IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : COURT FEE MATTER
RFA NO. 161/2005
Judgment reserved on : April 21, 2006
Judgment delivered on : April 27 , 2006
M/s Hari Gokal Jewellers ....Appellant.
through: Dr. K.S. Sidhu, Sr. Advocate,
with Ms. Maldeep Sidhu and
Mr. Mayank Goel, Advocates.
Satish Kapur ....Respondents
through : Mr. Sidharth Aggarwal, Advocate,
SWATANTER KUMAR, J.
1. M/s Hari Gokal Jewellers, a partnership concern filed a suit for accounts against Mr. Satish Kapur while stating that the value of the suit for the purposes of court fee and jurisdiction is Rs.18 lakhs. The plaintiffs were paying the requisite court fee and in the event of decree being exceeding the amount mentioned in the plaint, the plaintiff undertook to pay the additional amount as directed by the Court. The suit was filed on the premise that the defendant was carrying on somewhat similar business under the name and style of Satish Kapur and Co. The defendant used to supply raw gold and the parties were having dealings for the last 5 to 6 years. The defendant was selling the raw gold to the plaintiff and he was buying jewelery from it. The payments were being made by cheques issued from time to time by the plaintiff against the bills raised by the defendant. On one occasion, the defendant was paid a sum of Rs.1,60,000/- as a loan and as a measure of accommodation on the occasion of the marriage of his daughter in January, 2004. On these transactions, according to the plaintiff, the defendant would be found to be owing to the plaintiff a sum of Rs.18,00,000/- approximately. The plaintiff claims to have made oral and written demands to the defendant including serving a demand notice dated 7th October, 2004 and corrigendum thereto dated 23rd October, 2004 for payment of the amount due to the plaintiff from the defendant but instead of making the said payments, the defendant threatened the plaintiff vide notice dated 16th October, 2004 that the plaintiff owed money to the defendant and as such the plaintiff filed the aforesaid suit with a prayer that a decree for account may be passed against the defendant for the period prior to and after the marriage of her daughter in relation to jewelery transactions as well as the loan taken. Thus, the plaintiff prayed for passing of a preliminary decree for rendition of accounts and also for passing such other orders as the Court may deem fit and proper in the facts of the case.
2. Summons in the suit were issued. In response to the said summons, the defendant on 14th January, 2005 filed an application under Order 7 Rule 11 CPC to which the plaintiff filed a reply. After hearing the arguments of the parties on the said application, vide judgment dated 16th February, 2005, the learned Additional District Judge, Delhi rejected the plaint by holding that the suit as framed was not maintainable and dismissed the suit with costs of Rs.10,000/- and directed that the registry of the Court to prepare a decree in terms thereof.
3. Aggrieved from the said judgment and decree of the learned trial Court, the plaintiff/appellant has preferred the present Regular First Appeal. The correctness of the judgment and decree of the trial court has been questioned by the appellant in the present appeal primarily on the following grounds :-
(a) the trial Court had directed service of summons on the defendant to settle the issues and as such, without requiring the defendant to file written statement and framing of issues, the Court could not have even entertained an application under Order 7 Rule 11 CPC for rejection of plaint much less actually reject the plaint of the plaintiff. In this regard the appellant has also relied upon the judgment of the Bombay High Court in the case of Nishit M. Prabhu Verlekar Vs. Chandranath Vinayak Dhume and others AIR 1986 Bombay 46 and judgment of the Privy Council in the case of Kanhaya Lal Vs. National Bank of India, Ld 1913 Indian Law Reports Vol. 40 privy council page 598.
(b) In view of provisions of Order 8 of the Code, the defendant was obliged to file written statement within a period of 30 days from the date of service of summons or within such extended time as the Court may permit but not exceeding 90 days. The defendant having filed no written statement, the court has exceeded its jurisdiction in entertaining the objection with regard to maintainability of suit.
(c) There was regular accounts maintained between the parties. The plaintiff/appellant was thus entitled to ask for rendition of accounts and could estimate the value of the suit for the propose of court fee and jurisdiction on imaginary basis. Therefore, rejection of plaint by the trial Court is erroneous.
