Discretion To Accept Documents At Later Stage Continues Under Order VII Rule 14(3) After Rule 18 Deletion: Kerala High Court

The High Court held that the discretion earlier conferred by Rule 18 continues under Order VII Rule 14(3).

The Court was hearing two Regular First Appeals challenging a money decree passed against a partnership firm and its partners in favour of a steel manufacturer over unpaid dues for credit purchases.

A Division Bench comprising Justice Sathish Ninan and Justice P. Krishna Kumar, while stressing that procedural requirements cannot override the objective of ensuring fair adjudication, observed: “Rule 18 gave a discretion to the Court to accept the document produced at a later stage. At the first blush it would appear that on the deletion of Rule 18, the power has been taken away. But it is significant to note that the said power has been retained and transplanted, verbatim, as sub rule (3) to Order VII Rule 14”.

Background

The plaintiff, a steel manufacturing company, instituted a suit alleging that the first defendant partnership firm, its authorised dealer, defaulted in clearing dues despite repeated demands. While the principal amount was decreed by the trial court, the defendants challenged both the limitation and the admissibility of the plaintiff’s account books.

The contention raised in the appeal was that since Order VII Rule 18 CPC had been deleted in 2002, non-production of original account books at the time of filing the plaint rendered them inadmissible. It was also contended that the suit was barred by limitation and that one of the defendants was wrongly treated as a partner of the dealer firm.

Court’s Observation

The Kerala High Court examined the contentions that the plaintiff had not produced original account books at the time of filing the plaint and that the accounts, therefore, could not be relied upon.

The Court rejected the argument that the power to accept documents filed after the plaint stood extinguished with the deletion of the earlier Rule, holding that the same discretion now exists under Order VII Rule 14(3). It reiterated that procedural rules serve the administration of justice and cannot be treated as technical barriers to the reception of relevant material.

Since the originals were later produced, admitted in evidence, and no objection was taken before the Trial Court, the defendants could not raise such a plea for the first time on appeal, the Court remarked.

On the evidentiary value of the accounts, the Bench found that the plaintiff had proved the correctness of the financial statements through testimony of financial officials who spoke to the maintenance and correctness of the ledgers. The entries in the ledgers were further supported by the invoices relating to the supply of goods and by written communications between the parties wherein the defendants acknowledged their liability and sought time to discharge it. The Court held that the balance outstanding against the defendants thus stood conclusively established.

The Court also considered the plea that a payment mentioned in the plaint did not appear in the accounts. It found this discrepancy to be purely clerical in nature and explained during evidence, without affecting the overall correctness of the account statements.

With respect to the status of the second defendant, the Court held that though he had participated in business transactions on behalf of the firm, there was no material to prove that he was a partner. The liability fixed upon him by the trial court was therefore set aside, while the decree against the remaining defendants was upheld.

On the claim for interest, the Bench observed that the award by the trial court required modification in view of prevailing conditions. Interest was refixed at a lower rate from the date of suit until decree, and a further reduced rate thereafter until realisation.

Conclusion

The Court found that the suit was within limitation and that the plaintiff had proved the outstanding liability. As regards the second defendant, the Court held that his partnership status was not proved. Therefore, the decree against him could not be sustained.

The Bench modified the rate of interest awarded by the Trial Court. It directed that interest shall be payable at 9% per annum from the date of suit till decree and 6% per annum thereafter till realisation.

Accordingly, the appeal was partly allowed with modification of the interest rate, while the decree was affirmed in all other respects.

Cause Title: Jimmy Elias v. Tata Iron and Steel Company Limited (Neutral Citation: 2025:KER:88827)

Appearances

Appellants: Advocates Varghese C. Kuriakose and G. Krishnakumar

Respondents: Advocate V. N. Haridas

Click here to read/download Judgment