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PETITIONER: CHANDRADHAR GOSWAMI & ORS.

       Vs.

RESPONDENT: THE GAUHATI BANK LTD.

DATE OF JUDGMENT: 14/10/1966

BENCH: RAMASWAMI, V. BENCH: RAMASWAMI, V. SHAH, J.C.

CITATION:  1967 AIR  816            1967 SCR  (1) 921  CITATOR INFO :  R          1971 SC2293  (6,9)  R          1971 SC2328  (6)  R          1986 SC 959  (11)

ACT: 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).

HEADNOTE: 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  deedfurther 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 ofsums due  to  it from the appellants and the  suit  was claimed to be withinthe  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  suffi- cient  evidence and so some independent evidence had  to  be

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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. [903 G-H]

JUDGMENT: 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 of 1955. 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 thereunder.   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.

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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 in evidence. 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 mortgage deed. 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, namely- 901

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(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 before us. 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 amount. 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  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.   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 anyentry in a  banker’s               book shall in all legal proceedingsbe                             received   as  prima  facie  evidence  of   the               existence ofsuch   entry,  and  shall   be               admitted   as   evidence   of   the   matters,

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             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 indepen- dent evidence had to be given by the bank to show that  this sum  was  advanced.   What  would  be  the  nature  of  such

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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 Art. 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.

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G.C.                                   Appeal allowed in part. 905