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Himachal Pradesh High Court · body

2000 DIGILAW 46 (HP)

MOHAN MEAKIN LTD. v. SURJIT BEVERAGES PVT. LTD.

2000-03-20

R.L.KHURANA

body2000
JUDGMENT R.L. Khurana, J.—The plaintiff-company has filed the present suit against the defendant-company for the recovery of Rs. 34,89,664.57 paise on the following averments : 2. The plaintiff-company is a Public Limited Company duly incorporated under the provisions of the Companies Act, 1956, and is engaged in the manufacture and sale of Indian Made Foreign Liquor (for short : IMFL) and Beer etc. having various units and sale outlets all over the country. The registered office of the company is in District Solan. 3. The defendant-company is a private limited company duly incorporated under the Companies Act, 1956 having its registered office at Mohali, District Ropar (Punjab) and a branch office at Delhi. 4. The defendant-company has been making purchases of IMFL and Beer from the plaintiff from time to time. The supplies were made to the defendant-company by the plaintiff-company from 19.6.1987 to 1.3.1991 from its. wholesale outlet at Ludhiana and from November 1989 to November 1990 from its wholesale outlet at Bombay. The plaintiff-company is maintaining a mutual current and open account in its books in the name of defendant-company in which all supplies made from time to time to the defendant-company and payments received from it from time to time were being duly accounted for. As per such account of sum of Rs. 28,39,241.72 paise is due from the defendant-company in respect of the supplies of IMFL and Beer made from its Ludhiana wholesale outlet during the period 19.6.1987 to 1.3.1991. Another sum of Rs. 1,18,098.14 paise is due in respect of the supplies of IMFL and Beer made to the defendant-company during the period 22.11.1989 to 23.11.1990 from Bombay wholesale outlet. Since the defendant failed to pay the amount in terms of the conditions attached to the sales, the plaintiff-company is entitled to interest on the outstanding amount at the rate of 18% per annum amounting to Rs. 5,32,321.71 paise. The total sum due towards principal and interest comes to Rs. 34,89664.57 paise. 5. The defendant-company while resisting the suit, admitted the supplies of IMFL and Beer made to it by the plaintiff-company from time to time. The outstanding amount, as claimed by the plaintiff-company was denied. Maintenance of mutual, open and current account was also denied. 5,32,321.71 paise. The total sum due towards principal and interest comes to Rs. 34,89664.57 paise. 5. The defendant-company while resisting the suit, admitted the supplies of IMFL and Beer made to it by the plaintiff-company from time to time. The outstanding amount, as claimed by the plaintiff-company was denied. Maintenance of mutual, open and current account was also denied. It was pleaded that nothing is due to the plaintiff-company and that inspite of repeated demands having been made, the plaintiff-company has failed to supply a complete statement of account. The accounts in the ledger are not correct and have been manipulated. It was further pleaded that the amount of security deposit to the tune of Rs. 10,00,000/- and another sum of Rs. 18,39,241.72 paise, being the value of goods returned have not been adjusted and accounted for by the plaintiff-company. The defendant company also raised objections as to the territorial jurisdiction of this court and that the suit has not been filed by a duly authorised and competent person. 6. On the pleadings of the parties, following issues were framed on 24.3.1994:— 1. Whether this court has no jurisdiction to try the suit? OPD._ 2. Whether Shri H.N. Handa is competent to file the suit? OPP. 3. Whether there was mutual current and running account with the defendant, if so, its effect? OPP. 4. Whether defendants are liable for adjustment of Rs. 10,00,000/ as alleged? OPD. 5. Whether plaintiff owes Rs. 22,88,798/- as alleged? OPD. 6. Whether there is no cause of action for plaintiff to file the suit as alleged? OPD. 7. To what amount the plaintiff is entitled to? OPP. 8. To what rate of interest or any interest the plaintiff is entitled to? OPP. 9. Relief. 7. I have heard the learned Counsel for the parties and have also gone through the record of the case. My findings on the above issues are as under:— Issue No. 1. 8. Admittedly, the defendant-company neither resides nor works for gain within the territorial jurisdiction of this court. It is also not disputed that all the supplies were made by the plaintiff-company to the defendant-company either from its Ludhiana wholesale outlet or from its Bombay wholesale outlet and that no supply was made from any outlet falling within the territorial jurisdiction of this Court. 