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Escorts Limited v/s Sai Autos and Others


Company & Directors' Information:- ESCORTS LIMITED [Active] CIN = L74899HR1944PLC039088

    Suit No. 2043 of 1987

    Decided On, 20 July 1990

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE MAHINDER NARAIN

    For the Appearing Parties : Avtar Singh, H. R. Arora, Advocates.



Judgment Text

MAHINDER NARAIN, J.


The plaintiff, a company incorporated under the Companies Act, 1956, having its registered office at H-2, Connaught Circus, New Delhi, has filed this suit for recovery of Rs. 1, 38, 916 against four defendants. Defendant No. 1 is Sai Autos, defendant No. 2 is Mr. K. Neela Mohan Rao, partner and proprietor of Sai Autos, defendant No. 3 Sri Y. Venkateswar Rao is also a partner and proprietor of Sai Autos and defendant No. 4 is Mr. Bollam Venkatramaiah.


Sai Autos are stated to have been dealers at Karim Nagar (Andhra Pradesh) for the sale of Ford Tractors made by the plaintiff-company.


It is the case of the plaintiff-company that Mr. Charanjit Singh, who has signed and verified the plaint, is the principal officer, as also the vice-president and secretary of the plaintiff-company, and is authorised to sign, verify the plaint and file the present suit, and to prosecute the same on behalf of the plaintiff-company in terms of the general power of attorney dated January 28, 1966, granted to him by the plaintiff-company, and registered in the books and records of the Sub-Registrar, New Delhi at No. 164 in Additional Book No. 4, Volume No. 238 on pages 98 to 101 on January 31, 1966.


It is asserted in the plaint that a Ford Tractor, manufactured by the plaintiff, was purchased by defendant No. 4. The plaintiff says that this was a sale on credit.


The plaintiff has filed affidavit evidence of its officers, by which the said transaction of sale of the tractor to defendant No. 4 stands proved.


It is stated in the affidavit that defendant No. 4 actually paid the money to defendants Nos. 1 to 3, vide his cheque dated July 31, 1986. It is stated that this cheque was collected by defendants Nos. 1 to 3 illegally and unauthorisedly. Defendants Nos. 1 to 3 instead of paying the money realised to the plaintiff-company, kept the money themselves. It is also asserted in the affidavit that as defendant No. 4 was bound to pay the money directly to the plaintiff he was liable to pay the price of the tractor purchased by him to the plaintiff-company, which he had failed to do.During the course of arguments, it was stressed that defendant No. 4 was liable for the price of the tractor, which amount he had wrongly paid to defendants Nos. 1 to 3. In the plaint, it is clearly asserted that the decree for payment of the suit amount may be passed against defendants Nos. 1 to 3, and only in the alternative the decree may be passed against defendant No. 4. During the course of arguments, I had told counsel for the plaintiff that it would be a travesty of justice if the defendant were to be made to pay again for the tractor, which he had admittedly paid for to defendants Nos. 1 to 3, by passing a decree against him. Counsel for the plaintiff, very fairly, gave up this claim made against defendant No. 4. The claim against defendant No. 4, in this suit, is, therefore, dismissed.


Inasmuch as the power of attorney which is relied upon by the plaintiff-company, executed on the 28th day of January, 1966, by Mrs. Raj Nanda and Sodhi Karta Singh and execution whereof was admitted before the Registrar of Assurances, it was asserted that power to institute suit stands proved.


During the course of arguments, which were heard ex parte, I pointed out to counsel that the presumption as to due execution of the power of attorney was available only to those powers of attorney which were executed in accordance with the provisions of section 85 of the Indian Evidence Act and as the power of attorney dated January 28, 1966, was not in accordance with the provisions of that section, no presumption can arise with respect thereto.


Section 85 of the Evidence Act provides that,



"the court shall presume that every document purporting to be a power of attorney, and to have been executed before, and authenticated by, a notary public or any court, judge, Magistrate, Indian Consul or Vice-Consul or representative of the Central Government was so executed and authenticated."


