# UNION OF INDIA v. Mis CHATURBHAI M. PATEL & CO. AND VICE VERSA

- **Citation:** [1976] 2 S.C.R. 902
- **Court:** Supreme Court of India
- **Decided:** 1975-12-09
- **Case number:** Civil Appeals Nos. 972-913 of 1968
- **Bench:** K. K. Mathew, S. Murtaza Fazal Ali
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-v-mis-chaturbhai-m-patel-co-and-vice-versa-6577
- **Pages:** 4

## Headnote

Fraud-must be estabiis/u'd beyond reasonable doubt-Mere suspicionlf proof of fraud,
'111e resondent filed a suit against the, Union of India alleging that due to
negligence of the railways a consignment of tobacco despatched by him to
Gaya was substituted in transit and that in its place inferior tobacco was deli·
vered al Gaya.
The railways on the other hand alleged fraud and collusion
between the respondent and his father, also a bidi tobacco merchant in Gujarat,
because by deliberate manipulation, ·the respondent consigned inferior goods
to Gaya and superior goods to Gujarat.
The trial court dismissed the respondent's suit. The High Court allowed the
suit for damages but refused refund of exci&ci duty said to have been paid by
the respondent.
Dismissing the appeal to thi9 Court,
HELD : (I) The appellant had not been able to make out a case of fraud.
The High Court was justified in negativing the plea of fraud and in decreeing
the suit.
[904-FJ
(2) Fraud, like any other charge of criminal offence, whether made in civil
or criminal proceedings must be established beyond reasonable doubt.
However suspicious maY be the circumstances, however strange the coincidences
and however grave the doubts, suspicion alone can never take the place of
proof.
[904 .. FG]
A. L. N. Narayanan Chettyar v. Official Assignee, lligh Court Rangoon,
A.I.R. 1941 P.C. 93, referred to.
In the instant case there is absolutely no evidence to show any prior meeting
of the minds between the respondent and hi~ father before the consignment was
sent either to Gujarat or Gaya so as to raise an inference that these two persons bad hatched up a conspiracy in order to defraud the appellant.
[904-EF]

