1. This second appeal raises an important and difficult question of law. In order to appreciate the question, it is necessary to set out a few relevant facts.
2. The appellant herein had dealings with the respondents. Monies were borrowed by the respondents on khatha and also by pledging gold from time to time. While the pledge transactions carried lesser interest, higher interest was payable on khatha dealings. The case of the appellant is that as a result of an arrangement between the parties, the interest on pledge transactions were carried over to the khatha account and that the respondents were liable to pay higher rate of interest. The appellant produced his account books and examined himself as P. W. 1. He also produced correspondence to show that entries were made in his accounts in accordance with the arrangement. He strongly relied upon a letter written by the respondents dated 26-12-1958 and marked as Ex. A-8 in which it was stated by the respondents that they had also made credit and debit entries in accordance with the appellant's letter.
The District Munsif of Visakhapatnam accepted the appellant's case and decreed the suit. But on appeal, the Subordinate Judge of Visakhapatnam came to a different conclusion. As I am satisfied that the Subordinate Judge erred in not referring to the several documents in the case as also in his view as to the effect of the non-production of the respondents' accounts and as I propose to call for a revised finding, I do not wish to express myself on the merits of the respondents' claim. I shall only deal with the question of law, viz., as to the inference to be drawn as against the respondents who have not produced their accounts.
3. It is admitted by D. W. 1. the son of the 1st defendant, that they also maintain accounts relating to pledges and khatha transactions with the appellant. He stated that the accounts relating to 1947 and 1948 were filed in the Agency Subordinate Judge's Court, Jaipur. But, so far as the ac-counts for the year 1949 were concerned, he admitted that they were in Jaipur. It was further elicited in the course of the cross-examination that the respondents posted their accounts in accordance with the account copies furnished by the appellant. While the appellant produced his regularly main-tained accounts upon which the Trial Court placed great reliance, the respondents kept back from the court their accounts. The Subordinate Judge held that no adverse inference could be drawn as against the respondents inasmuch as the appellant did not summon or give notice to the respondents to pro-duce their accounts. The point to be determined is whether this view of the Subordinate judge is right.
4. The point is directly governed by an un-reported Bench decision of this Court in Rednam Dharmarao v. Rednam Viswanadha (Unreported judgment of this Court in Appeal No. 741 of 1951), to which I was a party. Reliance was placed in that decision upon the observations of Lord Shaw in Murugesam Pillai v. M. D. Gnana Sambandha Pandara Sannadhi, ILR 40 Mad 402: (AIR 1917 PC 6). It was stated thus:
'Lord Shaw, in delivering the judgment of the Judicial Committee, condemned the practice which has grown up in Indian Procedure of those in possession of important documents or information lying by, trusting to the abstract doctrine of the onus of proof, and failing accordingly to furnish to the courts the best materials for its decision.' The distinction between the documents being in the possession of third parties and the parties to the suit is clearly pointed out in the following terms: 'With regard to third parties, this may be right enough; they have no responsibility for the conduct of the suit; hut with regard to the parties to the writ it is, in their Lordships' opinion, an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the court the written evidence in their nossession which would throw light upon the proposition.''
The view taken by the Privy Council in the aforesaid decision is in accordance with the provisions of Section 114 of the Indian Evidence Act. Section 114 enacts that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events human conduct and public and private business, in their relation to the facts of the particular case. Illustration (G) provides that the Court may presume that evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it. It is important to note that in drawing the presumption, the expression used in Section 114 is 'may' and not 'shall'. The note to illustration (g) in Section 114 also shows that no presumption should be drawn if a man refuses to produce a document which would bear on a contract of small importance on which he is sued, but which might also injure the feelings and reputation of his family. That note gives the clue as to how the presumption should be applied i. e,, regard should be had to the facts and circumstances of each case.
5. A few other Privy Council decisions taking the same view may next be referred to. The first of those decisions is that reported in Srinivasa Moorthy v. Venkata Varada Aiyangar, ILR 34 Mad 257 (PC). Lord Macnaghten confirmed the decision of the High Court and agreed with the view of Subrah-mania Ayyar J. It was held that as all the testator's papers came at his death into the hands of the defendant and as he did not produce them to show how much of the assets left by the testator were his own acquisitions, the learned Judges of the High Court were right in drawing an adverse inference as against the defendant. The view expressed by Lord Shaw in ILR 40 Mad 402: (AIR 1917 PC 6) was reiterated by the Privy Council in Bameshwar Singh v. Bajit Lal, AIR 1929 PC 95. Lord Blanesburgh held that the excuses made by the defendant for the non-production of the relevant documents were unsatisfactory and unreliable.
