1. Civil Revision Petitions Nos. 777 and 778 of 1931.--These petitions arise out of two suits O.S. Nos. 56 and 58 of 1926 on the file of the Additional Subordinate Judge of Rajahmundry. The plaintiffs in both suits are the same, being commission agents who also undertook to finance the operations of the merchants who employed them. The defendants are timber merchants who used to procure timber from the Agency Tracts and despatch it to the plaintiffs for sale. In O.S. No. 58 there is a single defendant, who traded alone, and in O.S. No. 56 the 4th defendant was his partner in dealings of this character. The plaintiffs claimed considerable sums of money as due to them on accounts, being the excess of advances made over the value of timber received. They pleaded in each case a settlement of account as having taken place in the year 1922, these settlements being followed by further dealings. The defendants disputed these settlements, although not in very unequivocal terms. Their case in fact was twofold, first, that the so-called settlements were to be subject to further scrutiny, and secondly, that even if it be held that they were definite settlements of account they were vitiated by fraud. The first issue in each case inquired whether for the reasons stated in their written statements the defendants were entitled to re-open these settlements of account. In order to obtain material upon this issue the petitioner, who is the sole defendant in the one suit and the 1st defendant in the other, applied in the two suits for permission to inspect the plaintiffs' accounts relating to the pre-settlement period and then to cross-examine them upon the results of the inspection. When the applications came on for hearing both the petitioner and the pleader were absent, so that the Court had to come to an ex parte decision. It held that the petitioner had not qualified himself to make such a request because his allegations of fraud and misconduct against the plaintiffs were couched in general terms, and no specific instances were adduced. Since that was the sole ground upon which the petitions were dismissed, I propose first to consider whether the request should have been rejected for this reason.
2. It is common ground that the settlements were based wholly upon plaintiffs' accounts, the defendants not having maintained any accounts. It is accordingly urged before me that in such circumstances, where the specific evidence is exclusively in the hands of one party, it is not reasonable to insist upon the other party giving definite particulars of misconduct which an examination of that evidence alone would disclose. The very reason why inspection is needed, is in order that the principal may be in a position to formulate his charges against the agent. It is not therefore essential in every case to require specific allegations before making an order of the kind sought. I have not been shown any Indian Law directly upon this point but I think that English decisions clearly show that this position is correct. The learned Additional Subordinate Judge refers to only one English case, Parkinson v. Hanbury (1867) L.R. 2 H.L. 1. What that case decided was that where a plaintiff seeks to open a settled account there must be in the bill a distinct statement of specific errors in the account. This is what Lord Westbury calls 'the old rule, clearly enunciated by Lord Hardwicke,' and he goes on to observe that having: regard to the manner in which the evidence is taken in Courts of Equity there would be no protection to a defendant if he had not, by proper averments in the bill, distinct notice of the allegation that he had to meet. This objection, I think, may be got over, under our procedure, by requiring a party to file additional pleadings embodying the necessary particulars obtained from inspection; and having regard to later case-law more precisely upon the topic now in question, I do not think that this case can be regarded as conclusively settling the: law. If it did so settle it, clearly not only this application but the connected issue could not be entertained. In Whyte v. Ahrens (1884) 26 Ch.D. 717 a firm of merchants in London sued a firm carrying on business in Japan whom they had employed as agents to purchase Japanese goods and forward them to England, the allegation being that the defendants had purchased the goods at prices higher than the current prices and had secretly received commissions from the vendors and made profits in other ways. The charges were stated only in general terms, no particulars being mentioned. The defendants pleaded a settlement of account and the plaintiffs applied for a summons for discovery of documents in order to upset it. Bacon, V.C., in allowing the application referred to Order 19, Rule 6, which corresponds to our Order 6, Rule 4, but pointed out that the plaintiffs were unable to state particulars because all the papers relating to the transactions were in the possession of the defendants.
They say they have not given evidence because they cannot, but if the defendants furnish them with the papers or books of accounts they will then give the particulars, and shew more distinctly the grounds on which they claim to be entitled to relief.
3. In the Court of Appeal Cotton, L.J., agreed with the view-taken by the, learned Vice-Chancellor but Fry, L.J., dissented, basing himself upon Parkinson v. Hanbury (1867) L.R. 2 H.L. 1. He considered that the pleadings were not adequate for the trial of the particular issue and that the rule required a statement of 'a particular error or errors, or fraud or frauds, or suppression of moneys received; in fact a distinct allegation of the specific error.' The same, question came before the Court of Appeal in Leitch v. Abbott (1886) 31 Ch.D. 374 where Chitty, J., had refused to make an order. The Court of Appeal reversed the decision for the reasons given in the judgments of Cotton and Bowen, L.JJ., Fry, L.J., only remarking that the inclination of his opinion was in favour of the judgment of the Court below. Cotton, L.J., observes:
There is here a general allegation of fraud and the plaintiff wants discovery to enable him to prove his allegation. It may be that he will afterwards have to amend his pleadings, but to say that he must give details of the fraud in the first instance would be to reduce the right of discovery in cases of fraud to very narrow limits indeed.
4. Bowen, L.J., puts the matter cogently thus:
Ought, then, the generality of an allegation of fraud to be a bar to the right of discovery? It seems to me that the very fact that the pleader. is unable to plead except in general terms, is, in many cases, the very reason why he should have discovery from the other party, so as to enable him to plead the fraud in detail.
5. Again in Sachs v. Speilman (1888) 37 Ch.D. 295, where the defendants asked for further particulars of the transactions alleged in the plaint before putting in their statement of defence, North, J., after reviewing the. previous cases, based his decision upon similar considerations.
6. It appears to me that, in the absence of any reasons for holding that the procedure should be different under our Code, these decisions ought to be followed, and that the correct view accordingly is that the mere inability of a party to particularise in his allegations does not afford a sufficient ground for refusing to grant him inspection. This, as I have said, was the only reason given for dismissing the applications and unless there be any other grounds for refusing them I think that they should be granted. The issue has been framed and the nature of the case is such that the defendant may well be unable to secure justice without inspecting the plaintiffs' accounts. I have been asked to refrain from interfering upon the ground that these are very old suits, dating from 1925, and that the defendants have been responsible for much of the delay that has occurred. This argument has not been supported, however, by explanations showing how the defendants, or which of them, were responsible. It is not contended that this application itself has led to delay and I cannot, therefore, find that this would be good ground for refusing it. A better argument is that the applications came at a late stage. The issues were framed in February, 1926, and no satisfactory reason has been given why these applications were not made as soon as the parties went to trial on the question of re-opening the settlement. What I have to consider, however, is whether the plaintiffs are likely to be prejudiced by the order being made now. The 1st plaintiff is said to have died and the 2nd plaintiff's examination has been proceeding for some time and has not yet been completed. This is the witness whom it is desired to cross-examine after inspection of the accounts and I have not been shown how such an inspection at the present stage would result in prejudice. The lateness of the application may better, I think, be dealt with by an order as to costs than by denying the defendants' facilities which they ought otherwise to enjoy. For these reasons I allow the petitions and direct the Lower Court to grant the inspection applied for and thereafter to allow due opportunity for cross-examination. This order will, however, be contingent upon the petitioner praying the costs of the respondents of these applications in the Lower Court and here unconditionally and before the inspection is permitted. After inspection and before the trial is resumed, the defendant in O.S. No. 58 and the 1st defendant in O.S. No. 56, who is the petitioner here, will file a statement specifying in detail the objections which he takes to the accounts, the settlement of which in each case he desires to re-open.