Ester Industries Limited vs Subhash Chand Prabhash Chand

Valmiki J Mehta, J.

RFA No. 69/1998

By the present appeal filed u/s 96 of the Code of Civil Procedure, 1908 (CPC), the Appellant-Defendant impugns the judgment and decree dated 6.11.1997 whereby the suit for recovery filed by the Respondent-Plaintiff herein was decreed for its dues towards brokerage/commission.

After completion of the pleadings, Trial Court framed the following issues:

i) Whether the claim of the Plaintiff is barred by time? OPD

ii) Whether the Plaintiff had a valid and enforceable contract with the Defendant? OPP

iii) Whether the Plaintiff is entitled to recover the amount of Rs. 2,95,801/- from the Defendant? OPP

iv) Whether the Plaintiff is entitled to pendente lite and future interest?

v) Relief.

Issue No. 2 was the first issue which was argued by the Appellant-Defendant before this Court. It was argued that as per the letter of appointment, the contract was with HUF firm by the name of M/s. Subhash Chand Prabhash Chand. It was argued that the contract with the HUF firm to which the brokerage was payable came to an end on 31.3.1992. It is argued that the partnership which filed the present suit came into existence on 18.2.1993 i.e. after the dealings of the parties had already come to an end in March, 1992. It was therefore urged that the Respondent-Plaintiff has no locus standi to file the suit for recovery.

I am afraid I do not agree with the argument of the learned senior counsel for the Appellant because no doubt the original contract was with the HUF concern, however, any creditor can transfer his debt to a third person and this transaction is known as transfer of an actionable claim and is duly recognized by Section 130 of the Transfer of the Property Act, 1882. The learned Trial Court has relying upon this provision and the partnership deed dated 18.2.1993 Ex.PW1/1 held that there is a signed written instrument for transfer of the dues of the erstwhile HUF to the partnership concern. The relevant clause of the partnership concern by which the assets and liabilities of the erstwhile HUF firm were taken over by the Respondent partnership concern reads as under:

This Partnership Firm i.e. M/s. Subhash Chand Parbhash Chand have taken over all the assets & liabilities as going concern of the erstwhile firm M/s. Subhash Chand Parbhash Chand (HUF) without any break what so ever.

A creditor can be a transferor and the transferor here is the HUF concern. The karta of the erstwhile HUF concern is a partner in this partnership. Therefore there is an instrument in writing signed by the karta of the HUF evidencing the transfer of the debt by the HUF concern and which creditor has transferred the right to recover the dues to the Respondent partnership firm. In my opinion, the requirement of Section 130 of the Transfer of Property Act, 1882 is wholly satisfied in the facts of the present case. Also, in equity, if payment has to be made, the same should not be denied on technicalities and also interpretation of documents should not be done in such an impractical manner so as to defeat equity and justice. Therefore, I hold that the partnership firm was duly authorized to get a decree in its favour and so was held by the trial Court.

Learned senior counsel for the Appellant very vehemently argued that there was no case laid out in the plaint of transfer of an actionable claim and nor was such a case put up before the witnesses of the Appellant-Defendant during the course of trial or in any manner in the Court below. In my opinion, this argument is an argument of desperation, because once the partnership deed has not been challenged by the Appellant-Defendant and which document was duly proved and exhibited as Ex.PW1/1 before the Court and which contained the necessary clause, in fact, onus was upon the Appellant to show as to why the dues which were otherwise payable should not be defeated on a technical ground. I do not agree that the findings in the judgment of the trial Court should be interfered with on the ground of technicalities because as per the facts which emerge, which have emerged in the present case, then, equity and justice must prevail and not technicalities.

The second issue which was argued on behalf of the Appellant was that the suit was barred by limitation. Qua this issue, it was argued that the suit was instituted on 18.3.1996 whereas the last admitted transaction between the parties was 20.7.1992 as per statement of account of the Respondent as maintained by the Appellant. It was argued that the suit ought to have been filed before 20.7.1995 and consequently the suit was barred by limitation. I do not agree. This statement of account maintained by the Appellant-Defendant itself in its books of account has been proved and exhibited as Ex.DW1/P1. As per this statement of account once the last entry in this account is dated 20.7.1992 which is admitted/proved by the Appellant-Defendant, then, in terms of Article 1 of the Limitation Act, 1963 the limitation commences on the last date of the financial year. The last date of the financial year is 31.3.1993 and therefore the suit could have been filed upto 31.3.1996. The suit has been filed on 18.3.1996. It cannot be disputed that the statement of account Ex.DW1/P1 is an open mutual current account containing reciprocal entries and therefore clearly falls within the meaning of the expression under Article 1 of the Limitation Act. Accordingly, this contention that the suit is barred by limitation is rejected.

The last contention which was urged on behalf of the Appellant was that rate of interest has been wrongly granted from February, 1994 @ 15% per annum. I may note that the Respondent-Plaintiff duly gave a legal notice dated 27.7.1994 which has been exhibited as Ex.PW1/5. In paragraph 4 of this notice, the Respondent-Plaintiff had claimed interest @ 21% per annum as the commercial rate. This notice is in accordance with the Interest Act, 1978 which requires giving of a notice in order to claim interest. Once a legal notice has been given claiming interest, which was not complied with, the trial Court was fully justified in granting interest. I do not think that in the facts and circumstances of the present case interest @ 15% p.a. simple is such which calls for interference by this Court in appeal.

Sitting as an Appellate Court, I can only interfere with the findings of the trial Court if findings of the trial Court are illegal or perverse. Merely because another view is possible in the facts and circumstances, this Court is not entitled to interfere with the impugned judgment and decree. In my opinion, the trial Court has exhaustively, with clarity, and in a detailed manner, examined all the issues, the facts, the evidences and has arrived at appropriate conclusions with respect to each of the issues which were urged before the trial Court and has also urged before this Court.

In view of the above, the appeal being devoid of merit is dismissed with costs of the present appeal which are quantified at Rs. 25,000/- for both appeals payable within 2 weeks from today. Trial Court record be sent back.

RFA No. 94/1998

Two issues which were argued in this case pertaining to limitation and the rate of interest have already been dealt with by me above in RFA No. 69/1998 and for the same reasons the pleas of the suit being barred by time and that interest ought not to be awarded are accordingly rejected.

One issue which was additionally urged in the present appeal was that in the suit the principal amount claimed was Rs. 1,78,806.96/- but the statement of account filed by the Respondent herein only proved as due an amount of Rs. 1,19,859.46/- as on 1.4.1993. It is therefore urged that the suit should not have been decreed for Rs. 1,78,806.96/-.

I am afraid this argument does not deserve acceptance because the statement of account filed by the Respondent-Plaintiff was only up to 1.4.1993, however, the transaction between the parties continued thereafter and which is clear from the statement of account filed by the Appellant-Defendant itself and which showed the last transaction on 31.6.1993 on account of commission being payable to the Respondent-Plaintiff. In this account the balance due as on 30.6.1993 is Rs. 1,78,806.96/- i.e., the amount which is in fact claimed by the Plaintiff in the suit. Therefore, the suit has been rightly decreed for Rs. 1,78,806.96/-.

This appeal is also accordingly dismissed. Interim orders in the appeals are vacated and the security stands discharged. Trial Court record be sent back.