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2025 DIGILAW 1173 (TS)

Yamini Vision v. Hathway Cable And Data Com Pvt. Ltd.

2025-10-07

ABHINAND KUMAR SHAVILI, VAKITI RAMAKRISHNA REDDY

body2025
JUDGMENT : Vakiti Ramakrishna Reddy, J. This Appeal is filed by the appellants/plaintiffs against the Judgment and Decree dated 06.09.2017 passed in O.S.No.163 of 2005 (hereinafter will be referred as ‘impugned judgment’) on the file of Chief Judge City Civil Court at Hyderabad (hereinafter will be referred as ‘Trial Court’), wherein the suit filed by the plaintiffs against the defendant for recovery of money was dismissed. 2. For the sake of convenience, the parties shall be referred to as they were arrayed before the Trial Court. I. BRIEF FACTS: 3. The plaintiff No.2 and the defendant entered into a Business Transfer Agreement (BTA) dated 04.09.2001 under which the plaintiff No.2 agreed to transfer the business of the plaintiff No.1 for Rs.68,84,500/-. While 70% of the consideration i.e., Rs.48,19,150/- was paid upfront, the balance of 30% i.e., Rs.20,65,350/-, due by 31.12.2001 under Clause 3.3.2, was not paid. 4. Instead, the defendant gave oral assurances, leading the plaintiffs to continue transactions on its behalf. Between 2001 and 2004, the respondent made part payments and, in a fax, dated 14.07.2004 (Ex. A-24) admitted the liability. Despite these allegations, the defendant continued part payments in October and December 2004 in relation to other suits (O.S. No.513/2005 and O.S. No.255/2005) and compromised O.S. No.190/2005 by paying Rs.37,00,000/- on 01.09.2008. 5. Having exhausted all remedies, the plaintiffs instituted the present suit seeking restoration to pre-agreement status, damages of Rs.31,80,639/- with future losses, or alternatively Rs.1,22,00,000/- as damages. Notably, the respondent/defendant remained ex parte for nearly 16 months before filing a written statement and failed to examine any witnesses or adduce evidence in defense. 6. The defendant resisted the claim, contending that the BTA dated 04.09.2001 was subject to the conditions stipulated under Clauses 3 and 5 therein. It was contended that the plaintiffs had to increase the subscriber base to 5,140 and ensure monthly collections of Rs.8,03,400/-. The plaintiffs allegedly failed to meet these obligations and misrepresented both subscriber numbers and collections. The defendant therefore denied liability for the alleged balance of Rs.20,65,350/-. II. ISSUES FRAMED BY THE TRIAL COURT 7. On the basis of pleadings, the Trial Court framed the following issues: i. Whether the plaintiff is entitled for the suit amount together with interest @ 18% per annum? ii. Whether the plaintiff is entitled for "status-quo ante" position? iii. The defendant therefore denied liability for the alleged balance of Rs.20,65,350/-. II. ISSUES FRAMED BY THE TRIAL COURT 7. On the basis of pleadings, the Trial Court framed the following issues: i. Whether the plaintiff is entitled for the suit amount together with interest @ 18% per annum? ii. Whether the plaintiff is entitled for "status-quo ante" position? iii. Whether the plaintiff is entitled for damages and future loss together with interest @ 18% per annum? iv. Whether the plaintiff is entitled for declaration that the clauses 5.5, 8 and 10 of the Agreement dated 04.09.2001 as void? v. Whether the suit claims are in time? vi. To what relief? III. EVIDENCE ON RECORD 8. During the course of trial, one B.V. Narsimha Reddy, the General Power of Attorney holder of Plaintiff No.2, represented the plaintiffs and deposed on their behalf as PW1 and got marked Exs.A1 to A43 on their behalf, whereas the defendant neither examined itself or any witness nor produced any documentary evidence on its behalf. IV. FINDINGS OF THE TRIAL COURT 9. The Trial Court dismissed the suit by judgment dated 06.09.2017, holding that: a. The plaintiffs failed to prove fulfillment of contractual conditions under Clause 3.3.2 of the BTA. b. Without establishing subscriber strength and collection figures, the balance of Rs.20,65,350/- did not become payable. c. The clauses challenged by the plaintiffs (5.5, 8 and 10) could not be said to be unconscionable or opposed to public policy. d. Consequently, the plaintiffs were not entitled to the relief claimed. V. SUBMISSIONS OF THE PARTIES: a) Submissions on behalf of the Appellants/Plaintiffs: 10. The plaintiffs contend that the judgment is perverse, contrary to law and evidence, as the defendant neither entered the witness box nor disputed exhibits, and by virtue of Order VIII Rule 5 CPC and Sections 58 , 111, and115 of the EVIDENCE ACT , the burden lies on the defendant. 