PRIVY COUNCIL

               Seth Maganmal

               Vs.

               Darbarilal Chowdhry

                  Privy Council Appeal No. 58 of 1924
(Viscount Sumner, J. Lords Atkinson Sinha and Sir John Wallis JJ.)

               06.12.1927

               JUDGMENT

LORD SINHA J.

1. This is an appeal from a judgment and decree of the Court of the Judicial
Commissioner of the Central Provinces, which reversed a judgment and decree of the
Subordinate Judge of Damoh in a suit which was filed on the 11th December 1916, in
order to enforce a mortgage executed by the defendant on the 5th March 1913.

2. The case has been tried under peculiarly unsatisfactory circumstances. The plaint
was registered on the 2nd January 1917. No written statement was filed, but only oral
statements of the pleaders on both sides recorded, and issues were framed on these.
The evidence was heard from time to time and at long intervals, and appears to have
taken altogether a period of nearly three years. Judgment was pronounced by a
Subordinate Judge who had not hoard any of the witnesses except two, and even of
these one had been partly examined by his pre-decessor-in-office. The result is that in
a case which entirely depends upon questions of fact, neither of the Courts dealing
with the case had the benefit of seeing the witnesses and had to appreciate the
evidence recorded by another Judge. Under these circumstances their Lordships are
unable to attach the same importance as they otherwise would, to the findings of fact
of the trial Court, and it is necessary that they should feel convinced that the judgment
of the Judicial Commissioner under appeal is wrong before they can advise that it
should be set aside.

3. The plaintiffs alleged that the defendant executed the mortgage in question after
having received the sum of Rs. 7,000 in cash, and they prayed for the usual mortgage
decree.
4. The defendant admitted the execution of the mortgage but denied that he had
received the consideration alleged and also that he owed any money to or had received
any money from the plaintiffs.

5. It is obvious that the onus of proving this defense lay on him, and lay heavily,
seeing that it is inconsistent with his own admissions in writing hereafter referred to. It
is necessary to scrutinize the defence story in detail and to see whether it is
corroborated in every material part in such a way as to neutralize the effect of these
admissions. For that purpose, such of the main facts as are not in dispute may be
stated as follows :

6. The plaintiffs have their principal shop at Damoh, which is called "badi dukan." Rai
Seth Sukhdeo was its munim. The plaintiffs had also a branch shop in the Mawganj
quarter of that town, doing only grain business. It was usually called the "adat shop."
In that shop the defendant's brother Gajadhar was the managing partner without any
share in the capital. In the paki rokad (fair cash book) of the adat shop there are three
debit entries in the handwriting of Gajadhar showing that the following sums had been
advanced to the defendant on the dates mentioned against them:

(1) Rs. 2,600 dated 13th February, 1913.
(2) Rs. 3,400 dated 12th February, 1913.
(3) Rs. 1,000 dated 17th February, 1913.
Total Rs. 7,000
7. The sarkat or acknowledgment book of that shop contains acknowledgments of the
defendant in his own handwriting purporting to have been written on these dates and
admitting these loans.

8. The plaintiffs alleged that the defendant had borrowed from their badi dukan Rs.
7,000, and given the mortgage in suit in order to satisfy the debts due by him to the
adat shop as evidenced by the above documents. What the defendant had to say with
reference to these facts will be apparent from the following statement made for him by
his pleader on the 5th December 1917 :

