M/S Yesoram Construction Company v. Reema Bejoy

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE A.HARIPRASAD** **TUESDAY, THE 23TH DAY OF MARCH 2018 / 2ND CHAITHRA, 1940,** **AS.No. 150 of 2000** **AGAINST THE DECREE DATED 30-11-1998 IN OS 889/1994 of I ADDL.SUB COURT,ERNAKULAM** ## **APPELLANT/PLAINTIFF :** **M/S.YESORAM CONSTRUCTION COMPANY A REGISTERED PARTNERSHIP FIRM, REPRESENTED BY ITS MANAGING PARTNER SRI.A.R.SREEDHARA VADHYAR HAVING ITS OFFICE AT 'YESORAM' BUILDING, CONVENT ROAD, ERNAKULAM, COCHIN - 682 035.** **BY ADV.SRI.P.R.VENKATESH.** ## **RESPONDENT/DEFENDANT :** **REEMA BEJOY, W/O BEJOY, RESIDING AT PUTHENPURACKAL HOUSE, PONOTH ROAD, ERNAKULAM - 682 017.** **BY ADV. SRI.KURIAN GEORGE KANNANTHANAM (SR.)** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 13-03-2018, THE COURT ON 23-03-2018 DELIVERED THE FOLLOWING:** ## A.HARIPRASAD, J. -------------------------------------- ## A.S No.150 of 2000 -------------------------------------- Dated this the 23rd day of March, 2018 ## J U D G M E N T Plaintiff is the appellant in this first appeal. His suit, viz; O.S No.889 of 1994 on the file of the Additional Sub Court, Ernakulam, was dismissed by the learned trial judge, finding that the appellant has not established a right to recover money from the defendant. 2. Facts relevant for decision are as follows : Plaintiff is engaged in the business of construction, supervision and designing of buildings. It is a firm registered under the provisions of the Indian Partnership Act, 1932. The plaint is instituted by its Managing Partner. A.S No.150 of 2000 2 3. Defendant approached the plaintiff to construct a 4 storied building in a plot belonging to her. The extent of the plot was 7.58 cents situated in Survey No.563/2 of Ernakulam village. Husband of the defendant, Mr.Bejoy and the Managing partner of the plaintiff firm were very good friends. Having regard to the cordial relationship between the husband of the defendant and the managing partner of the firm, no written agreement was made for narrating the terms and conditions in respect of the building construction. 4. The agreement between the plaintiff and defendant was that the plaintiff should design the building, supervise the work and execute the work by employing labourers and render service in that regard. It is the allegation in the plaint that the remuneration payable by the defendant to the plaintiff was also agreed upon. The agreement between the parties was that the defendant should pay to the plaintiff an amount equal to 8% A.S No.150 of 2000 3 of the total labour charges plus 8% of the value of the materials purchased by the plaintiff on behalf of the defendant plus 3% of the value of the materials purchased by the defendant and/or by her husband directly. It is the case in the plaint that the oral agreement entered into between the parties was in the month of September, 1992. 5. Pursuant to the above agreement, the plaintiff commenced work on 03-10-1992 and got the building plan approved. Plaintiff mobilized labour and materials and commenced the work with right earnestness. It is the allegation that the plaintiff has been maintaining a clear and correct account in respect of the amounts spent for and on behalf of the defendant. Accounts have been produced along with the plaint. According to the plaintiff, the firm had incurred Rs.19,03,814.81/towards value of the materials purchased and labour charges for the building construction. It is admitted in the plaint that the defendant had A.S No.150 of 2000 4 paid a total sum of Rs.13,00,000/- to the plaintiff. After giving credit to the same, the defendant is liable to pay a sum of Rs.7,56,119.99/- to the plaintiff. Apart from the above, service charges and interest at the rate of 18% are also payable by the defendant. Hence, the total claim in the plaint is for Rs.8,47,046.24/-. Despite various demands, the amount was not settled and hence the suit. 6. The respondent/defendant filed a written statement admitting that there was an agreement to construct a building by the plaintiff for and on behalf of the defendant, but denied the terms and conditions set out in the plaint. Defendant admitted that the plaintiff was in good terms with her husband. Fact that the building construction was entrusted to the plaintiff is also admitted. According to the contentions in the written statement, the plaintiff told defendant's husband that he needed to pay a total architect's fee of 3 to 5 % of the actual cost of the building. The A.S No.150 of 2000 5 plaintiff has given an estimate cost of construction, which is produced along with the written statement. The estimated cost of construction as per the document is Rs.14,53,900/-. Plaintiff effected purchases of materials on behalf of the defendant by representing that if an architect himself bought the materials, there would be substantial discounts. Plaintiff incurred an expense of Rs.19,03,814/- is not correct. The calculations shown in the plaint are incorrect. The defendant is not liable to make any payment to the plaintiff. In fact, the plaintiff had collected money from the defendant much in excess of what was actually due. The suit is liable to be dismissed. 