JUDGMENT : CHATURVEDI, J. 1. The plaintiff's first appeal is directed against the judgment and decree dated 16-10-1950 passed by the learned Second Additional District Judge, Indore, in a suit for rendition of accounts. Instead of passing a decree for rendition of account or for re-opening accounts which the plaintiff wanted, leave has been given to surcharge and falsify the accounts. 2. The case of the plaintiff is that the defendant firm acted as agent of the plaintiff in forward transactions in gold and silver from Baisakh 2002 to Batsakh 2003. The Vaida transactions were carried on in the Indore market in accordance with the rules framed by the Bada Sarafa Cotton Association and the Bullion Exchange, Indore. The transactions there are made through certified brokers who are members of these associations and the contracts have to be recorded in the Cotton Contract Office. For this, registration fees are levied and the plaintiff was charged with these fees by the defendant firm. The defendant firm was not a certified broker, but had transacted business on behalf of the plaintiff through certified brokers of the Association. According to the plaint, the plaintiff had placed confidence in Nanooram Manaji, a partner of the defendant firm and used to make lump sum payment to defendant firm on Nanooram's assurance that the accounts would be rendered later. On the same assurance the plaintiff issued and delivered to the defendant firm two post dated cheques on Messrs. Grindley and Co. Bankers, Bombay, for Rs. 16,000 and Rs. 20,000 respectively; the first cheque being payable on 25-10-1946 and the second on 8-12-1946. The first cheque was drawn in favour of defendant firm and the second at the instance of the latter in favour of one Jagannath Neema. The defendant firm failed to render true and full account to the plaintiff and so the payment of the two cheques was stopped. The defendant firm had handed over to the plaintiff in June, 1946, on his demand, a book of account containing lump sum credit and debit entries of different Vaida transaction; but it lacked details and particulars. Therefore, the plaintiff insisted on the defendant firm furnishing detailed account and full information as to the transaction alleged to have been executed by the defendant firm on his behalf. Therefore, the plaintiff insisted on the defendant firm furnishing detailed account and full information as to the transaction alleged to have been executed by the defendant firm on his behalf. Nanooram had first put off giving accounts till October 1946; then somehow or other agreed to give some details and asked his Munim to prepare full accounts. Then he suddenly changed his mind and asked the plaintiff to depute some one on his behalf to take down the details of his account which his Munim would dictate. The plaintiff then sent his brother Narayandas to whom accounts for the months of Chaitra Samvat 2002/2003 were dictated. Nanooram then again changed his mind and he stopped supplying further details. The plaintiff alleged that as plaintiff's agent the defendant firm was bound to render a true and full account to the plaintiff, but the lawyers had taken the stand that the defendant firm had already rendered the accounts, and therefore the plaintiff filed this suit with a prayer for the following reliefs : (1) to have a full and true account of the transactions Baisakh Sudi 5 S. Y. 2002 (16-5-1945) to Baisakh Sudi Samvat Year 2003. (2) in the alternative, for re-opening of the above accounts : (3) payment of such sum as may be found due from the defendant firm and costs of the suit. 3. It may, however, be mentioned here that in para 6 of the plaint it was alleged that without prejudice to the plaintiff's case that a full and true account had not been rendered by the defendant firm, in the alternative, the plaintiff stated that the account was liable to be reopened on the ground of surcharge and falsification, as he discovered that in the transactions of Chaitra Badi Samvat Year 2002, the plaintiff had been saddled with cotton contract taxes payable to the Government about those transactions which had not been registered at the Cotton Contract Office; and that various transactions had been shown on behalf of the plaintiff which never had his authority; that the plaintiff has been debited with losses in certain transactions which had not been entered in the Cotton Contract Office at all, and that the rates at which some of these transactions were entered into on behalf of the plaintiff, differed from those at which these transactions had actually been carried out. 4. 