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Regular First Appeal No. 78 of 1980, decided on 28th February, 1987.

---O.VIII, Rr. 5 & 6--Suit for recovery of money--Set off--Defendant admitting claim of plaintiff but claiming set, off--Effect--Defendant's admission in written statement of claim of plaintiff and his failure to prove counter-claim, held, amounted to admission on which Trial Court rightly based its findings.

---S.34--Interest, entitlement to--Claim of interest not based upon any agreement between parties, held, would be penal rather than compensatory--In absence of any stipulation providing for its payment there would be no equitable ground to burden defendant with it.

Sh. Zahoor-ul-Haq for Appellant.

Ch. Sadiq Hussain for Respondent.

Date of hearing: 28th February, 1987.

-This judgment will also dispose of Regular First Appeal No.156/80 as both arise from the decree dated the 2nd of April, 1980, whereby while the respondent-plaintiff Kohinoor Textile Mills Limited's suit for recovery of Rs. 9,98,711.57 was decreed costs as also interest, the appellant-defendant's claim for set-off to the tune of Rs. 2,16,155.83 was dismissed.

2. The respondent, a public limited company, allegedly supplied cloth on credit basis to the appellant by maintaining a mutual, open and current account till the 13th of January, 1977, when the balance due from him as shown in their account books was Rs. 10,00,555.53. Their case was that despite demands, he avoided to pay it and hence the suit. They prayed for an additional sum of Rs. 50,000.00 as interest.

3. It was contended, in reply, that the person filing the suit on behalf of the plaintiff-Company was not duly authorised; that, in form, it should have been one for rendition of accounts particularly when there were counter-claims on account of short yardage, poor quality of cloth, losses suffered owing to low market rates, over payments and breach of an oral covenant precluding the plaintiff Company from selling their products to any other party in Lahore. Credibility of the account relied upon by the plaintiff was seriously assailed denying it to be mutual, open or current. It was urged that a sum of Rs. 12,14,867.40 was due from the plaintiff to the defendant and that after adjusting their claim against it, the outsanding balance of Rs. 2,16,155.83 was payable to him by way of set-off. In replication, the plaintiff-Company traversed the counter-claim or to have appointed the defendant to be their wholesale agent or to have made with him any verbal covenant of not supplying their goods to anyone else in Lahore. They re-affirmed the genuineness of the open, mutual and current account adding that it was maintained with overt consent of the defendant.

4. The following issues were framed:

(i) Whether the suit has not been filed through competent person , OPD.

(ii) Whether the suit is not maintainable in its present form G:

(iii) Whether the defendant is entitled to recover Rs.2,14,867.40 from the plaintiff as claimed in the written statement OPD.

(iv) Whether the plaintiff is entitled to the interest on the principal amount, so with what rate and for what period OPP.

(v) Relief.

The trial Court holding all of them against the defendant dismissed his cross-objections and decreed the respondent's suit to the extent of Rs.9,98,711.57 with costs and interest at 14% per annum on quarterly rests from the date of institution till realization.

5. Both the appeals have been preferred by the defendant- Kohinoor Agency through Seth Qamar Din. Keeping in view the contents of the written statement, it will not be wrong to say that the respondent's claim was admitted although a counter-claim of Rs.12,14, 857.40 was preferred. The onus to prove the same obviously shifted on the appellant but unfortunately he did not enter the witness box. On his behalf, however, his accountant Nazir Ahmad D.W.4 tried to prove copies Exh. D.1 to D.4 and D.6 of some accounts which on his interpretation related to claims preferred by them against the plaintiff Mills. As to authenticity of these accounts, the witness admitted that he did not take them from any ledger and that they were based entirely upon memory. The explanation for this novel way of maintaining accounts was that only such items were entered into ledgers as may have been admitted by the respondent-plaintiff. Obviously since the above accounts were not mentioned in any account books, those were never accepted by the respondent. The appellant did not deny dealings with the respondent-Company involving lacs and lacs of rupees in sale and purchase of cloth, but failure on his part to maintain any reliable account of such a huge and extensive business was unusual making his counter-claim exceptionally sceptical. His accountant D.W.4, seemed to have unduly relied upon his memory, all the more when he on his own admission never entered into any transaction with the plaintiff. According to practice observed by them, it was always the appellant Seth Qamar Din himself who would make transactions and, therefore, if someone's memory was to be relied upon, that should have essentially been of the appellant himself. He avoided entering the witness box to depose to them. The inference will arise against him. D.W.1 Rafiq Ahmad was another accountant of the appellant Agency. He too did not prove any ledger or account book showing that some claims were due from the plaintiff-Company. Although he disclosed to have presented a claim worth Rs. 9,50,000.00 to Tariq Saeed Saigol of the respondent-Mills, yet he admitted that he did not obtain any receipt from him thereabout. Their conduct revealed that not only they had not maintained any regular accounts but also failed to pass on any claims whatsoever to the respondent-Company against receipts. Other witnesses examined by him, namely, D.W.2 and D.W.3 deposed to the general custom or practice prevailing in the market in the matter of payment of dues but they did not pointedly refer to such payments being made between the present parties. The trial Court was right in concluding that the claim for set-off was not proved by any cogent evidence. Conversely D.W.4 admitted that the statement of account Exh. D.6 showing a balance of Rs. 9,98,711.57 due from the appellant to the respondent indicated that he had purchased cloth worth thereof from the respondent-Mills. This was the admission which the trial Court relied upon. No reason was advanced to suggest if it was wrong. If the appellant purchased the goods worth this amount from the respondent-Mills, he was obviously bound to pay for it. The finding of the lower Court on this point is upheld.

6. No other point was urged by Sh. Zahoor-ul-Haq for the appellant. He could not successfully point out if there was any oral covenant between the parties precluding the respondent-Mills from selling their goods to anyone else in Lahore or that the appellant acted as their sole agent. No document was placed on the record to support the contention that the parties had agreed between themselves not to sell the respondent's goods through any one else at Lahore. It was a bare assertion made in the written statement without having been corroborated by the appellant himself due to his failure to appear in the witness box. Mere oral statement of his witness, without his own, did not suffice to prove the same. Lastly, however, counsel maintained that awarding interest at 14% per annum on quarterly rests from the date of institution till realization was unjustified. The respondent's plea was that they had to borrow money from various Banks on payment of interest and, therefore, they were entitled to be compensated in that behalf. They added a sum of Rs.50,000,00 on this count but the lower Court allowed them at the flat rate of 14% per annum on quarterly rests. Admittedly, the element for interest was not based upon any agreement between the parties. The respondent failed to show by producing any banker or account if they had to raise money from Banks on interest to meet their requirements arising out of the appellant's default. The claim was evidently more pen. than compensatory. In the absence of any stipulation providing for its payment, there were no equitable grounds to burden the appellant with it. Consequently we accept this appeal partially to the extent that he mill not be liable to pay any interest. With this exception, both the appeals are dismissed with costs throughout.

A.A./K-20/L Appeal partially allowed.

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