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TMI Blog2002 (10) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... ant repaid an aggregate amount of ₹ 1,22,00,000/- towards the principal amount. The last payment towards the principal amount was of a sum of ₹ 25,00,000/- on 29th June, 1996, leaving a balance of ₹ 3,57,00,000/-. The defendant also paid various sums towards interest between 1.4.1995 and 31.3.1998 at the intervals and at the rates mentioned above. After 31st March, 1998 the defendant did not pay any amount to the plaintiff. 3. This brings me to two important documents viz. balance confirmation letters signed by the defendant, on the basis whereof the plaintiff has filed this suit. The plaintiff, under the cover of its letter dated 7th April, 1998 enclosed a Statement of Account for the period 1st April, 1997 to 31st March, 1998 and sought the defendant's confirmation thereof. The defendants' Accountant confirmed the same. Thereafter, the defendant sought the plaintiffs' confirmation of its account, contained in the defendant's letter dated 31.3.1999 which the plaintiff did. 4. Before dealing with the defendant's case in respect of the above confirmation letters, it is necessary to refer to the contents thereof. (a) The plaintiff's sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch, 1997 was paid at 18% per annum. I will come to legal effect of the balance confirmation letters after dealing with the defendant's case. 6. Mr. J.D. Dwarkadas, the learned Senior Counsel appearing on behalf of the defendant firstly denied that the defendant's Accountant signed the plaintiff's Ledger Account dated 8th April, 1998. He further stated that the person who signed the defendant's confirmation letter is not the Accountant of the defendant and not binding on the defendant. The submission was made on the basis of paragraph 14 of the defendant's affidavit in reply dated 19th July, 2002. The denial is ex facie false and in any event of no legal consequence as it was accepted by the defendant. 7. After filing this suit, the plaintiff made an application for ad interim reliefs for attachment before judgment under Order XXXVIII Rule 5 of the C.P.C. in terms of a Draft Notice of Motion subsequently numbered as Notice of Motion No. 2813 of 2000. The defendant filed its affidavit in reply dated 14th March, 2002. The balance confirmation letters were extremely important documents. Indeed, the suit has been filed on the basis thereof. If, in fact, the same h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace between the plaintiff and the companies of the Kamat Group, the company or its officers or its directors never had any direct dealings or negotiations at any time. However, for the purpose of accounting the Accountant of the company/affiliate of the groups used to sign letters and statements/confirmation in mutual interest of both the groups. Hereto annexed and marked as Exhibit 6 is a copy of the statement showing some of the entries of the amounts between the groups showing routing/re-routing of money between the groups which indicates that payments originated from affiliate of one group goes back to the attitude of the same group." The affidavit also contains details which according to the defendant evidences its above defence. 9. To make good the defendant's case that no interest was payable, Mr. Dwarkadas, referred to various factors. 10. Before dealing with the same, it is important to reiterate that the balance confirmation letters indicate beyond any doubt that interest was agreed to be and was in fact paid by the defendant at the rates, for the period and at the time stated by the plaintiff. I have already rejected the defendant's contention that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as omitted to notice was that the entry in the plaintiff's said Ledger Account clearly states that it was only a "part" payment towards interest for that quarter. As I have already explained above, the balance amount of the ₹ 14,06,500/ was paid on 4th April, 1998 and 31st July, 1998 as confirmed by the defendant's own letter dated 31st March, 1998 which clearly states that the same was paid towards interest. 14. Before this position was clarified by Mr. Chinoy, the learned Senior Counsel for the plaintiffs, Mr. Dwarkadas also stated that there was no explanation for the payment of ₹ 14,06,500/- referred to in the defendant's confirmation letter. Once again, the defendant, who made the payment and addressed the confirmation letter made no such point in its affidavit in reply. After the explanation was tendered on behalf of the plaintiff, 1 did not hear anything to the contrary on behalf of the defendant. 15. Mr. Dwarkadas then referred to the table in paragraph 5 of the plaint which contains the particulars of payments made by the defendant to the plaintiff towards interest. He submitted that the same belies the plaintiff's case that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to him, the liability was inter se the two groups and not between individual members of each group. This is not a defence which I would term as moonshine. It is concocted. At the outset, it must be mentioned that this theory was never mentioned in the correspondence that ensued between the parties prior to the suit. 18. If in fact, such was the agreement or understanding between the parties, a variety of consequential issues and contingencies would necessarily have arisen, requiring the parties to necessarily resolve them as well. For instance, which of the constituents of a particular group would be entitled to the benefit of the accounts when made up? Which of the constituents of the other group would be liable to make good the same? It is impossible to believe that especially parties, such as those before me, would leave such matters vague and without being reduced to writing. I asked Mr. Dwarkadas whether it was the defendant's case that upon on taking accounts the Kamat group was found to be the debtor of the Advani group, each and every person or company or firm of the Kamat group would be liable for the same? In fairness to Mr. Dwarkadas, he did not pretend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n letters. Thus, in any event, the same are irrelevant and were introduced only for the purpose of confusing the issue. 