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This article is written by Meenal Sharma, a student of Vivekananda Institute of Professional Studies. This article talks about the importance of The Bankers’ Books Act 1891, its important sections and the amendments made in the Act by the Information Technology Act 2000. 

Introduction

Maintaining records is an integral and essential part of the banking institutions. For instance, a customer wants to deposit ₹10000 in a bank. He deposits the amount with a banker who acknowledges the deposit with a receipt. The banker will then make proper entry of the same in a ledger book or an account book. Later, the customer claims that he deposited  ₹15000 in the bank but only ₹10000 were credited in his account. In this case, the banker will have appropriate records to verify it. The bank can verify that only ₹10000 were deposited by the customer. If any legal proceedings are initiated against the bank, it can produce a certified copy of the record. The Bankers’ Books Evidence Act, 1891 provides the law with respect to bankers’ books and what are the certified copies of the bank records. 

Historical overview

Records have been maintained in banking institutions since their inception. The procedure of maintaining records is integral for such establishments. These records are usually maintained in ledger books, account books, etc. these are called bankers’ books. The Bankers’ Books Evidence Bill was passed by the legislature on 1st October 1891. The main objective of this Act was to make the provisions of the English Bankers’ Books Evidence Act, 1879 in India. 

In England, this law was brought into force to amend the Law of Evidence with respect to bankers’ books. According to this Act, in all legal proceedings, a copy of any entry in the bankers’ books such as transactions, accounts shall be treated as a prima facie evidence of such entry. 

This Act has been amended by the Information Technology Act, 2000 with the advent of computer systems which are now being used to maintain records in banking institutions rather than on paper.  

Importance of this Act

the Bankers’ Books Evidence Act 1891 provides guidelines to banking institutions about legal proceedings relating to banking records. This is an Act which was brought into force to amend the Law of Evidence with respect to banking records. In every bank, bookkeeping or recording of transactions is recorded in bank books such as ledger books, registers, account books, and other books used in ordinary courses of business. If there is any discrepancy of these banking records, it will amount to a violation under this Act. Any banking institution or any company that carries out a banking function is bound by this Act if any legal proceeding is initiated against them. 

Definitions

Section 2 of the Act defines the following:

  • Company: Under this Act, a company refers to any company which is defined under Section 3 of the Companies Act 1956 including any foreign company defined under Section 591 of the same Act.
  • Corporation: Any body corporate established by any law for the time being in force in India is a corporation. It includes the Reserve Bank of India, the State Bank of India and any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act 1959. 
  • Bank/Banker: According to this Act any company/corporation carrying on the business of banking is a bank or banker. Further, it includes any post office savings bank, any money order office and any partnership/ individual to whom the provisions of this Act have been extended.
  • Bankers’ Books: These refer to ledger books, account books, daybooks, cash books and other books used in the ordinary course of business of a bank. These records can be kept in a written form or they can be stored in microfilm, magnetic tape or any other form of mechanical or electronic data retrieval mechanism. They may be kept onsite or at an offsite location such as a backup or disaster recovery site.
  • Legal proceedings: Under this Act, legal processing means any proceeding or inquiry under which evidence is given or may be given. It includes arbitration, any investigation/inquiry under the Criminal Procedure Code, 1973 or any other law which is in force for the collection of evidence by a police officer or any other person authorised to do the same by a magistrate or any existing law. 
  • The Court: Under this Act, the court refers to the person(s) before whom the legal proceedings are held. 
  • Judge: A Judge under this Act means a Judge of a High Court Division.
  • Trial: It refers to any hearing before the Court where evidence is taken. 
  • Certified Copy
    • With respect to written records, a certified copy means a copy of an entry in the bankers’ book with a certificate written at the foot of such copy. It certifies that it is a true copy of the entry and it is contained in ordinary books of banks, made in the ordinary course of business and the concerned book is still in the custody of the bank. A copy can also be obtained mechanically or by any other process that itself ensures the accuracy of the copy, in this case, a certificate to that effect is also required. In certain cases, where the book from which such copy was prepared is destroyed in the usual course of business of the bank, a certificate to that effect is also required. These certificates have to be dated and subscribed either by the principal accountant or the manager of the bank with his name and official title.  
    • When the books of records are stored as data in floppy, disk, tape or any other electromagnetic data storage device then the printout of such data or copy of such printout along with statements certified in accordance with Section 2A is a certified copy. 
    • Certified copy also includes the printout of any entry that is stored in microfilm, magnetic tape or any other form of mechanical or electronic data retrieval mechanism that itself ensures the accuracy of such printout as a copy of the entry and containing certificates in accordance with Section 2A