4. The suit was resisted by the defendant firm on various grounds. It was alleged that the plaintiff was a resident of Mhow Cantonment which was foreign territory so far as Holkar State was concerned. The plaintiff therefore requested the defendant firm to permit him to deal in forward transactions in gold and silver on the credit of the defendant firm. It was agreed that the plaintiff would indemnify the defendant firm for all losses and charges which the defendant firm would require to pay for them and that the defendant firm would receive remuneration at the rate of Rs. 1-12-0 per bar over the value of the transactions put through. But the defendant firm was not the agent of the plaintiff and was not liable to render accounts to the plaintiff. There was no running account of a continuous character wherein lump sum payments were made by the plaintiff without reference to distinct qualities of each Vaida. It was also stated that it was not true that Nanooram ever assured the plaintiff that the accounts would be rendered later. The plaintiff maintained his own accounts and was fully aware of the payments made by the defendants and of the liability incurred by their firm for each Vaida and the plaintiff used to make payments in discharge of these distinct liabilities. It was admitted that the defendant firm received a cheque of Rs. 16,000 dated 25-10-1946 but it was asserted that this was in discharge of the liability incurred in Chaitra Sudi 15 Vaida amounting to Rs. 16,029-8-0. Another cheque was given to Jagannath Neema as payment was to be made for the losses incurred by the plaintiff in Chitra Badi 30 Vaida in the name of the defendant firm and this was done with the consent and privity of plaintiff and Jagannath Neema. The defendant firm maintained that it had nothing to do with this cheque as Neema's liability was discharged by the plaintiff. The accounts were settled on each Vaida and liabilities were discharged on each payment made by the plaintiff and thus there was never any liability to render account. The defendant firm contended that the plaintiff at the most can only claim to reopen particular vaida transactions on the definite allegation that the defendant firm did not in fact make payment alleged or incurred. 5. The defendant firm contended that the plaintiff at the most can only claim to reopen particular vaida transactions on the definite allegation that the defendant firm did not in fact make payment alleged or incurred. 5. On these pleadings two issues were framed in the following words by the Indore State High Court on 13-2-1948 ; (i) Was there surcharge and falsification of accounts by the defendant firm as specified in the statements furnished by the plaintiff and collectively marked 'A' ? (ii) On the pleadings, is the defendant firm not the agent of the plaintiff and therefore not entitled to render accounts ? 6. On 14-2-1948 an application was presented by the pleader for the plaintiff making it clear that the suit was for rendition of accounts on the ground that the defendant was his agent in respect of Vaida transaction in gold and silver and that without prejudice to the claim for an account, the plaintiff had further pleaded in the alternative that the account was liable to be re-opened on the ground of surcharge and falsification. It was also requested that the main issue is Issue No. 2 which may first be decided before proceeding to record evidence on Issue No. 1. We do not know how this application was disposed, of, but the order of the learned Single Judge of Indore State High Court dated 9-4-1948 is in the following words :- "One witness for the plaintiff examined. The point at issue between the parties is whether, there were surcharge and falsification of accounts by the defendant firm as is specified in the statements furnished by the plaintiff and collectively marked 'A'. This involves comparison of the accounts as kept by the defendant with the numerous items made in respect of these transactions in the books of Dalals and in the Registry Office. It therefore appears convenient that these accounts should be examined by a Commissioner and he should report the result in the form of report ........... Mr. D.G. Bhalerao is appointed Commissioner with authority to examine accounts and to examine witnesses if that becomes necessary and to submit his report on issue No. 1 as framed in the case". 7. It appears that the learned Judge of the Indore High Court, who tried the case in the beginning, attached importance only to issue No. 1. Mr. D.G. Bhalerao is appointed Commissioner with authority to examine accounts and to examine witnesses if that becomes necessary and to submit his report on issue No. 1 as framed in the case". 7. It appears that the learned Judge of the Indore High Court, who tried the case in the beginning, attached importance only to issue No. 1. After recording the evidence of two witnesses, a Commissioner was appointed to examine accounts and then the file was, after the formation of Madhya Bharat State, transferred to the District Judge where the report of the Commissioner about accounts was furnished. On the basis of the report, the learned Additional District Judge has passed the decree as stated above. 