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Suit No. 193,of 1965, decided on 10th March 1967.
, S. 65‑Secondary evidence‑Statement of account signed by accountant‑Not admissible in absence of proof of loss of account books.
, S. 34‑Evidence‑Accounts‑No person can be charged with liability only on basis of entries in account books.
Interest for period prior to institution of suit -Basis of payment: agreement, usage and law.
S. 1‑Demand of' payment of debt‑Notice that interest will be claimed if payment not made -Necessary for claiming interest.
Des Raj Sawhuny v. Frays Motor Works A I R 1923 Lah. 302 ref.,
Dingomal N. Ramchandani for Plaintiff.
Ihsanul Haq Qureshi for Defendant.
Date of hearing: 3rd‑ March 1967.
The plaintiffs have claimed Rs. 40,000 (rupees forty thousand) from the defendant on two accounts, one maintained in the name of "Indus Traders Wheat Account" and the other in the name of "Indus Traders Gowar and Gum Account No. 2". The plaintiffs' case is that there were dealings between the parties since 1948, in the course of which the plaintiffs acted as the defendant's Commission Agents in Karachi for sale of stocks of wheat consigned by the defendant from Nawabshah. Thee defendant used to draw hundis on the plaintiffs on these consignments. The plaintiffs paid these hundis and debited the defendant with the amounts thereof, and also with, items of expenses in connection with the sale of wheat. The defendant was given credit in the plaintiffs' books of accounts for the sale proceeds as and when the stocks of wheat were sold. On 1st October 1961, the parties settled the accounts and found a sum of Rs. 162.55 4ue to the plaintiffs. The account was, however, continued even after this date. The defendant sent 12,200 bags to the plaintiffs at Karachi in July and August 1962, against which e drew hundis on the plaintiffs. These stocks were sold in September 1962 and the defendant was debited with the amount of the hundis and the expenses of sale and was given credit for the sale proceeds. On 29th September 1962, a sum of Rs. 17,980.15 stood to the debit of the defendants in this account, which was maintained under the name of "Indus Traders Wheat Account". It is then stated that on 8th August 1962, the defendant opened a second account with the plaintiffs in the name of "Indus-Traders Gowar & Gum Account No. 2". The plaintiffs claim to have made advances to the Defendant in this account, and also to have paid moneys on his behalf in opening letters of credit for import of Gowar plant and machinery and in clearing the same from the Customs and in payment of the salary of one Muhammad Rafiq for 11 months at Rs. 500 per month. In this account, a sum of Rs. 23,153.20 (rupees twenty three thousand one hundred fifty three and twenty paisas) is stated to be due from the defendants to the plaintiffs.
2. The defendant, in his written statement, denied that he maintained any account with the plaintiffs in the name of "Indus Traders Gowar and Gum Account No. 2", or that he is liable to pay any amount to the plaintiffs on this account. But he admitted, in paragraphs 5, 9 and 15 of the written statement, that he owned Rs. 19,992.08 (rupees nineteen thousand nine hundred ninety‑two and eight paisas) to the plaintiffs on the first account maintained in the name of "Indus Traders Wheat Account". The defendant, however, denied his liability to pay any interest on this debit balance.
