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Petitioner: KHATOON BEGUM AND 4 OTHERS VS Respondent: MESSRS HYESONS COMMERCIAL AND JUDGMENT
Court Name: Sindh High Court Judge(s): Ajmal Mian Title:KHATOON BEGUM AND 4 OTHERS vs MESSRS HYESONS COMMERCIAL AND
JUDGMENT
Reported As: 1980 CLC 1666 Result: Suit decreed Judgment JUDGMENT ' This is a suit for the recovery of Rs, 5,32,004.77 filed by the deceased Shaikh Muhammad Usman Azad, whose legal heirs were brought on record after his death on 11th September, 1964. The facts leading to the filing of the above suit are that on 10th August, 1963 there was an agreement between defendant No, 1 and the deceased on the one hand as the promoters of a then proposed private limited company nameed 'Daily Anjam Ltd.' and the deceased on the other hand. The following were the main terms of the agreement Exh. P1/25. {{TABLE}} (1) "That the promoters shall form a private limited Company with a paid up capital of Rs, 1,00,000. (2) That the promoters shall contribute capital in the following proportions : #TBS Rs, 1,00,000 #TBE #TBS Mr. Muhammad Usman Azad. 20,000 #TBE #TBS Hyesons Commercial & Industrial Corporation Limited, and or its nominees ... Rs, 80,000 #TBE {{TABLE}} ' That the goodwill of the said business of publishing 'DAILY ANJAM' at Karachi and Peshawar with the exclusive use of name "DAILY ANJAM" as part name of the Company and the right to publish 'ANJAM' daily, weekly, fortnightly and monthly at Karachi, Peshawar and other places shall be transferred to the Promoters and later to the Company by the party of the second part for a consideration of Rs, 1,00,000 (Rupees one lakh) which shall be paid by the Company to the party of the second part.
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' That the party of the second part hereby agrees to transfer all furniture, fittings and fixtures, and all the tenancy rights in the buildings, press premises, office premises, godowns at present used in connection with the business of printing and publishing Daily Anjam at Karachi and Peshawar to the Promoters if required to do so and later to the Company. ' That the party of the second part hereby agrees to sell and transfer at cost price to the promoters if required to do so and later to the Company all plant and machinery at Karachi and Peshawar including Rotary machines and other machines recently imported and not yet installed as well as chemicals, etc." 2. In pursuance of the above agreement defendant No, 1 registered a private limited company under the name and style of Daily Anjam Limited (which is defendant No, 6 in the suit). Defendants Nos. 2 to 5 and the deceased were the directors of the Company but the controlling shares and the management was entirely in the hands of defendants Nos. 2 to 5. It has been averred that defendants Nos. 1 to 5 took over the business of publishing the Daily Anjam at Karachi and Peshawar from 1st July, 1963 and as the private limited company had not been formed and arrangement for publishing and carrying on the business had not been made by the promoters the paper continued to be published from its old office and the promoters and later on defendant No, 1 used and continued to use all furniture's, fittings, fixtures and all the Press premises, office premises, godowns, etc. And are continuing to do so uptil today. It has been further averred that the defendants also used the stock of newsprints belonging to the deceased for the publication of Daily Anjam from Karachi and Peshawar and that the cost of these properties is estimated at Rs, 4,34,635.65. It has also been averred that the promoters and later the company, defendant No, 6, did not at any time require to purchase the property mentioned except for the newsprint, which they consumed and for which they agreed to pay and that the price of the same also could not be determined by consent between the deceased and the promoters and later by defendant No, 6. It has been further averred that the deceased has also paid salary of the staff amounting to Rs, 80,000 and has further spent a sum of Rs, 50,067.67 as miscellaneous expenses and the defendants are liable to pay the above amount to the deceased. It has been also averred that thus a total sum of Rs, 5,64,102.67 is due and payable by the defendants to the deceased and that the deceased several times called upon the defendants to settle and pay the above outstanding dues, but the defendants failed and neglected to do so, and consequently they were served with the legal notice dated 31st March, 1964 which ensued correspondence between the parties, out no payment was made to the deceased. On the basis of the above averments, the deceased had prayed for a decree for Rs, 5,32,004.77 with 6% interest from the date of the suit till realization and costs. 