8. Much of the arguments centred round the wording of the first issue But it has to be borne in mind that the issue is not about "any right to surcharge and falsify" but about a fact whether there was actual surcharge and falsification of the accounts by the defendant firm. Here the words "surcharge and falsification" are used in their ordinary sense which may mean that if any of the parties can show an omission for which credit ought to be given, that is a surcharge ; if anything is inserted that is a wrong charge, he is at liberty to show it and that is falsification. (Halsbury, Vol. 23, page 388 foot note (f)). It is in this sense that the words "surcharge" and "falsification" are used in issue No. 1. It does not show, as has been argued at the bar, that the issue was whether there was any right to 'surcharge and falsification' ? The law is well settled that where a single item complained of was a fraudulent item, the proper order to make was to open the accounts altogether ; but where the item complained of is not a fraudulent item, and the accounts are of some years' standing, the proper order is only to give liberty to surcharge and falsify. ('Gething v. Keighley), (1878) 9 Ch. D. 547 (A)). In- 'Williamson v. Barbour', (1878) 9 Ch D 529 (B), it was made clear that if the impeached accounts contain errors of considerable extent both in number and amount, whether caused by, mistake or fraud, the Court will order such accounts to be opened and will not merely give liberty to surcharge and falsify. D. 547 (A)). In- 'Williamson v. Barbour', (1878) 9 Ch D 529 (B), it was made clear that if the impeached accounts contain errors of considerable extent both in number and amount, whether caused by, mistake or fraud, the Court will order such accounts to be opened and will not merely give liberty to surcharge and falsify. But if a fiduciary relation exists between the parties, then the Court would make a similar order if such accounts are shown to contain less number of errors, or if they contain any fraudulent entries. This principle has been followed in India in- ('A. Rahim v. H.V. Low and Co.'. AIR 1925 Rang 210 (C) and in- 'Bachheylal v. Gundoomal', AIR 1933 Oudh 557 (D)), etc. 9. Mr. Sanghi, on behalf of the appellant, contended that the second issue ought to have been decided first and there can be no doubt about it. But from the evidence recorded by the Commissioner and from the copies of the Bahi Khata that are on record, it is quite obvious that the defendant firm was the agent of the plaintiff and was liable to render accounts. In fact the learned Judge, who tried the case proceeded on that basis and the allegations in the written statement of the defendant firm to the contrary appear to be without any foundation. The fact as has been established by the evidence of the Munim of the defendant firm is clear that the plaintiff depended for his forward transactions upon the defendant firm and that the latter maintained accounts. It is also clear that there was no meeting between the parties to settle the accounts by the ascertainment of the existing balance and that there was no agreement to take gross sum as the balance, a sum which the plaintiff was willing to pay and the defendant was content to receive as a result of these accounts. It has also come out in evidence that the payment of the two cheques was not an indication of any settled account. From the copies of the Bahi Khata that have been produced, it is obvious that there was a running account maintained by the defendant firm and it, is clearly a case of persons standing in fiduciary relation. It has also come out in evidence that the payment of the two cheques was not an indication of any settled account. From the copies of the Bahi Khata that have been produced, it is obvious that there was a running account maintained by the defendant firm and it, is clearly a case of persons standing in fiduciary relation. In this view of the matter, I do not think any purpose would be served by sending the case back for a decision on issue No. 2. I take it that the Court proceeded on the footing that the defendant firm was liable to render accounts to the plaintiff. Mr. Rege, on behalf of the defendant, rightly contended that the whole basis of a decree for accounts is a liability or the part of the defendant to account. As leave has been given to surcharge and falsify the accounts it should mean that the Court below had come definitely to the conclusion that the defendant firm was liable to render accounts. It may further be mentioned that the words of R. 11, O. 26, Civil P.C. clearly indicate that before an order can be made for appointment of a Commissioner, the examination or adjustment of accounts must be considered necessary. I am therefore of opinion that the contention of Mr. Sanghi about remitting the case back for a decision on issue No. 2 does not merit any serious consideration. 