3. The following issues were settled on the pleadings of the parties ‑‑
(1) Whether the defendant had only one account "Indus Traders Wheat Account", or another account "Indus Traders Gowar Gum Account"; also with the plaintiffs
(2) What amount is due to the plaintiffs from the defendants
(3) Whether the plaintiffs are entitled to interest
(4) Whether the plaintiffs are entitled to costs
(5) To what relief if any are the plaintiffs entitled
Issue No. 1:‑----
4. The main contest between the parties has centred on the question whether the defendant had only one account with the plaintiffs in the name of "Indus Traders Wheat Account", or he had a second account also in the name of "Indus Traders Gowar and Gum Account No. 2". The defendant has not denied the liability on this first account. Therefore, the only question which requires decision is whether the defendant had this second account also with the plaintiffs. P. W. S. Rashid Hussain, who is Plaintiff's Manager stated that the second account was opened on 8th August 1962, in connection with the business of Indus Gum and Protein Manufacturing Ltd. The witness admitted that this account was for this company, on whose behalf the plaintiffs incurred expenses in opening letters of credits, clearance from Customs of Gowar plant and machinery, payment of the salary of its employee, namely, Rafiq Ahmed and in advances to the defendant to enable him to proceed to Europe. The witness further stated that the share‑holders of this company were the plaintiffs' Managing Director, namely, Malik Abdur Rehman and his wife Chand Begum and one Shaikh Muhammad Ikram, who was then a Manager of the plaintiffs. The witness also said that so far as he could recollect, there were no other share‑holders in this company. Thus, on the admission of the plaintiffs only witness, Rashid Hussain, the second account maintained in the name of Indus Traders 6owar and Gum Account No. 2 was that of Indus Gum and Protein Manufacturing Co. Ltd., which is a limited liability company and, therefore, a separate juristic person. This company has not been made a patty to the present suit. I fail to understand how the defendant could be made liable on the account of this company. P. W. Rashid Hussain admitted that the plaintiffs did not have any written instructions from the defendant to open the second account. It is also not the case of the plaintiffs that the defendant assumed liability by standing surety, for payment of the balance due in the second account from this limited company. The plaintiffs' learned Advocate, Mr. Dingomal N. Ramchandani, however, placed reliance on Exh. 5/5, which is a photostat copy of the defendant's letter, dated 28‑10‑63, , to Malik Abdur Rehman, the Managing Director of the plaintiffs. In this letter, the defendant stated that‑----
"The gum business which is being carried on under the name and style of 'Indus Gum and Proteins Manufacturing Ltd.' is an absolutely separate affair with which you or the Asio African Company has no concern."
It is contended by Mr. Dingomal that this statement amounts to an admission by the defendant that the plaintiffs, or their Managing Director and his wife and their former Manager Shaikh Muhammad Ikram, were not in any way concerned with Indus Gum and Proteins Manufacturing Co. Ltd. and that this company belonged to the defendant. The letter Exh. 5/5, was in reply to the plaintiffs letter dated 17th October 1963, which letter the plaintiffs have failed to produce in Court. No inference adverse to the defendant can be drawn from the statements made in Exh. 5/5 unless this letter is read with the plaintiffs own letter dated 17th October 1963. In the absence of this second letter, it cannot be said as to what were the circumstances under which the defendant made the statement which, according to Mr. Dingginal, amounts to an admission that the Indus Gum and Dingginal, Manufacturing Ltd., belonged to the defendant. Assuming, however, that this statement amounts to an admission relevant for the purpose of the present suit, the position still remains that Indus Gum and Proteins Manufacturing Ltd. being a limited company, is a separate and distinct juristic person and the defendant cannot be made liable for the account which this company maintained with the plaintiffs, unless he assumed liability therefore by standing surety.
5. Another objection to the plaintiffs' contention that the defendant is liable on the second account is, that the plaintiffs have failed to prove the various items standing in this account. The plaintiffs have not produced their account books. They have merely relied on the statement of account Exh.5/2. But the accountant who prepared this statement has not been examined by the plaintiffs. P. W. Rashid Hussain admitted that he did not prepare this statement and that, as Manager of the plaintiffs, he did not have any concern with the plaintiffs' account books. This witness also stated that the plaintiffs have in their possession credit and debit vouchers relating to the entries in this account. But these vouchers also have not been produced in Court. The statement of account has been signed only by the plaintiff' accountant, but has not been certified by any Director of authorised officer of the plaintiffs. This statement would therefore, at the most amount to secondary evidence of the entries in the plaintiffs books of accounts. But in the absence of proof of loss of these books, this secondary evidence is not admissible. Moreover, the statement of account has to be proved through the accountant who prepared it, but the accountant has not been examined by the plaintiffs. Under section 34 of the Evidence Act, no person can be charged with liability only on the basis of entries in account books, least of all on the basis of copies of these entries which have not been duly proved. I am, therefore, of the view that no liability can be fixed for the second account on the defendant on the basis of the statement Exh. 5/2.