Inasmuch as the power of attorney in question was not registered before the Notary Public or any court, Judge, Magistrate, Consul or Vice-Consul or representative of the Central Government, no presumption can arise with respect to it as Registrar of Assurances is not one of the persons named in section 85 of the Evidence Act. As presumption regarding its due execution of the power of attorney dated January 28, 1966, could not be raised, the benefits of section 85 of the Evidence Act could not be availed of vis-a-vis the said power of attorney. Counsel for the plaintiff did not dispute and he could not, that and Registrar of Assurances is not a "representative" of the Central Government. He is a person who discharges his statutory functions under the Registration Act.


In this view of the matter, as the power to institute the suit had to be proved, a copy of resolution No. 5 passed in the meeting of the board of directors of Escorts Ltd. (plaintiff) held on 16th October, 1965, was placed on record, and this was not enough, the original minutes book containing resolution No. 5 dated October 16, 1965, was brought to court. I saw the original minutes book. It contains the aforesaid resolution No. 5 dated October 16, 1965. This resolution approves the draft power of attorney which was proposed to be granted. The manner of proving the said resolution which has been adopted by the plaintiff is an affidavit of Mr. P. N. Arora, son of Mr. Lekh Raj, being affidavit dated March 22, 1990. In that affidavit, it is stated that the minutes of the board of directors have been written in the hand of Ms. Amarjit Kaur, who is the representative of the plaintiff-company. The deponent says that he can identify the handwriting of the said Amarjit Kaur.


The manner in which such a resolution of the board of directors of companies are to be proved, is clearly stated by Hardayal Hardy J. in a judgment passed in Suit No. 469 of 1986 in Oberoi Hotels (India) Pvt. Ltd. v. Observer Publications (P.) Ltd. In this judgment, it has been stated that,



"the only way to prove that a particular resolution was passed at a meeting of the board of directors of a company is that the minutes book in which the said resolution was recorded as having been passed should be produced in court as that alone can form evidence of the fact under section 194 of the Act. "Section 194 of the Companies Act reads as under :" 194. Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein".


In view of the fact that the minutes book of the plaintiff has been produced before me, after seeing the same I am satisfied that resolution No. 5 was passed in the meeting of the board of directors held on October 16, 1965. The plaintiff has thus proved the conferment of the powers of attorney to Shri. Charanjit Singh with power to institute the suit. By virtue of the provisions of the Order 29 of the Code of Civil Procedure, a principal officer can sign and verify the plaint. It is also established that Charanjit Singh is a principal officer of the plaintiff-company, who can as such officer, sign and verify the plaint in suit and he is also authorised to institute this suit by virtue of the power of attorney dated January 28, 1966.


The next question that arises is what amount is due from defendants Nos. 1 to 3 to the plaintiff-company. For this purpose, copies of accounts have been produced by the plaintiff-company. Copies of the accounts produced by the plaintiff-company deal with the transaction between the plaintiff and defendants Nos. 1 to 3. In none of the affidavits filed by the plaintiff, have these accounts been proved in accordance with the provision of section 34 of the Evidence Act, which sets out the manner in which any person can be charged with liability on accounts, and how the liability is to be proved.


Section 34 of the Evidence Act reads as under :


"Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."


In view of the provisions of section 34 of the Evidence Act, entries in the books of account are alone not sufficient evidence to charge any person with liability. Nor can copies of entries in the books of account be sufficient to charge any person with liability. The manner in which entries in the books of account are to be proved to charge any person with liability, has been dealt with by the Supreme Court in Chandradhar Goswami v. Gauhati Bank Ltd., 1967 AIR(SC) 1058, 1967 (37) CC 108, 1967 (1) SCR 898, 1919 AIR(Nag) 141, 1967 (1) CompLJ 98. The Supreme Court has clearly stated that the entries in the books of account are not primary evidence of indebtedness. A plaintiff has to lead evidence in the shape of vouchers, bills, etc., to prove the entries in the books of account.


