Delhi High Court
J.K.Aggarwal vs Bank Of India on 11 November, 2008
Author: Pradeep Nandrajog
i.6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 594/2007
% Date of Order: 11.11.2008
J.K.AGGARWAL ..... Appellant
Through: Mr. Sanjay Gupta, Advocate
versus
BANK OF INDIA ..... Respondent
Through: Mr. R.K.Dhawan, Advocate
Mr. Rahul Gaur, Advocate
CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE J.R.MIDHA
1. Whether reporters of local papers may be allowed
to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?
: PRADEEP NANDRAJOG, J.(Oral)
1. Heard learned counsel for the parties.
2. The appellant was undoubtedly a guarantor in
respect of a loan advanced to defendant No.1 by respondent
No.1 who was the plaintiff. In respect of the loan, defendants
No.2 and 3 as also the appellant, impleaded as defendant No.4,
stood guarantee for repayment.
3. The suit has been decreed in sum of Rs.7,84,415/-
together with pendente lite and future interest @ 18.5% per
annum from date of suit till realization.
4. We may note that the principal borrower i.e.
defendant No.1 and co-defendants No.2 and 3 have not
challenged the decree. Only the appellant is in appeal.
5. The statement of account on which the suit was
based has been proved as Ex.P-13. The same reads as under:-
Date Particulars Debits Cr. Or Dr. Credits Balance
10/12/97 By Balance/Totals 25,00,000 Dr. 25,00,000
as per last
statement
Brought Forward
(To loan disburse)
01/01/98 To intt upto 18,443.64
31.12.1997
26/03/98 To intt upto 71,785.96
26.03.1998
27/03/98 By Transfer 12,960
29/07/98 To intt upto 2,29,633
31.07.1998
30/09/98 To intt upto 74,644
24.09.1998
23/12/98 By Transfer 10,000
29/12/98 To pay slip issued 750
for search in ROC
1/11/99 By Transfer 30,00,000 Cr. 1,14,873
8/11/99 To Transfer 42,480
(Valuation of Car)
31/12/99 To intt upto 71,279
10/11/98
Recovered
31/03/2000 By Transfer 1114 NIL
301012960 301012960 NIL
03/04/2000 By Transfer 301012960 301012960 NIL
29/09/2000 To Transfer 1114
03/10/2000 By Transfer 1114 Cr. 1114
301124360 301235760
Certified that the above is true copy of the entry/entries contained in the ledger
being one of the ordinary book of the Bank, that such entry/entries were made in
the usual and ordinary course of the business of the Bank and that the said
book/record is still in the custody of the Bank.
STATEMENT OF UPDATED DUES
CUM INTEREST CERTIFICATE
06/12/2000 To Balance B/Forward from statement as per Cr. 1114
Bankers' Books Evidence Act 1981
To interest 785529 Dr. 7,84,415
accrued from
01/01/99 to
05/12/2000
6. Since Ex.P-13 has been certified under the Bankers'
Book Evidence Act, the learned Trial Judge has held that entries
reflected in Ex.P-13 have to be treated as correct.
7. Before analyzing Ex.P-13 viz-a-viz the challenge to
the entries therein recorded, we would note at the outset that
the appellant was denied the right to file a written statement
and had no defence and thus was not permitted to lead any
evidence. Thus, the fate of the appellant has to be decided
limited to the question whether the plaintiff proved its case.
8. Needless to state a defendant who has not filed a
written statement can always cross examine the witnesses of
the plaintiff and can succeed if the defendant demolishes the
credibility of the witnesses of the plaintiff or otherwise is able to
demolish the case of the plaintiff.
9. The challenge by the appellant to Ex.P-13 was
predicated by cross examining the sole witness of the bank,
examined as PW-1, with respect to the debit entry in sum of
Rs.42,480/- recorded on 8.11.1999 as also a debit entry in sum
of Rs.7,84,415/- reflected in the statement of account on
6.12.2000 after closing the account by recording a transfer
entry on 3.10.2000, recording a credit balance in sum of
Rs.1,114.
10. The witness of the bank was cross examined on the
two entries and the relevant extracts of the testimony are as
under:-
"I have seen the document Ex.P-13. As per the said
statement the withdrawal was made only once at the
time of disbursement of loan........ I have not prepared
the statement of account Ex.P-13. I remained posted in
the branch till June 1998, therefore, I cannot identify the
name of the officer who has signed the Ex.P-13.............
The bank has not placed any document or bill of the
surveyor in respect of the expenditure of Rs.42,480/- on
account of valuation of the car................ The loan
ledger from which the debit entry of Rs.7,84,415/- has
been made in Ex.P-13 has not been either produced
today or the copy of the same are not on record..........
It is correct that the minimum price of Rolls Royce is
around Rs.1 crore while the Ferrari being a sports car,
its minimum value is around Rs.2.5 crores. I cannot say
on what basis the valuer of the bank has valued the car
for just Rs.30,00,000/- (Rupees Thirty Lacs)."
11. Learned counsel for the appellant has urged that the
debit entry in sum of Rs.42,480/- is neither by way of interest
payable nor represents the money withdrawn by the defendant
No.1 and hence the plaintiff bank could prove the said debit
entry only if it produced the bill raised by the valuer and the
voucher or receipt evidencing payment under the bill.
Challenging the debit entry in sum of Rs.7,84,529/- reflected in
Ex.P-13 after closing the account by certifying that Rs.1,114/-
was the credit balance in the account, learned counsel for the
appellant urges that PW-1 has not been able to prove the
justification of the said debit entry.
