Chandradhar Goswami & Ors Vs. The
Gauhati Bank Ltd.  INSC 224 (14 October 1966)
14/10/1966 RAMASWAMI, V.
CITATION: 1967 AIR 816 1967 SCR (1) 921
R 1971 SC2293 (6,9) R 1971 SC2328 (6) R 1986
SC 959 (11)
Indian Evidence Act, 1872, s. 72--Entries in
bank's books of account showing payment of loan to constituent-Certified copies
of such entries whether by themselves evidence of such loan-Effect of s. 4 of
Bankers' Books Evidence Act (18 of 1891).
The appellants through their karta had an
open mutual and current account with the respondent bank. They borrowed from
the bank and also paid monies into it. On March 1, 1947 a sum of Rs. 15,956/7
was due to the bankfrom the appellants. In order to pay off that amount a
mortgage deedwas executed by the appellants in favour of the bank. Under that
deed further amounts up to a limit of Rs. 16,000 could be advanced to the
appellants against the security mentioned therein. According to the bank, under
the said provision of the deed a further sum of Rs. 10,000 was advanced to the
appellants on March19, 1947.On April 9, 1953 the bank filed a suit for the
recovery of sums due to it from the appellants and the suit was claimed to be
with in the period of limitation on the allegation that on November 24, 1949,
the appellants had repaid a sum of Rs. 100 to the bank. The appellants denied
that they had borrowed Rs. 10,000 as alleged or that they had repaid Rs. 100.
The trial court decreed the suit of the bank and the High Court upheld the
decree. The appellants then came to this Court by special leave. The questions
that fell for determination were (i) whether by producing a copy of the entry
relating to the loan of Rs. 10,000 in these account books the bank had proved
the said loan, (ii) whether the suit was within time.
HELD : (i) In view of s. 34 of the Evidence
Act the appellants could not be saddled with liability for the sum of Rs.
10,000 said to have been advanced to them on March 19. 1947 on the basis of a
mere entry in the account.
Section 34 says that such entry alone shall
not be sufficient evidence and so some independent evidence had to be given by
the bank to show that this sum was advanced. Such evidence not having been
given the claim could not be upheld. [903 C] (ii)Section 4 of the Bankers'
Books Evidence Act (18 of 1891) certainly gives a special privilege to banks
and allows certified copies of their accounts to be produced by them and those
certified copies become prima facie evidence of the existence of the original
entries in the accounts and are admitted as evidence of matters, transactions,
and accounts therein. But such admission is only where and to the extent as the
original entry itself would be admissible by law and not further or otherwise.
Original entries alone under s. 34 of the Evidence Act would not be sufficient
to charge any person with liability and as such, copies produced under s. 4 of
the Bankers' Books Evidence Act could not charge any person with liability.
[902 C-E] (iii)The suit was clearly within time insofar as the liability for
sale under the mortgage deed was concerned as it was filed within 12 years of
the execution of the mortgage as allowed by Art. 138 of the Limitation Act of
1908. [903 G] 899 As to the personal liability under the deed that was beyond
time as the suit was filed more than six years after the execution of the
mortgage allowed by Art. 116. The entry of the payment of Rs. 100 in the accounts
also did, not help the bank in this behalf. That entry was of no value under s.
19 or s. 20 of the Limitation Act for neither a writing signed by the
appellants nor an acknowledgement of payment in the handwriting of the
appellants or in a writing signed by them had been proved. Nor did Art. 85 help
the bank in fixing personal, responsibility on the appellants as the time of
three years allowed by that Article had ended before the filing of the suit.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 733 of 1964.
Appeal by special leave from the judgment and
decree dated August 1,1960 of the Assam and Nagaland High Court in F.A. No. 33
Naunit Lal, for the appellants.
