Sub : The Bankers Evidence Act, 1891
IN THE HIGH COURT OF DELHI AT NEW DELHI
RFA No. 595/2001
Date of Decision: October 10, 2006
CENTRAL BANK OF INDIA .....
! Through : Mr. Vinay Sharma, Adv.
M/S GEETAJI CHEMICAL INDUSTRIES and ORS. .... Respondents
Through : Mr. B.L. Chawla, Adv.
CORAM:HON'BLE MR. JUSTICE T.S. THAKUR
HON'BLE MR. JUSTICE S.L. BHAYANA
1. Whether reporters of local papers may be
allowed to see the judgment? NO
2. To be referred to the Reporter or not? NO
3. Whether the judgment should be
reported in the Digest? NO
Per THAKUR, J :
This is a plaintiff's appeal arising out of a suit for
recovery of money
which the Additional District Judge, Delhi has
dismissed by the impugned
judgment and decree. The facts giving rise
to the institution of the suit and
the present appeal may be summarized as under :
2. The defendant respondent No. 1 herein is
a partnership concern with
respondents No. 2 to 4 as its partners.
The plaintiff bank's case as set out in
the plaint was that defendant No. 1 firm
approached the plaintiff for the grant
of a loan facility in connection with the latter's
business against collateral
securities of Life Insurance Policies, shares
of Joint Stock Companies,
properties and farm land.
The plaintiff accordingly sanctioned a cash credit
facility of Rs.50,000/- against hypothecation of stock
of dyes, chemicals etc.
as well as against the collateral securities mentioned
above worth Rs.70,875/-.
Requisite documents necessary in this connection
were executed by the defendant
borrowers which included a Demand Promissory
Note for Rs.50,000/-, a letter of
continuity, a letter of waiver and an agreement
of hypothecation to secure
Demand Cash Credit against goods, all dated
20th June, 1983. The payment of
loan was guaranteed by defendant No. 5 who
executed a letter of guarantee in
favour of the plaintiff.
3. A fresh set of documents was executed by the
defendants in June,
1987. Since however the defendants were not
regular in making payments, they
were informed that they should make payments
regularly which did not evoke any
response. Communications dated 31st August, 1987
and 11th September, 1987 were
in that connection sent to the defendants
in response to which defendants 1 to 4
by their letter dated 18th September, 1987
assured the plaintiff that they would
submit regular statement of stocks in time
and adjust the outstanding dues of
the plaintiff in the near future as they were
expecting their payment very soon.
Letters dated 5th October, 1987, 23rd November, 1987,
3rd December, 1987 and
19th December, 1987 pointed out the failure
of the defendants to bring down the
debit balance, submit balance sheet and
trading account and furnish statements
of hypothecated stocks.
4. The plaintiff's further case is that defendant No. 3,
partner of Defendant No. 1 acknowledged the
debit balance against the firm in a
sum of Rs.1,09,944/- as on 31st December, 1987
by signing a debit balance
confirmation on the same date, i.e., 31st December, 1987.
to the defendants thereafter to liquidate the
outstanding dues also evoked no
response forcing the plaintiff to recall the
advance in terms of a notice dated
2nd September, 1988. In response, defendants
No. 2 and 3 executed a fresh set
of documents including a Demand Promissory
Note, a Letter of Continuity and a
Letter of Hypothecation all dated 29th January, 1990
for a sum of
Rs.1,41,346.80. Defendant No. 5 once again stood
surety for the said amount by
issuing a letter of continuing guarantee dated
29th January, 1990. An
acknowledgment dated 29th January, 1990
executed in favour of the plaintiff
clearly acknowledged a sum of Rs.1,41,346.80
inclusive of interest upto 30th
June, 1989 to be due and payable by the defendants.
5. The plaintiff's case in the above backdrop
was that a sum of
Rs.1,96,834/- was outstanding against the
defendants as on 19th September, 1991
as evidenced by a copy of the statement of
account filed with the plaint. The
defendants having failed to repay the said
amount despite demands, institution
of the suit for recovery of the amount with interest
pendente lite and future by
sale of hypothecated stocks had become
6. In the written statement filed on behalf of
the defendants, it was not
disputed that defendant No. 1 was a partnership
concern, though it was alleged
that the same stood dissolved long back.
It was also admitted that the
defendants had approached the plaintiff for
a loan facility for Rs.50,000/- in
the year 1983 which was granted against
the security of LIC policies, share
certificates etc. The allegation that the
defendants had signed the documents
in consideration of the said facility was
According to the defendants,
they had signed blank forms and papers at
the instance of the bank officials at
the time of grant of the facility.
Similarly the averment regarding renewal of
the said documents and execution of
fresh documents in the year 1987 was denied
as the documents referred to in the
said para were, according to the defendants,
signed by them while the same were blank.
It was alleged that the defendants had
instructed the bank to dispose of the share
certificates and adjust the accounts or in the
alternative to return the certificates to the
defendants to enable them to dispose the
same and to deposit the amount with the
bank, but the plaintiff bank had failed to
act in the matter causing financial loss to
The allegation that the defendants had
acknowledged the debit
balance of Rs.1,09,944/- as on 31st December, 1987
was also denied.
It was alleged that blank forms and papers were
signed at the instance of the bank
officials in the year 1987 only.
