Section 34 of Indian Evidence Act provides that:
Entries in books of accounts 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.
As a general rule, a man’s own statement can’t be taken as Evidence for him, though in certain cases it may be used as a Corroborative Evidence. The entries mentioned in Section 34 being the acts of the party himself, must be received with caution. But these statements are in principle admissible upon considerations similar to those which have induced the courts to admit certain statements in Evidence when made by persons who are dead and cannot be called as “witnesses”.[i]
Such entries were not admitted in English Common Law unless they happened to be against the interest of the person making them or were made in the course of his business by deceased person. But equity courts have gradually enlarged this exception, and now books of account regularly kept have been accepted by them as Evidence. The essentials on which these principles are based[ii]:
- The habit and the system of making such books with regularity, ensure their accuracy.
- The influence of habit prevents casual inaccuracy, and counteracts the casual temptation of mis-statements.
- As such books record a regular process of business transaction, an error almost certain can be detected and rectified.
- In such Books mis-statements cannot be made, except by a systematic and comprehensive plan of falsification.
The rule rests upon the consideration that the entry or other writing was within the writer’s business. In all such entries the writer has full knowledge, no motive to falsehood, and there is the strongest improbability of falsehood. Safer sanction rarely surrounds the testimony of the witness examined under the oath. The principle of admissibility of parties account books or shop books shows a recognition of the two traditional exceptions to rule against hearsay, namely, the necessity principle and the circumstantial probability.
Books of Account Regularly Kept in the Course of Business
“Book” ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as “Book” for they can be easily detached and replaced.
In dealing with the word “Book” appearing in Section 34 of Indian Evidence Act, Court in Mukundram v. Dayaram[iii] observed:
“In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book. … I think the term ‘book’ in Section 34 aforesaid may properly be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of Section 34, and I have no hesitation in holding that unbound sheets of paper, in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of Section 34.”
In business parlance “Account” means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Words “Regularly Kept” mean that the entries in the books were contemporaneously made at the time the transactions took place.
Moreover Supreme Court has laid down in CBI vs V.C. Shukla[iv] that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted hereinbelow:
“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 debits 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 arises to do so for his future purpose. Admittedly the said diaries were not being maintained on day-to-day basis in the course of business. There is no mention of the dates on which the alleged payments 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 abbreviated 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.”
From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business.
Probative Value of Entries made in the Course of Business
It has been laid down in CBI vs V.C. Shukla as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability.
With respect to evidentiary value of regular account book, the Apex Court in Beni v. Bisan Dayal[v] has 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[vi] the High Court, while negativating 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.”
From the above discussion it is clear that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It is therefore, necessary for Courts to first ascertain whether the entries in the documents, with which they are concerned, fulfill the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed.
Can Proceedings be initiated on the basis of Random Sheets and Loose Papers
In CBI vs V.C. Shukla, it was held that it is open to any unscrupulous person to make any entry any time against anybody’s name unilaterally on any sheet of paper or computer excel sheet. There being no further corroborative material with respect to the payment, no case is made out so as to direct an investigation, and that too against large number of persons named in the documents. Such entries have been held to be prima facie not even admissible. If Investigation is ordered on the basis of such documents, it would be very dangerous and no constitutional functionary/officer can function independently, as per the constitutional imperatives. No case can be said to be made out on the basis of material which is not cognizable in law.
The apex Court has considered the entries in Jain Hawala diaries[vii], note books and file containing loose sheets of papers not in the form of “Books of Accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act, and that only where the entries are in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible.
Courts have to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, an apprehension of wrong is casted even before initiating investigation.
In case Courts allow to do so, then investigation could be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of accounts but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case Courts do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily.[viii]
Although this Court, in the decision of Lalita Kumari vs Government of Uttar Pradesh[ix] and others, has laid down that when there is commission of offence apparent from the complaint and a cognizable offence is made out, investigation should normally be ordered and the falsity of the allegations can be ascertained during the course of investigation. But the decision of Lalita Kumari (supra) is of no help to the persons seeking direction for an investigation from a Court on the basis of documents which are irrelevant, and per se not cognizable in law as piece of evidence and inadmissible in evidence and thus a roving inquiry cannot be ordered on such legally unsustainable material.[x]
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 prosecution based upon the documents not in the form of account books maintained in regular course of business (random sheets, loose papers, stray materials not in the form of regular books of account) which led to the investigation has time and again being quashed by the Apex Court.
[ii] Poole vs Dicas, 1 Bing. (N. C.) 649.
[iii] AIR 1914 Nag. 44.
[iv] (1998) 3 SCC 410.
[v] Civil Revision No. 301 of 1921, Madhya Pradesh High Court.
[vi] Punjab High Court.
[vii] L.K. Advani v. Central Bureau of Investigation, 1997 Cri LJ 2559.
[viii] Writ Petition(s) (Civil) No(s). 683/2014,
Center for Integrity, Governance and Training in Vigilance Administration and Anr. vs Union of India and Ors. (Also known as Sahara-Birla Case)
[ix] 2014 (2) SCC 1
[x] Supra Note VIII.
ABOUT THE AUTHOR
Harshit Sharma has done his B.A., LL.B (Criminal Law Hons.), from National Law University, Jodhpur (2019) and he completed his Masters in Criminal Law in July 2020. He secured AIR-15 in CLAT PG (2019) and he has Qualified NTA NET (December 2019). Currently, he is preparing for his Delhi Judicial Services 2019 Interview and simultaneously working for his PhD enrolment. He can be reached at firstname.lastname@example.org.