Important sections and significance

Section 2

Section 2A It provides that certain certificates shall be accompanied with the printout or copy of printout referred in Section 2(8). They are:

  • Certificate by the principal accountant of the branch manager stating that it is:
    • A printout of the entry or
    • A copy of such printout 
  • Certificate by a person in charge of the computer system containing a brief description of the computer system along with the following:
    • Particulars of safeguards adopted by the system to ensure that only authorised persons have entered the data or performed any other information.
    • Particulars of safeguards adopted to ensure prevention and detection of an unauthorised change of data.
    • Particulars of safeguards available to retrieve lost data due to reasons such as systematic failure.
    • Particulars of the manner in which data is transferred from the system to any removable media such as floppy, disc, tape, or any other electromagnetic data storage device. 
    • Particulars of the mode of verification ensuring the accurate transfer of such data to the removable media.
    • Particulars of the mode of identification of such data storage device
    • Particulars of arrangement for custody and storage of such devices
    • Particulars of the safeguards to prevent and detect tampering with the system 
    • Any other factor which can certify the accuracy and integrity of the system.

According to Section 2A(c), a certificate is required from the person in charge of the computer system that the computer operated properly at the material time as to the best of his knowledge and that he was provided with relevant data. It further certifies that the printout correctly represents or is derived from the relevant data.

Section 3

Section 3 states the power of the State Government to extend the provisions of this Act. The State Government can extend the provisions of this Act to be applied to the books of any partnership or individual carrying on the business of the banker within territories that fall under its administration. The State government can do so by notification in the official gazette and it can also rescind such notification. 

Section 4

Section 4 specifies certain matters which require the production of original entry for proper investigation. According to this section, a certified copy of an entry in a bankers’ book shall be a prima facie evidence of the existence of such entry. The certified copy shall be admitted as evidence of matters, transactions and accounts recorded in every case. The certified copy shall be admissible to the same extent as an original copy is admissible. 

Section 5

Section 5 states that in legal proceedings to which the bank is not a party, unless the court or judge makes an order for a special cause, the officer of the bank should not be compelled to either produce bankers’ books for proving any content or appear as a witness for proving matters, transactions, and accounts recorded.

Section 6

Section 6(1) provides the provision of inspection of books by the order of the court or the judge. The court or judge may order:

  • A party to a legal proceeding to be at liberty to inspect and take copies of entries in a bankers’ book for purposes of such proceeding or
  • The bank to prepare and produce certified copies of all such entries within a specific time accompanied by a certificate dated and prescribed in the prescribed manner, stating that no other is found in the books of the bank relating to the matter in an issue of the proceeding. 

According to Section 6(2), the court may also order under Section 5 or Section 6 of the Act with or without summoning the bank which shall be served on the bank three days before the same is required to be obeyed excluding bank holidays unless otherwise directed by the court or judge. 

According to Section 6(3), before the expiry of limited time for the obedience of the aforementioned order, the bank may at any time either offer to produce the books of the bank at the trial; or give notice of their intention to show cause against the concerned order which shall not be enforced without any further order. 

Section 7

According to Section 7(1), the costs of the application to the court or judge for the purpose of the Act and the cost of anything done or to be done under the order of court or judge, made for the purpose of the Act shall be at the discretion of such court or judge. The court or judge may also order such costs to be paid by the bank to any party in case they have been incurred by any improper delay or fault of the bank. 