6. Accordingly, my finding under issue No. 1 is that the defendant had only one account in the name of "Indus Traders Wheat Account" with the plaintiffs and, further, that the plaintiffs have failed to prove that the second account in the name of "Indus Traders Gowar and Gum Account No. 2" is that of the defendant or to establish the defendant is liable for the debit balance alleged to be standing in this account. '
Issue No. 2:‑----
7. I have held under issue No. 1 that the defendant is not liable on the second account maintained in the name of "Indus Traders Gowar Gum Account No. 2". The defendant, however, has admitted in paragraphs 5, 9 and 15 of the written statement his liability for Rs. 19,992.08 (rupees nineteen thousand nine hundred ninety‑two and eight paisas) on the first account maintained in the name of "Indus Traders Wheat Account". The defendant is, therefore, liable only for this amount.
Issue No. 3:‑---
8. This issue raises the question as to whether the plaintiffs are entitled to any interest for the period preceding the institution of the suit. Interest is payable by a debtor to the creditor on the basis of:‑---
(i) agreement;
(ii) usage; and
(iii) statutory provisions.
The plaintiffs' witness, Rashid Hussain, admitted that there was no agreement between the parties for payment of interest. The plaintiffs have also failed to establish any usage which would entitle them to charge interest from the defendant. Rashid Hussain set up the case of a practice in the plaintiffs office, under which the plaintiffs charge interest from their constituents. But the plaintiffs' own practice does not amount to usage, so as to entitle them to debit interest to their customers. The plaintiffs' learned Advocate, Mr. Dingomai relied for the plaintiffs' claim for interest on section 1 of the Interest Act, 1839 (XXXII of 1839), which is as follows:‑---
"It is, therefore, hereby enacted that upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain we're payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of payment: provided that interest shall be payable in all cases in which it is now payable by law."
It is not the plaintiffs case that any debt is payable by the defendant to the plaintiffs by virtue of any written instrument at a certain time. But Mr. Dingomal says that the plaintiffs can claim interest under the second limb of this section, which provides that interest may be allowed from the time when the demand of payment shall have been made in writing, so as such demand shall give notice to the debtors that interest will be claimed from the date of such demand until the term of payment. For the purpose of bringing the plaintiffs case within the second part of this section, Mr. Dingomal has taken stand on Exh. 5/4, which is plaintiffs' 'letter dated 28th May 1963, by which demand was made upon the defendant for payment of Rs. 45,342.78 on two statements of accounts alleged to have been annexed to this letter. But this letter does not make any demand for payment of interest. It is, however, contended under the second part of section 1 of the Interest Act, 1839, demand for payment of interest as such is not necessary, and that demand for debt, if made, would entitle the creditor to interest from the debtor. I am unable to accept this view. The relevant words of this section are when demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the term of payment". There is no ambiguity in this language. The section clearly requires that demand of payment should be accompanied by notice that interest will be claimed if payment is not made. In this connection, I may refer to the decision of the Lahore High Court in Des Raj Sawhuny v. Frays Motor Works (A I R 1923 Lah. 30;), wherein it has been laid down that in the absence an express agreement to pay interest, or a written demand or notice that interest would be charged under the provisions of Act, XXXII of 1839, the claim as to interest cannot be entertained. Mr. Dingomal, however, referred to Exh. 5/5, the photostat copy of the defendant's letter dated 28‑10‑1963 to the plaintiffs' Managing Director. The defendant has referred in this letter to the plaintiffs letter dated 17th October 1963, claiming interest in the Gum and Feed business. This appears to be a reference to the second account regarding which I have already held that the defendant is not liable. There is no mention in this letter of the first account in the name of "Indus Traders Wheat Account". I have, therefore, to hold that the plaintiff's did not give any notice to the defendant with regard to interest on this first account, for which liability has, been admitted by the defendant. Therefore, my finding under this issue is that the plaintiffs are not entitled to any interest on this account for the period previous to the institution of the suit.
Issues Nos. 4 and 5 :‑---
9. In view of the findings on issues Nos. 1 to 3. 1 hold that the defendant is liable only on the first account in the name of "Indus Traders Wheat Account" to the extent of Rs. 19,992.08 (rupees nineteen thousand nine, hundred ninety‑two and eight paisas) and that the plaintiffs are entitled to the costs of the suit proportionate to this amount. Accordingly, the plaintiffs suit is decreed only in the sum of Rs. 19,992.08 (rupees nineteen thousand nine hundred ninety‑two and eight paisas) with proportionate costs and interest at six per cent. per annum from the date of the suit until payment.
K. M. A. Suit partly decreed.
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