2025 (12) TMI 999 - HC - Indian Laws

Appeal dismissed; decree for outstanding dues upheld, burden of proof under Evidence Act Sections 101-103 correctly applied

HC dismissed the appeal, affirming the trial court's decree for recovery of the outstanding amount, along with pendente lite and future interest. It held ... Entitlement to a decree for recovery - entitlement to pendente-lite and future interest - burden to prove - non-application of mind - violation of principles of natural justice - HELD THAT:- The respondent/plaintiff was able to prove the sale of goods to appellant/defendant and part payment of Rs. 8,00,000/-. This was admitted by appellant/defendant in his written statement, affidavit of evidence and cross-examination - Moreover, as per Section 102 of Indian Evidence Act, 1872 the burden of proving documents rests on the plaintiff, and once plaintiff creates a strong prima facie case, the onus may shift to the appellant/defendant to disprove it. In Muddasani Venkata Narsaiah v. Muddasani Sarojana [2016 (5) TMI 1509 - SUPREME COURT], the Supreme Court held that if a witness is not cross-examined, then their testimony is deemed to be undisputed, and the court would presume that their account is accepted. The Court further clarified that any facts stated by one party in their pleadings, which are neither challenged in the pleadings nor through cross-examination by the opposing party, must be accepted as fully established. In Mohd. Abdullah Azam Khan [2022 (11) TMI 1575 - SUPREME COURT], the Supreme Court observed that the burden of proof lies on the person who asserts a fact and not on a party who denies it, particularly when it is not self-evident, and remains on them unless discharged - the Supreme Court in paragraph 80 of Mohd. Abdullah Azam Khan also observed that Section 103 of IEA provides that the burden of proving a specific fact lies on the party who wants the Court to believe in its existence, unless the law places that burden elsewhere. This amplifies Section 101 of IEA, which states that the burden lies on the party asserting the affirmative. It is apparent from the findings recorded by the Trial Court that the appellant/defendant has failed to discharge the burden of proof cast upon him to establish the alleged return of goods, grant of discount, or any other adjustments as claimed. The appellant/defendant did not lead sufficient evidence to substantiate these assertions, and in the absence of such proof, the law is clear that the person who asserts a fact needs to lead evidence to that respect. Therefore, the Trial Court rightly declined to accept these pleas. The appeal is dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the plaintiff proved entitlement to a money decree for Rs. 11,85,701/- towards the price of T-shirts supplied to the defendant. 1.2 Whether the defendant established any deductions/set-off towards alleged fake invoice, return of goods, trade discounts, or loss on account of alleged inferior goods. 1.3 Whether the defendant's monetary claim arising out of transactions routed through a separate concern could be adjusted in the present suit. 1.4 Whether the Trial Court correctly exercised discretion under Section 34 of the Code of Civil Procedure, 1908 in awarding pendente lite and future interest at 7% per annum. 1.5 Whether the video recording relied upon by the defendant, without compliance of Section 65B of the Indian Evidence Act, 1872, could substantiate the alleged return of goods. 1.6 Whether any ground was made out for appellate interference on the assertion that the impugned judgment was passed in haste and without proper appreciation of evidence. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to decree for Rs. 11,85,701/- Interpretation and reasoning 2.1 The Court noted the defendant's clear admission in the written statement, evidence affidavit and cross-examination that he had purchased T-shirts worth Rs. 19,85,701/- from the plaintiff and made part payment of Rs. 8,00,000/-, leaving a balance of Rs. 11,85,701/-. These admissions crystallised and rendered conclusive the factum of purchase and outstanding principal. 2.2 Referring to Sections 101 and 102 of the Indian Evidence Act, 1872, as elucidated in the decision in Mohd. Abdullah Azam Khan v. Nawab Kazim Ali Khan, the Court held that once the plaintiff discharged the initial burden by proving sale and part payment, and created a strong prima facie case, the onus shifted to the defendant to prove any facts disentitling the plaintiff to recovery. Conclusions 2.3 The plaintiff validly established the supply of goods and outstanding principal of Rs. 11,85,701/-, and the defendant's admissions reinforced this. The decree for the said principal amount was correctly granted and warranted no interference. Issue 2 - Alleged deductions/set-off (fake invoice, return of goods, discounts, inferior goods) Legal framework 2.4 The Court applied Sections 101-103 of the Indian Evidence Act, 1872, holding that the burden of proof lies on the party asserting the affirmative of a fact; the person who alleges adjustments or deductions must prove them. Reliance was placed on the principles in Mohd. Abdullah Azam Khan regarding burden and shifting onus, and on Muddasani Venkata Narsaiah v. Muddasani Sarojana regarding consequences of absence of cross-examination. Interpretation and reasoning 2.5 The defendant claimed four heads of deductions totalling Rs. 8,04,544/-: (i) an alleged fake invoice of Rs. 2,40,328/-, (ii) return of goods of Rs. 3,36,878/- under a Debit Note, (iii) discount of Rs. 1,47,338/-, and (iv) Rs. 80,000/- deducted by a third party for inferior goods. 2.6 The Trial Court had recorded, and the High Court affirmed, that the defendant did not cross-examine the plaintiff with respect to the alleged fake invoice, the claimed discount, or the claim of Rs. 80,000/- towards inferior goods. Applying Muddasani Venkata Narsaiah, the Court held that unchallenged testimony is deemed undisputed and accepted, and that matters sworn by one party, not challenged in pleadings or cross-examination, must be treated as fully established. 