3. The defendants have filed a joint written statement, wherein it has been averred that the suit as framed is not maintainable in law inasmuch as the defendants through their Advocate's letter dated 13th April, 1964 tendered a cheque dated 15th April, 1964 for Rs, 32,018 to the deceased on the explicit condition that the same was in full and final settlement of all the claims of the said deceased against the defendants and that the deceased appropriated the said cheque and thereby accepted the condition subject to which the payment was tendered. It has further been averred that as the said payment was made in full satisfaction of all the claims of the deceased against the defendants, the said deceased/plaintiffs have no cause of action against the defendants. It has been further averred that the suit is barred by sections 21 and 56 of the Specific Relief Act. It has also been averred that the correct facts are that the defendants agreed to pay to the deceased a sum of Rs, one lac : (1) as a goodwill of the business of publishing Daily Anjam at Karachi and Peshawar with the exclusive use of the name Daily Anjam as a part name of the company and the right to publish Anjam Daily, Weekly, Fortnightly and Monthly at Karachi, Peshawar and other places, and (ii) as a price for the furniture, fittings, fixtures of all the tenancy
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rights in the building, Press premises, office premises, godowns which were being used in connection with the business of printing and publishing Daily Anjam at Karachi and Peshawar, which the deceased had agreed to transfer and that accordingly the said deceased did transfer and delivered possession of the said properties to the defendants. It has also been averred that the contention of the plaintiffs that the consideration of these items of properties was not fixed and was left to be determined later on, is obviously an after thought without any foundation and the same is denied by the defendants. It has further been averred that the transfer was to be in the name of the promoters in the first place if the said deceased was required to do so and that the transfer was definitely to be in the name of the company later on. It has also been averred that the above stipulation was made with the view to provide the taking over of Daily Anjam from the said deceased during the intervening period from the date of signing of the agreement and the incorporation of Daily Anjam Limited. It has further been averred that as a matter of fact all the items mentioned in clause (4) of the agreement were required by the Company and there was no question of determining their price later on and that all these items were required by the promoters of the company. It has also been averred that both K. M. Munir on behalf of Messrs Hyesons Commercial and Industrial Corporation Ltd. And the deceased got the Daily Anjam registered with the Registrar of Companies and not defendant No, 1 as alleged in the plaint. It has been denied that the cost of the property referred to in paras. 5 to 8 of the plaint is Rs, 4,34,035.05 or that the deceased has paid the salary of the staff or that he incurred the miscellaneous expenses of Rs, 50,067.67. It has further been denied that the defendants are liable to pay Rs, 5,64,102.67. It has been averred that the correct facts are that the deceased had agreed to sell all machineries as described in the Schedule annexed to the agreement of sale, in the first place in the name of the promoters if they required to do so and secondly in the name of the company later on. It has been further averred that accordingly the deceased sold and the defendants did purchase all the business of publishing Daily Anjam at Karachi and Peshawar including the machinery recently imported and not installed and the rotary machines, chemicals, etc. It has also been averred that the promoters took over all the business of publishing the Daily Anjam at Karachi and Peshawar with effect from 1st July 1963 and that Daily Anjam Limited, of which the deceased was also a director, was incorporated on 14th September 1963. It has been further averred that Daily Anjam Ltd. Paid to the deceased a sum of Rs, one lac as consideration for the goodwill and as the price for the furniture, fixtures, fittings, tenancy rights in the buildings, Press and office premises, godowns, etc., the then used in connection with the business of the printing and publishing the Daily Anjam at Karachi and Peshawar and have by using the said properties as the purchaser of the same. It has also been averred that the defendants have paid fat all these items and have also paid the salary to the staff and incurred miscellaneous expenses. It has also been averred that the defendants maintain regular books of account and have sent a statement of account of the deceased along with their letter dated 18th April 1964. It has further been averred that the defendants also sent a cheque for Rs, 32,018.90 in favour of the deceased in full and final settlement of all his claims and that the deceased accepted the cheque knowing fully well that the cheque was tendered on the specific condition that it was in full and final settlement of all his claims. In view of the above averments the defendants have denied their liability to pay any amount to the plaintiffs. 3. (a) With the consent of the learned counsel for the parties on 19th April, 1965 as many as 10 issues were adopted and an additional issue was framed vide order dated 24th March, 1967. However, before the trial of the suit on 9th August, 1967 with the consent of the learned counsel for the parties Mr. Q. M. Raymond was appointed as a Commissioner to go into the accounts relating to the claims enumerated in the aforesaid order and to submit his report. The break-up of the plaintiffs' claim in the order was as follows :- {{TABLE}}