Like the learned Judges of the High Court ha considered that 'their non-production is due to the fear that, if produced, they would either establish the plaintiffs claim, or, in view of the defendant's admission as to the existence somewhere within the village three jotes of the plaintiff of the area assigned would lead to a successful claim albeit in another suit, which would be more serious for the defendant than that made in this suit.' His Lordship next referred to the views expressed by Lord Shaw in ILR 40 Mad 402: (AIR 1917 PC 6) and expressly endorsed his approval of those observations. Lord Tankerton in delivering the judgment of the Judicial Committee in Mahabir Singh v. Ramanadhwaj Prasad Singh, 64 Mad LJ 413: (AIR 1933 PC 87) also expressed the same view. Reference was made to Section 114(g) of the Evidence Act. His Lordship stated that before drawing an inference adverse to a party, the only condition necessary was that the Court must be satisfied that the evidence should be produced.
6. Sri E. Venkatesam, the learned advocate for the respondents however contended that it is open to a litigant to refrain from producing any documents which he considers irrelevant and that if the opposing litigant is dissatisfied, he should apply for an affidavit of documents and obtain inspection and production of all that appear to him in such affidavit to be relevant and proper. He further contended that without following the procedure laid down in Orders XI and XVI C. P. C., it was not open to that party nor the Court at his suggestion to draw any inference as to the contents of the document not produced. In support of his argument, he strongly relied upon the decision of the Privv Council in Mt. Bilas Kunwar v. Desraj Ranjit Singh, ILR 37 All 557: (AIR 1915 PC 96). Referring to the non-production of the plaintiffs books, the High Court of Allahabad observed as follows:
'Furthermore, the plaintiffs produced none of their books, a matter to which we attach great significance, to show that any rent Was received in respect of this bungalow. It may be that if those books were produced, they would have shown that in some way the rent was credited to Musammat Jagmag Bibi or set off against some claim they had against her.'
On appeal Sir George Farwell delivering the judgment of the Privy Council held that the view of the High Court was wrong and made the following remarks:
'The High Court Judges 'attach great significance' to the non-production of the hooks showing the accounts of the general estate, and appear to draw an inference therefrom adverse to plaintiffs claim; and such inference is. in their Lordships' opinion, unwarranted. These hooks do not necessarily form any part of the plaintiff's case; it is of course possible that some entries might have appeared therein relating to the bungalow. But it is open to a litigant to refrain from producing any documents that he considers irrelevant; if the other litigant is dissatisfied, it is for him to apply for an affidavit of documents, and he can obtain inspection and production of all that appear to him in such affidavit to be relevant and proper. If he fails so to do, neither he nor the court at his suggestion is entitled to draw any inference as to the contents of any such documents. There is no ground for any inference such as is made in the High Court that the books, if produced, would have shown rent credited to Jagmag or set off against some claim against her. They related to a different property, and the possibility of entries relating to the bungalow therein is very remote, but even if it had been greater, the court was not entitled to draw any such inferences, It is for the litigant who desires to rely on the contents of documents to put them in evidence in, the usual and proper way; if he fails to do so no inference in his favour can be drawn as to the contents thereof.'
I have no doubt that this case strongly supports the respondent's contention. I find it difficult to reconcile it with the Privy Council decisions referred to in the earlier part of my judgment.
7. It is however significant to note that Lord Shaw, who was a party to the earlier decision in ILR 37 All 557: (AIR 1915 PC 96) expressed a different view in ILR 40 Mad 402: (AIR 1917 PC 6). In the latter decision he drew the distinction between the documents being in the possession of third parties and the documents being in the possession of parties to the suit. He forcibly pointed out that it would be 'an inversion of sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the written evidence in their possession which would throw light upon the proposition.' All the subsequent Privy Council decisions have followed this view. It might therefore be reasonably inferred or held that the Privy Council changed the view expressed in ILR 37 All 557: (AIR 1915 PC 96).
As already stated supra, in none of the Privy Council cases except in ILR 37 All 557: (AIR 1915 PC 96) was it held that in order to raise the presumption under Section 114(g) of the Evidence Act, it was necessary to follow the procedure of giving a notice for the production of documents under order XI C. P. C., or to summon the documents under Order XVI C. P. C. The only important condition laid down is that the party should prove that the document is in existence and is in the possession or custody of the party against whom the adverse inference is sought to be drawn.
8. The decision in ILR 37 All 557: (AIR 1915 PC 96) was followed in Gordhan Das v. Anand Prasad, ILR 1942 All 247: (AIR 1942 All 242), Premraj v. Nathumal, ILR 1936 Nag 142: (AIR 1936 Nag 130), Chela Panchan and Co. v. Mangtulal Bagaria 154 Ind Cas 48: (Pat) and Chandra Narayan Deo v. Ramachandra, ILR 24 Pat 541: (AIR 1946 Pat 66). The Privy Council decision in ILR 40 Mad 402: (AIR 1917 PC 6) is not referred to or discussed in any of those cases. In Shivaprasad Singh v. Prayag Kumari Debee, ILR 61 Cal 711: (AIR 1935 Cal 39), both the Privy Council decisions in ILR 37 All 557: (AIR 1915 PC 96) and ILR 40 Mad 402: (AIR 1917 PC 6) are referred to but no attempt is made to reconcile the conflicting views expressed therein. The Privy Council decision in ILR 40 Mad 402; (AIR 1917 PC 6) is similarly Followed in Gurusami Nadar v. Gopalaswami Odayar, ILR 42 Mad 629; (AIR 1919 Mad 444), Shankar Rao v. Kamta Prasad, ILR 1946 Nag 844: (AIR 1947 Nag 129), Chidambaram v. Chidambaram, AIR 1951 Trav-Co. 87 and Palaniappa v. A. and F. Harvey, AIR 1953 Trav-Co. 481. There is no reference or discussion of the contrary principle laid down in ILR 37 All 557: (AIR 1915 PC 96).
