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Report No. 185

Section 34

Sections 34 to 37 are placed under the heading "statements made under special circumstances".

Section 34 of the Act (as amended by Act 21/2000) reads as follows:

"Section 34: Entries in books of account when relevant.- Entries in the books of account [including those maintained in an electronic form] 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."

There is an illustration below section 34, which reads as follows:

"Illustration: A sues B for Rs.1000 and shows entries in his account books showing B to be indebted to him to this amount. The entries are relevant, but are not sufficient, without other evidence to prove the debt."

In the 69th Report of the Law Commission, in Chapter 13, under the heading "Entries in Books of Account", the section has been critically examined. Part I of the chapter is 'Introductory', Part II contains the 'previous law', Part III refers to 'English Law and Roman Law', Part IV with 'corroboration', Part V with 'Interpretation and Procedure', Part VI contains the conclusion (see para 13.27).

Reference was made to the language in the corresponding section of the Evidence Act of 1855 and to section 43 therein which was in different language:

"Section 43. Books proved to have been regularly kept in the course of business, shall be admissible as corroborative but not as independent proof of the facts stated there"

It was pointed out that the present Act uses the words 'proved to have been regularly kept' for the words 'regularly kept' used in the Act and that there is a change in the law, as pointed by Markby J. in Belaet v. Rash Beharie: (1874) 22 W.R. 549.

Reference was made to the provisions of section 54 of the (English) Chancery Practice Amendment Act, 1852 which made entries 'prima facie' evidence and to the practice of 'supplementary oath' under the Roman law (see also Or. 30. R7 of the Supreme Court Rules, added in 1894) (Sarkar, 15th Ed., 1999 p. 756).

Under the present Act, books of account, according to the 69th Report (see para 13.16), when not used to charge a person with liability (civil or criminal) may be used as independent evidence without the need for any further corroboration but when sought to make any person liable, the books would require corroboration (see Sarkar, ibid p. 758). Other evidence may be that of the maker of the entry or for that matter, any 'fact' relevant under the Evidence Act (para 13.17).

It was pointed out that entries in books of account could be relevant under other provisions of the Act also, e.g. section 32(2) as statements made by a person in the ordinary course of business or under section 159, to refresh the memory of a witness, if the entry has been made by that witness himself and relates to some transaction concerning which he is now giving evidence.

Absence of an entry in the book is not relevant under section 34 but can become relevant under sections 9 and 11.

The 69th Report concluded by stating (see para 13.27) that section 34 did not require any substantial amendment except for a verbal change by substituting the words "such entries" for the words "such statement".

In the Hawala case which went up to the Supreme Court CBI v. V.C. Shukla AIR 1998 SC 1406, which more or less affirmed the judgment of the Delhi High Court in L.K. Advani v. CBI (1997) Crl LJ 2559, the section came under elaborate scrutiny. In that case, the verdict in favour of the accused was based in the High court, upon the conclusion that the alleged entries in diaries were mere entries kept by a person as a memorandum and there were no debit or credit entries and were not account books falling under section 34.

The Supreme Court, on appeal, observed that spiral pads and spiral note books is a book of account but not loose sheets of papers contained in a file. The court however observed that it was not necessary that the entry should be made at or about the time the related transaction took place so as to pass the test of having been 'regularly kept'. Again, activities carried on continuously in an organized manner with a set purpose to augment one's own resources may amount to 'business'.

The Privy Council had occasion to interpret section 34 of the Act and the corresponding provision under the 1855 Act, in Bhoy Hong Kong v. Ramanathan: ILR 29 Cal 334 = 29 IA 43; Jaswant v. Sheo Narain, 21 IA; Ganga Prasad v. Inderjit, 23 WR 390; Rajeshwari v. Bal Kishen, 14 IA 142; Dy. Commr. v. Ram Prasad, 26 IA 254; Dwarkadass v. Janki Dass, 6 MIA 88; Imambandi v. Mota Suddi, AIR 1918 PC 11; Gopal v. Sri Thakurji, AIR 1943 PC 83; Sorabjee v. Koonmarjee, 1 MIA 47; Seth Lakshmi v. Seth Indra, 13 MIA 365; Srikishen v. Harikishen, 5 MIA 432; Mulka v. Tekaeth, 14 WR 24 (PC); Seth Maganmal v. Darbari Lal, AIR 1929 PC 39; Farraquharson v. Wwarka, 14 MIA 259.

