Whether it is necessary to produce and prove books of accounts for recovery of money given on promissory note?

 Coming to the last averments of the appellant that the

books of account have not been produced by the plaintiff as required

under Section 34 of the Evidence Act, I again do not find any merit in

the said contention. Firstly, the “book of accounts” as referred to in this

section means books in which merchants, traders or businessmen

generally keep their accounts i.e. statements of debits and credits or

receipts of any payments. Since there is no evidence on record that

the plaintiff was in fact indulged in the business of money lending then

obviously, the plaintiff was not required to maintain the books of

accounts and thereafter prove the same in accordance with the

requirement of Section 34 of the Evidence Act. Therefore, nonproduction

of these books, is of no consequence.

15. It is more than settled that it is not in all cases that nonproduction

of account-books by itself may be pressed into service as a

factor to disbelieve a litigant’s case and characterize his conduct as

fraudulent. Each case has to be decided on its own merits. Otherwise

also, it is normal that account-books kept in the regular course of

business of a tradesman is merely a compilation of all the details of his

dealings from day-to-day and is practically a summary of such

transactions written up in bills,vouchers, anamath chits etc. Therefore,

the account-books by themselves do not stand on any better footing

than a bill or a voucher issued by the plaintiff in the regular course of

business.

16. Here in the instant case, the plaintiff is armed with the

pronote acknowledging the liability to pay a sum of Rs.1,00,000/- by

the defendant in favour of the plaintiff and the execution of such

pronote has duly been proved on record and as a matter of fact, has

not been seriously disputed even by the defendant. Therefore, the

provisions of Section 34 of the Evidence Act, have no applicability to

the facts of the instant case.

The substantial question of law is accordingly answered.

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

R.S.A. No. 704 of 2008

Date of decision: 29. 08. 2019

Smt. Brij Bala  Vs  Sh. Surender Kumar

Coram

The Hon’ble Mr. Justice Tarlok Singh Chauhan, Judge.

Citation: AIR 2020(NOC) 154 HP

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Whether investigation can be started against any person on basis of loose sheets of papers?

With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus;

“37. In Beni v. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts.”

20. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court.

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

(Before Arun Mishra and Amitava Roy, JJ.)

Common Cause (A Registered Society) and Others .

v.

Union of India and Others 

Interlocutory Application Nos. 3 and 4 of 2017

In

Writ Petition (Civil) No. 505 of 2015

Decided on January 11, 2017

Citation:2017 SCC OnLine SC 41,AIR 2017 SC540

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Why books of accounts are held admissible in evidence?

 It has also been held that the rationale behind admissibility of parties' books of account as evidence is that the regularity of habit, the difficulty of falsification and the fair certainty of ultimate detection give them in a sufficient degree, a probability of trustworthiness." 

Supreme Court of India

Ishwar Dass Jain (Dead) Thr. Lrs vs Sohan Lal (Dead)By Lrs on 29 November, 1999

Bench: M.Jagannadha Rao, M.B.Shah

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Whether entries in ledger can be relied on absence of production of cash book?

 The ledger by itself is only a secondary piece of evidence. Entries are always made first either in the Rojmel or in the cash book or in the day book as the case may be, and they are posted periodically into the ledger subsequently. As a matter of fact it is evident from what is produced as a ledger before me that the posting has been done on June 30, 1959 at one sitting, in respect of compensation which had allegedly become payable to defendant No. I from July 1958 till 30th June, 1959. This is evidently a secondary piece of evidence. The primary evidence would have been the cash book, or the day book or the rojmel whatever was being maintained. As a matter of fact, defendant No. 3 had made an affidavit of documents upon which they would rely. That affidavit was dated 22-11-1966. In that affidavit cash book for the period 1958 to 1963 has been referred to. The cash book, however, was never produced before the Court.

Bombay High Court

Zenna Sorabji And Ors. vs Mirabelle Hotel Co. (Pvt.) Ltd. ... on 14 January, 1980

Equivalent citations: AIR 1981 Bom 446

Bench: S Manohar

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Whether Unbound sheets of paper though filed in with one continuous account are book of account?

Under Section 34 of the Evidence Act, entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the court has to inquire, but such entries shall not alone be sufficient evidence to charge any person with liability or for showing payment. The principle of Section 34 is to admit only such statements recorded by the parties in his own behalf as a books of account, kept in the regular course of business. Therefore, when an entry of that kind is supplied, it must be shown to be a book and that book must be a book of account and that account must be one regularly kept in the course of business, as envisaged under the said section, Ordinarily collection of sheets of papers bound together with the intention that such binding shall be permanent and the papers used collectively in one volume can be said to be a book of account under Section 34. Unbound sheets of paper, in whatever quantity, though filed in with one continuous account, are not a book of account within the meaning of Section 34 of the Act.

Gauhati High Court

Dharam Chand Joshi vs Satya Narayan Bazaz on 13 March, 1992

Equivalent citations: AIR 1993 Gau 35

Bench: D Baruah

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How to prove factum of payment?