4. While terming the arguments of the appellant as misplaced and misconceived in law, counsel appearing for the respondent supported the judgment and decree of the trial Court in addition to the reasons stated therein on the ground that the plaint is vague and vexatious; the suit is without any cause of action and that the defendant had a right to file application under Order 7 Rule 11 of the Code for rejection of plaint at any stage of the suit. It was further stated that summons served upon the defendant were not for framing of issues but in any case such an argument would be without basis. It is the contention of the respondent that in accordance with the settled principles of law, the trial Court has not fallen in any error of law or jurisdiction in passing the impugned judgment.
5. Firstly we may refer to the plaint filed by the plaintiff/appellant. Under Order 2 of the Code of Civil Procedure, the plaint as far as practicable be framed so as to afford ground for final decision upon the subjects in dispute and must prevent further litigation. The plaint should include the whole cause of action. All parties necessary to the suit be impleaded. The plaint must disclose cause of action and there has to be proper joinder of cause of action. It is settled principle of law that the plaint filed by the plaintiff should neither be vague nor vexatious. It is the abundant duty of the plaintiff to clearly and unambiguously plead his case. It must clearly spell out the cause of action and the reliefs claimed against which of the defendants. Unfortunately, all these ingredients are missing in the plaint. This is the plaint running into 6 paragraphs including the cause of action, valuation, jurisdiction and the prayer clause. In the plaint, it is nowhere stated that during which period the parties entered into various transactions for sale and purchase as contended and how the alleged loan of Rs.1,60,000/- was a business transaction. Instead of discussing the plaint and its contents and legal consequences at a greater detail, it may be appropriate to refer to the main paragraphs of the plaint, which are only 3 to 5, which read as under :-
3. The plaintiffs have been having dealings with the defendant, both as buyers from, and sellers to, him for the last 5 to 6 years. The defendant has been selling raw gold to the plaintiffs and he has been buying jewelry from them. Payments were being made by cheques issued from tome to time, by the plaintiffs against the bills raised by the defendant. The cheques so issued were, quite often, given in full discharge of the price of gold delivered at a time, and sometimes the cheques were given on account. On one occasion the defendant was paid Rs.1,60,000/- as a loan and as a measure of accommodation on the occasion of the marriage of his daughter in January, 2004. Thus there has been a mutual, open and current account between the parties involving two parallel sets of dealings by which each party has been giving credit to the other.
4. In the estimate of the plaintiff, the defendant would be found to be owing to the plaintiffs from the accounts to be rendered, a sum of Rs.18,00,000/- (Rupees Eighteen Lakhs) approximately. The plaintiffs made oral and written demands on the defendant, including the demand notice, dated 07.10.2004/corrigendum, dated, 23.10.2004, for payment of the amount due to the plaintiffs from the defendant. Instead of making the payment, as demanded, or agreeing to render accounts, the defendant threatened in writing by way of notice, dated, 16.10.2004, sent by his lawyer falsely stating that the plaintiffs ...owe my clients money... Without specifying any such amount as may be outstanding in the accounts against the plaintiffs. Thus the cause of action for this suit arose on 16.10.2004.
5. The value of the suit for purposes of jurisdiction and court fee is Rs.18,00,000/- (Rupees Eighteen Lakhs). The plaintiffs are hereby paying the requisite court fees; and in the event of the decretal amount as may be ultimately adjudged exceeding the amount mentioned above, the plaintiffs hereby undertake to pay the additional amount as directed by the court.
Another factual error on the basis of which the arguments of the appellant before this Court are founded is that the Court had issued summons under Order 5 Rule 1 and 5 of the Code only for framing of issues and not for determination. During the course of hearing, records of the trial Court were called for and the first summons issued by the court to the defendant reads as under :-
SUMMONS FOR SETTLEMENT OF ISSUES
(Order V, Rules 1 and 5 of the Code of Civil Procedure)
IN THE COURT OF ....................................................