12. Learned counsel for the respondent No.1 responds by
urging that inadvertently the interest payable from 1.1.1999 to
5.12.2000 could not be debited in the account at the relevant
time and thus corrective action was taken. Justifying the debit
entry in sum of Rs.42,480/-, learned counsel urged that indeed
the same represented the payment made to the surveyor when
the car hypothecated to the bank was sold in sum of
Rs.30,00,000/- (Rupees Thirty Lacs).
13. Suffice would it be to state that a bank statement of
account certified under the Bankers' Book Evidence Act has not
to be treated as a conclusive proof. Section 4 of the said Act
only raises a presumption to the truthfulness and correctness of
a statement of account certified under the Bankers' Book
Evidence Act. In the decision reported as AIR 1967 SC 221
Chandradhar Goswami & Ors. vs. Gauhati Bank Ltd. it was held:-
"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.
xxxxxx
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 along 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."
14. The learned Trial Judge has thus ignored the law on
the subject and has taken an incorrect view that law treats
entries in the books of account maintained by a banker and duly
certified under the Bankers' Book Evidence Act as conclusive
proof thereof.
15. Let us revisit Ex.P-13.
16. The same evidences that the entire loan in sum of
Rs.25,00,000/- (Rupees Twenty Five Lacs) was disbursed in one
installment on 10.12.1997. Debit entries pertaining to interest
which had accrued from time to time have been duly reflected
in Ex.P-13. As and when some money was received by the
banker credit entries have been made. As on 1.11.1999,
Rs.30,00,000/- (Rupees Thirty Lacs) has been credited in the
account. The same obviously is the sale proceeds realized by
the bank when the hypothecated motor vehicle was sold. It
would not be out of place to record at this stage, that by said
date, total amount payable by the loanee to the bank was
Rs.28,85,127/- and for said reason a credit balance has been
reflected in the account in favour of the loanee in sum of
Rs.1,14,873/- i.e. Rs.30,00,000/- minus Rs.28,85,127/-.
17. It is of importance to note that while closing the
account and certifying the same as correct, the bank has shown
that as of 31.10.2000 a credit balance is available in the
account in sum of Rs.1,114/-.
18. From nowhere an entry has been made in the
statement of account as of 6.12.2000 debiting Rs.7,85,529/- as
the alleged interest which has accrued.
19. The witness of the bank who was cross examined,
and as noted above, stated that he had no personal knowledge
as to in what manner the statement of account was prepared.
He also stated that the stated loan ledger wherefrom the debit
entry was reflected was not produced. He also stated that he
had not prepared Ex.P-13 and categorically stated that he could
not tell about the details of the interest which have been
debited in the account and more so the stated consolidated
interest entry dated 6.12.2000.
20. It is obvious that the bank has not been able to prove
the debit entry in dispute.
21. We need not, thus, deal with the debit entry in sum
of Rs.42,480/- as the said debit would make difference to the
case of the appellant.
22. The purity of the statement of account Ex.P-13 has
been seriously dented by the manner in which the bank has
made debit entries pertaining to interest which had become
payable. For the loan in sum of Rs.25,00,000/- availed of on
10.12.1997, interest has been debited in sum of Rs.18,443.64
up to 31.12.1997 i.e. interest component for 21 days is
Rs.18,443.64. Thereafter, with effect from 1.1.1998 till
26.3.1998, interest has been debited in sum of Rs.71,785.96. A
measly sum of Rs.12,960/- had been received by the bank
thereby reducing the debit balance by said miniscule amount.
Thereafter, interest with effect from 27.3.1998 till 31.7.1998 has
been debited in sum of Rs.2,29,633/-. Thereafter for the period
1.8.1998 up to 24.9.1998 interest has been debited in sum of
Rs.74,644. Learned counsel for the bank failed to justify
interest being debited in sum of Rs.2,29,633 on 29.7.1998 for
the reason if interest on a debit of Rs.25,00,000/- for 21 days
comes to Rs.18,443.64 and for the next 86 days comes to
Rs.71,785.96, the same cannot be Rs.2,29,633 for the next 120
days. That apart, as per the loan documents the interest was
with quarterly rests, meaning thereby the interest had to be
debited every quarter. The periodicity with which interest has
been debited in Ex.P-13 does not match the terms of the
contract.
23. Before concluding it would of some significance to
note that the witness of the bank admitted that the two cars
valued at Rs.3.5 crores were sold for a paltry sum of
Rs.30,00,000/- (Rupees Thirty Lacs). It appears to us that only
one car was sold, which one we do not know.
24. Be that as it may, for the reasons noted hereinabove
we hold that the evidence on record establishes that the debit
entries in Ex.P-13 pertaining to interest are random casting a
serious doubt about their correctness. The basis of the suit is
the debit entry in sum of Rs.7,85,529/- evidenced by the fact
that the suit seeks recovery of Rs.7,84,415/- which is the sum
reached by adjusting Rs.1,114/-. The entry of Rs.7,85,529/- is
stated to be interest from 1.1.1999 to 5.12.2000. Entire loan of
Rs.25,00,000/- and interest thereon were recovered on
1.11.1999. The respondent therefore could not have charged
interest after 1.11.1999. The last entry is highly tainted and has
not been proved by the witness of the bank.
25. We allow the appeal.
26. Impugned judgment and decree dated 23.8.2007
against the appellant is set aside. Suit filed by the respondent
against the appellant is dismissed.
PRADEEP NANDRAJOG, J.
J.R.MIDHA, J.
NOVEMBER 11, 2008
mm