7. Before the trial court, three witnesses were examined on the side of the plaintiff and two on the side of the defendant. Exts.A1 to A363 and Exts.B1 to B6 were marked on the side of the rival parties. Exts.C1 and C2 are the Commissioner's report and valuation report. A.S No.150 of 2000 6 8. Heard the learned counsel for the appellant and learned Senior counsel appearing for the respondent. 9. Learned counsel for the appellant strongly contended that the lower court did not appreciate the evidence in the correct perspective. Despite producing relevant bills and vouchers revealing the purchase of materials by the plaintiff for the defendant's building construction, the lower court did not examine them in the right perspective. Further contention is that, original issues cast in the suit were recast without notice to the plaintiff and the real issues in the case were omitted to be considered. It is also contended on behalf of the appellant that the reasons stated by the court below for disbelieving the evidence - both documentary and oral - adduced on the side of the plaintiff is whimsical and legally unsupportable. It is further contended that undue reliance had been placed on Exts.B1 and B2, issued by the plaintiff and the court below failed to A.S No.150 of 2000 7 appreciate the candid explanation given to them by the plaintiff. It is also urged that Ext.A356 balance sheet for the assessment year 1995-96 of the plaintiff firm submitted before the Income Tax Office, Ernakulam would show that the amounts claimed was outstanding to the credit of the plaintiff firm. 10. Learned Senior counsel, per contra contended that the court below has correctly appreciated the evidence and dismissed the suit. 11. It is seen from the judgment that the court below raised three issues for consideration, which reads thus : 1. Was their agreement for payment of 8% of the total labour charges and 8 to 3%, as the case may be, of the cost of materials ? 2. What is the amount (if any) to which the plaintiff is entitled ? 3. What is the order as to costs ? A.S No.150 of 2000 8 12. Managing Partner of the firm was examined as PW1. PW1 deposed in terms of the plaint contentions. It is his testimony that he does not have details regarding the materials directly purchased by the defendant. At the time of cross examination of PW1, it is brought out that there was no practice of getting signatures on the bills from the persons on whose behalf the materials were purchased. But on a scrutiny of exhibits, ie., large number of cash bills produced, it is revealed that they carried the name of the defendant. There is no case for the defendant that the plaintiff falsely obtained bills in the name of the defendant for purchases made in connection with his other construction activities. It is true that the learned trial Judge did not consider the relevancy of the voluminous bills and vouchers produced on the side of the plaintiff. It is pertinent to note that the defendant has no case that those documents are fabricated or falsely created for the purpose of the suit. A.S No.150 of 2000 9 13. As pointed out by the learned counsel for the appellant, Ext.A356, copy of the balance sheet for the assessment year 1995-96 of the plaintiff firm also shows the amounts outstanding from the defendant to the firm. 14. Learned trial Judge discarded the day books namely Exts.A356 to 363 for the period from 01-04-1992 to 01-03-1995 on the ground that PW2 was not competent to prove the same. This finding was arrived at for the reason that someone other than PW2 had maintained the accounts till January, 1995 and PW2 had no personal knowledge about it. According to the learned counsel for the appellant, this finding is clearly illegal. 