Book of Account

Central Bureau of Investigation vs. V.C. Shukla and Ors. (02.03.2026 - SC) : MANU/SC/0168/1998

Case Note:
Held: Interpretation - Words & Phrases-“Book”—It has been held in the case of Mukundram v. Dayaram [AIR 1914 Nagpur 44], that a “book” consists of sheets of paper bound or fastened together to form a material whole. Loose sheets or scraps of paper cannot be called a “book”. Following this ratio, it is held that while the two spiral notebooks and the two spiral pads are “books” for the purposes of S. 34 of the Indian Evidence Act, the files containing loose sheets of paper are not “books”. ” ‘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 in Mukundram v. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court 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 be 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 S. 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 S. 34.”

We must observe that the aforesaid approach is in accord with good reasoning and we are in full agreement with it. Applying the above tests it must be held that the two spiral note books (MR 68/91 and MR 71/91) and the two spiral pads (MR 69/91 and MR 70/91) are “books” within the meaning of Section 34, but not the loose sheets of papers contained in the two files (MR 72/92 and 73/91).”

2. Interpretation-Words & Phrases-“Book of Account”-It has been held in the case of Mukundram v. Dayaram [AIR 1914 Nagpur 44], that a book in which monetary transactions are recorded and the entries totalled and balanced is a ‘book of account’. The main notebook, MR 71/91, meets this criterion, since the entries record monetary transactions which have been duly reckoned, therefore it comes within the definition of ‘book of account’ for the purposes of S. 34 of the Indian Evidence Act. “From the……….definitions of ‘account’ it is evident that if it has to be narrowly construed to mean a statement of formal transactions between two parties including debtor-creditor relation and arising out of contract, or some fiduciary relations undoubtedly the book MR 71/91 would not come within the purview of Section 34. Conversely, if the word ‘account’ is to be given wider meaning to include a record of financial transactions properly reckoned the above book would attract the definition of ‘book of account’………..It cannot be gainsaid that the words ‘account’, ‘books of account’, ‘business’ and ‘regularly kept’ appearing in Section 34 are of general import. Necessarily, therefore, such words must receive a general construction unless there is something in the Act itself, such as the subject matter with which the Act is dealing, or the context in which the words are used, to show the intention of the legislature that they must be given a restrictive meaning………..Indubitably, the Act lays down the rules of evidence to be applied and followed in all judicial proceedings in or before any Court including some Courts-martial. Keeping in view the purpose for which the Act was brought into the statute book and its sweep, the words appearing in Section 34 have got to be given their ordinary, natural and grammatical meaning, more so, when neither the context nor any principle of construction requires their restrictive meaning………..In Mukundram……….the Court proceeded to consider what is meant by a ‘book of account’ under Section 34 and stated as under:

“To account is to reckon, and I am unable to conceive any accounting which does not involve either addition or subtraction or both of these operations of arithmetic. A book which contains successive entries of items may be a good memorandum book: but until those entries are totalled or balanced, or both, as the case may be there is no reckoning and no account. In the making of totals and striking of balances from time to time lies the chief safeguard under which books of account have been distinguished from other private records as capable of containing substantive evidence on which reliance may be placed.” (emphasis supplied)

We have no hesitation in adopting the reasoning adumbrated in the above observations. The underlined portion of the above passage supports the contention of Mr. Altaf Ahmed and rebuts that of Mr. Sibal that MR 71/91 is only a memorandum, for the entries made therein are totalled and balanced. We are, therefore, of the opinion that MR 71/91 is a ‘book of account’ as it records monetary transactions duly reckoned.”

3. Interpretation-Words & Phrases-“Business”-Any activity carried on continuously and systematically by a person by the application of his labour or skill in order to earn an income is ‘business’-ratio of Supreme Court judgment in the case of Barendra Prasad Ray v. I.T.O. The activities of the Jain brothers, even if considered illegal, were therefore ‘business’ activities, hence the entries recorded in MR 71/91 make it a book of account kept in the course of business. “……….in Barendra Prasad Ray v. I.T.O. ………..this Court observed that the word ‘business’ is one of wide import and it means an activity carried on continuously and systematically by a person by the application of his labour or skill with a view to earning an income. The activities of the Jain brothers, as sought to be projected by the prosecution now on the basis of the materials collected during investigation (detailed earlier) would, therefore, be ‘business’ for they were being carried on continuously in an organised manner, with a set purpose (be it illegal) to augment their own resources. MR 71/91 is, therefore, a book of account kept in the course of business.”

