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Raja Bhagwan Baksh Singh Vs. Damodarji Joshi and ors. - Court Judgment

LegalCrystal Citation
CourtAllahabad
Decided On
Judge
Reported in59Ind.Cas.20
AppellantRaja Bhagwan Baksh Singh
RespondentDamodarji Joshi and ors.
Cases ReferredMcKellar v. Wallace
Excerpt:
.....negatives the allegation of security. e, the gold) would be detained for two or three months and clearly implied that it would be given back after that period. the statement he made in his deposition as to the date of the return of the gold was also clearly untrue. we are satisfied, in agreement with the court below, that the gold was not given to the plaintiffs by way of security. 16. we think that, although the appeal has failed, the respondents should not be allowed costs of the appeal as a mark of our disapprobation of the conduct of the principal plaintiff in making numerous statements in this case which we cannot help thinking were, to say the least of them, untrue statements......on behalf of the appellant that it was agreed at the time of the execution of the promissory note in suit that the accounts would be explained and adjusted when payment would be finally made is, in our judgment, without force and it has not been established that such an agreement was entered into by the parties. it is true that mr. mcgregor, the manager of the defendant, wrote to the plaintiffs on the 9th of april 1913, for a detailed account of their dealings with the raja, but he said that he wanted this because muhammad amin had not got all the papers thereby implying that he had some of the papers. he repeated the request on june 7th, 1913 (see rule 40 and rule 4'.) on the 1st of july 1913, however, he wrote to the plaintiffs as follows: 'i have seen your banking account with.....
Judgment:

1. This appeal arises out of a suit for recovery of Rs. 3,50,000, principal, and Rs. 58,746-1-6, interest, in all, Rs. 4,08,746-1-6, on the basis of a promissory note executed by the appellant on the 9th of November 1910.

2. The plaintiffs are a firm of jewellers and money-lenders of Benares, who carry on considerable business. The defendant-appellant is the Raja of Amethi and a Taluqdar of Oudh. In 1904, a suit was pending against him in regard to his Estate and for the expenses of that suit he was in need of money. He was approached by the plaintiff's firm and dealings began with him. Large sums of money were advanced to him from time to time and he also purchased jewelry of considerable value from the plaintiffs. It is alleged, and not denied, that he received from the plaintiffs nearly three lacs of rupees in cash and it is stated that jewelry of the value of nearly Rs. 90,000 was supplied to him. Accounts were submitted to him from time to time and he signed them and, on two previous occasions, executed promissory notes for the amounts shown by the accounts to be due. The final promissory note is that of the 9th of November 1910, for the principal sum of Rs. 3,50,000. The rate of interest mentioned in the note is 8-annas per cent. per mensem, that is, 6 per sent. per annum, simple interest. The plaintiffs, however, state that the rate orally agreed upon was compound interest at the same rate with monthly rests and interest has been claimed at that rate. Credit has of course, been given for payments made by the defendant.

3. The defendant-appellant, whilst admitting execution of the promissory note, asserted that the first plaintiff, Damodarji Joshi, had ingratiated himself into the favour of the defendant and acquired great influence over him; that in collusion with the defendant's servants he fraudulently caused the defendant to sign accounts and execute promissory notes; that it was understood between the parties that accounts would be explained and adjusted when final payment would be made; that this had not been done, and that the full amount of the last promissory note was not due to the plaintiffs. He urged that the accounts should be re-opened and fresh accounts taken of the dealings between the parties. He objected to the charging of compound interest, to the claiming of interest on the price of the jewelry sold to him, to the price of the jewelry and, in particular, to that of a blue diamond, and in substance he contended that he had been overcharged to the extent of about Rs. 50,000.

4. The Court below has decreed the claim in part. The learned Subordinate Judge refused to re-open the accounts on the ground that a settled account could only be re opened where a fiduciary relation existed between the parties and no such relation existed in the present case. As to the blue diamond, he held that the first plaintiff was the agent of the defendant for the purchase of it and that he could only charge the price actually paid for it to the celler. The learned Judge, therefore disallowed Rs. 10,100 the amount of difference between the price charged and the amount paid. As to other articles of jewelry, be held that it had not been established that any excessive charge was made. He further held that the plaintiffs had wrongfully detained certain bars of gold which they had taken from the defendant and pawred wish the Allahabad Bank and that the defendant was entitled to interest on the value of the gold bars. He accordingly deducted from the claim the amount of such interest. Ha also was of opinion that the plaintiffs were entitled to obtain simple interest on the amount of the promissory note for Rs. 3,50,000 and not compound interest as claimed and he did not allow further interest for the period subsequent to the institution of the suit. The total amount for which a decree was passed was Rs. 3,51,255-9-3. The defendant has preferred this appeal and the plaintiffs have filed cross-objections in regard to the order of the Court below as to the gold bars and the interest for the period of the pendency of the suit and future interest.