15. Heavy reliance is placed on various decisions to contend that the principle in Section 34 of the Evidence Act was not properly appreciated by the court below. The Division Bench of Rajasthan High A.S No.150 of 2000 10 Court in Vastulal Pareek alias Bastilal v. Official Liquidator, Pareek Commercial Bank Ltd. (AIR 1962 Rajasthan 118), laid down a proposition that transactions evidenced by entries in account books can be proved by person whose account books they are and who had knowledge of the transactions. Merely because the Accountant, who made the entries was not examined, the books cannot be discarded. The following proposition is laid there under: “10 -12. It has been contended that the entries in the account books were not admissible under Section 34 of the Evidence Act and that they have not been duly proved by the person who made the entries. These arguments were not advanced before the learned single Judge and we think that they have no force at all. Ramdas of course admitted that several of the entries in the khata were written by his accountant Mr. Vengulkar A.S No.150 of 2000 11 and this accountant has not been examined. Non examination of the accountant, however, does not affect the position because the transactions could be equally proved by Ramdas who had knowledge of them. It is also to be remembered that the account books have not been proved in this case for the purpose of fastening any liability. They have been merely proved to show how these disputed advances of money were dealt with by Ramdas. It is beyond dispute that the appellant had transactions with Ramdas in the sale and purchase of Shares and, therefore, Ramdas could as well prove the transactions and the entries made in his books of account. For these reasons, we are unable to entertain the submission of the learned counsel that the entries in the books of account were inadmissible and not of any evidentiary value in A.S No.150 of 2000 12 this case. The most impressive argument of Mr. Agarwal, however, is based on the entries in the accounts themselves. He has endeavoured to show that some of the credit entries actually went to the credit of the Bank under liquidation and, therefore, in spite of the fact that the khata stands in the name of M/s. B. R. Pareek and Sons Ltd., the moneys were actually utilised for the purposes of the Bank. This aspect of the case was unfortunately not specifically urged before the learned trial Judge and we have been therefore obliged to scrutinise the argument in some detail. (His Lordship examined and scrutinised the account-book and then proceeded). 16. In Kaka Ram Sohanlal and others v. Firm Thakar Das Mathra Das and Another (AIR 1962 Punjab 27) , a Division Bench of the Punjab A.S No.150 of 2000 13 High Court held thus : “ (11) Learned counsel for the appellant then contended that even if the plaintiff's books of account had been duly proved, these alone were not sufficient to charge the appellant with liability and that each entry in the account books should have been proved. In this connection, he referred to the provisions of section 34 of the Indian Evidence Act, 1872, and a number of authorities inter alia Banwari Lal v. Mt. Hussaini AIR, 1939 Lah 455, Ganeshi Lal v. Firm Mangat Ram Atma Ram, AIR 1924 Lah 540, and Abdul Haq v. Firm Shivji Ram Khem Chand, AIR 1922 Lah 338. It is true that account books alone are not sufficient to charge a person with liability but in the present case there is sufficient corroborative evidence in support of the account books. This corroborative evidence is found in the plaintiff's own statement A.S No.150 of 2000 14 as P.W.6, the various receipts and vouchers, Exhibits P. 36 to P. 44 and P. 64 to P. 100, instructions (ruqqas) Exhibits P. 2 to P. 31, and the defendants' own account books so far as they are available. It was laid down in Kallu Mal Dhakkan Lal v. Bhawani Das Rekhab Das : AIR 1925 All 742, as under- "Section 34 does not limit in any way at all the nature of the material upon which a Court may rely to support the statements in a book of account. Such material may take the shape of contemporary vouchers, receipts or other documentary evidence or of sworn oral testimony." It was also held in Firm Jodha Mal Budhu Mal v. Ditta AIR 1925 Lah 242(1), that the plaintiff's own statement on oath in support of entries could be sufficient to support the entries in plaintiff's A.S No.150 of 2000 15 account books to fix the defendant with liability. It was again held in Suraj Prasad v. Mt. Makhna Devi : AIR 1946 All 127, - "No doubt entries in the account books maintained by a creditor are not by themselves evidence to attach a liability to the debtor but they can be used to corroborate the evidence given by the creditor that the payments had been made and a decree can be passed on the basis of such corroborated evidence." In my opinion, where the transactions in dispute are numerous and extend over a large number of years, it is not necessary to prove each and every item in the account books but only the specific disputed entries are required to be proved. In such a case, the question to be determined is whether the account books are regularly kept and are genuine. In the present case, the plaintiff has A.S No.150 of 2000 16 made a definite statement that the account books are regular and he was not cross-examined with regard to the genuineness of these account books, as already mentioned above. I would, therefore, hold that the plaintiffs' own statement on oath in support of the entries was sufficient to fix the appellants with liability.” 