7. Similarly the averment in the plaint that the
documents were renewed by
execution of a fresh set of documents in 1990
was also denied and an allegation
made to the effect that the documents relied
upon were actually signed blank in
June, 1983 at the time the loan facility was extended.
The acknowledgment of
the outstanding amount in June, 1989 was also
similarly questioned on the ground
that the same had been created by making use of some blank form which the
plaintiff had obtained at the time of extending the loan facility.
8. On the pleadings of the parties, the trial court framed the following
issues on 6th September, 1997 :
i.Whether the defendants signed on blank form
and papers as alleged ? OPD
ii.Whether the defendants acknowledged the
iii.Whether the plaintiff is entitled to the suit
iv.Whether the plaintiff is entitled to the interest?
If so, at what rate? OPP
9. In support of its case, plaintiff examined
PW-1 Sh.R.C. Poria. The
defendants did not, however, lead any evidence
nor appeared to argue the matter.
The court below was, all the same, of the opinion
that the plaintiff had failed
to substantiate its claim for recovery of the
The court was of the view that it was for
the plaintiff to first prove that the documents
relied upon by the plaintiff had been executed
by the defendants in which event alone,
the defendant could be called upon to
establish that the same had been signed blank.
The statement of Sh.R.C. Poria did not, according
to the trial court, help the
plaintiff inasmuch as the same was limited
to the signing and verification of
the plaint. Aggrieved by the dismissal of the suit,
the plaintiff bank has
filed the present appeal, as already noticed earlier.
10. Appearing for the appellant, Mr. Sharma
argued that the view taken by
the trial court was erroneous in law.
The court below had, according to the
learned counsel, failed to appreciate that
the signatures on the documents
relied upon by the plaintiff had not been disputed
by them. All that the
defendants had alleged was that the documents were
signed when the same were
blank. The onus to prove that assertion was
upon the defendants as indeed issue
No. 1 clearly placed the onus of proof in regard
to the said allegation on the
defendants. Defendants having failed to adduce
any evidence and having failed
even to step into the witness box to support the
allegation made by them, there
was no option but to hold that the documents
had been duly signed by the
11. Mr. Sharma further argued that the court
below had failed to notice
the fact that the plaintiff had proved the duly
certified copy of the statement
of account marked Ex.PW1/1 and that the said
statement was admissible in
evidence by itself without any further proof.
The court had also, according to
the learned counsel, failed to notice that the
plaintiff had been permitted to
produce secondary evidence by order
dated 8th December, 1999 in view of the fact
that the original documents had been lost and could not,
therefore, be placed on
record. The statement of Sh. R.C. Poria, the certified
copy of the statement of
account showing a debit balance as on the date
of the institution of the suit
and the documents filed on record pursuant
to the order of the trial court
dated 8.12.99 coupled with the failure of the
defendants to lead any evidence to
show that the same were signed blank had,
according to the learned counsel, made
out a case for passing a decree in favour
of the plaintiff.
12. On behalf of the respondents, it was on the
other hand argued that the
evidence on record was insufficient to justify a
decree and that the trial court
was correct in holding that the plaintiff bank
had not proved the execution of
the documents on the date they were alleged
to have been signed and executed.
13. We have given our anxious consideration
to the submissions made at the
bar and perused the record.
The statement of PW-1 Sh. R.C. Poria not only
proves the authority of Sh. C.D. Kashyap to
sign and verify the plaint but also
a certified copy of the statement marked Ex.PW1/1.
The defendants did not, as
noticed earlier, produce any evidence in rebuttal.
None of them appeared even to
support the theory that the documents in question
on which the signatures were
admitted had been signed while the same were blank.
The result was that the
allegation that the documents relied upon by
the plaintiff had been signed while
they were still blank remained unsubstantiated.
The onus of issue No. 1 framed on the basis of that
allegation was clearly upon the defendants.
This implied that in case defendants failed to prove
the allegation, the documents would betaken as
having been executed on the dates on which
they purport to have been executed.
There was, therefore, no option but to hold
issue No. 1 against the defendants.
The necessary corollary from that
finding would be that the
documents had been executed not on the
date and in the manner alleged by the
defendants, but as the documents themselves
purported to have been executed.
Such being the position, there was no room for
dismissing the suit filed by the
plaintiffs. The documents relied upon by the
plaintiffs supported by the
certified copy of the statement of account
constituted sufficient proof for the
plaintiff to succeed in its claim.
Section 4 of The Bankers Evidence Act, 1891
makes a certified copy of the statement of
account admissible in evidence
without any formal proof. It reads :
4. Mode of proof of entries in banker's books ?
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 extentas, the original
entry itself is now by law admissible,
but not further or otherwise.
14. In the light of the above, the suit filed by
the plaintiff ought to
have been decreed against the defendants
jointly and severally. In as much as
the court below took a different view,
it committed a mistake that needs to be
corrected in appeal.
15. In the result, we allow this appeal; set aside
the impugned judgment
and decree the suit filed by the plaintiff for a
sum of Rs.1,96,834 with
interest @ 6% pendente lite and till realization.
The plaintiff shall beentitled to the costs
of the suit also.
We further direct that the plaintiff shall be free
to recover the amount in question by
sale of the hypothecated
stocks and the shares pledged to the bank
by way of collateral securities.
T.S. THAKUR, J
S.L. BHAYANA, J.
October 10, 2006