2.7 On the alleged discount of Rs. 1,47,338/- and the Rs. 80,000/- towards inferior goods, the Court noted there was no supporting documentary evidence, no ledger, and only bare assertions, which were held to be legally insufficient to discharge the burden under Sections 101-103 of the Evidence Act. 2.8 On the alleged return of goods of Rs. 3,36,878/- under Debit Note (Ex. DW-1/13), the plaintiff denied the suggestion in cross-examination. The Debit Note did not bear the plaintiff's signature or acknowledgement; it did not specify invoice particulars of the returned goods; no ledger was filed; and no evidence of reversal of Input Tax Credit (ITC) was produced. The defendant admitted absence of plaintiff's signature and failed to produce relevant GST documents despite opportunity. 2.9 The defendant sought to corroborate the Debit Note through DW-2, who claimed to be plaintiff's employee and to have returned goods by rickshaw. The Court, concurring with the Trial Court, found DW-2's testimony unreliable: he produced no proof of employment or identity; no acknowledgment of receipt on the Debit Note; no proof of hiring or using a rickshaw; and admitted he came to depose at the instance of the defendant. His evidence was therefore insufficient to establish the alleged return of goods. 2.10 The Court reiterated that the burden to prove such adjustments remained on the defendant as the asserting party; he failed to bring sufficient material to enable the Court to accept the alleged deductions. Conclusions 2.11 The defendant failed to discharge the burden of proving the alleged fake invoice, return of goods, trade discounts, and loss due to inferior goods. The courts below rightly rejected all claimed deductions and set-off, and the defendant remained liable for the full outstanding principal of Rs. 11,85,701/-. Issue 3 - Claim relating to transactions through separate concern and pendency of separate suit Interpretation and reasoning 2.12 The defendant claimed that after adjustments, the plaintiff was instead liable to pay Rs. 23,71,283/- in relation to amounts received in the bank account of a separate concern (bearing a different GST registration) and asserted entitlement to recover a larger sum from that concern. 2.13 The Court affirmed the Trial Court's finding that the two concerns involved-one being the plaintiff's proprietorship and the other being a separate concern in the name of another proprietor with a distinct GST number-have separate legal and tax identities. The defendant had already instituted a separate recovery suit against the other concern, which was pending. 2.14 On this basis, the Court held that the defendant's alleged claim of Rs. 23,71,283/- against the separate concern was sub judice in another proceeding and could not be treated as an adjustment or set-off in the present suit confined to the plaintiff's firm. Conclusions 2.15 The defendant's broader monetary claim against the separate concern was irrelevant for determination of liability in the present suit and could not reduce or extinguish the plaintiff's claim. The decree for the principal amount in the present suit was correctly granted without accounting for that separate, pending claim. Issue 4 - Award of interest under Section 34 CPC Legal framework 2.16 The Trial Court applied Section 34 of the Code of Civil Procedure, 1908 to award pendente lite and future interest at 7% per annum on the decreed amount. The High Court examined the exercise of discretion within this statutory framework. Interpretation and reasoning 2.17 The Court noted that the Trial Court, after decreeing the principal sum of Rs. 11,85,701/-, consciously applied Section 34 CPC and fixed interest at 7% per annum. No legal or factual infirmity in the rate or exercise of discretion was demonstrated in appeal. Conclusions 2.18 The award of pendente lite and future interest at 7% per annum under Section 34 CPC was upheld as a proper and lawful exercise of judicial discretion. Issue 5 - Admissibility and probative value of video recording without Section 65B certificate Legal framework 2.19 The Court considered the requirement of a certificate under Section 65B of the Indian Evidence Act, 1872 for admissibility of electronic records, including video recordings. Interpretation and reasoning 2.20 The defendant, through DW-2, relied on alleged mobile phone video footage said to depict the act of returning goods. However, no certificate under Section 65B accompanied the electronic record. 2.21 The Trial Court found, and the High Court agreed, that the absence of a Section 65B certificate rendered the video legally inadmissible as electronic evidence. Additionally, even on a factual appreciation, the video only showed DW-2 standing in front of the defendant's shop and did not substantiate the alleged return of goods. Conclusions 2.22 The video recording, lacking a Section 65B certificate and having minimal probative value, could not support the defendant's case regarding return of goods and was rightly disregarded. Issue 6 - Allegation of hurried or non-application of mind by the Trial Court and scope of appellate interference Interpretation and reasoning 2.23 The defendant argued that the Trial Court's judgment was passed in haste, without due application of judicial mind, and without considering the totality of evidence. The High Court independently traversed the pleadings, evidence, and reasoning of the Trial Court. 2.24 On such re-appraisal, the Court found that the Trial Court had painstakingly analysed each defence, including the alleged Debit Note, testimony of DW-2, claimed discounts, alleged inferior goods, and the separate claim against the other concern. The findings were based on admissions, documentary evidence, evidentiary burdens, and established legal principles. Conclusions 2.25 No perversity, non-application of mind, or procedural haste was found in the impugned judgment. The appeal disclosed no valid ground for interference with the Trial Court's decree, and was therefore dismissed, rendering pending applications infructuous.