4. Interpretation-Words & Phrases-“Regularly Kept”-It is not necessary that an entry must be made in the book of account at the time the related transaction takes place so as to enable the book to pass the test of ‘regularly kept’. The notebook MR 71/91 has been regularly and systematically maintained, and its correctness or otherwise will not affect its admissibility as a relevant fact under S. 34. “……….to ascertain whether a book of account has been regularly kept the nature of occupation is an eminent factor for weighment. The test of regularity of keeping accounts by s shopkeeper who has daily transactions cannot be the same as that of a broker in real estates. Not only their systems of maintaining books of account will differ but also the yardstick of contemporaneity in making entries therein. We are, therefore, unable to subscribe to the view of Mr. Sibal that an entry must necessarily be made in the book of account at or about the time the related transaction takes place so as to enable the book to pass the test of ‘regularly kept’………..we find that MR 71/91 has been regularly and systematically maintained. Whether the system in which the book has been maintained guarantees its correctness or trustworthiness is a question of its probative value and not of its admissibility as a relevant fact under Section 34. The other three books, namely MR 68/91, MR 69/1 and MR 70/91 would not however come within the purview of the above Section, for, even though some of the monetary transactions agreed therein appear to be related to those in MR 71/91, they (the three books) cannot be said to be books of account regularly kept.”

5. Evidence-Admissibility-Probative Value-Corroborative Evidence-Since the notebook MR 71/91 has been held to be a ‘book of account regularly kept in the course of business’, it is admissible as evidence in terms of S. 34 of the Indian Evidence Act. However, S. 34 clearly lays down that even if a book of account is relevant and admissible in evidence, it is not, on its own, sufficient to fasten a liability on any person. There must be independent evidence of the monetary transactions, and the book of account would be in the nature of corroborative evidence only. Since there is no such independent evidence, S. 34 of the Indian Evidence Act will not apply in the facts of the case, and MR 71/91 cannot be accepted as evidence against the respondents. “……….even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person………..even if we proceed on the assumption that the entries made in MR 71/91 are correct and the entries in the other books and loose sheets (which we have already found to be not admissible in evidence under Section 34) are admissible under Section 9 of the Act to support an inference about the formers’ correctness still those entries would not be sufficient to charge Shri Advani and Shri Shukla with the accusations levelled against them for there is not an iota of independent evidence in support thereof………..the statements of the four witnesses, who have admitted receipts of the payments as shown against them in MR 71/91, can at best be proof of reliability of the entries so far they are concerned and not others. In others words, the statements of the above witnesses cannot be independent evidence under Section 34 as against the above two respondents. So far as Shri Advani is concerned Section 34 would not come in aid of the prosecution for another reason also. According to the prosecution case itself his name finds place only in one of the loose sheets (Sheet No. 8) and not in MR 71/91. Resultantly……….Section 34 cannot be pressed into service against him.”

6. Conspiracy-Evidence-Statements-No charge of criminal conspiracy was framed against the Jains, although allegations of conspiracy exist in the charge-sheet. Some of the statements of the witnesses are irrelevant to the charge of conspiracy, while others are not sufficient in themselves to conclude that the respondents conspired together, therefore, since there is no prima facie evidence affording a reasonable ground to believe that these persons had entered into a conspiracy, the requirements of S. 10 of the Indian Evidence Act have not been met and the entries in the documents cannot be used as evidence. I.P.C.: S. 120B. “……….no charge was framed against the Jains for having entered into a criminal conspiracy amongst themselves (even though such was the allegation in the charge sheet). We need not, therefore, consider the materials collected during investigation from that perspective. Indeed, according to the charges of conspiracy all the respondents were parties thereto and the conspiracy existed for the period from February, 1990 to January, 1991. Therefore we have to ascertain whether there is prima facie evidence affording a reasonable ground for us to believe about its such existence………..To persuade us to give an affirmative answer to the above question Mr. Altaf Ahmed drew Sour attention to the statements of Jacob Mathai (L.W.4), Dr. P.K. Magu (L.W.14), Vijay Kumar Verma (L.W.15), Bharat Singh (L.W.16) C.D.D. Reddy (L.W.17), S.R. Choudhary (L.W.18), Ram Prashad (L.W.19), H.P. Guha Roy (L.W.20) and Narendra Singh (L.W.21). On perusal of their statements we find that some of them are irrelevant to the charges of conspiracy with which we are now concerned while others, to the extent they can be translated into legally admissible evidence, only indicate that Shri Shukla was known to the Jain Brothers and had gone to their residence on formal occasions. The above statements cannot be made a reasonable ground to believe that all of them have conspired together. So far as Shri Advani is concerned, we find that no one has even spoken about him in their statements. Since the first requirement of Section 10 is not fulfilled the entries in the documents cannot be pressed into service under its latter part.”