5. It is contended on behalf of the appellant that it has been proved that he provisionally signed the promissory note on the understanding that full and true accounts would be rendered at the time of the final closing of the account and it was strenuously urged that, in any case, the appellant was entitled to have the accounts re-opened.

6. The view of the learned Subordinate Judge that settled accounts can be re opened only where a fiduciary relation exists is, in our opinion, incorrect. Settled accounts may be reopened on the ground of substantial error or fraud. This was held in Williamson v. Barbour (1878) 9 Ch. D. 529 : 50 L.J. Ch. 147 : 37 L.T. 698, where the law on the subject was thus laid down, by Jessell, Master of the Rolls:

if they (the errors) are sufficient in number and importance, whether they are errors caused by mistake, or errors caused by fraud, the Court has a right to open the accounts.... But...when the account is between persons in a fiduciary relation and the person who occupies the position of accounting party, that is, the trustee or agent, is the defendant, it is easier to open the account than it is in oases where persons do not occupy that position, that is to say, that a less amount of error will justify the Court in opening the account.' His Lordship added that 'Every case must depend on its own circumstances.' The same view was held by the Privy Council in McKellar v. Wallace 5 M.I.A. 372 : 8 (SIC). P.C. 378 : 1 Equity Rep. 309 : 1 Sar. P.C.J. 453, 18 E.R. 986 : 14 E.R. 144 : 97 R.R. 62. In the present case it is clear that there was no fiduciary relation and it has not been established that fraud was perpetrated. We have, therefore, to consider whether 'the accounts have been shown to be erroneous to a considerable extent both in amount and the number of items.

7. As we have already said, it is admitted that large sums of the money were advanced to the appellant in cash. It is further admitted by the appellant that he received twelve articles of jewelry from the plaintiffs which are still in his possession and have been used by him or by members of his family. As regards these articles, exception has been taken chiefly in regard to the blue diamond. In respect of the other articles it was stated generally that the price had been overcharged. An attempt was made to support this allegation by the evidence of a jeweller, but this evidence is far from satisfactory. As we shall point out hereafter, the accounts submitted to the appellant from time to time as to the detailed value of these articles which were accepted without demur and as to which at no time during the whole course of the dealings between the parties was any objection raised. As for the blue diamond the Court below has reduced the price charged for it by Rs. 10,100. The ground on which it has done so, namely, that the plaintiffs were the agents of the defendant in the matter of the purchase of the blue diamond does not commend itself to us. The fact, however, remains that the account has been re-opened as to the price of the blue diamond and the plaintiffs have submitted to the order of the Court below in the matter and have taken no exception to it. It is not, therefore, necessary for us to enter further into the question of the price of the blue diamond. As to the other jewels there is no satisfactory reason for re-opening the account.

8. The remainder of the account between the partier consists of (1) moneys paid in cash to or on account of the appellant, (2) sums expended by the plaintiffs in connection with a garden-house of the appellant in Benares, and (3) interest on the moneys advanced as well as on the price of jewelry which remained unpaid. As we have mentioned above, there is no dispute in regard to the first item. It has not been denied that all the sums entered in the accounts were paid either to the appellant in cash or to his creditors such as the Benares Bank. The correctness of items of the second description has not been challenged, and the items have also been proved. The total of these items is, moreover, comparatively small. It is the item of interest which is said to have been erroneously charged in the accounts and it is this item to which almost the whole of the argument addressed to us on behalf of the appellant was directed.