9. It is also not disputed that all the supplies were made by the plaintiff-company to the defendant-company either from its Ludhiana wholesale outlet or from its Bombay wholesale outlet and that no supply was made from any outlet falling within the territorial jurisdiction of this Court. 9. The various invoices through which supplies were made to the defendant-company have been placed on the record. These invoices are Ex. PW 2/2 to PW 2/730. The same contain a stipulation that it is agreed between the parties that in the event of any dispute arising between the parties, only the courts in Himachal Pradesh shall have the jurisdiction. 10. Similar stipulation in the invoices came up for consideration before this court in Inder Singh Dhirv. Messers Mohan Meakin Brewaries Ltd. [ILR (1977) HP 271] and in Mohan Meakin Ltd. v. M/s. Rajmat Liquors (P) Ltd. [1997 (1) Sim. L.C. 401], and it was held, on facts similar to the one involved in the present case, that only the courts in Himachal Pradesh would have the jurisdiction. 11. In view of the ratio laid down in the abovementioned two cases, Bit is held that the court has the jurisdiction to try the present suit. The issue is decided against the defendant-company. Issue No. 2. 12. The present suit has been filed by the plaintiff-company through its Secretary PW 1 Shri H.N. Handa, who also holds the power of attorney, copy of which is Ex. P.I. 13. There is no evidence in rebuttal by the defendant-company. Therefore, it is held that Shri H.N. Handa, being the Secretary and General Attorney of the plaintiff-company is competent to file the suit. The issue is according^ decided in favour of the plaintiff-company. Issue No. 3. 14. The present suit for recovery of the outstanding amount has been filed by the plaintiff-company on the basis of a mutual, open and current account. 15. The defendant-company, on the other hand, has denied the mutual, open and current account and has contended that the suit would not be governed by Article 1 of the Limitation Act, 1963. Therefore, the suit is not within time since the same has been filed for the recovery of the amount after the expiry of the requisite period of three years from the day the amount claimed is alleged to be due. 16. Therefore, the suit is not within time since the same has been filed for the recovery of the amount after the expiry of the requisite period of three years from the day the amount claimed is alleged to be due. 16. Following two questions arise for determination under the present issue:— (i) Whether there was a mutual, open and current account t between the parties; and (ii) If the answer to question No. (i) above is in the negative, whether the suit is within time. 17. Mutual, open and current account means a course of dealing where each party furnishes credit to the other on the reliance that on settlement the accounts will be allowed, so that one will reduce the balance due on the other. To be mutual, there must be transactions on each side creating independent obligations on the other and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations. 18. In Hindustan Forest Company v. Lal Chand and others [AIR 1959 SC 1349], the parties entered into an agreement for the supply of grains by the sellers to the buyers at the rates and times specified. The agreement stated that on the day it had been made the buyer had paid to the sellers Rs. 3,000/- and had agreed to pay a further sum of Rs. 10,000/- within ten or twelve days as advance and the balance due for the price of goods delivered after the expiry of every months. The said sum of Rs. 10,000/- was later paid by the buyers to the sellers. Various quantities of goods were thereafter delivered by the sellers to the buyers and though such deliveries had not been made strictly at the times specified in the contract, the same had been accepted by the buyers. The buyers in their turn had made various payments towards the price of goods delivered but not month by month and had not further paid it in full. The last delivery of goods was made on 23.6.1947 and the suit for recovery of the balance amount was filed on 10.10.1950. 19. It was held that there was no reciprocity of dealings. There were no independent obligations. The last delivery of goods was made on 23.6.1947 and the suit for recovery of the balance amount was filed on 10.10.1950. 