R. Gopalakrishnan, for the respondents.
The Judgment of the Court was delivered by
Wanchoo, J. This is an appeal by special leave against the judgment of and
decree of the Assam High Court and arises in the following circumstances. The
Gauhati Bank Limited (hereinafter referred to as the bank) brought a suit
against the appellants for the recovery of Rs. 40,000/-. Its case was that
appellant No. 1 had been dealing with the bank for the needs and business of
the family consisting of himself and the other appellants as karta of the
family, and in that connection he had an open, mutual and current account with
the bank. In that connection moneys were borrowed from the bank and moneys were
also paid into the bank and a current account had been opened in the name of
appellant No.1. On March 1, 1947, a sum of Rs. 15,956/7/was due to the bank
from the appellants. In order to pay off that amount, a mortgage deed was
executed by the appellants in favour of the bank for Rs. 15,956/7/-, and some
land, a house, a fixed deposit and three policies were given as security there under.
The mortgage deed also provided that the bank would advance money up to Rs.
16,000/to the appellants as and when they required it. Interest would be
payable at Rs. 6/per cent per annum with monthly rests. It was also provided
that the entire amount due including any further advances taken upto the limit
of Rs. 16,000/and interest would be realised from the securities in certain
order which was mentioned in the mortgage deed. It was further provided that if
the entire amount due could not be recovered from the property given in
security, it would be recoverable personally from the appellants. The case of
the bank was that after the execution of this mortgage deed, a further sum of
Rs. 10,000/was borrowed by the appellants from the bank, on March 19, 1947.
Thereafter two amounts were paid into the bank, one on May 14,1948 and the
other on November 900 24, 1949. Nothing was paid thereafter and eventually on
October 31, 1952 the amount due to the bank was Rs. 39,496/8/-. The suit was
filed on April, 9, 1953 for the sum of Rs. 40,000/-, and the usual prayer for
sale of the mortgaged properties was made.
The suit was resisted by the appellants and a
number of defences were taken on their behalf. One of the defences with which
we are now concerned was that the allegation of the bank that any money was
taken as loan after March 1,1947 was in correct. Another defence was that the
allegation that on November 24, 1949, Rs. 100/-were repaid was untrue.
Further the appellants contended generally
that the accounts of the bank were not kept correctly and in regular course of
business and were fraudulent and were therefore not relevant and not admissible
Two main questions arose on the pleadings,
namely (i) what was the amount due to the bank from the appellants, and-(ii)
whether the suit was within limitation. Seven issues were framed by the trial
court of which issue No. 3 related to the amount due to the bank from the
appellants and issue No.4 related to the question of limitation. Other issues
related to other points to which no reference is necessary to be made now, for
we are not concerned with them.
Issue No. 3 relating to the total amount due
to the bank appears to have been overlooked by the trial court, though when
dealing with the seventh issue relating to relief to which the bank was
entitled, the trial court said that the bank was entitled to Rs. 15,956/7/-,
which were due on March 1, 1947 and Rs. 16,000/which were to be further
advanced under the mortgage deed of 1947, thus holding that Rs.32,000/were due
to the bank excluding interest. The way the trial court dealt with this matter
clearly shows that it did not understand what it had to find on the issue
relating to the total amount due to the bank. It seems to have treated the
amount of Rs. 16,000/(which was the limit of the advance to be made to the
appellants) as if it was an actual advance made to them on March 1, 1947, even
though the case of the bank was that that amount was not actually advanced. The
copy of accounts filed by the bank showed that Rs. 10,000/were advanced out of
this limit of Rs.
16,000/-. Further on the question of
limitation, the trial court held that the suit was within time in view of the
payment of Rs. 100/on November 24, 1949. It therefore decreed the suit after
making a small deduction because interest had been calculated at Rs. 9/per cent
per annum instead of Rs. 6/per cent per annum which was provided in the
The appellants then went in appeal to the
High Court. The mortgage deed of March 1, 1947 was not disputed in the High
Court, and the two main questions raised in the High Court were, namely901
(i)that the sum of Rs. 10,000/said to have been advanced on March 19, 1947 had
not been proved to have been advanced in view of the fact that no evidence was
produced besides the copy of the accounts to substantiate it, and in this
connection reliance was placed on s. 34 of the Indian Evidence Act, No. 1 of
1872, and (ii) that the amount of Rs. 100/had not been paid on November 24,
1949 and therefore the suit was barred by limitation. The High Court seems to
have held that the advance of Rs. 10,000/had been proved on the basis of the
copy of the account produced by the bank and the reason given for this was that
there was no specific challenge to the correctness of any of the entries in the
account, particularly to the specific entry relating to Rs.
