MAJETI RAMACHENDRAYYA Vs. MAMIDI BUCHAYYA

JUDGEMENT

(1.) The question raised is as regards the right to discovery and inspection. The plaintiff is the commission agent of the defendant and sues him on a promissory note said to have been executed in pursuance of a settlement of account. The dealing consisted in the defendant sending the plaintiff timber for sale on commission and monies being advanced by the plaintiff to the defendant. The defendant pleads that the plaintiff, while professing to sell the timber to third parties, sold it on various occasions to himself and that owing to such and other acts of fraud on his part, he, the defendant, is not bound by the settlement. On a previous application by the defendant, inspection was ordered of the plaintiff's ledger and fair day-books. The discovery now sought relates to certain other books such as the plaintiff's rough day books and shop books. The question is whether the defendant's request should be granted.

(2.) There are at least three English cases bearing directly on this point. In each of them there was a settled account and the question was raised by the principal as against his agent. In Whyte V/s. Ahrens (1884) 26 Ch. D 717, Bacon, V.C. points out that the right to discovery arises from the relation of principal and agent and that the settled account is no answer to that right. Prom his order for production of accounts the defendants appealed. Cotton, L J observes that according to the old practice in the Court of Chancery, production would have been ordered even in the absence of specific charges of fraud. Then comes the question, has the law been altered? Referring to Order XXXI, Rule 20, of the Rules of the Supreme Court (corresponding to Order XI, Rule 20, of the Civil Procedure Code) which says that if the right to the discovery sought depends on the determination of any issue, the Court may order that such issue be determined first and reserve to a later stage the question as to the discovery; the learned Lord Justice goes on to observe: "Is there a plea that should be settled first which bars the discovery?" For determining the very issue of the settled account, the production of the documents is essential and therefore that rule does not operate as a bar. There were two applications in that case, one by the agent for particulars and other by the principal for discovery; the former application was ordered to stand over till the production of the books.

(3.) In Leitch Vs. Abbott (1886) 31 Ch. D. 374 : 55 L J Ch. 460 : 54 L T 258 : 34 W R 506 : 50 J.P. 441, Bowen, L J explains, as did Bacon, V.C. in the previous case, that the plaintiff's right to discovery arises not out of the fraud but out of the relation of principal and agent. He further points out that the very fact that the principal is unable to plead except in general terms, is in many cases the most cogent reason why he should have discovery from the other party. Referring to Order XXXI, Rule 20, he observes that the discovery is wanted for the determination of the very issue relating to the settled account.