9. The plaintiffs have in their accounts charged compound interest with three monthly rests. The defendant appellant, denies that he ever agreed to pay compound interest and it is the charging of compound interest to which he objects and which is alleged to be a serious error in the accounts. There is no direct evidence, save the statement off the first plaintiff, Damodarji, that an agreement was entered into for the payment of compound interest. The statement of Damodarji on the point seems to be hearsay but we find that, ever since the commencement of dealings between the parties, on the 20th of November 1904, com-pound interest has been charged in the accounts. These accounts are printed on page 82 and subsequent pages of the respondent's book. It appears that since that date accounts were made out and submitted to the defendant. In the years 1904 and 1905 promissory notes appear to have been taken from the defendant on each occasion when money was borrowed by him in cash from the plaintiffs, but when the dealings were extended and mutual confidence was established the practice of taking promissory notes seems to have been discontinued. We find that in 1907 when partition took place between the several members of the plaintiff's firm an account was prepared of the amount due to the firm by the defendant. This account, which is printed or page 82 of the respondent's book, showed a balance of RS. 1,14,672-7-9 as due by the defendant and was signed by him. Chhunnu Lal who made the partition added further interest and declared the total sum due up to 31st August 1907, and allotted it to the share of the plaintiffs. Not only was the account signed in recognition of its being correct but on the 24th of November 1907, a promissory note was executed by the defendant for the total amount due up to the aforesaid date, including compound interest, In this promissory note reference was made to the accounts of the plaintiffs. In accounts for subsequent years compound interest was charged every quarter till on the 25th of October 1908, a balance was struck and signed by the defendant admitting Rs. 2,02,884-1-2 to be due, for this amount he executed a promissory note on the 19th of May 1909, After this date also dealings continued between the parties and on the 9th of November 1910, the promissory note for Rs. 3,50,000, which is the foundation for the suit, was executed. It recites that the account of the note was admitted to be due. In the accounts for the whole of this period compound interest was charged and there was no concealment or misrepresentation of any sort. The defendant asserts that the accounts were never explained to him and that he signed such papers and documents as he was asked to sign. It is said on his behalf that he was entirely under the influence of his servants, Muhammad Amin and Ragho Ram, that these men were bribed by the plaintiffs and that they obtained the defendant's signatures on accounts and other papers. The evidence on the record does not satisfy us that these men had such influence over the defendant that they could induce him blindly to sign accounts admitting liability for large sums of money and execute promissory notes for these sums. The defendant is the owner of a large estate and is apparently a man of affairs. He had managers, some of whom were Europeans, to look after his estate and his pecuniary dealings. It is not, therefore, likely that he did not satisfy himself as to the general correctness of the accounts. As we have said above, compound interest was charged every quarter and nothing was concealed. Many of the amounts paid by the defendant were credited towards interest. We do not think it probable that all these entries escaped the attention of the defendant on that they were withheld from him or that he was deceived in any way as regards those entries. It has not been proved to our satisfaction that Muhammad Amin and Ragho Ram were bribed. The only evidence to which our attention has been sailed consists of letters from which it appears that on one occasion a email sum of money was paid to Muhammad Amin and Damodarji offered to pay the expenses of his medical treatment when he was ill. This evidence is hardly sufficient to prove bribery. Another circumstance referred to on behalf of the appellant is that the plaintiff Damodarji wrote a letter to Ragho Ram in which he told him that, the accounts should be signed and a promissory note drawn up in a particular form. It is not unusual for a creditor to ask his debtor to execute documents in a particular form but his writing to the debtor's servants to ask his master to sign in that form does not raise the inference that undue influence was to be used. Muhammad Amin and Ragho Ram have not been examined as witnesses), although they appear to have, made over to their master some of the letters written to them by Damodarji, plaintiff, and they have not ventured to depose before the Court that they never explained accounts to their master and that he did not understand the accounts when he signed them and executed promissory notes. Under these circumstances, we are unable to hold that the appellant was ignorant of the contents of the accounts signed by him. As these accounts contained clear and specific en-tries of compound interest and they were accepted by the defendant without any objection on his part, he acquiesced in the charging of compound interest and the inference is not unreasonable that he had agreed to pay compound interest. In coming to this conclusion we have not overlooked the fact that in none of the early promissory notes executed by the defendant there is any mention of compound interest; but, for the reasons stated above, we think it is now too late for the defendant to repudiate the inclusion of compound interest in the accounts and to urge that the accounts are erroneous. The Court below was, in our opinion, right in refusing to re-open the account which was adjusted by the execution of the promissory note on which the claim is based.