10,000/The contention as to limitation was
also rejected by the High Court, and the appeal was dismissed. Thereupon the
appellants obtained special leave, and that is how the matter has come up
The main question urged before us is that
there is no evidence besides the certified copy of the account to prove that a
sum of Rs. 10,000/was advanced to the appellants and therefore in view of s. 34
of the Evidence Act the appellants cannot be saddled with liability for that
Section 34 is in these terms:"Entries in
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 shall not alone be sufficient evidence to charge any person with liability."
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 account 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 there under,
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. We have
already indicated that they went to the. length of saying that the accounts
were not correctly kept, and were fraudulent. They also said that no money had
been taken by them after March, 1, 1947. This being their pleading, the trial
court rightly framed the third issue relating to the total amount due from the
appellants to the bank. But unfortunately it overlooked to go into that issue
specifically and we have already indicated how it made a mistake in arriving at
the amount due when considering the issue relating to relief. In any case as
the appellants had not admitted the correctness of the accounts filed by the
bank, particularly after March 1, 1947, the bank had to prove payment of Rs.
10,000/on March 19,1947 if it wanted to charge the appellants, 902 with
liability for that amount, But all that the bank did was to produce a certified
copy of account under s. 4 of the Bankers' Books Evidence Act, No. XVIII of
1891. Section 4 of that Act reads thus" Subject to the provisions of this
Act, a certified copy of any entry in a banker's book shall in all legal
proceedings be received as prima facie evidence of the existence of such entry,
and shall be admitted as evidence of the matters, transactions and accounts
therein recorded in every case where, and to the same extent as, the original
entry itself is now by law admissible, but not further or otherwise".
It will be clear that s. 4 gives a special
privilege to banks and allows certified copies of their accounts to be produced
by them and those certified copies become prima facie evidence of the existence
of the original entries in the accounts and are admitted as evidence of
matters, transactions and accounts therein, but such admission is only where,
and to the same extent as, the original entry itself would be admissible by law
and not further or otherwise. Original entries alone under s. 34 of the
Evidence Act would not be sufficient to charge any person with liability and as
such copies produced under s. 4 of the Bankers' Books Evidence Act obviously
cannot charge any person with liability. Therefore, where the entries are not
admitted it is the duty of the bank if it relies on such entries to charge any
person with liability, to produce evidence in support of the entries to show
that the money was advanced as indicated therein and thereafter the entries
would be of use as corroborative evidence. But no person can be charged with
liability on the basis of mere entries whether the entries produced are the
original entries or copies under s. 4 of the Banker's Books Evidence Act. We
cannot 'agree with the High Court that the mere fact that the appellants did
not specifically mention the sum of Rs. 10,000/as not having been advanced to
them in their written statement would make any difference on the facts of the
present case. We have already pointed out that the appellants did not admit the
correctness of the accounts produced specially after March 1, 1947. We have
also pointed out that it was stated on their behalf that nothing was borrowed
after March 1, 1947. The main appellant in whose name the account was, appeared
as a witness and stated that so far as he remembered he only borrowed Rs.
8,000/from the bank and nothing thereafter. He also stated that he did not
remember to have borrowed any sum from the bank after the execution of the
mortgage deed. In the face -of this pleading of the appellants and the
statement of one of them, the bank had to prove that the sum of Rs. 10,000/was
in fact advanced on March, 19,1947 and could not rely on mere entries in the
books of account for that purpose. This is clear from the provision in s. 34 of
the Evidence 903 Act. No attempt was made on behalf of the bank to prove by any
evidence whatsoever that a sum of Rs. 10,000/was advanced on March 19, 1947.