According to Section 7(2), such order of payments of costs to or by the bank shall be enforced only if the bank is a party to the proceedings. 

According to Section 7(3) under Section 7, any order on application to the Court of Civil Judicature awarding costs may be executed as if it were a decree for money passed by itself. However, nothing in Section 7(3) shall be construed to derogate from the power which is possessed by the court or judge making an order for enforcement of the directions relating to the payment of costs. 

Section 8

According to Section 8 in the application of sections 5, 6 and 7 the investigation or inquiry under the Criminal Procedure Code, 1973 or any other law which is in force for the collection of evidence by a police officer or any other person authorised to do the same by a magistrate or any existing law, the order of the court or judge referred in sections 5, 6, and 7 shall be construed as referring to an order made by officers of rank Superintendent of Police or above as specified by the appropriate government. Here the appropriate government refers to the government which employs the police officer or any other person conducting the investigation or inquiry. 

Amendments 

The Information Technology Act, 2000 amended the definition of bankers’ books in the Bankers’ Books Evidence Act, 1891. The following changes were made by this Act:

  • Amendment in Section 2(3): Earlier the definition of bankers’ books only contained ledgers, daybooks, cash books, accounts books as well as other books used in the ordinary course of business in a bank. After the amendment, it includes records stored in microfilm, magnetic tape or any other form of mechanical or electronic data retrieval mechanism. 
  • Section 2(8)(b): This sub-clause was added to the definition of a certified copy which includes a printout of any entry that is stored in microfilm, magnetic tape or any other form of mechanical or electronic data retrieval mechanism that itself ensures the accuracy of such printout as a copy of the entry 
  • Section 2A: This section was added to deal with certification requirements for admissibility of a certified copy in the printout form. It provides which certificates shall be required by the person in charge of the computer system. 

Recent judgements

Om Prakash v. Central Bureau of Investigation: In this case, it was held that Section 65B of the Indian Evidence Act is pari materia to Section 2A of the Bankers’ Books Evidence Act. Therefore they should be construed together. Moreover in Anvar P.V v. P.K. Basheer and Ors, it was observed that a special law will always prevail over general law. This implies that even though there is a provision (Section 65B) for electronic records under the Indian Evidence Act, the provision that deals specifically with the admissibility of banking records in electronic form are Section 2A of the Bankers’ Books Evidence Act. Thus, following the principle of ‘generalia specialibus’ Section 2A will be preferred over Section 65 B with respect to dealing with banking records in electronic form. 

Sonu @ Amar v. State Of Haryana: In this case, it was observed that the test to determine an objection pertaining to the admissibility of banking records should be allowed or not depends on whether or not the defect in question could be cured at the stage of marking the document and the party tendering evidence could have resorted to the regular mode of proof. 

Radheshyam G. Garg v. Safiya bai Ibrahim Lightwalla: In this case, it was observed that when an agent of bank signs a certificate validating the record to be a true copy of the original,  maintained in the usual course of business and kept in the bank’s custody then the court should not focus on all the conditions provided under Section 2(8) of the Act and take a hyper-technical approach. The conditions provided under Section 2(8) of the Act are directory and not mandatory. 

Conclusion

Banking records are considered to be reliable pieces of evidence. To ensure the accuracy of these pieces of evidence the Bankers’ Books Evidence Act, 1891 provides for a certification process. The Act provides guidelines for banking institutions or companies carrying the business of banking, where bank records are required to be produced in a legal proceeding. These banking institutions are required to strictly comply with provisions of this Act as they are bound by this Act. If there is any discrepancy in records it would amount to a violation of the Act. Changes are made by the advent of computers and the internet in society. Banking is no exception. The records are being maintained through computer systems by almost every bank. Therefore, the Information Technology Act 2000 made certain amendments in the said Act regarding a certified copy of printouts of the entry and what certifications are required to prove the authenticity of such certified copy. 

References 

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