7. Conspiracy-Evidence-Admissions-Admissibility and Relevance-Whether a statement in a book of account is an “admission” (in terms of S. 17), which can be accepted as relevant evidence under S. 21 of the Indian Evidence Act-Difference between “admission” and “confession”-An oral or documentary statement suggesting any inference as to any fact in issue or relevant fact may be proved against a party to the proceeding as “admission”, but only voluntary and direct acknowledgement of guilt is a “confession”. When a confession falls short of actual admission of guilt it may nevertheless be used as evidence against the person who made it or his authorised agent as an ‘admission’ under S. 21. The entries in the seized documents (books of account) are statements which can be regarded as “admissions” but, not being “confessions”, cannot be used against Shri Advani and Shri Shukla. Since a conspiracy presupposes the existence of at least two parties, and since the prosecution has not been able to show prima facie that either Shri Advani or Shri Shukla were parties involved in the alleged Conspiracy, the statements in the books of accounts cannot be proved as admission of the Jains that there was such a conspiracy. “Lastly, comes the question whether the entries are ‘admissions’ within the meaning of Section 17 of the Act so as to be admissible as relevant evidence under Section 21; and if so, as against whom can the entries be proved. In Section 17 admission has been defined to be a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact and which is made by any of the persons, and under the circumstances, mentioned in the subsequent Sections (Sections 18 to 21). Section 18, so far as it is relevant for our present purposes, provides that statements made by a party to the proceeding or by an agent to any such party, whom the Court regards under the circumstances of the case, has expressly or impliedly authorised by him to make them are admissions………..it is manifest that an oral or documentary statement made by a party or his authorised agent, suggesting any inference as to any fact in issue or relevant fact may be proved against a party to the proceeding or his authorised agent as ‘admission’ but, apart from exceptional cases (as contained in Section 21), such a statement cannot be proved by or on their behalf While on this point the distinction between ‘admission’ and ‘confession’ needs to be appreciated………..only voluntary and direct acknowledgement of guilt is a confession but when a confession falls short of actual admission of guilt it may nevertheless be used as evidence against the person who made it or his authorised agent as an ‘admission’ under Section 21……….the entries [which are ‘statements’ as held by this Court in Bhogilal Chunilal……….], being ‘admissions’-and not ‘confession’-cannot be used as against Shri Advani or Shri Shukla. However, as against Jains the statements may be proved as admissions under Section 18 read with Section 21 of the Act provided they related to ‘any fact in issue or relevant fact’. Needless to say, what will be facts in issue’ or ‘relevant facts’ in a criminal trial will depend upon, and will be delineated by, the nature of accusations made or charges levelled against the person indicted…………the prosecution has not been able to make out a prima facie case to prove that Shri Advani and Shri Shukla were parties to such conspiracies, the charges of conspiracy, as framed/sought to be framed, cannot stand also against the Jains, for the simple reason that in a conspiracy there must be two parties. Resultantly, the statements cannot be proved as admission of Jains of such conspiracy.

8. Corruption-Abetment-Since no prima facie case has been made out against Shri Advani or Shri Shukla of their having committed the offence under S. 7 of the Prevention of Corruption Act, the question of Jains’ committing the offence under S. 12 does not arise. “……….Section 12 of the P.C. Act………..reads as under:-

“Punishment for abetment of offences defined in Section 7 or 11.- Whoever abets any offence punishable under section 7 or section 11 whether or not that offence is committed in consequence of that abetment, shall be punishable with imprisonment for a term which shall be not less than six months but which may extended to five years and shall also liable to fine.”

……….Undoubtedly for a person to be guilty thereunder it is not necessary that the offence mentioned therein should have been committed pursuant to the abetment. Since ‘abetment’ has not been defined under the P.C. Act we may profitably refer to its exhaustive definition in Section 107 of the Indian Penal Code. As per that Section a person abets the doing of a thing when he does any of the acts mentioned in the following three clauses:

(i) instigates any person to do that tiling, or

(ii) engages with one or more other person or persons in any conspiracy for the doing of that thing…………. or

(iii) intentionally aids, by any act or illegal omission, the doing of that thing.

So far as the first two clauses are concerned it is not necessary that the offence instigated should have been committed. ……….under the third clause when a person abets by aiding, the act so aided should have been committed in order to make such aiding an offence. In other words, unlike the first two clauses the third clause applies to a case where the offence is committed………..Since in the instant case the prosecution intended to prove the abetment of Jains by aiding (and not by any act falling under the first two clauses averted to above) and since we have earlier found that no prima facie case has been made out against Shri Advani and Shri Shukla of their having committed the offence under Section 7 of the P.C. Act, the question of Jains’ committing the offence under Section 11-and, for that matter, their admission in respect thereof-does not arise, Incidentally, we may mention that the abetment by conspiracy would not also arise……….”

9. Interpretation-Words & Phrases-“Public Servant”-The question whether Members of Parliament come within the definition of ‘public servant’ so as to be liable to prosecution under the Prevention of Corruption Act is left open in view of the fact that no prima facie case has been made out against any of the respondents. “…….Another question of considerable importance that came up for consideration in these appeals was whether members of Parliament come within the definition of ‘public servant’ in the P.C. Act so as to make the respondents liable for prosecution for alleged commission of offences thereunder. We did not deem it necessary to go into that question as we found, proceeding on the assumption that they could be so prosecuted, that no prima facie case was made out against any of the respondents to justify the charges that were framed against the Jains and Shri Shukla (in one case); and were to be framed against Jains and Shri Advani (in the other) pursuant to the order of the trial Court. Accordingly, we dismiss these appeals keeping this question of law open.”