(Name, description and place of residence)
has been instituted a suit against you for .................. vide plaint copy attached herewith, you are hereby summoned to appear int his Court in person or by pleader duly instructed, and above to answer all material questions relating to the suit, or who shall be accompanied by some other person able to answer all such questions, on the ................. day of ............................... at ..................... o'clock in the forenoon to answer the claim and you are directed to produce on that day all the documents upon which you intend to rely in support of your defence.
TAKE NOTICE that in default of your appearance on the day before mentioned the suit will be heard and determined in your absence.
GIVEN under my hand and Seal of the Court, this ..................... day of .................20.................
A bare reading of the above summons clearly shows that the summons, though issued under Order 5 Rule 1 and 5 CPC, required the defendant to appear in Court and do any and all the acts stated in the said summons. Furthermore, the summons clearly provided for determination of the suit in the event of default of appearance. In other words, there was no direction in the summons issued by the Court that the suit is listed only for framing of issues and the Court was left with no option except to ask the defendant to file the written statement then frame the issues and then alone the Court to deal with the question of jurisdiction or rejection of plaint for want of cause of action. Thus, the argument addressed by learned counsel appearing for the appellant is based on wrong hypothesis and a assumption, which is contrary to court record. The two judgments relied upon by the learned counsel appearing for the appellant, thus, on facts have no application to the present case. This can safely be said in addition to the fact that the said two judgments would not hold the field as of today in view of the consistent view taken by the different High Courts as well as the Supreme Court that the provisions of Order 7 Rule 11 CPC could be invoked at any stage. The legislature in its wisdom had opted not to impose any restriction on the power of the court to entertain and decide an application under Order 7 Rule 11 of the Code at any stage of the proceedings. Once no such limitation is imposed by the Legislature nor such an intent could be inferred reasonably, the Court would not impose unnecessary embargo on the power of the Court for invoking such provisions. It is also settled rule of law and as even referred by the Privy Council in the judgment of Kanhaya Lal (supra) that the court can be asked to decide an issue on a plea of demurrer and for that purpose the defendant must be taken to admit for the sake of arguments that the allegations in the plaint are true modo et forma. It is not necessary for this court to discuss this issue in any greater detail inasmuch as both these principles are well settled and accepted. With respect, the view of the Bombay High Court in Nishit M. Prabhu Verlekar (supra) would not hold the the field of law as being not in comity and conformity with the judgments as even of the Supreme Court. In order to put the matter beyond doubt, reference can be made to a judgment of this Court in the case of New Holland Tractors (India) Pvt. Ltd. Vs. M/s Raja Industrial Works & Ors (IA 6689/2005 in CS (OS) No. 501/2004 decided on 8th September, 2005) wherein the court held as under :-
4. It is further a settled canon of civil jurisprudence that the court while considering an application under Order 7 Rule 11 of the CPC has to assume that the facts averred in the plaint are primarily correct particularly when such averments are supported by the documents in the case. Reference in this regard can be made to the judgment of ABN-Amre Bank v. the Punjab Urban Planning and Development Authority 1993(3) PLR 479, where the court held as under:-
7. It is a settled rule of law that the plea of rejection of plaint is founded on the PLEA OF DEMURRER. A person raising such plea in law has to take the facts as stated by the opponent as correct. Despite tentative admission of such correctness, the plaint does not disclose a complete or even partial cause of action or the relief claimed is barred by law and thus, the plaint is liable to be rejected within the provisions of Order 7 Rule 11 of the Code of Civil Procedure. Plain language of this rule shows that for determination of an application under this provision, the Court has to look into the plaint. This concept has been extended by judicial pronouncement of various courts so as to take within its ambit even the documents filed by the plaintiff alongwith plaint or subsequent thereto but prior to the hearing of such application...................
5. Reference can also be made to the judgment of Supreme Court in Liverpool & London S.P. & I. Association Ltd. v. M.V. Sea Success I and another (2004) 9 SCC 512, wherein the Supreme Court held as under:-
139. Whether a plaint discloses a cause of action or not is essentially a question of act. But whether it does or does not must be found out from reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is as to whether if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed.