10. So far as Issue No. 1 is concerned Mr. Sanghi raised several objections about the jurisdiction exercised by the Commissioner in taking evidence and in submitting his report. I have perused fully the report of the Commissioner and I have no hesitation in observing that the Commissioner throughout the report remained within the limits laid down by the District Judge in his order dated 11-2-1949. However there is some substance in Mr. Sanghi's criticism that the learned trial Judge without considering the objections of the parties to the report of the Commissioner, adopted it without even discussing the evidence on the various points and without analysing the report. I am quite clear in my mind that it is incumbent on a Court to investigate a Commissioner's report and to consider the objections of the parties to that report and then to come to an independent conclusion. I am quite clear in my mind that it is incumbent on a Court to investigate a Commissioner's report and to consider the objections of the parties to that report and then to come to an independent conclusion. In this case the learned trial Court had not at all taken the trouble of scrutinizing the report and consequently we were deprived of the opinion of the Court below while hearing arguments about the report of the Commissioner. 11. It had been alleged by the plaintiff that there were large number of transactions carried on by the defendant firm on his behalf which he had not authorized. The Commissioner's report has negatived this charge. The Court below has not expressed any opinion on the point, whether the report is justifiable on this point. In my judgment this was a question falling entirely within the province of the Court and the Court ought to have expressed a definite opinion on the point. Mr. Sanghi invited our attention to that portion of the statement of Govindlal, Munim of the defendant firm where he said that whenever the plaintiff was absent, the defendant firm would enter into transactions on his behalf only when he received letters of authority from the plaintiff. But the said witness did not produce any letter of authority about the transactions which the plaintiff impeached. He said In the presence of this sort of statement I very much doubt if the report of the Commissioner can be justified on this point. I however, do not think it proper to express any opinion on this point till full opportunity is given to the parties to adduce evidence. 12. On other points the learned Commissioner came to the conclusion that : (i) There was a mistake in the transaction of one bar only as on 29-3-1946 the transaction of one Pat was wrongly entered in the 'Bahi Khata' of the defendant against the plaintiff; and that (ii) there was a mistake in respect of brokerage registry fee; and 'Dharmadaya' in regard to the transaction of 16 bars which were never carried out through brokers, and the brokerage, registry fee and (Dharmadaya) were wrongly charged to the plaintiff. The Commissioner was of opinion that except these two errors, there were no other errors in the account maintained by the defendant. The Commissioner was of opinion that except these two errors, there were no other errors in the account maintained by the defendant. The Court below thought that this was correct and if it was so then Mr. Rege's contention must prevail that the suit ought to have been dismissed; for these are negligible errors in the transactions worth lacs of rupees. The learned counsel for the respondent, therefore, on this ground supported the cross objections filed on behalf of the respondent for the dismissal of the suit. Mr. Rege placed reliance on 'Nalini Kumar v. Gadadhar', AIR 1929 Cal 418 (E) which following the dictum enunciated in- 'Bharat Chandra v. Kiran Chandra', AIR 1925 Cal 1069 (P) held that it is not open to any principal who has got the accounts of his agents in his possession to employ the machinery of the Court for examining the accounts on the off-chance of making his agent liable for any sum which on such examination may be found due from him. In my opinion, this is a sound principle, but due to certain circumstances to be stated later, the principle cannot be made applicable to the facts of the present case. 13. Mr. Sanghi has taken us elaborately through the evidence adduced before the Commissioner and also through his report. He invited our attention to an error whose importance cannot be minimized. In that pana (Ex. P. 1), in possession of the plaintiff, a certain transaction about 6 bars was shown as with one Sironjwlla. It has been mentioned that the rate of one bar was Rs. 162-10-0 and the transactions of 5 bars were effected at the rate of Rs. 163-14-0 per bar. It transpires that in the defendant's book it has been mentioned that the transaction of only one bar was with Sironjwalla and that of 5 bars was with the defendant firm itself. I fail to understand the propriety of hiding from the plaintiff the fact that the transaction of 5 bars was with the defendant firm itself and not with Sironjwalla. Mr. Sanghi urged that this was a case of fraudulent entry. I may not go so far, but certainly there is ground to believe that it lacked of 'bona fides'. 