11. The trial court failed to consider that under the agreement dated 04.09.2001 the plaintiffs transferred business, while the defendant had to pay the balance by 31.12.2001 but never invoked penal clauses, instead giving repeated assurances and part payments till 2008. 12. It is further contended that, Ex. A25 (payment of Rs.37,00,000/- in 2008), Ex. A18 (deposit slips), and Ex. A24 (admission of dues) prove liability, but were ignored, along with binding precedents. 13. Despite alleging excess payments in Ex. A3 and Ex. 12. It is further contended that, Ex. A25 (payment of Rs.37,00,000/- in 2008), Ex. A18 (deposit slips), and Ex. A24 (admission of dues) prove liability, but were ignored, along with binding precedents. 13. Despite alleging excess payments in Ex. A3 and Ex. A5, the defendant continued to pay, as evidenced by Ex. A22 and Ex. A25, which the trial court failed to appreciate. 14. It was further submitted that trial court also overlooked audit reports confirming 995 subscribers, the justified plea to declare clauses of Ex. A1 void, and the fact that Ex. A3 was antedated. The plaintiffs had shown defendant’s dominant position and fiduciary role, with admissions unchallenged in cross-examination, yet the case was not appreciated properly, by the Trial Court. 15. On the basis of the aforesaid submissions, one B.V. Narsimha Reddy, representing the plaintiffs has prayed that, there being merit in the appeal, the same may be allowed. b) Submissions on behalf of the respondent/defendant: 16. Per contra, learned counsel for the defendant contends the suit is unsustainable as there was no valid privity of contract; plaintiffs failed to meet conditions of BTA dated 04.09.2001, including 5,140 subscribers and Rs.8,03,400/- monthly collections. 17. It is argued that plaintiffs failed to prove their case; non-examination of the defendant is not admission, and Ex. A18, A24, A25 do not prove liability, being unrelated or unilateral documents. 18. It is submitted that the payments made from 2001 to 2008 were under a separate consultancy agreement, not acknowledgment of liability; since plaintiffs failed to achieve targets, the defendant could withhold or renegotiate balance consideration and plaintiffs misrepresented subscriber base, audit exposed false claims, and failure to meet contractual thresholds disentitles them to relief. The 2013 amendment of plaint altered the cause of action and introduced time-barred claims, rendering them impermissible under Article 27 of the LIMITATION ACT . 19. In such circumstances referred to above, the learned Counsel for the defendant prayed that, there being no merit in the present appeal, the same deserves to be dismissed. VI. ISSUE FOR CONSIDERATION: 20. In view of the rival contentions, the issue that arises is: “Whether the dismissal of the plaintiffs’ suit is sustainable in law, or whether an adverse inference ought to have been drawn against the defendant under Section 114(g) of the Indian EVIDENCE ACT ?” VII. DISCUSSION AND ANALYSIS: 21. The plaintiffs produced the documentary evidence (Exs. ISSUE FOR CONSIDERATION: 20. In view of the rival contentions, the issue that arises is: “Whether the dismissal of the plaintiffs’ suit is sustainable in law, or whether an adverse inference ought to have been drawn against the defendant under Section 114(g) of the Indian EVIDENCE ACT ?” VII. DISCUSSION AND ANALYSIS: 21. The plaintiffs produced the documentary evidence (Exs. A1–A43) which included acknowledgments of liability and part payments. Ex. A24 clearly acknowledged dues, while Ex. A25 reflected a substantial payment of Rs.37,00,000/-. These documents were neither rebutted nor explained by the defendant. 