6. In the plaint, the plaintiff has specifically averred that the parties had negotiations, exchanged correspondence and the Letter of Intent dated 17.12.1998 was signed at Delhi. Further, it is stated that the payments were being received by the plaintiff at Delhi and the period of Letter of Intent was also extended from Delhi. The defendants had also admitted their liability at Delhi and confirmed the same by different documents including 6.1.2003 and the payments which were received at Delhi from the defendants were also encashed at Delhi. In paragraph Nos. 23 and 24 of the plaint, definite averments have been made in regard to the above and it is specifically stated that on the back of every invoice, there was a clause exclusively vesting the jurisdiction in the courts at Delhi. The Clause reads as under:-
The letter of intent is subject to Delhi jurisdiction and the same has been signed, executed and accepted at Delhi by both you and New Holland Tractors (India) Ltd.
7. In the application under Order 7 Rule 11, the applicants have no-where stated that the averments of the plaint are factually incorrect. On the contrary what is stated is that the dealership agreement was not signed and the above clause printed at the back of the invoices cannot oust the jurisdiction of other courts and as such the parties are not consensus ad idem and the courts at Delhi would have no jurisdiction. It is no-where stated that the Letter of Intent was not confirmed at Delhi. In fact, what is stated is that the same was extended up to 16th December, 1999 and thereafter the agreement was not extended. As such, the jurisdiction would not be vested in this court. The Letter of Intent which was extended by letter dated 4th June, 1999 is stated to have been signed and confirmed between the parties at Delhi while all other terms and conditions of the previous agreement were extended. The plaintiff has filed various copies of the invoices during the relevant period that they were issued at Delhi and every invoice contained the above exclusive jurisdiction clause and the parties are bound by the terms and conditions of a written document and cannot be permitted to challenge the same in any case at this stage of the proceedings. The counsel for the plaintiff has also relied upon the judgment of the Supreme Court in A.B.C. Laminart Pvt. and anr. v. A.P. Agencies, Salem AIR 1989 SC 1239 to contend that where confirmation order acknowledging receipt of orders, registering it ' subject to terms and conditions overleaf' within the clause making disputes subject to jurisdiction of a particular court, would be enforceable and form part of the main contract. It is also held by the Supreme Court in this case that such a contract to choose jurisdiction between two courts is not opposed to public policy.
8. It may be noticed that the objection as to place of sue has to be taken at the first instance in terms of Section 21 of the Code. In terms of Section 20 of the Code, the suit shall be instituted in a court within the local limits of whose jurisdiction cause of action wholly or in part arises. The expression 'cause of action' has received liberal but definite construction in various pronouncements of the court. The cause of action which would determine jurisdiction of the court in consonance with these provisions essentially has to be material part of the entire chain of cause of action. The cause of action alleged to have arisen within the territorial jurisdiction of the court must be substantial in reference to the transaction in question. At this stage usefully reference can be made to certain principles governing the jurisdiction of the court under Order 7 Rule 11. in a recent judgment of this court in the case of Arunesh Punetha v. Boston Scientific Corporation and others (CS(OS) No. 951/2004) decided on 25.08.2005 where the court held as under:-
3. The Supreme Court in a very recent judgment titled as Liverpool & London S.P. & I. Association Ltd. v. M.V.Sea Success I and another (2004) 9 SCC 512, discussed at great length not only the ambit and scope of these provisions but also commented upon certain vital issues in relation to maintainability and adjudication of an application under Order VII Rule 11 of the Code. This judgment in fact has been heavily relied upon by the learned counsel appearing for the non-applicant/plaintiff in support of his submissions. While describing the meaning of cause of action, the court held as under:-
Cause of action
140. A cause of action is a bundle of acts which are required to be pleaded and proved for the purpose of obtaining relief claimed in the suit. For the aforementioned purpose, the material facts are required to be stated but not the evidence except in certain cases where the pleading relies on any misrepresentation, fraud, breach of trust, wilful default or undue influence.
149. In D. Ramachandran v. R.V. Janakiraman (1999) 3 SCC 267 it has been held that the court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action.