14. I fail to understand the propriety of hiding from the plaintiff the fact that the transaction of 5 bars was with the defendant firm itself and not with Sironjwalla. Mr. Sanghi urged that this was a case of fraudulent entry. I may not go so far, but certainly there is ground to believe that it lacked of 'bona fides'. 14. Then there are large number of wrong entries in the defendant's books and the mistake in these entries has been said to be rectified by applying the so-called "theory of average" It can be explained only by concrete examples. In the transactions of 18-3-1946 the defendant's account books showed transaction about 27 bars of silver at the rate of Rs. 153-1-0 per bar. The plaintiff objected to the rate of ten bars only. The entries in the account books of the defendant firm did not tally with the entries in that of the brokers or in that of the Cotton Contract Office. Jagannath Broker's account books showed three different rates for these bars : 17 bars at the rate of Rs. 153-1-0 per bar. 5 bars at the rate of Rs. 153-0-0 per bar. 5 bars at the rate of Rs. 153-2-0 per bar. In another transaction of 39 bars, the defendant's 'Bahi Khata' showed the rate of Rs. 153-2-0 per bar. The plaintiff took objection to the rate of 21 bars. The broker's books showed different rates for different number of bars, i.e. 13 bars at the rate of Rs. 153-2-0 per bar. 13 bars at the rate of Rs. 153-2-6 per bar. 13 bars at the rate of Rs. 153-1-6 per bar. Of course the average rate will be Rs. 153-2-0 per bar. In another transaction of 19-3-1946, the books of defendant firm showed the rate of Rs. 154 for 27 bars and Rs. 154-2-0 for 29 bars. In his own account, the plaintiff took objection only to the rate shown for 8 bars. The books of Ratanlal Nemkumar brokers showed the following transactions : 27 bars at the rate of Rs. 154 per bar. 22 bars at the rate of Rs. 154-2-0 per bar. 5 bars at the rate of Rs. 154-4-0 per bar. 3 bars at the rate of Rs. 153-14-0 per bar. There is no doubt that the average rate will be the same as shown in the books of the defendant firm. 15. 154 per bar. 22 bars at the rate of Rs. 154-2-0 per bar. 5 bars at the rate of Rs. 154-4-0 per bar. 3 bars at the rate of Rs. 153-14-0 per bar. There is no doubt that the average rate will be the same as shown in the books of the defendant firm. 15. In four other different transactions on different dates, the plaintiff took objection to the rate of 34 bars entered in the 'Bahi Khata' of the defendant firm, and there is not the least doubt that there is considerable difference here from the rates entered in the brokers' books and in the Registers of the Cotton Contract Office. But the defendant firm in all such cases has taken shelter behind the so-called "theory of average"; and the learned Commissioner and the Court below found it a paracea for all the evils of accounting found in the books of the defendant firm. I am not impressed with this theory of average which must have created considerable confusion in the profit and loss account. There is force in Mr. Sanghi's contention that the defendant firm was dealing with certified brokers on behalf of many clients. But the brokers' books or the register of the Cotton Contract Office would not show the clients' names. These names would appear only in the books of defendant. So the 'theory of average' cannot give us a true picture of the transactions entered into by the defendant firm on behalf of the plaintiff. No broker has come forward 10 say that there is a practice of giving the average rate and not the rate which a certain transaction was carried out. Even in the written statement this theory of average was not in the least mentioned. In my opinion all these entries must be considered to be erroneous, and I feel that the defendant firm was grossly negligent in its duties to record the transactions justly and truly in the manner in which they were carried out in the market. I need not emphasize that the right of a principal to have an account taken in equity rests upon the trust and confidence reposed in the agent and that it is the duty of every agent to render just and true account of his agency to the principal. I need not emphasize that the right of a principal to have an account taken in equity rests upon the trust and confidence reposed in the agent and that it is the duty of every agent to render just and true account of his agency to the principal. The entries in the account books of the defendant firm do not show that it adhered to this duty in respect of the transactions carried on behalf of the plaintiff. 