17. Another reason for the trial Judge to disbelieve the account books is that in the day books, every day space had been left between the last entries and the next day's entries and therefore, it was very easy to make additions any time. For this reason, the day book was disbelieved. In order to challenge this finding, the learned counsel for the appellant relied on , Jain Plastic Industry and others v. Gopi Chand (AIR 1990 Delhi 51) wherein the following principle is laid down : - “..........It is common knowledge, and judicial A.S No.150 of 2000 17 notice can be taken of this fact, that whereas a cash book or a journal or other primary books of account may not have blank pages but there will be few ledgers which will not have blank pages. A ledger is meant to contain accounts of different parties like Banks, customers, landlords, tenants etc. A certain number of pages are allocated to each account. For instance, a bank account may have pages I to 10 allocated to it, a customer's account may have pages I1 to 20 allocated to it. The ledger is kept usually for a whole year and they are bound to be blank pages in the ledger. Merely because the ledger which was produced before the Tribunal contained blank pages cannot lead to the conclusion that the entries made therein are wrong.......” 18. When DW1 was examined, he tried to develop a case that on a A.S No.150 of 2000 18 comparison of the cost of construction of the defendant's building and a neighbouring building, it revealed that the plaintiff had received excess amount than that was stipulated at the time of entering into a contract. However, the cost of construction of two buildings close to one another cannot be taken as a determinative factor without understanding the structural specifications and the cost of materials used in both. Expert's report would show that the building in dispute was constructed in a reasonably strong manner. It is the case of the parties that both the plaintiff and the defendant had purchased materials for the building construction. It is not clear as to how much materials were supplied by the defendant and how much were purchased by the plaintiff. However, the facts revealed from the cash bills and vouchers produced on the side of the plaintiff cannot be discounted in the absence of a case that they did not pertain to the building in question. A.S No.150 of 2000 19 19. Relying on Firm Sriniwas Ram Kumar v. Mahabir Prasad and Others (AIR 1951 SC 177), the learned counsel for the appellant contended that going by the case admitted by the defendant, the plaintiff should have been granted a decree to the extent the documents justified his claim. Dismissal of the suit in toto was legally unjustifiable. 20 Having heard the learned counsel on both sides, I am of the view that the learned Sub Judge did not state any valid reason for discarding the cash bills and vouchers proved by the plaintiff to substantiate his claim. Further, discarding the account books was also on the sole reason that the gaps could be seen in the entries in the day book. Ledgers were also not properly scrutinized. 21. Another situation which arose at the time of hearing is that Exts.A1 to A3 (ledgers) produced before the court below could not be traced out in the records before this Court. Despite making various A.S No.150 of 2000 20 attempts, this Court had no opportunity to go through the above documents. 22. Non-suiting the plaintiff merely on the basis of Exts.B1 and B2 issued by the plaintiff to the defendant cannot be legally justified as the explanation of the plaintiff relating to those documents was not considered by the court below. 23. Having regard to the facts and circumstances, I am of the view that the court below did not appreciate the oral and documentary evidence in the correct perspective. In the absence of proper adjudication of the issues arising in this case, this Court is constrained to remand the case to the trial court for a fresh adjudication. In the result, the appeal is allowed. The impugned judgment and decree passed by the trial court is set aside. The matter is remitted to the trial court for a fresh consideration. The parties are free to adduce A.S No.150 of 2000 21 evidence, if they so choose. The court may, if necessity arises, recast the issues and dispose of the case on merits, after hearing both sides, preferably within a period of six months, from the date of receipt of records. Parties shall appear before the trial court on 12.04.2018. Court fee shall be refunded to the appellants under Section 67 of the Kerala Court Fees and Suits Valuation Act, 1959. A. HARIPRASAD, JUDGE. **amk** A.S No.150 of 2000 22 A.HARIPRASAD, J. --------------------A.S No.150 of 2000 J U D G M E N T --------------------23 rd March, 2018