9. A few days before the execution of the bond in suit, Gajadhar had gone to
Jubbulpore in connexion with the defendant's marriage. During his absence Rai Sahib
Seth Sukhdeo found some money short in the adat shop and wired to Gajadhar to
come back. When Gajadhar came he was threatened by Rai Sahib Sukhdeo with
prosecution and arrest for the alleged defalcation. As Rai Sahib Suhkdeo holds the
position of an Honorary Magistrate and is an influential man, and as Gajadhar was the
only person of the defendant's family to arrange for the marriage of the defendant, the
defendant in order to avoid the threatened prosecution of his brother executed a sarkat
for Rs. 7,000 in favour of badi dukan as required by Rai Sahib Sukhdeo. (The Judicial
Commissioner states in his judgment that the words "badi dukan" appear to be a
clerical mistake. It should have been adat shop.) In order to give a colouring of truth
Rao Sahib Sukhdeo coerced the defendant into showing in the sarkat that the amount
of Rs. 7,000 was taken on three different dates. None of these items was taken as a
loan. The amount of defalcation was said to be Rs. 7,000. By, executing the sarkat the
defendant avoided complications during his marriage. On return of the marriage party
the said munim again threatened the defendant that he would prosecute unless a
mortgage-deed for Rs. 7,000 was given, as there was no security for the sarkat debt.
The defendant subsequently learnt that there was no shortage of money in the adat
shop. The bond is therefore void for want of consideration and also because it was
executed under undue influence, coercion and for stifling prosecution for a non-
compoundable offence.

10. This story is entirely denied by the plaintiffs, and it is their case that the three
loans in February were actually advanced from the till of the Adat shop by Gajadhar to
the defendant on the three different dates as shown in its books.

11. The real question, therefore, is whether the defendant had in fact borrowed from
the Adat shop those three sums of money amounting to Rs. 7,000, for the satisfaction
of which the mortgage is said to have been executed. The Judicial Commissioner
considered that the mere fact of the actual payment before the registering officer or the
ultimate removal of the money to the badi dukan did not affect the question as the
consideration of the mortgage bond was intended to satisfy the defendant's liability to
the adat shop. The crucial question is the defendant's antecedent liability to the adat
shop.

12. The defendant and his brother, Gajadhar, denied that any such advance was made,
and, though the trial Court did not believe their story, the Judicial Commissioner came
to the conclusion that no cash loans were taken by the defendant from the adat shop
and that the acknowledgments in the sarkat-book and the entries in the Pakki Rokad
were made under the circumstances spoken to by them. He considered that their
evidence received material corroboration from the following circumstances:

       (a)A telegram dated 14th February, 1913 (Ex. D. 1), from Damoh, addressed to
       Gajadhar at Jubbulpore, to prove that Gajadhar was not at Damoh on the 14th
       February.
       (b)The non-production by the plaintiffs of the Katchi Rokad (or rough cash
       book of the adat shop for 1913, which would be the best evidence of the trans-
       actions in that month as it would contain entries made from day to day.
       (c)The fact that though all the account books were written by subordinate
       clerks, the only entries in the Pakki Rokad (or fair cash book), which was
       written up at varying intervals from the Katchi Rokad, which were in the
       handwriting of Gajadhar, were under the dates 13th to the 17th February.
       (d)The failure of the plaintiffs to call the munim Sukhdeo, who died before the
       hearing was actually concluded, but who could have been called on several
       previous dates when the case was heard.
       (e)The evidence of several witnesses which proved that some credit entries in
       their names were falsely made after the 17th February in the Pakki Rokad of the
       adat shop to square up corresponding debit entries which were equally fictitious
       and which had been made before the 17th February in order to cover up
       defalcations or deficits, whether Gajadhar was himself guilty of the same or not.
13. It was argued before their Lordships that none of the circumstances above related
either singly or taken together justified the Judicial Commissioner in accepting the
defendant's story.

14. Taking the telegram first; it purports to be sent by Nathoolal, is addressed to
Gajadhar c/o Kodoolal Dasratlal, Jubbulpore, and is dispatched from Damoh at 8.25 p.
m. The contents are as follows:

       "Come by first train soon."
15. Nathoolal, examined as a witness on behalf of the defendant, stated that the
Munim Sukhdeo sent for him in Magh, 1968 (February 1913), and asked for
Gajadhar's address at Jubbulpore, he, having left Damoh a day or two before, that he
gave the address and thereupon the munim sent a telegram (to Gajadhar) through his
man, but he did not know its contents. Gajadhar deposed that Ex. D. 1 was the
telegram he received. He had gone into the interior of the district when the telegram
was received by his relative to whose care it was addressed. He got it on his return
from the interior to Jubbulpore, and he immediately returned to Damoh, which he
reached on the 17th or 18th February. The Judicial Commissioner came to the
conclusion that Gajadhar was not at Damoh on the 14th February 1913, and that the
evidence of the plaintiffs' witnesses that the three different sums of money were
actually advanced by Gajadhar to the defendant on the dates shown in the account
books could not be accepted.

