State is a virtuous litigant, at least regarded as such. Taking technical pleas of limitation, want of registration and in its frantic bid to defeat the claim built up a case not set up it is a different matter that these grounds are not made out, but raising them itself is a matter which runs counter to Supreme Court''s observations - "it is unfortunate that a public authority like the Port Trust should, in all morality and justice, take up such a plea to defeat a just claim of the citizen. It is high time that the Governments and public authorities adopt the practice of not relying upon technical pleas for the purpose of defeating legitimate claim of citizens and do what is fair and just to the citizens." Even if one takes a very rigid view of the Plaintiffs'' case, considering by the admission made by Kamal Warsi as reproduced above and going by the evidence of D.W. 1, the non-production of documents despite service of notice, Exhibit-3 and the surrounding circumstances as established, we have no manner of doubt that the signatures, Exhibits 1 and 2 have been duly proved within Section 4 of the Evidence Act as in fact the learned Trial Judge has rightly found it to be so and we see no justifiable reason for making any departure therefrom. Trial Courts judgments and decrees stand affirmed.
In view of the foregoing discussions, both these appeals fail, they are liable to be dismissed and accordingly dismissed with cost, counsel fee Rs. 5,000/-.