19. It was held that there was no reciprocity of dealings. There were no independent obligations. Insofar as the- payments had been made after the goods had been delivered,they had been made towards the price due and were in discharge of the obligations created in the buyers by the deliveries made to them to pay the price of the goods delivered and did not create any obligation on the sellers in favour of the buyers. The sum of Rs. 13,000/- paid as and by way of advance payment of price of goods to be delivered was paid in discharge of obligations to arise under the contract. It was paid under the terms of the contract which was to buy the goods and pay for them. It did not itself create any obligation on the sellers in favour of the buyers. It was not intended to be and did not amount to an independent transaction, detached from the rest of tiie contract. The sellers were under an obligation to deliver the goods, but such obligation arose from the contract and not from the payment of the advance alone. If the sellers had failed to deliver the goods, they would have been liable to refund the monies advanced on account of price of goods and might also have been liable in damages, but such liability would then have arisen from the contract and not from the fact of the advances having been made. Apart from such failure, the buyers could not recover the monies paid in advance. 20. A Division Bench of this Court in M/s. Roshan, Lal Kuthiala and another v. Raja Rana Yogendra Chandra and others [AIR 1996 HP 14], has held that an account is mutual, open and current when it is an account between two parties, having mutual dealings which is running or current, that is, not closed, and open. Where one person supplies to other person one kind of goods or work and obtains from him another kind, debiting him with cost of the former and crediting him with cost of the latter, the account is mutual. Where one person supplies to other person one kind of goods or work and obtains from him another kind, debiting him with cost of the former and crediting him with cost of the latter, the account is mutual. There must be a mutual credit, founded on a subsisting debt on the other side or an express or an implied agreement for a set off of mutual debts. Where there is obligation only on one side and at no time was there over payment, it cannot be said that there is mutual, open and current account. In order that the account liability is mutual, there must be transactions on each side, creating independent obligations on the other and not merely complete or partial discharges of such obligations. 21. The Madras High Court in Raju and others v. L. Kumaramuthu [AIR 1975 Madras 1] has held that mere striking of the balance after the parties have had a continuous dealing as between themselves cannot, prima facie, make that account a mutual, open and current account. The account may be current and equally it may be open, but unless it is mutual it ceases to be a mutual, open and current account. Unless it is established that during the dealings one party has become a creditor to the other and at another time the other party who is the creditor, has become a debtor to the other which brings out the essence of mutuality in the accounts, it cases to be a mutual, open and current account. 22. In the present case, only the plaintiff has been making deliveries of goods to the defendants and price thereof was being paid by the defendants from time to time either in full or partial discharge of the obligations. There has been no independent obligation on the plaintiff in favour of the defendants. In the accounts being maintained by the plaintiff, the price of goods supplied were being debited and the monies received from time to time from the defendants towards the price of goods supplied, were being credited. The transactions between the parties were thus pure and simple that of sale of goods. There has been no mutuality of obligations. Therefore, it cannot be said that there has been a mutual, open and current account between the parties. 23. Next comes the question whether the suit is within time. The transactions between the parties were thus pure and simple that of sale of goods. There has been no mutuality of obligations. Therefore, it cannot be said that there has been a mutual, open and current account between the parties. 23. Next comes the question whether the suit is within time. The plaintiff company has claimed the suit amount being the balance of the cost of IMFL and Beer supplied during the period 19.6.1987 to 1.3.1991 from its Ludhiana outlet. The suit has been filed on 30.3.1992. 24. The present suit being the simple suit for the recovery of the value of goods supplied, the, same would be barred by time in so far as the goods which were siipplied before 31.3.1989. In other words, the suit is within time only in respect of the recovery of value of goods supplied during the period 1.4.1989 to 1.3.1991 from Ludhiana outlet. The suit in respect of goods supplied from Bombay outlet fro-n 22.11.1989 to 23.11.1990 also is within time. The issue is accordingly decided partly in favour of the plaintiff-company and partly in favour of the defendant-company. Issues No. 4, 5 and 7. 25. All these three issues are being taken up together since they are co-related and interconnected. 