16. It is urged on behalf of the plaintiffs (appellants) that even though the telegram
was sent on the 14th February, Gajadhar might have been at Damoh during business
hours on that date, as the telegram was not dispatched till 8.25 p. m. This depends on
the distance between the two places Damoh and Jubbulpore and the times of the train
service between them. That argument was apparently not urged, either before the
Subordinate Judge or the Judicial Commissioner, both of whom were in a better
position to deal with it than their Lordships, who are, therefore, unable to hold that the
Judicial Commissioner was wrong in holding that the telegram was conclusive to show
that Gajadhar was not at Damoh on the 14th February.

17. It would further appear that the entry of the 17th February is equally fictitious,
even if it is assumed that Gajadhar returned to Jubbulpore on the 17th and not on the
18th. The telegram purporting to come as it did from Nathoolal, an employee of the
adat shop, was as an urgent summons to return and could not but convey that
something serious had occurred in connexion with the adat shop, and it is difficult to
believe that on the very day Gajadhar returned to Damoh he should lend a further sum
of Rs. 1,000 to his brother, and thereby commit another grave irregularity in
connexion with the cash of the shop; for such it was alleged to be by evidence on the
plaintiff's side.

18. The next question to consider are the facts mentioned as (b) and (c) above.

19. As regards the Katchi Rokad, this is what the Judicial Commissioner says :

20. Pakki Rokad is not written from day to day, but is written at the convenience of the
clerks when they get time. It is the Katchi Rokad in which transactions are entered at
the very time. These are copied in the Pakki Rokad afterwards at the convenience of
the clerks. It is, therefore, the Katohi Rokad which is the really important document. If
these amounts were really advanced in cash to the defendant, as was the plaintiffs'
case, they must have found place in the Katchi Rokad. Though the defendant had
made determined efforts to get the plaintiffs to produce the Katchi Rokads of the Adat
shop, they failed to produce them. No satisfactory explanation was given for their non-
production, and the plaintiffs merely made a bald statement they had not got any
Katchi Rokad of that shop. It was never alleged by the plaintiffs that Gajadhar had
removed them. Rampal's evidence given as D. W. 9, to the effect that the Katchi
Rokads of the adat shop were with Gajadhar cannot, therefore, be believed. Gajadhar
had already been divested of all his powers over the adat shop, and it seems very
unlikely that he would have been permitted to retain these books or to remove them.
From hearing to hearing the defendant was pressing for the production of the Katohi
Rokads and still no suggestion was made on behalf of the plaintiffs till Rampal was
examined that these had been taken away by Gajadhar.

21. Similarly as regards the entries in the Pakki Rokad, the Judicial Commissioner
observes :

22. There is one very important circumstance for which no explanation has been
offered for the plaintiffs. All the account books were written by subordinate clerks. On
no other days were any account books of the adat shop written by Gajadhar. It was
only the Pakki Rokad of 13th February 1913 to 17th February, that was written by
Gajadhar. Gajadhar swears that he had gone through the whole of the Pakki Rokad for
that year and that on no other date were any entries made by him. This has not been
denied by the plaintiffs. This extraordinary circumstance of Gajadhar writing Pakki
Rokad only on these particular dates could not have been a mere accident. It was
apparently done with the sole object of preventing the defendant from subsequently
denying his liability for these items. The plaintiffs' munim was, it appears, taking all
possible precautions to cover the real nature of the debits and to give them an
appearance of ordinary loan transactions which the defendant may not subsequently
deny, otherwise there was no meaning in Gajadhar writing the Pakki Rokad only on
these four days.