10. The contention put forward on behalf of the appellant that it was agreed at the time of the execution of the promissory note in suit that the accounts would be explained and adjusted when payment would be finally made is, in our judgment, without force and it has not been established that such an agreement was entered into by the parties. It is true that Mr. McGregor, the manager of the defendant, wrote to the plaintiffs on the 9th of April 1913, for a detailed account of their dealings with the Raja, but he said that he wanted this because Muhammad Amin had not got all the papers thereby implying that he had some of the papers. He repeated the request on June 7th, 1913 (see Rule 40 and Rule 4'.) On the 1st of July 1913, however, he wrote to the plaintiffs as follows: 'I have seen your banking account with the Raja Saheb of Amethi and find that since the pro-note handed to you by the Raja Saheb for Rs. 3,50,000 on 9th November 1910, a further sum of Rs. 47,241-13-0 has accrued on interest, making up a total due to you of Rs. 3,90,241-13-0. I am arranging that, in the end of September 1913, if your amount is not paid off in full, a mortgage-bond will be executed including interest up to the date of its execution.' This letter, which is printed on page 42 of the respondents' book, shows not only that the manager had seen the plaintiff's accounts but also that the amount of the promissory note in suit, together with subsequent interest, was due and that arrangements would be made for its payments. A letter in such unequivocal terms is inconsistent with the theory of a future adjustment of accounts.

11. A suggestion was finally made to the effect that the promissory note in question was not executed on the date it bears but on a later date. There is, in our judgment, no foundation for this suggestion. The plaintiffs had nothing to gain by antedating the document.

12. For the above reasons, we are of opinion that the defendant's appeal is without force and must be dismissed.

13. We have now to consider the objections raised on behalf of the plaintiffs respondents.

14. The first objection relates to some bars of gold which the, plaintiffs admittedly took from the defendant and did not return for a long time. The plaintiffs have stated in the plaint that the gold was given to them as security for the money due to them and this statement has been repeated by Damodarji in his deposition. The defendant, on the other Land, asserts that the bars of gold were taken from him by Damodarji for the purpose of raising money to enable him to purchase a (SIC) necklase. The gold bars were handed over to Damodarji on the 18th of July 1910, and it has been proved by incontrovertible evidence that he pawned them with the Benares Branch of the Allahabad Bank three days afterwards as security for a loan of Rs. 2,04,000 and they remained in the custody of the Bank till October 13 h, 1913, although the debt had been discharged in the previous month of December. The statement of Damodarji that the gold had been given to him as security for the money due to him is clearly untrue. In the receipt which he gave for the gold on the 18th July 1910 (page 114A) there is no mention of security at all and the letter which he wrote to the defendant on the 19th of July 1910 (page 97 A) clearly negatives the allegation of security. In that letter he stated that the deposit (i.e, the gold) would be detained for two or three months and clearly implied that it would be given back after that period. In a subsequent letter, dated December 10, 1910, (page 97 A), referring to a demand for the gold, he said that it was of no use to him and added, 'As it was kept with you so it is kept with me.' He also said that he was making arrangements about it. It will be remembered that all this time the gold wag pledged with the Allahabad Bank for the money borrowed from it by Damodarji, go that Damodarji was making an untrue representation in this letter. The statement he made in his deposition as to the date of the return of the gold was also clearly untrue. We are satisfied, in agreement with the Court below, that the gold was not given to the plaintiffs by way of security. The defendant has sworn that he asked for the return of the gold through Muhammad Amin. This is corroborated by the admission of Damodarji, as contained in the letter of the 10th of December 1910, to which we have referred above. It is thus manifest that the gold, which was of large value was wrongfully detained for upwards of three years in spite of demands for its return. The Court below was, therefore, justified in allowing compensation to the defendant for the wrongful detention of his gold and we think that the amount of compensation was properly and reasonably assessed. In our judgment, the objection of the plaintiffs in regard to the gold and the defendant's plea that the compensation awarded is inadequate ate both untenable.

15. The next objection advanced on behalf of the respondents is that the Court below has improperly refused to award interest to them for the period of the pendency of the suit as also future interest. As we have already stated, the learned Subordinate Judge awarded simple interest only on the amount of the promissory note in suit and not compound interest as claimed. This he did up to the date of the institution of the suit. The plaintiffs have taken no exception to this award of interest, but they urged that further interest for the period subsequent to the date of the suit ought to have been awarded. The reason assigned by the Court below for its action may be open to criticism. But a Court has a discretion to the award of interest after the instantiation of a suit of this description. Having regard to the fast that throughout the whole period of the dealing between the partiss compound interest has been charged and the total amount of such interest exceeds a lac of rupees the Court below was, in our opinion, justified in declining to award further interest. We, therefore, disallow the respondents' objection as to further interest.

16. We think that, although the appeal has failed, the respondents should not be allowed costs of the appeal as a mark of our disapprobation of the conduct of the principal plaintiff in making numerous statements in this case which we cannot help thinking were, to say the least of them, untrue statements. We accordingly dismiss the appeal and overrule the respondent's objections and direct the parties to bear their own costs in this Court.


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