152. So long as the claim discloses some cause of action or raises some questions fit to be decided by a judge, the mere fact that the case is weak and not likely to succeed is no ground for striking it out. The purported failure of the pleadings to disclose a cause of action is distinct from the absence of full particulars. (See Mohan Rawale (1994) 2 SCC 392.)
155. The reason for the aforementioned conclusion is that if a legal question is raised by the defendant in the written statement, it does not mean that the same has to be decided only by way of an application under Order 7 Rule 11 of the Code of Civil Procedure which may amount to prejudging the matter.
4. Further while discussing the scope and nature of the order passed under Order VII Rule 11 and what could constitute a cause of action in contra-distinction to no cause of action, the Supreme Court held as under::-
132. It is trite that a party should not be unnecessarily harassed in a suit. An order refusing to reject a plaint will finally determine his right in terms of Order 7 Rule 11 of the Code of Civil Procedure.
133. The idea underlying Order 7 Rule 11(a) is that when no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of Civil Procedure, the courts would interpret the provisions in such a manner so as to save expenses, achieve expedition and avoid the court's resources being used up on cases which will serve no useful purpose. A litigation which is in the opinion of the court is doomed to fail would not further be allowed to be used as a device to harass a litigant. (See Azhar Hussain v. Rajiv Gandhi 1986 Supp SCC 315 SCC at pp. 324-35.)
9. Reliance by the plaintiff has also been placed upon another judgment of this court in the case of Pramod Kumar Gupta v. M/s. Skylink Chemicals 93(2001) DLT 143 in support of his contention that as per the averments made in the plaint, the defendants had approached the plaintiff for carrying on the business and for signing of the agreement in question at Delhi in addition to the fact that the Letter of Intent was signed and confirmed at Delhi would sufficiently provide territorial jurisdiction of this court.
10. Furthermore, an applicant raising an objection in regard to maintainability of the suit at the very threshold of the proceedings has to at least prima facie take the averment made in the plaint as correct unless the documents placed on record including that of the plaintiff demonstrate that the plaint is patently vexacious based on false-hood and such averments cannot be taken as correct. Reference in this regard can be made to the judgment of this court in Skipper v. Atma Ram Properties Pvt. Ltd. 56(1994) DLT 514.
Learned counsel appearing for the respondent in support of his submissions has also relied upon the judgments in the case of Kanhayialal Vs. Hiralal, AIR 1947 Bombay 255, Narandas Vs. Pappamal, AIR 1967 SC 333,Triloki Nath Vs. Dharmarth, AIR 1975 J&K 76, State Vs. Alagirisubramanian AIR 1988 Madras 248 and M.P. Abdul Hameed & Co. Vs. TN Civil Supplies Corpn. AIR 1988 Madras 9.
The contention of the learned counsel appearing for the appellant that the learned trial Court has exceeded its jurisdiction and in fact has acted in violation of provisions of Order 8 is certainly without any merit. The rules and procedure are primarily intended to achieve the twine object underlining the code of Civil Procedure. Firstly, the parties must approach the court with true and clear facts, which are entitling them for seeking the legal remedy before the Court and secondly that the disputes between the parties should be resolved finally and expeditiously. The expeditious disposal is a linchpin to the administration of civil justice. The purpose of Order 7 Rule 11 CPC is to put an end to the cases, which are covered under clause (a) to (d) of Order 7 Rule 11 CPC at the very thrashold and in any case at the possible earliest stage. To allow the parties carry on vague and vexatious litigation, which in any case offends the provision of code, would be traversity of justice. In order to secure ends of justice and ensure expeditious disposal, a litigant is obviously at liberty to invoke the provisions of Order 7 Rule 11 CPC at any stage of the proceedings and the mere fact that summons have been issued even for framing of issues by the Court, would no way cause any legal impediment in consideration of such application by the Court of competent jurisdiction. In the case of Saleem Bhai and Others Vs. State of Maharashtra and Others (2003) 1 SCC 557 the Supreme Court in an unambiguous term even held that the order of the trial Court directing defendants to file written statement without deciding the application under Order 7 Rule 11 was contrary to the scheme of the Code. The Court held as under :-
A perusal of Order 7 Rule 11 CPC makes it clear that the relevant facts which need to be looked into for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power under Order 7 Rule 11 CPC at any stage of the suit - before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an application under clauses (a) and (d) of Rule 11of Order 7 CPC, the averments in the plaint are germane; the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage, therefore, a direction to file the written statement without deciding the application under Order 7 Rule 11 CPC cannot but be procedural irregularity touching the exercise of jurisdiction by the trial court. The order, therefore, suffers from non-exercising of the jurisdiction vested in the court as well as procedural irregularity. The High Court, however, did not advert to these aspects.