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Newsprints consumed account Rs, 2,34,035 Use of Office premises at Karachi 1,20,000 Use of Office premises at Peshawar 50,000 Salary between July-August, 1963 at Karachi 44,000 Salary at Peshawar between July-November 1963 36,000 Misc. Expenses at Karachi 32,000 Misc. Expenses at Peshawar 3,000 (i) For Printing at Peshawar Fittings, fixtures and furniture taken from Karachi 15,000 Office 20,000 For Peshawar Office 10,000 Total Rs, 5,64,122 {{TABLE}} (b) The plaintiffs had examined 8 witnesses before the Commissioner, whereas the defendants had examined 2 witnesses in addition to the submitting of the documentary evidence, which inter alia included certain account books for the period in dispute. The learned Commissioner after hearing the' parties submitted his report, dated-30th June .1972, whereby he came to the conclusion that the plaintiffs were not entitled to any amount. To the above report, the plaintiffs have filed objections. Before the objections were taken up, for hearing, upon the plaintiffs' application this Court vide an order dated 18th April, 1978 permitted the plaintiffs to examine two additional witnesses subject to the right of the defendants to examine any witness in rebuttal. In pursuance of the above order, S. M. Fasih (P. 9) and Abdul Aziz (P. 10) were examined on 30th October, 1978. However, Mr. A. A. Zari, the learned counsel for the defendants, stated on the above date that he did not wish to lead any oral evidence. After that the case was fixed for arguments on the objections to the Commissioner's report as well as on the merits of the case. When the case came up for hearing before me for arguments with the consent of the learned counsel for the parties, I have resisted the issues and have framed the following one issue "What amount if any, is due and payable to the plaintiffs ?" (c) Mr. Afzal Nabi, learned counsel for the parties has attacked the Commissioner's report on the following grounds :- (i) That the learned Commissioner has relied upon the account books filed by the defendants which were not genuine. (ii) That the defendants had not produced the entire record, and, therefore, an adverse inference should have been drain against them. (iii) That even otherwise, the account books could not have been relied upon as there were numerous wrong entries in the account books. 4. (a) Before dealing with the above contentions raised by the learned counsel for the plaintiffs in respect of the Commissioner's report, it may he pertinent to ascertain the scope of the Commissioner's power under the Court Reference. In this regard it will be advantageous to refer to the Commissioner's reference dated 26th September, 1969 made to this Court for soliciting the order thereon, and the objections to the above reference filed by the defendants. Through the above reference it was stated that after the closing of the cross-examination of the defendants' second witness, the Commissioner desired to put certain questions to him and enquired from the learned counsel for the parties as to whether they had any objection to the Commissioner putting questions to the said witness. In reply thereof, Mr. Afzal Nabi stated that he had no objection, but Mr. Zari stated that the function of the Commissioner was very limited and that was to record the evidence produced on the 10 items mentioned in the order dated 9th August, 1967 and to forward his evidence with a report as to the actual proceeding which had taken place before him, but
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without recording any finding or expressing any view. Because of the above objection of the learned counsel for the defendants, the Commissioner, sought order of this Court through the aforesaid reference. The defendants filed lengthy objections to the above reference, in which inter alia it was averred that the Commissioner was only to record the evidence and to forward the same to the Court with his report about the number and names of the witnesses examined by him and about the actual proceeding before him and that the Commissioner had no power to give his finding on the merits of the claim of the plaintiffs and that it was the function of the Court which could not be delegated to the Commissioner. Reliance was also placed by the learned counsel for the defendants on the cases 58 I A 173 ; AIR. _1925 Sind 265.; AIR 1936 Lah. 458 ; AIR 1931 P C 136 ; AIR 1916 P C 250 ; AIR 1960 Pb. 430 and AIR 1942 Bom. 266 