16. Considering that it is a case of principal and agent and that a fiduciary relation existed between the parties and that the impeached accounts contain many errors sufficient in number and importance to entitle the Court to reopen the accounts, the question requires serious consideration whether a decree passed by the Court below to surcharge and falsify the accounts be maintained or whether it should be altered to one for reopening the accounts. It is very well known that a decree to surcharge and falsify the accounts generally causes hardship to the principal, while a decree for reopening the accounts is bound to create difficulties for the agent. In a case concerning a fraudulent entry reported in- 'Allfrey v. Alfrey', (1849) 1 Macs G. 87 (G), the Lord Chancellor explained the difficulties in the two cases thus : "It is impossible to say, that, on going through an open account after a great length of time, which the accounting party has not for many years, called upon to do, he may not be exposed to very great hardship, and may not be able to exonerate himself from certain obvious charges which may be made against him, and which he must be subject to, until he can relieve himself by evidence. On the other hand, it is quite obvious that there may be an utter inability in the party injured, under a mere permission to surcharge and falsify, to discover what the fraud was, or what the error was, he being a stranger altogether in the transaction, only knowing the transaction as falsely represented to him by the party guilty of fraud. It would, therefore, be in vain to tell him "If you can point out an error it shall be corrected"; for that is exactly the difficulty under which he labours; he is ignorant of the transaction and yet he is called upon to prove and substantiate an error". 17. It would, therefore, be in vain to tell him "If you can point out an error it shall be corrected"; for that is exactly the difficulty under which he labours; he is ignorant of the transaction and yet he is called upon to prove and substantiate an error". 17. A Court always leans in favour of the innocent and the injured party and considering that the plaintiff is the injured party and that the accounts are of very short duration and are also not of long standing, I am of opinion that it is a fit case where the decree to surcharge and falsify the accounts should be altered to one for reopening the accounts. I would, therefore, allow the appeal with costs and alter the decree passed by the Court below to that of reopening the accounts. The trial Court will give the Commissioner already appointed suitable directions in this respect. The cross-objections would be dismissed with costs. 18. DIXIT, Offg C.J. :- I am also of the opinion that there should be a decree in favour of the appellant for the rendition of accounts by the defendant-respondent. In this case the important question that should have been first determined by the trial Court was whether the defendant rendered accounts to the plaintiff. It is only after determining this issue that the lower Court could have proceeded to consider whether on account of certain errors in the account rendered it should be re-opened or whether the plaintiff should be given leave to surcharge and falsify the account. Instead of following this course the trial Court took it for granted that the accounts had been rendered by the defendant to the plaintiff. There was some controversy at the Bar whether in view of the order dated 9-4-1948, passed by the trial Court, it can be taken that the parties were agreed that the accounts had been rendered. Having regard to the application presented by the plaintiff stressing the importance of deciding first the question whether the accounts had been rendered, as also the letter dated 11-2-1949. addressed by the Commissioner to the learned District Judge seeking clarification about the scope of his authority under the Court's order of 9-4-1948, it is difficult to hold that the plaintiff had abandoned the issue of the rendition of accounts. addressed by the Commissioner to the learned District Judge seeking clarification about the scope of his authority under the Court's order of 9-4-1948, it is difficult to hold that the plaintiff had abandoned the issue of the rendition of accounts. Be that as it may, even if it is assumed that the defendant did render accounts to the plaintiff, I think for the errors pointed out by my learned brother in the accounts rendered, they must be re-opened. The error in the application of average rates to certain transactions shown to have been effected on behalf of the plaintiffs is of sufficient magnitude and importance. It is true that there would be no difference in the total value or price of a number of transactions whether it is determined according to the individual rates of the transactions or the average rate, provided the transactions are between one and the same parties. But here the average rate that was applied by the defendant for explaining away certain transactions effected on behalf of the plaintiff, was arrived at by mixing up transactions with other parties. 19. I, therefore, agree with the order proposed by my learned brother that in place of the decree for surcharge and falsification, a preliminary decree directing the defendant to render accounts to the plaintiff should be passed. The trial Court will now take further proceedings according to law. Order accordingly.