The entry in the account books in that connection is to the effect: "To
amount paid to Gauhati branch as per D/advice, dated 6th March, 1947". If
this amount of Rs. 10,000/was paid by the bank on the order of the appellants
or any one of them that order should have been produced in support of the
entry, and then the entry would have been helpful to the bank as a
corroborative piece of evidence. But the bank did nothing of the kind. The only
witness produced on behalf of the bank was an officer who had nothing to do
with the Tezpur branch where the transactions were entered into. We are
therefore of opinion that in view of s. 34 of the Evidence Act the appellants
cannot be saddled with liability for the sum of Rs. 10,000/said to have been
advanced on March, 19,1947 on the basis of a mere entry in the amount. Section
34 says that such entry alone shall not be sufficient evidence, and so some
independent evidence had to be given by the bank to show that this sum was
advanced. What would be the nature of such independent evidence would certainly
depend upon the facts of each case; but there can be no doubt that some
independent evidence to show that advance had been made has to be given.
Further, as in this, case the dispute was with respect to one entry of Rs.
10,000/it should not have been difficult for the bank to produce evidence with
respect thereto. We cannot therefore agree with the High Court that the advance
of Rs. 10,000/on March 19, 1947 has been proved in this case.
It is urged on behalf of the bank that we
might give opportunity now to the bank to prove that the money was in fact
paid. We are of opinion that it is too late now after 13, years to give a
further opportunity to the bank to prove what should have been proved by it in
the very beginning in view of the denial of liability for anything after March
1,1947 in the written statement of the appellants. In this view of the matter,
the appeal must be allowed with respect to this sum of Rs. 10,000/Then we come
to the question of limitation. The suit is clearly within time insofar as the
liability for sale under the mortgage deed is concerned as it was filed within
12 years of the execution of the mortgage (see Art. 138 of the Limitation Act
of 1908). As to the personal liability under this deed, that is beyond time as
the suit was filed more than six years after the execution of the mortgage (see
116 ibid). Nor does the entry of payment of
Rs. 100/in the accounts help the bank in this behalf. That entry is of no value
under s. 19 or s. 20 of the Limitation Act for neither a writing signed by the
appellants nor an acknowledgement of payment in the handwriting of the
appellants or in a writing signed by them has been proved. Nor does Art. 85 of
the Limitation Act of 1908 help the bank. Assuming this Is a case of an open,
current and mutual 904 account, the last payment was made in November 1949.
Article 85 gives limitation of three years
from the close of the year in which the last item admitted or proved is entered
in the accounts (such year to be computed as in the account). The account in
this case shows that the year was calendar year. The mutuality in this case
came to an end in 1949 for we find from the account that thereafter there are
only entries of interest due to the bank upto October 31, 1952. So the bank
would get three years from the end of 1949 under Art. 85 and as the suit was
filed on April 9, 1953, this entry will be of no help to the bank. We are
therefore of opinion that the bank cannot get a decree fixing personal
liability on the appellants and all that it is entitled to is a decree for sale
of the mortgaged property.
We therefore partly allow the appeal and
declare that the amount due to the bank on April 9, 1953, the date of the suit,
would be Rs. 15,956/7/plus compound interest at the rate of Rs. 6/per cent per
annum with monthly rests up to that date minus the two sums, namely, Rs.
1,498/10/3 and Rs. 100/shown as paid on May 14, 1948 and November 24, 1949, and
thereafter Rs. 6/per cent per annum simple interest will run. The trial court
will modify the preliminary decree passed by it accordingly and give the
appellants three months' time after the preliminary decree has been so modified
to pay the amount failing which the bank would be entitled to pray for a final
decree for sale of the properties mortgaged. 'Mere will be no personal decree.
The bank will get proportionate costs in the
two courts below. As the defence of the appellants has failed on the main
question, they will bear their own costs throughout.
Appeal allowed in part.