Books of Accounts is not considered as a conclusive evidence to determine liability to rule out any attempt to manipulate to fix liability on someone else due to any element of self-interest and partisanship
Books of Accounts is not considered as a conclusive evidence to determine liability to rule out any attempt to manipulate to fix liability on someone else due to any element of self-interest and partisanship.
In a suit filed for recovery under Order 37 of the Code of Civil Procedure, 1908, in a bid to obtain leave to defend, the Court, while declining to prayer to allow leave to defend, adjudicated amongst other issues, namely, Limitation to initiate recovery proceeding flowing from agreement; Non-Admissibility of parties’ books of account as conclusive evidence (Section 34 of the Evidence Act, 1872); Effect of Memorandum of Understanding (MoU) if unstamped;
In regard to issue of limitation the issue to be considered was that in a loan agreement, if there is an amount to be recovered, effective when, the limitation will start to run. It was held that in these circumstances, Article 22 of the Schedule to the Limitation Act would be applicable. It provides a limitation of three years commencing from the date when the loan is made and the money lent can be recovered under an agreement on demand. In the instant matter the agreement was not pertaining to loan but was relating to a deposit with the understanding that the said amount or parts thereof will be allocated towards future agreements to be entered into between the parties and if no future agreements are entered upon, the consideration amount would be refundable on demand. In such circumstances, the period of limitation would be from the date demand is made and not from the date when the deposit is made.
In reference to second aspect i.e. admissibility of parties’ books of account as evidence, it was held that books of accounts is not considered as conclusive evidence to determine liability is to rule out any attempt to manipulate to fix liability on someone else due to any element of self-interest and partisanship. However, as an exception to above, the principle does not apply to a situation when the liability is sought to be fastened on someone on the basis of his own books of accounts, since, here there can be no self-interest or possibility of partisanship involved to guard against.
In regard to the third aspect, i.e. defect in stamping, the remedy is provided in Section 35 of The Indian Stamp Act, 1899. The amount of duty payable is prescribed in Schedule IA of the Stamp Act, as applicable to respective State. In case of Delhi, an agreement of the nature of MoU is stampable under Article 5(c) of the Schedule IA of the Stamp Act as applicable to Delhi with stamp duty of Rs.50/ and the maximum penalty provided is ten times, by payment whereof, the defect can be cured.
M/s. Gold Developers Pvt. Ltd. & Anr. vs. M/s. Nitishree Infrastructure Ltd. & Anr.
(Delhi HC, 26.09.2013)