21. Mr. Dwarkadas invited my attention to stray sentences in the correspondence between the parties where the plaintiff had referred to the dues of the "Group". By a letter dated 17th December, 1999 the plaintiff stated that the amounts outstanding from the defendant's group amounted to more than ₹ 7,06,00,000/-. The plaintiff further annexed a statement showing the amounts due from the various companies of the defendant's "group". I do not see how this would assist the defendant in establishing its alleged agreement. It is true that various members of the plaintiff's group advanced various amounts to the members of the defendant's group. This, however, does not support the defendant's case. The use of the expression "group" was only a compendious method of referring in the body of the letter to the various transactions between the members of the groups and the outstanding by each member of one group qua the relevant member of the other group as specified in the annexure. 22. In this regard, it is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belongs to the same group. To hold to the contrary, would lead to absurd consequences. It is also clear from the order that the various facts mentioned herein were not considered by Kochar, J. Considering the view I have taken, it is not necessary to deal with Mr. Chinoy's submission that the order is not binding on me as an appeal from the said order is pending. Nor it is necessary, therefore, to refer to the judgments cited by him in this regard. 25. This brings me to two questions of law viz. (a) Whether the suit based on the balance confirmation letters is maintainable as a Summary Suit ? (b) Whether the balance confirmation letters contain a promise to pay the amount with interest at 18% per annum ? 26. In Hiralal and Ors. v. Badkulal and Ors., [1953]4SCR758 , the Supreme Court was concerned with a suit which was instituted for recovery of an amount due at the foot of mutual dealings. In the plaintiff's book, the defendant signed the following entry : "₹ 84,000/- balance due to be received up to Bhadon Sudi 11 Samvat 2006 made by check and understanding of accounts with Hiralalji's books" The entry was signed by the defendant with the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the accounts stated between them and was thus clearly maintainable." 27. In Khan Chand v. Dayaram AIR 1929 Lah 263 affirmed by the Supreme Court in the above case the Division Bench held that even a balance struck and accepted implies a promise to pay. In Gordon Woodroffe & Co. v. Sk. M.A. Majid & Co., AIR1967SC181 , the Supreme Court held : "The legal position is that the accounts are settled or stated if they are submitted and accepted as correct by the other side to whom the accounts have been rendered. Such a statement of accounts need not be in writing, nor is it necessary, that before the accounts are settled, they should be gone into by the parties and scrutinized and supported by vouchers. It is sufficient if the accounts are accepted and such acceptance may be inferred by conduct of parties." Thus, the balance confirmation letters furnish the plaintiff a cause of action on which the suit is maintainable. 28. The balance confirmation letters were accepted by the defendant unconditionally, answer the description of an account stated and imply a promise to pay. If the defendant's case viz. that there were mutual dealings between the parties is accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 Posh Vad, 12 Monday 6.2.1967.( Sd/- )Mota Visraj." It was contended that the writing did not disclose any promise to make payment, that the promise, if any, for payment was previous or oral and not on a written contract and that it was merely an acknowledgement. Negating the contention K.K. Desai, J. held that the writing contained an obligation and an implied promise that the amount would be repaid by the defendant. Answering in the affirmative the question whether it constitutes a written contract within the meaning of Order 37 Rule 2, K.K. Desai, J. held as follows : "Now, it is true that prior to the amendment of Rule 2, a summary suit could be instituted in all cases where a debt or liquidated demand in money arose on contract, express or implied. It is quite clear that previously a written contract was not a necessary condition for institution of a summary suit to recover debt or liquidated demand in money. Where express or implied obligation to pay debt or liquidate demand in money arose, even on an oral contract, a summary suit could be instituted. Under the amended Rule, summary suits cannot be instituted when such debt or demand in money arises on oral con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e latter is entitled to receive a certain amount from the former. In these circumstances, I am at loss to understand why no summary suit would lie on such a clear-cut admission. To take any other view would be contrary to the honest and moral view of the law." The learned Judge went on to pass a decree in favour of the plaintiff at the stage of the hearing of the summons for judgment. 33. The judgments squarely apply to the present case. The authorities have uniformly held that an unconditional acknowledgement implies a promise to pay because that is the natural inference, if nothing is said to the contrary. In the present case there is no express agreement by defendant to pay any amount to the plaintiff. The unconditional confirmation/ acknowledgement of the closing balance constitutes an implied promise by the defendant to pay the same. The suit is maintainable as a Summary Suit. 34. It was further submitted on behalf of the defendants that the balance confirmation letters in any event do not contain an agreement in writing to pay interest. It was submitted that the balance confirmation letters and even the T.D.S. Certificates for that matter only evidence an agreement fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that case. In Quinn v. Letham 1901 AC 495 it was held that a judgment is only an authority for what it decides and not what is logically deducible thereof. The judgment has been followed consistently by this Court (see Dyes and Chemical Workers Union v. Bombay Oil Industries Ltd. (2001) 1 CLR 544. 39. I would view the matter differently. While adjusting accounts the parties acknowledged without any reservation that with effect from 1st January, 1997 interest was paid and received at 18% per annum. That the confirmation of the balance in the plaintiff s account implied an agreement to pay interest upto the date on which it was paid is not disputed. Indeed it cannot be disputed. It would be stretching thing to suggest that the defendant paid interest without there being any agreement to do so. 40. There is nothing, apart from the Counsels submission, that this agreement to pay interest was restricted to the period for which it was to be paid. If interest has been paid in the past and the balance is confirmed by the debtor and the creditor, then subject to anything to the contrary it would imply a promise to continue to pay interest at that rate on the balance confirmed. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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