26. Ex. PW 2/1 is the statement of account in respect of the goods supplied to the defendant-company by the plaintiff-company from its Ludhiana wholesale outlet during the period 19.6.1987 to 1.3.1991. After adjusting the amounts received from the defendant-company during this period from time to time, the outstanding amount comes to Rs. 28,39,244.72 paise. In view of the findings recorded under Issue No. 3 above that the claim pertaining to the value goods supplied before 31.3.1989 has become time barred, the amount becoming time barred is to be deducted from the outstanding amount of Rs. 28,39,244.72 paise. 27. As per statement of account Ex. PW 2/1, the outstanding amount for the period upto 30.3.1989, the claim as to which has become time barred, was Rs. 15,34,224.57 paise. If such amount is deducted, the total outstanding amount pertaining to supplies made from Ludhiana outlet during the period 1.4.1989 to 1.3.1991 would come to Rs. 13,05,020.15 paise. To this amount is to be added the sum of Rs. 1,18,098.14 paise being the price of the supplies made from Bombay outlet during the period 22,11.1989 to 23.11.1990. 15,34,224.57 paise. If such amount is deducted, the total outstanding amount pertaining to supplies made from Ludhiana outlet during the period 1.4.1989 to 1.3.1991 would come to Rs. 13,05,020.15 paise. To this amount is to be added the sum of Rs. 1,18,098.14 paise being the price of the supplies made from Bombay outlet during the period 22,11.1989 to 23.11.1990. The total amount thus outstanding as on the date of suit comes to Rs. 14,23,118.29 paise. 28. PW 2 Shri R.K. Arora, Accounts Officer of the plaintiff-company has admitted to the following facts:— (a) the defendant-company had deposited a sum of Rs. 10,00,000/ - with the plaintiff-company as security and that such security amount has not so far been adjusted; (b) A credit note to the tune of Rs. 17,74,417.15 paise dated 29.3.1992 was issued in favour of defendant-company. The amount of such credit note has not been adjusted while calculating the suit amount. 29. Thus a total sum of Rs. 27,74,417.15 paise payable to the defendant-company by the plaintiff-company has not been accounted for by the plaintiff-company. If such amount is accounted for and adjusted against the amount found due from the defendant company, then nothing would remain due since as against the total claim of Rs. 14,23, 118.29 paise against the defendant company, the plaintiff-company has a sum of Rs. 27,74,417.15 paise in its hand for adjusting against the outstanding amount. 30. There is yet another aspect of the case. Statement of account Ex. PW 2/1 pertaining to supplies made from Ludhiana is incomplete. PW 2 Shri R.K. Arora has deposed:— I".......It is correct that the copy of the statement of account Ext. PW 2/1 pertaining to Ludhiana depot as filed alongwith the suit is not complete inasmuch as it does not contain the reverse entries pertaining to the above referred to three amounts. It is correct that all the entries appearing at page No. 42 of the said ledger have not been reflected in the statement of account, copy of which is Ext. PW 2/1. It is correct that the said ledger has remained in possession of the plaintiff till date. It was brought by me even on the last date of hearing. I do not know in whose hand the. entries appearing at page 42 of the register are. This ledger was being maintained by the accountant of Ludhiana Depot. PW 2/1. It is correct that the said ledger has remained in possession of the plaintiff till date. It was brought by me even on the last date of hearing. I do not know in whose hand the. entries appearing at page 42 of the register are. This ledger was being maintained by the accountant of Ludhiana Depot. It is correct that all the entries appearing at page 42 are in same ink having been made at one and the same time. These entries were made before the conclusion of the audit. The plaintiff is maintaining all the audit reports. I cannot say if the entries at page 42 were made before the internal audit or before the statutory audit......" 31. Therefore being an incomplete and incorrect statement of account, no reliance can be placed thereon. On the basis of evidence coming on record, it is held that after adjusting the amount of security deposit and that of the credit note, nothing is due from the defendant-company. All these issues are as such decided against the plaintiff-company and in favour of the defendant- company. Issue No. 6. 32. In view of the findings that nothing is due from the defendant-company, it is held that there is no cause of action to the plaintiff-company to file the present suit. The issue is accordingly decided in favour of the defendant-company. Issue No. 8. 33. Since nothing is due from the defendant-company, the question of interest does not arise. The present issue has, therefore, become redundant. Relief. 34. As a result of the above findings, the present suit fails and the same is accordingly dismissed with costs. Counsel fee assessed at Rs. 5,500/-. Appeal dismissed.