## Text

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902
UNION OF INDIA
v.
Mis CHATURBHAI M. PATEL & CO.
AND VICE VERSA
December 9, 1975
[K. K. MATHEW AND S. MURTAZA FAZAL ALI, JJ.]
Fraud-must be estabiis/u'd beyond reasonable doubt-Mere suspicionlf proof of fraud,
'111e resondent filed a suit against the, Union of India alleging that due to
negligence of the railways a consignment of tobacco despatched by him to
Gaya was substituted in transit and that in its place inferior tobacco was deli·
vered al Gaya.
The railways on the other hand alleged fraud and collusion
between the respondent and his father, also a bidi tobacco merchant in Gujarat,
because by deliberate manipulation, ·the respondent consigned inferior goods
to Gaya and superior goods to Gujarat.
The trial court dismissed the respondent's suit. The High Court allowed the
suit for damages but refused refund of exci&ci duty said to have been paid by
the respondent.
Dismissing the appeal to thi9 Court,
HELD : (I) The appellant had not been able to make out a case of fraud.
The High Court was justified in negativing the plea of fraud and in decreeing
the suit.
[904-FJ
(2) Fraud, like any other charge of criminal offence, whether made in civil
or criminal proceedings must be established beyond reasonable doubt.
However suspicious maY be the circumstances, however strange the coincidences
and however grave the doubts, suspicion alone can never take the place of
proof.
[904 .. FG]
A. L. N. Narayanan Chettyar v. Official Assignee, lligh Court Rangoon,
A.I.R. 1941 P.C. 93, referred to.
In the instant case there is absolutely no evidence to show any prior meeting
of the minds between the respondent and hi~ father before the consignment was
sent either to Gujarat or Gaya so as to raise an inference that these two persons bad hatched up a conspiracy in order to defraud the appellant.
[904-EF]
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 972-913 of
1968.
From the Judgment and Decree dated the 1st December 1961, of
the Allahabad High Court in First Appeal No. 285 of 1958.
Gobi11d Das and S. P. Nayar for the appellants in Appeal 972 and
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for Respondents in C.A. 973/68.
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S. M. Jain, J. P. Goyal, S. K. Jain and Shripal Singh for Respondent in Appeal 972 and for the Appellant in C.A. 973/68.
The Judgment of the Court was delivered by
FAzAL Au. J. This is a defendant's appeal by certificate, granted
by the High Court of Allahabad under Art. 133(1) of the Constitution of India. The plaintiff which is a registered partnership firm at
Banaras dealing in Bidi tobacco filed the pres~nt suit for dam2ges
against the defendant Union of India on the allegation that it had
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UNION v. CHATURBHAI & co. (Fazal AU.!.)
903
despatched a. consignment containing to_bacco at Banaras for G_aya i_n
Bihar for delivery to the firm Chaturbhat M. Patel & Co: at Gaya. T~1s
consignment was booked under Invoice No. 107 Railway
Receipt
No. 89551 dated July 9, 1954. The plaintiff's allegation was that due
to negligence of the Railway t_he identical goods despatched by . !he
plaintiff did not reach the consignee at G~ya but the g?ods ;:ontammg
inferior type of tobacco reached there ~h1ch caused senous ioss to the
plaintiff.
The suit wa~ filed after no.tic~ under s .. 80 of the Code of
Civil Procedure was given.
The plamtiff also claimed refund of the
e1ecise duty which was paid by the plaintiff. The suit was resisted _by
the defendant mainly on the ground that due to fraud and collusion
between the plaintiff in Banaras and his father's fir~ in ~ujarat,
t~e
consignment at Benaras was interchanged by mampulat1on and d~h
beratien so that the inferior goods were sent to Gaya and the supenor
goods were sent to Gujarat which were sold by the firm at Gujarat and
huge profit was earned by the aforesaid firm.
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The Trial Court framed a number of issues
and accepted the
defence and accordingly dismissed the suit. The plaintiff then filed an
appeal in the High Court of Allahabad which reversed the judgment
and decree of the Trial Court and decreed the plaintiff's suit for
damages but refused to pass a decree regarding the amount of
the
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excise duty said to have been paid by the plaintiff.
Iv1r. Gobind Das appearing for the appellant submitted that there
were number of suspicious circumstances which clearly went to show
that some amount of fraud had been played on the defendant py the
collusion of the plaintiff with his father at Gujarat whose firn1
was
known as Mangal Bhai Prabhu Das. In support of his contention he
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has relied on three or four circumstances which have been fuily disCUS8ed by the High Court.
On a perusal of the judgment of the High Court we find that the
case is concluded by findings of fact and normally the appellant could
not have been granted the certificate for leave to appeal but for the
fact that the judgment of the High Court was one of reversal and the
valuation of_ the suit was ov~r. Rs. ~0,000/-. Nevertheless the High
Court has discussed the susp1c1ous Clfcumstances relied upon by the
defendant/appellant and has held that there was no conclusive or
reliable evidence to prove the fraud or collusion as alleged by the defendant.
One of the circumstances was that on June 9 1954 a consignment of 191 bags of tobacco was booked by Mangai Bhai Prabhu
Das the father of the plaintiff from Railway Station Vasad in Gujarat
to Indian Zarada Factory, Banaras which was owned by the plaintiff.
This co?Signment was taken delivery of by one Mohanlal an agent of
the Indian Zarada Factory at Benaras and was re-warehoused in the
bon~d warehouse of t?e. Factory at Benaras. On the same day the
consignment of the plamtJff was also warehoused at the same place
Thereafter a forwarding note was presented at Benaras on June 24;
~954 on behalf.of the Indian Zarada_Factory for despatch of 174 bags
of tobacco to his father Manga~ Bhat Pral!>hu Das Patel in Gujarat on
the ground th~t tJ:e goods. were of an. inferior quality. It is said that
the goods of mfer10r quality were deliberately despatched to Gaya,
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904
SUPREME COURT REPORTS
[1976] 2 S.C.ll,
whereas the other consignment was sent to Gujarat by changing the
marks on the bags. The High Court, however, has pointed out that
there was absolutely no evidence to show that such a manipulation or
changing the marks was done either by the plaintiff or his agent at
Benaras.
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Similarly reliance was placed on the fact that although the consignment reached Gaya on July 17, 1954 yet the delivery· of the aforesaid consignment was taken by the plaintiff cousin at Gaya more
than a month thereafter i.e. on August 25, 1954 and that too after the
Railway authorities at Gaya wrote a ktter to the consignee on August
23, 1954. The High Court has pointed out that there is no evidence
to show that the consignee at Gaya knew that the goods had arrived
there on July 17, 1954, and the letter which was sent to the uncle of
the plaintiff at Gaya was received by him after a long time. There is
no doubt that there was some amount of negligence on thll part of the
Railway authorities because they wrote a letter to the consignee at
Gaya more than a month after the goods were received and it they
had sent the letter immediately after receipt of the consignment, and
if in spite of that there was delay in taking delivery, something could
be said for the plaintiff.
Lastly it was urged by Mr. Gobind Das for the appellant that the
plaintiff who was the owner of the Indian Zarada Factory at Eenaras
and his father who was the owner of the firm in Gujarat appear to
have entered into a conspiracy to defraud the defendant in view of
their close relationship. The High Court has rightly pointed out that
the plaintiff is a separated son and has nothing in common with his
father, except the business in tobacco which is carried on at two different places. It has also been pointed out by the High Court that the
father has married a second wife and that shows that there is
no
close affiriity between the plaintiff and his father. Further more, there
is absolutely no evidence to show any prior meeting of minds between
the plaintiff and his father before the consignment was sent either to
Gujarat or Gaya so as to raise an inference that these two persons had
hatched up a conspiracy in order to defraud the defendant. This argument, therefore, has no force and must be overruled.
The High Court has carefully considered the various circumstances
relied upon by the appellant and has held that they are not at all conclusive to prove the case of fraud. It is well settled that fraud like
any other charge of a criminal offence whether made in civil or criminal proceedings, must be established beyond reasonable doubt; per
Lord Atkin in A. L. N. Narayanan Chettyar v. Official Assignee, High
Court Rangoon(11). However suspicious may be the circumstances,
however strange the coincidences, and however grave the doubts, suspicion alone can never take the place of proof. In our normal life we
are sometimes faced with unexplainable phenomenon and strange coincidences, for, as it is said, truth is stronger than fiction. In these circumstances, therefore, after going through the judgment of the High
Court we are satisfied that the appellant has not been able to make out
a case of fraud as found by the High Court. As such the High Court
(I) A. I. R. 1941 P. C. 93.
..
UNION v. CHATURBHAI & co. (Fazal Ali, J.)
905
was fully justified in negativing the plea of fraud and in decreeing the
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suit of the plaintiff.
Cross objections have been filed by the plaintiff/respondent for disallqwing the amount of excise duty paid by the plaintiff. After persuing the judgment of the High Court, we find absolutely no merit in
these cross objections.
The result is that the appeal and the cross objections are dis-
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missed, but in the circumstances of the case without any order as to
costs.
P.B.R.
Appeals dismissed.
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