The Supreme Court of India too had occasion to deal with this section. We have already referred to CBI v. V.C. Shukla, AIR 1998 SC 1406.

In State Bank of India v. Ramayanapu Krishna Rao: (AIR 1995 SC 244), the Supreme Court observed that the certified copy of ledger accounts maintained in the regular course of business is admissible under section 34 and can be used as a piece of evidence corroborating any substantive evidence on record indicating liability if any. That was a case of a Bank. Otherwise, ordinarily, in courts, entries in a Day Book, contained in the regular course of business are given greater evidentiary value than mere entries in ledgers. Earlier, in Mahasay v. Narendra: AIR 1953 SC 431, the Supreme Court stated that loose sheets of account have not the same probative force as books of accounts regularly kept.

No particular form of books of account is generally prescribed, although books are far more satisfactory when kept in the form of daily entries of debits and credits in a day book or journal. But it must be a regular account-book as would explain itself and as appears on its face to create a liability in an account with the party against whom it is offered, and not to be a mere memorandum for some other purpose.

Hence, mere loose sheets of papers are not admissible and a single entry does not constitute an account book (Jones, section 575). Books of account must be held to have been proved even in the absence of their being written, upon proof of their being properly maintained and kept: Ramjanki v. Juggilal: AIR 1971 SC 2551. Where a debit entry at the end of a page showed sale of certain goods written closely in a cramped manner and in a different ink, it was not accepted: Venkata Mallayya v. Ramaswami & Co.: AIR 1964 SC 818.

In S v. Ganeswara: AIR 1963 SC 1850, it was held that the entries, though relevant, are however, not by themselves sufficient to charge anyone with liability. The entry in A's account books, though in his own favour as a piece of evidence may be taken into consideration along with the evidence of A that the amount was paid by A to B. In Chandradhar v. Gauhati Bank, AIR 1967 SC 1058, it was held that mere entries in Banks books of account or copies thereof are not sufficient to charge a person with liability except where the person concerned accepts the correctness of entries. In Dadarao v. State, AIR 1974 SC 388, it was held that mere entries of account are not sufficient evidence of entrustment so as to substantiate a plea of breach of trust, AIR 1974 SC 388.

Non-existence of entry in books of account was held to be relevant under sections 5 and 11 in State v. C. Ganeswara: AIR 1963 SC 1850. In State Bank of India v. Yammam Gouramani Singh: AIR 1994 SC 1644, it was held that entries in books of account corroborated by the evidence of the Branch Manager and other bank officials was sufficient proof of the loan transaction.

It may here be noted that for Banker's Books, special provision is made in the Banker's Books Evidence Act (19/1889 as amended by Act 12/1900). It has also been amended by the Information and Technology Act (21/2000). After Barker v. Wilson: 1980(1) WLR 884, regarding the applicability to 'microfilm' of Banker's Books, the same has been given legislative approval by Banking Act, 1987; Trust Savings Banks Act, 1981; Building Solicitors Act, 1986. 'Banker's Books' now include (i) ledgers (ii) day book (iii) cash books (iv) account books (v) other records used in the ordinary business of the Bank whether those records are kept on microfilm, magnetic tape or any other form of mechanical data retrieval mechanism. As to entries, see also section 54 of the Indian Companies Act (1/1956), Or 7 CPC.

In England, it has been held that a person's medical record kept by a National Health Service Hospital is not 'a record relating to trade or business' within section 1(1)(a) of the (English) Criminal Evidence Act, 1965 (See R v. Caryden 1978 (2) All ER 700 (CA)). However, under that Act, Bills of Lading and cargo manifest have been held to be business records (R v. Sullivan: 1978 (2) All ER 718 (IA)).

Having considered the above case law and other aspects, we do not think any further amendment of section 34 is needed. We, therefore, agree with conclusion in the 69th Report (see para 13.27 of 69th Report) that the words "such statements" be substituted by the words "such entries".



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