In this view of the matter, neither the copy of the ledger account, nor the ledgers themselves, in respect of accounts of defendants Nos. 1, 2 and 3 is enough evidence to charge them with liability, and no decree can be passed against the defendants on the basis thereof.


Learned counsel for the plaintiff then referred to the affidavit which had been filed in which it has been stated that defendants Nos. 1 to 3 sent the cheques for Rs. 1, 06, 000 being the cheque dated July 31, 1966, for the purpose of liquidating the amount due, which has been received from defendant No. 4 by defendants Nos. 1, 2 and 3 but had not been paid to the plaintiff. The said cheque was dishonoured when presented, and has been filed along with the documents, and has been proved by the affidavit of Mr. J. L. Chawla dated March 22, 1990. The dishonoured cheque is on record, and is marked as exhibit PW-2/6. The memo of dishonour is exhibit PW-2/5. Counsel for the plaintiff states that after this cheque was dishonoured, further, a reference was made to defendants Nos. 1, 2 and 3 about the dishonoured cheque of Rs. 1, 06, 000. In lieu of the dishonoured cheque of Rs. 1, 06, 000, two cheques for Rs. 50, 000 and for Rs. 56, 000 dated August 30, 1986, and September 30, 1986, respectively, were sent by defendants Nos. 1, 2 and 3. The said cheques are marked as exhibit PW-2/7 and exhibit PW-2/8. These two cheques also, when presented for encashment, were dishonoured and the memo of dishonour is marked as exhibit PW-2/9.The aforesaid cheques, exhibit PW-2/6, exhibit PW-2/7 and exhibit PW-2/8 go to show that defendants Nos. 1, 2 and 3 owed a sum of Rs. 1, 06, 000 to the plaintiff-company, and that they purported to pay the same by giving a cheque of Rs. 1, 06, 000 and thereafter by giving two cheques, one for Rs. 50, 000 and the other for Rs. 56, 000. The dishonour of the said cheques indicates that the said amount which was due to the plaintiff remained unpaid and the plaintiff is entitled to the payment of Rs. 1, 06, 000 in lieu of the price of the tractor which was supplied to defendant No. 4, who paid its price to defendants Nos. 1, 2 and 3, but defendants Nos. 1, 2 and 3 failed to give the same to the plaintiff who was actually entitled to receive the said price. The said cheques are an admission and proof of indebtedness of defendants Nos. 1, 2 and 3 to the plaintiff-company.


As regards the claim of interest on the amount which has to be paid to the plaintiff-company, namely, Rs. 1, 06, 000, counsel f

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or the plaintiff relied upon exhibit PW-2/1 which is the Dealer's Sales Agreement executed by the plaintiff and defendant No. 1. According to clause 14(d) thereof the amount is payable with interest at the rate of 1.5% per mensem which comes to 18% per annum. Thus, the plaintiffs are entitled to a decree for Rs. 1, 06, 000 against defendants Nos. 1, 2 and 3 and by virtue of the agency agreement between the plaintiff and defendant No. 1, the aforesaid unpaid amount is payable by the defendants to the plaintiff with interest at the rate of 18% per annum. The tractor in question was supplied to defendant No. 4 on January 10, 1986. Defendant No. 4 has paid the amount to defendant No. 1. The plaintiff is entitled to interest from the date of supply of the tractor till realisation of the price of the same.In this view of the matter, I pass a decree in favour of the plaintiff and against defendants Nos. 1 to 3 jointly and severally for a sum of Rs. 1, 06, 000. The plaintiff shall also be entitled to interest on the aforesaid amount at the rate of 18% per annum from the date of supply of the tractor to defendant No. 4, i.e., January 10, 1986, and at the same rate from the date of filing of the suit till its realisation. No order as to costs.
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