In view of above well settled position of law, we have no hesitation in holding that the application under Order 7 Rule 11 CPC was maintainable and has rightly been dealt with by the trial Court. Therefore, the two submissions made on behalf of the appellant are without substance and merit.
From the averments made in the plaint again there is no doubt that the plaint is vague, ambiguous and does not contain any of the necessary particulars. As already noticed, the plaint must contain complete facts or a bundle of facts, which would give rise to a cause of action as known and understood in law. No details of time, transaction, amount and account have been given in the plaint. The plaint only contains above 3 referred paragraphs, which in our view by no stretch of imagination can be said to be inconformity with the provisions of the Code. Not only this, in the notice alleged to have been served upon the defendant, the plaintiff had claimed a definite amount of Rs.17,39,169/- with interest @12%. This demand was denied and disputed by the defendant in his reply dated 16th October, 2004. Both these notices are available on record of the trial Court. In the notice, the appellant had raised no claim with regard to any rendition of account and even in the notice, no such details were given. The facts stated in the notice have not even been averred in the plaint that jewelery worth 15,79,169/- against receipt was given to the defendant by the plaintiff.
In view of these facts as stated in the plaint and the documents filed by the plaintiff, there can hardly be any doubt that suit for rendition of accounts would not be maintainable. Furthermore, in the plaint there is no reference to any fiduciary or other relationship like master or servant, employee and contractor, regular mutuality of accounts maintained in the normal course of business where a party holds the goods in trust or otherwise and members of the trust. The vague averments made in the plaint do not give rise to any definite cause of action, which could form basis for institution of suit for rendition of accounts. Another facet of the present case is that the plaintiff had himself given a notice for recovery of a definte amount and so as he maintained in the plaint by paying the 12% interest to the said amount and valuing the suit at a sum of Rs.18 lakhs. The plaintiff is certainly master of the suit as a discretion to value the suit for purposes of court fee and jurisdiction but this discretion of the plaintiff has to be regulated by the well settled cannons of law. Where the plaintiff in his notice and even then in the plaint claims a definite sum, which in the notice dated 7th October, 2004 was claimed beyond any shadow of doubt, the suit for rendition of accounts could not be instituted by the said plaintiff.
In the case of Wockhardt Veterinary Ltd. Vs. M/s Raj Medicos & Another 1998 VI AD (Delhi) 1, the Court held as under :-
In the case before me the valuation for the purpose of jurisdiction has been quantified with the sole objective to confer jurisdiction on this Court as this Court will have pecuniary jurisdiction if the valuation of the subject matter is over Rs.5 lakhs, otherwise in the normal course, the jurisdiction would lie with the District Judge. No doubt law provides that in case of relief for rendition of account when the amount is not ascertained the plaintiff cannot be asked to give a specific and ascertained figure of the amount on which relief is sought in the suit. But that does not give a licence to the plaintiff to give a wholly arbitrary and unreasonable figure so as to divest a Court which has got the jurisdiction to try the suit and to invest a Court which for these aforesaid three lines would not have the jurisdiction to try the suit by giving a higher valuation so as to bring suit within the pecuniary jurisdiction of this Court.