in support of the above contention. The above reference and the objections thereto, were taken up on 8th October, 1969 by Dorab Patel, J. (as his Lordship then was) and the following clarification was made :- ' Turning now to the other questions raised by the Commissioner, Mr. Zari has cited authority to show that the Commissioner cannot give a finding on the evidence he is permitted to record. No authority is required for a proposition so obvious.. Mr. Raymond admitted that his choice of word "findings" was not very apt. What he meant was whether he could make any comment on the evidence recorded by him. As the evidence is lengthy and has he has been asked to give a report, I see no objection to his making any comments on the evidence. Mr. Zari's apprehensions that this might prejudice his case are not justified, because the evidence will be assessed by the Court and not by the Commissioner. The other request of the Commissioner is that he should be permitted to put questions to the witnesses. If this is allowed, it would enable the production of evidence which one side or the other failed to adduce. I do not think that this is fair nor was Mr. Afzal Nabi able to show (how) the Commissioner was competent to put questions on his own. Accordingly this request is disallowed. The reference is disposed of accordingly." (b) From the above order it is clear that the authority of the Commissioner was more or less confined to the recording of the evidence and to make comments upon the evidence but he was not authorised to give a finding about the genuineness of the account books or about the merits of the plaintiffs' claim. Before me Mr. Zari has urged that the Commissioner being an expert in accounts his report should not be lightly interfered with. Reliance was placed on the case of Chandan Mull Indra Kumar and others v. Chiman Lal Girdhar Das Parekh and another (1) and the case of Uttam Kumardas v. Ajgar Ali Meah (2). In the above P. C. Case it was held that it is not safe for the Court to act as an expert and to overrule the elaborate report of a Commissioner, whose integrity and carefulness are unquestioned. Whereas in the Dacca case it was held that the Court must consider reasons given in report before rejecting it. But when Mr. Zari's attention was invited to his aforesaid objection to the Commissioner's reference and to the aforesaid order passed by Dorab Patel, J., he candidly submitted that he adheres to his above stand taken in his objections and that the Commissioner's report does not contain any finding. 5. (a) I have to therefore, examine the evidence recorded by the Commissioner, the documents produced before him and also the evidence recorded by this Court. A reference can also be made to the comments made by the Commissioner. I, therefore, intend to deal with the plaintiffs' claim. {{TABLE}} Rs, (b) (i) Newsprint consumed account ..................................... 2,34,035 (i) AIR 1940PC3 (2) P D 1955 Dacca 15 The break-up of the above item given by the plaintiffs in Annexure `A' dated 5th September, 1967 filed by the plaintiffs before the Commissioner was as follows :- Rs, (1)
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(2) #TBS (3) 1,01,108.43 (4) #TBE (5) (6) #TBS (7) 87,851.62 (8) 1,32,926.62 (9) #TBE (10) (11) #TBS (12) 45,075 (13) #TBE (14) Newsprint A/c No, 1 as per Daily Anjam Ltd. Ledger ending 24th October, 1963........... (15) Newsprint A/c No, 2 as per Daily Anjam Ltd. Ledger ending 24th October, 1963........... {{TABLE}} (16) Balance of newsprint at Karachi which was not entered in books. It was agreed mutually to be paid separately by the Managing Director of Messrs Hyesons Limited with the deceased after allowing wastage of newsprint unfit for consumption. The full amount of reams 8,881, sheets 209 for Rs, 1,11,012.15 was shown in the income-tax return ending on 30th June, 1963. 2,34,035.05 ' A perusal of the above-quoted break-up indicates that whereas the newsprint valuing Rs, 1,32,926.62 was reflected in the account books but the newsprint, worth Rs, 1,01.108.43 was not reflected in the account books, as it was allegedly outside the account books. P. W. 1 Abdul Waheed Qureshi at lines 669 to 676 at page 18 of the file of the depositions has admitted as follows :- "The deceased was given credit for newsprint of the value of Rs, 1,32,000 in October, 1963. This is the total value of newsprint of the current account register given to the office of daily Anjam for consumption. The sum of Rs, 1,32,000 covers newsprint given to the office of daily Anjam for consumption from 1st July, 1963 till 31st October, 1963." ' P. W. 3 Syed Muhammad Idris Ahmad Shah Jilani at line No, 12i9 to 1293 at page 81 of the depositions' file has also admitted the aforesaid fact in the following Words :- "In July 1963, the deceased Usman Azad told me to credit his account in the value of the newsprint in stock, and I credited his account accordingly. From 1st July, 1963 till 24th October, 1963 I have credited the account of the deceased Usman Azad in the Karachi books with