23. Their Lordships are unable to hold that the Judicial Commissioner was wrong
when he says with reference to the above as follows:

24. The fair conclusion to be drawn from these circumstances is that the Katchi
Rokads of the adat shop were intentionally suppressed by the plaintiffs, and that their
production in Court would have gone against them. The entries in the Pakki Rokad of
these particular dates were made by Gajadhar after his return from Jubbulpore. These
circumstances support the defendant's allegation that they were all made on one day.
Gajadhar's statement that different dates against the different items debited to the
defendant were put in order to ward off suspicion cannot be said to be without any
foundation.

25. As regards (d) the Judicial Commissioner says :

26. The absence of the evidence of Rai Sahib Sukhdeo in the case is also remarkable.
He was the principal person involved in all these transactions, and could have given us
the first hand account thereof. He could have denied on oath the allegations made by
the defendant and his witnesses, and his cross-examination by the defendant would
have elicited several points. He attended the Court on many hearings and should have
been the first witness to be put in the witness box on the plaintiffs' behalf. The
principal evidence of the plaintiffs began on 10th December 1918, and Sukhdeo was
alive till the end of May following. It was said that from before 10th December 1918,
till his death, Sukhdeo was ill and unable to give his evidence. This illness did not,
however, prevent his going about on tour in the interior of the district and travelling by
train, as is apparent from the order sheets of the 4th March and the 15th April 1919.
He was intentionally kept back, the idea perhaps , being to put him as the last witness
on the plaintiffs' side.

27. Their Lordships are again unable to hold that this inference is unwarranted, or that,
on the facts established, the learned Judicial Commissioner was in error in finding
material corroboration of the defendant's story.

28. As regards the last-mentioned circumstances of corroboration noted as (e) above :
Gajadhar's evidence was that in the books of the adat shop certain items had been
debited on dates prior to the 17th February 1913, in the names of certain persons,
though the transactions never took place. The effect 'was to withdraw so much money
from the till. These bogus debit entries were squared up by corresponding credit
entries made after the 17th February, i. e., after the defendant had undertaken the
liability of Rs. 7,000 as being defalcations for which his brother was responsible. If
the question of these defalcations rested on the evidence of Gajadhar alone it would
have been difficult to accept the story of the alleged deficiency. But the Judicial
Commissioner found that some, though not all, of the alleged bogus entries were
proved to be such by independent and disinterested witnesses who proved that the
credit and debit entries in question appearing in the plaintiffs' boots, and purporting to
be records of transactions with those witnesses or their firms, did not appear in their
own books of account, and that no such transactions took place in fact. It was hardly to
be expected that such independent evidence would be available in respect of all the
various items relied upon by the defendant as bogus items. But the books are
sufficiently discredited if a certain number are proved which precludes the possibility
of error or accident, and their Lordships are unable to hold that the Judicial
Commissioner was wrong in holding that the evidence of the witnesses examined by
the defendant left no reasonable doubt about there having been defalcations and
deficits.

29. In the result the Judicial Commissioner accepted the story of the defendant, and
held that the acknowledgments in the sarkat book were given and the mortgage in suit
executed by the defendant under the circumstances alleged by him.

30. Their Lordships consider that no sufficient reason has been shown to disturb these
findings of fact, which are sufficient to dispose of the case.

31. The plaintiffs having made a substantive case as to the consideration for their
mortgage, cannot now be allowed to shift their ground and urge that the defendant
accepted the civil liability of his brother Gajadhar for the defalcations which he
alleged and which they denied. Their Lordships, therefore, consider it unnecessary to
go into the question whether a creditor can or cannot by stifling a prosecution obtain a
valid guarantee for his debt from third parties.

32. Their Lordships will humbly advise His Majesty that the judgment and decree of
the Judicial Commissioner should be affirmed, and this appeal dismissed with costs.

Appeal dismissed.