Reference can usefully be made to the judgment of the Supreme Court in the case of K.C. Skaria Vs. Govt. of State of Kerala and Another (2006) 2 SCC 285 where the Court clarified the law for suit for rendition of accounts. The relevant portions of the judgment reads as under :-
15. It is now well settled that the right to claim rendition of accounts is an unsual form of relief granted only in certain specific cases and to be claimed when the relationship between the parties is such that the rendition of accounts i the only relief which will enable the plaintiff to satisfactorily assert his legal right (vide Jowahar Singh v. Haria Mal, followed in Gulam Qutab-ud-din Khan v. Mian Faiz Bakhsh, State of J&K v. L. Tota Ram, Triloki Nath Dhar v. Dharmarth Counsel). The right to seek rendition of accounts is rccognised in law in administration, suits by a partner of a firm for dissolution of the partnership firm and accounts, suits by beneficiary against trustee(s), suits by a member of a joint family against the karta for partition and accounts, suits by a co-sharer against other co-sharer(s) who has/have received the profits of a common property, suits by principal against an agent, and suits by a minor against a person who has received the funds of the minor.
16. Even where there is no specific provision for rendition of accounts, courts have recognised an equitable right to claim rendition of accounts. In Narandas Marardas Gaziwala v. S.P. Am. Papammal this Court considered the maintainability of a suit by an agent against the principal for accounts. Negativing the contention that only a principal can sue the agent for rendering proper accounts and not vice versa (as Section 213 of the Contract Act provided that an agent is bound to render proper accounts to his principal on demand without a corresponding provision in the Contract Act enabling the agent to sue the principal for accounts), this Court held : (SCR pp.40 F and 42 D-E)
In our opinion, the statute is not exhaustive and the right of the agent to sue the principal for accounts is an equitable right arising under special circumstances and is not a statutory right.
Though an agent has no statutory right for an account from his principal, nevertheless there may be special circumstances rendering it equitable that the principal should account to the agent. Such a case may arise where all the accounts are in the possession of the principal and the agent does not possess accounts to enable him to determine his claim for commission against his principal. The right of the agent may also arise in an exception case where his remuneration depends on the extent of dealings which are not known to him or where he cannot be aware of the extent of the amount due to him unless the accounts of his principal are gone into.
17. To summaries, a suit for rendition of accounts can be maintained only if a person suing has a right to receive an account from the defendant. Such a right can either be (a) created or recognised under a statute; or (b) based on the fiduciary relationship between the parties as in the case of a beneficiary and a trustee; or Β© claimed in equity when the relationship is such that rendition of accounts is the only relief which will enable the person seeking account to satisfactorily assert his legal right\. Such a right to seek accounts cannot be claimed as a matter of convenience or on the ground of hardship or on the ground that the person suing did not know the exact amount due to him, as that will open the floodgates for converting several types of money claims into suits for accounts, to avoid payment of court fee at the time of institution.
On simple analysis of the above enunciated principles of law applied to the facts of the present case, we have no doubt in our mind that the appellant could not have instituted a suit for rendition of accounts even when the entire averments made not only in the plaint but as well as in the notice served by the plaintiff upon the defendant are taken to be true for the purpose of disposing of this application under Order 7 Rule 11 CPC. The cause of action is based on the facts pleaded and relatable to the relief claimed as sine qua non to the institution and maintainability of the suit before the Court of competent jurisdiction.
In light of the judgment of the Supreme Court in the case of K.C. Skaria (supra), it was for the plaintiff to satisfy the ingredients stated therein before he could claim successfully that the suit for rendition of account was maintainable. The averments made in the plaint are vague and inadequate even to constitute a proper cause of action. Before the plaintiff would call upon the defendant to render the accounts, the plaintiff has to satisfy the Court that he has a legal right to claim rendition of accounts. It could not file a suit for recovery of money in the garb of a suit for rendition of accounts. The view taken by the trial court, thus, can hardly be faulted. In fact the plaint of the plaintiff suffers from more than one defects in law and the order passed by the learned trial Court could even be sustained for additional reasons as indicated by us above.
For the reasons aforestated, this appeal is dismissed. However, in the facts and circumstances of the case, we reduce the costs of Rs.10,000/- as imposed by the trial Court to Rs.5000/-. The judgment and decree of the trial Court is modified limited to the above extent.
RFA No. 161/2005 is accordingly disposed of while leaving the parties to bear their own costs.
( SWATANTER KUMAR )
( S.L. BHAYANA )