Rs, 1.32,000 being the value of the newsprint. This amount of Rs, 1,32,000 comprises of Rs, 45,075 shown in Exh. P-3/3 and Rs, 87,851.62 shown in Exh. P-3/3 and Rs, 87,851.62 in Exh. P-3/9. All the entries appearing in Exh. P- 3/3 and Exh. P-3/9 were correct and are in my handwriting. I had informed the deceased about having credited his account with Rs, 1,32.000 and he replied it was alright. I am shown the statement of accounts filed before the Commissioner and I state that the entries of Rs, 45,057 and Rs, 87,851.62 shown at items Nos. 1 and 2 in this statement are the same amounts as shown in Exhs. P-3/3 and P-3/9 respectively. In spite of the credit given in the books of account of Rs, 1,32,000 to the deceased I stated that the plaintiffs are entitled to payment of this amount as it has not been paid." ' It may be noticed that P. W. 1, who was the General Manager and P. W. 3, who was the accountant of the deceased. Both have admitted in their above-quoted statements before the Commissioner that a credit entry for the above sum of Rs, 1,32;000 was given in the account books. The account
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books for the relevant period, i. e. The cash book Exh. P-1/4, and ledger Exh. P-1/5, were written by P. W. 3. The defendants have filed two statements of the deceased's account pertaining to Karachi and Peshawar offices, Exhs. D-2/3 and D 2/2 respectively, which also reflect the credit entries in respect of the newsprint. In Exh. D-2/3 the following credit entries are shown on account of newsprint. {{TABLE}} Total : Rs, 4,500.00 795.00 61,597.00 7,701.00 1,160.00 7,393.50 10,000.00 96,326.62(?) {{TABLE}} ' Whereas in Exh. D-2/2 a credit entry of Rs, 33,320 has been made in respect of newsprint. The total of the above entries comes to about Rs, 1,30,000. The above total figure is very close to the amount of the claim made by the plaintiffs. The reason of the above discrepancy we find in the statement of D. W. 2 Fayaz who at L. No, 939 at P. 167 has deposed as follows :- "According to me the rate of Rs, 15 per ream on which Rs, 36,600 has been credited to the deceased Usman has been inflated. Since this rate of Rs, 15 was inflated, I reversed the entry of Rs, 36,600 and gave the deceased credit at a reduced rate. I have given the deceased credit of Rs, 33,220 instead of Rs, 36,600. The entry of Rs, 33,220 has been shown in the Journal Exh. P. 3/16 (page 19) and has already been marked as Exh. 2/8." (a) I will take up later on the question as to whether the deceased had received the payment in respect of the newsprint when I will be dealing with Exh. D-2/3, wherein certain debits entries have been shown against the deceased. For the time being it will suffice to say that the price of the newsprint, for which the deceased was entitled to a credit has been taken care of in the aforesaid account books and in Exhs. D-2/3 and D-2/2 except that a sum of Rs, 3,380 has been reduced unilaterally by the defendants for the aforesaid reason given by D. W. 2 Fayaz. (b) It may again be observed that Exh. P-1/4,, cash book and Exh. P-1/5, ledger for the period commencing from 1st July, 1963 to 24th October, 1963 were written and maintained by P. W. 3 Jilani. It was urged by Mr. Afzal Nabi, learned counsel for the plaintiffs, that D. W. 3 Fayaz, (the accountant employed by the new management), who allegedly maintained accounts after the period commencing from. 25th October, 1963 has deposed before the Commissioner at Lines Nos. 1071 to 1081 that the cash book (Exh. P-1/4) and the ledger (Exh. P-1/5) are not the original books and have been rewritten by witness Jilani and that the original books are with witness Jilani and, therefore, no reliance can be placed on the above account books. Whereas Mr. Zari has urged that the above statement of D. W. 2 Fayaz appears to be plausible as under the sale agreement in question, the deceased was liable to settle all the liabilities and was entitled to receive the recoveries in respect of the period expiring on 30th June 1963 and, therefore, it was necessary for the deceased to have one set of the account books for the period commencing from 1st July, 1963 till 24th October, 1963. He further submits that the above accounts books do not contain any seal of the Audit Bureaus of Circulation(A B C) and, therefore, they could be the exact copies of the original account books. In my view the above controversy is not material inasmuch as according to P. W. Exhs. P-1/4 and P-1/5 are correct and they were written by him and, therefore, reliance can be placed on the above two account books. (c) Reverting to the plaintiffs' claim for the sum of Rs, 1,01,108.43 being the alleged price of the newsprint not reflected in the account books, it will suffice to observe that it is an admitted position that there is no entry in respect of the above alleged newsprint in the account books maintained by P. W. 3. The plaintiffs have relied upon the oral evidence of P. Ws. 1 and 3 and also on the fact…
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