There appears to be some confusion about the evidentiary value of the entries in books of account. Though the entries from the books of accounts may be relevant for the purposes of determination of any question, they cannot be the sole basis for fixing the liability upon a person to whose account the payments may have been debited in the books. The provisions of Section 34 are clear enough and they have been constantly interpreted as laying down a rule of evidence that the entries in the books of accounts would not be sufficient for purposes of fixing the liability against a person. There should additional evidence, independent, of those entries which would prove the factum of payment in respect of which the entries are made in books of accounts. Therefore, the Courts have considered that the entries from Books of Accounts are corroborative piece of evidence and they would not by themselves by sufficient evidence on the basis of which a liability can be fixed against a person. The observations of the Supreme Court inChandradhar Goswami & Ors vs The Gauhati Bank Ltd AIR 1967 SC 1058 at p.1060 make it clear that where the entries are not admitted, it is the duty of a party, seeking to enforce the liability of such entries, to produce evidence in support thereof to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. On the plain reading of Section 34, entries in the books of accounts may be relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability. In other words, there should be additional independent evidence by which the factum of payment is to be proved, and in that case the entries would be corroborative evidence. It is no doubt true that what should be the nature of additional evidence is always a question of fact depending on the circumstances of each case. It may, as has been held by the Courts, consist of vouchers, receipts, bills or any other oral evidence of witness having personal knowledge of the affairs of the transaction.

Gujarat High Court

Shubhkaran Rameshwarlal Agarwal vs Durgaprasad Private Ltd. on 12 July, 1971

Equivalent citations: AIR 1972 Guj 208, (1972) 0 GLR 179

Bench: B Mehta

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Whether a person can be charged with liability merely on the basis of entries in books of account?

Section 34 of the Indian Evidence Act states that entries in the books of account regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements should not alone be sufficient evidence to charge any person with liability. This section makes it clear that all entries in the books of account regularly kept in the course of business are relevant. But it must be shown that the accounts are in the books, the book must be book of accounts and the accounts must be regularly kept in the course of business. The entries are, however, not by themselves sufficient to charge any person with liability. It is a piece of evidence which the Court may take into consideration for determining whether the amount referred to therein was in fact paid by the plaintiff to the defendant. The regular proof of books and accounts requires that the clerks who have kept those accounts, or some person competent to speak to the facts, should be called to prove that they have been regularly kept and to prove their general accuracy. The quantum of evidence required for corroboration would vary in each case.

7. In Chandradhar v. Gauhati Bank, AIR 1967 SC 1058 -- the Supreme Court has observed as follows (at page 1060):

"It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of accounts are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts, the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account".

In Shambhu Bhat v. Karnataka Vyavasaya Varthaka Sangha Ltd., 1987 (1) KLT768, Kaliath, J. held as follows :

"The finishing words of Section 34 "shall not alone be sufficient evidence to charge any person with liability" certainly indicate that the evidence of the entries in books of account, though are relevant, cannot be treated as independent and substantial evidence. The evidentiary value of the entries in the account book must therefore be corroborative, supportive or confirmatory in nature. This section evidently makes an exemption to the doctrine that "a man cannot make evidence for himself. To attract this section, it has to be proved that the accounts are written in a book and that book must be a book of account and that account must be one regularly kept in the course of business. To say that the account is regularly kept in the course of business, requires that the accounts are kept according to a set of rules or a system".

Kerala High Court

Arakkan Narayanan vs Indian Handloom Traders And Ors. on 18 November, 1998

Equivalent citations: AIR 1999 Ker 279

Bench: S Sankarasubban

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Whether liablity Can Be Fixed On Any Person On The basis Of entry in books of account?

" An account presupposes the

existence of two persons such as a

seller and a purchaser, creditor

and debtor. Admittedly, the alleged

diaries in the present case are not

records of the entries arising out

of a contract. They do not contain

the debts and credits. They can at

the most be described as a

memorandum kept by a person for his

own benefit which will enable him

to look into the same whenever the

need arised to do for his future

purpose. Admittedly the said

diaries were not being maintained

on day-to day basis in he course of

business. There is no mention of

the dates on which the alleged

payment were made. In fact the

entries there in are on monthly

basis. Even the names of the

persons whom the alleged payments

were made do not find a mention in

full. they have been shown in

abreviated form. Only certain

'letters' have been written against

their names which are within the

knowledge of only the scribe of the

said diaries as to what they stand

for and whom they refer to."

After having held that the documents were neither books of account nor kept in the regular course of business the High Court observed that even if they were admissible under Section 34, they were not, in view of the plain language of the Section , sufficient enough to fasten the liability on the head of a person, against whom they were sought to be used.

Supreme Court of India

Central Bureau Of Investigation vs V.C. Shukla & Ors on 2 March, 1998

Author: M.K. Mukherjee

Bench: M Mukherjee, S Kurdukar, K Thomas

Leave granted.

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