Document's Author Need Not Be Examined If Signature Is Not Denied : Supreme Court

The Supreme Court has observed in its judgment delivered on December 16 that the examination of the author of a document is not required, if they had not denied their signature on the document, but only pleaded duress in execution of the same. "The High Court,in the impugned judgment, erred in holding that the appellant had not examined the author of the documents. Such reasoning is absolutely erroneous as in the written statement, the respondents had not denied their signatures on the documents referred to by the appellant but pleaded duress in executing of these large number of documents", the Court's judgment stated.The Supreme Court also reiterated that the onus to prove that a transaction is sham, bogus and fictitious is on the person who makes such a claim. A bench comprising Justices Hemant Gupta and V. Ramasubramanian allowed an appeal assailing the order passed by the Division Bench of Delhi High Court setting aside the decree of the Single Judge for the sum of Rs. 96,41,765.31 along with simple interest @ 15% p.a., from the date of institution of suit till the payment of the principal amount. Factual BackgroundThe appellant filed a recovery suit for a sum of Rs. 96,41,765.31. The Single Judge of the Delhi High Court allowed the suit and passed a decree for the sum along with simple interest. It was eventually set aside by the Division Bench on the ground that the appellant had failed to establish that it was a registered dealer with the Sales Tax Authorities in Delhi and therefore, it could not have sold papers in Delhi without paying Central Sales Tax.Appellant's/Plaintiff's caseThe appellant manufactured writing and printing papers which were sold to customers through wholesalers. The appellant sold its products against direct payment or payment by means of hundies. The respondent no. 1, its wholesaler dealer in Delhi, which purchased paper from its Delhi Sales Office and its mills in Saharanpur, lifted a stock of about Rs. 15-20 lakh per month. The sale made to the respondent no. 1 was through limited credit of 45-60 days as well as hundi. Interest was charged after fifteen days from the date of delivery. The rate of interest was 21% p.a., from the date of delivery till the date of payment along with penal interest of 3%. As a wholesaler, the respondent no. 1 got a trade discount amounting to Rs. 700-750 per ton. For the stock lifted during the period from November, 1985 to January, 1986, the respondent no. 1 did not make the due payments against the 189 consignment worth Rs. 72,27,079 received by it. Moreover, the hundies for 9 consignments worth Rs. 2,99,480 were also dishonoured. Therefore, the claim of the appellant stood at Rs. 96,41,765.31 (principal amount Rs. 71,82,266+Interest on outstanding bill Rs. 24,59,499.31).By way of an affidavit, the appellant tendered 976 documents including stamped and signed invoices, delivery challan, deposit notes, ST-1 form etc. In cross-examination the appellant clarified that in sale transactions by manufacturer with wholesaler, the sales tax was exempted, but sale transactions directly between the manufacturer and customer would be taxed. Respondents'/Defendants' caseThe appellants had adduced bills based on fictitious transactions, which are void in law. It was in fact the appellant who owed Rs. 45 lakh to the respondents. The respondents also alleged that the appellant had coerced them to sign documents and on the basis of the same had indulged in tax evasion. As the sale directly made from Saharanpur would be levied with a sales tax of 4%, the appellants used to take out the goods from the Mill in the name of the respondents and would sell it from appellant's Delhi depot in the open market at a higher profit. By way of an affidavit, the respondents had vouched that they could not adduce their book of account as they were spoiled by torrential rains and were eaten by pests. The receipt of goods and the signature on delivery challans were denied. It was alleged that the ST-1 Forms and certain other documents were signed under duress. Contention raised by the appellant It was argued that neither the respondents disputed the sales tax registration of the appellant, nor was an issue framed in this regard. However, the Division Bench had set aside the decree on the basis of non-registration under the Sales Tax Act. The Court was apprised that a registration certificate was filed by the appellant which made it clear that it was registered as a dealer under Section 14 of the Delhi Sales Tax Act, 1975. Contention raised by the respondentPlacing reliance on Subhra Mukherjee and Another v. Bharat Coking Coal Ltd. and Others (2000) 3 SCC 312, it was contended the onus of proof that the transaction was genuine was on the appellant, which it had failed to establish. Citing Ishwar Dass Jain v. Som Lal (2000) 1 SCC 434, it was averred that the appellant did not place books of accounts, but only extracts which would not be admissible in evidence. Analysis of the...

Document's Author Need Not Be Examined If Signature Is Not Denied : Supreme Court

Sohini Chowdhury

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