22. The plaintiffs, having produced substantial documentary evidence to establish their claim, had duly discharged their burden of proof. Consequently, the onus shifted to the defendant to substantiate its plea that the plaintiffs failed to meet the specific condition contained in the agreement in achieving the subscriber and collection targets. The fact that the entire records in that regard were only with the defendant, and despite having exclusive possession of the said relevant collection records and relevant data, the defendant failed to produce them and also abstained from entering the witness box, thereby attracting adverse inference against the Defendant. 23. Section 114(g) of the EVIDENCE ACT mandates that when a party withholds best evidence, the Court may presume that such evidence would, if produced, be unfavourable. 24. In Gopal Krishnaji Ketkar v. Mohamed Haji Latif , [( AIR 1968 SC 1413 )] the Hon’ble Supreme Court categorically held that even if the burden of proof does not strictly lie on a party, the Court may draw an adverse inference if such party withholds evidence in its possession which could elucidate the matter in controversy. Similarly, in Vidhyadhar v. Manikrao , [ (1999) 3 SCC 573 ) ] it was held that a party who abstains from entering the witness box and fails to support his own pleadings, exposes himself to an adverse inference that his case is not genuine. Again, in Khatri Hotels Pvt. Ltd. v. Union of India , [ (2011) 9 SCC 126 )] ., the Hon’ble Supreme Court reiterated that suppression or non-production of vital documents disentitles the party from any equitable or discretionary relief. Hence, when a party fails to produce the best available evidence, such failure raises a presumption against him. 25. Again, in Khatri Hotels Pvt. Ltd. v. Union of India , [ (2011) 9 SCC 126 )] ., the Hon’ble Supreme Court reiterated that suppression or non-production of vital documents disentitles the party from any equitable or discretionary relief. Hence, when a party fails to produce the best available evidence, such failure raises a presumption against him. 25. Applying these settled principles to the present case, it is evident that the defendant, having taken over the business under the BTA, was in exclusive possession of all operational and collection records. His failure to produce those records, along with his deliberate abstention from the witness box, warrants an adverse inference under Section 114(g) of the EVIDENCE ACT . 26. This Court, therefore, presumes that if the defendant had produced those records, they would have shown that the plaintiffs had, in fact, complied with the requirements under Clause 3.3.2 of the Agreement, thereby making the balance consideration payable. The subsequent payments evidenced by Exs. A24 and A25, which clearly acknowledge the subsisting dues, further strengthen the adverse inference drawn against the defendant. 27. The Trial Court committed an error in dismissing the suit without drawing such inference. Once the adverse inference is drawn, coupled with the unrebutted evidence of the plaintiffs, their entitlement to the balance consideration is clearly established. VIII. CONCLUSION: 28. For the foregoing reasons, this Court finds that: (i) The Trial Court erred in not applying Section 114(g) of the EVIDENCE ACT . (ii) The defendant suppressed best evidence and avoided the witness box, thereby vitiating his defense. (iii) The plaintiffs claim stand established on the strength of Exs. A1–A43 and unrebutted testimony. IX. RESULT: 29. The Appeal is allowed. The judgment and decree 06.09.2017 passed in O.S.No.163 of 2005 is set aside. 30. The suit is decreed in favour of the plaintiffs for Rs.31,80,639/- with interest at 9% per annum from the date of suit till realization, together with costs throughout. 31. As a necessary corollary, all pending miscellaneous/interlocutory applications, if any, in the appeal, shall also stand closed.