9. The next important decision, which has to be referred to, is the decision of the Supreme Court in Hiralal v. Badkulal, : 4SCR758 which, in my opinion, concludes the matter. Manajan J. followed the decision of the Privy Council in ILR 40 Mad 402: (AIR 1917 PC 6) and AIR 1929 P. C. 95. The relevant observations are at page 226 and are as follows:
'Mr. Bindra tried to get out of this situation by urging that it was no part of the defendants' duty to produce the books unless they were called upon to do so and the onus rested on the plaintiffs to prove their case. This argument has to be negatived in view of the observations of their Lordships of the Privy Council in ILR 40 Mad 402: (AIR 1917 PC 6) which appositely apply here..... This rule was again reiterated in AIR 1929 PC 95.'
Though no express reference is made to the decision in ILR 37 All 557: (AIR 1915 PC 96). I am inclined to hold that negativing the contention of Mr. Bindra amounts to preferring the view of the Privy Council in ILR 40 Mad 402: (AIR 1917 PC 6) to that of ILR 37 All 557: (AIR 1915 PC 96).
10. The conflict of view between the two Privy Council decisions has been recently noticed in Nathu Lal v. Phool Chand, AIR 1955 Vindh Pra 6 and Ridhikaran Ramadhin v. French Motor Car Co. Ltd., : AIR1955Ori60 . In both the cases, an attempt was made to explain away the Privy Council decision in ILR 37 All 557: (AIR 1915 PC 96.) as not laying down any principle of law but only turning upon the particular facts of the case viz., that the documents not produced were irrelevant or immaterial documents. Rao J., delivering the judgment of the Bench of the Orissa Hgh Court in : AIR1955Ori60 , expressed the distinction thus:
'There the concerned documents which were not produced were documents irrelevant to the case and it was held in those cases that if irrelevant documents which are not material for the purposes of the case are not produced, no adverse inference can be drawn against their non-production unless the party is summoned to produce those documents.'
Giving my best consideration. I am unable to appreciate the distinction pointed out by them. If the documents are found by the Court as wholly irrelevant or immaterial, their non-production even after notice to produce cannot affect or alter the situation, I do not wish to rest my judgment on this slender distinction.
11. As there is a conflict of authority between the decisions of the Privy Council, I wish to apply the principle laid down in Salmond's Jurisprudence, 10th Edition, at page 182, viz.,
'a precedent that would otherwise possess absolute authority loses this authority in three cases: (1) where there is a conflicting precedent of equal authority; . . . . '
and choose the view which commends itself to me. In the present case, I am inclined to take the same view as expressed in ILR 40 Mad 402; (AIR 1917; PC 6).
12. I may also base my judgment on the principle of law laid down by Lord Selborne in Campbell v. Campbell (1880) 5 AC 787). The relevant observations are at p. 798 and are as follows:
'If the two cases are not to be so reconciled, I apprehend that the authority, which is at once the more recent and the more consistent with general principles, ought to prevail.'
Lord Selborne's observations have been applied in Suryanarayana Rao v. Sarabayya, 9 Ind Cas 173 (Mad) (FB). It was pointed therein that the principle laid down as regards decisions of the House of Lords is also true of other tribunals of last resort like the Privy Council. As the decision in ILR 40 Mad 402: (AIR 1917 PC 6) is later than the decision in ILR 37 All 557: (AIR 1915 PC 96) and is in accordance with the provisions of Section 114(g) of the Evidence Act, I follow the later view.
13. As the Courts in India are also not bound by the decisions of the Privy Council after India was constituted into a Sovereign Democratic Republic and are free to consider the question on its own merits and as the Supreme Court in : 4SCR758 and the Bench of this Court in (Unreported judgment of this Court) Appeal No. 741 of 1951 have followed the decision in ILR 40 Mad 402: (AIR 1917 PC 6) I am inclined to hold that the Subordinate Judge was wrong in his view as to the inference to be drawn on the non-production of the respondents' account books.
14. The Subordinate Judge is therefore directed to submit a revised finding after perusing the entire oral and documentary evidence in the case. He is also at liberty to consider and dispose of any application that might he made on behalf of the respondents for admisssion of their account books as additional evidence. Time for submitting the finding one month after the re-opening of the High Court after summer recess. Time for objections 10 days after the receipt of the findings.