Case at a Glance
A kirana trader sued to recover Rs 10 lakh he said he had given as a friendly loan in February 2012. The trial court dismissed the suit in 2015, faulting him for not proving his computer-generated statement of account under Section 65B and for vague pleadings. The Delhi High Court reversed. Since the defendant never denied receiving the money and instead claimed it had been adjusted against a separate clove transaction, formal proof of the bank statement was unnecessary, his testimony stood unrebutted, and the adjustment defence failed for want of evidence. The suit was decreed for Rs 10,00,000 with 6% interest from the date of filing.
The appellant, proprietor of a kirana trading firm, said he advanced Rs 10,00,000 to the respondent as a friendly loan in February 2012, that interest was paid for an initial period and then stopped, and that his demand for repayment in September 2013 and legal notices in October and November 2013 went unanswered. He relied on a bank statement showing a Rs 10,00,000 debit and on a Form 16A (TDS certificate) dated 30 June 2012. He filed a recovery suit on 12 December 2013. The respondent filed a written statement but later stopped appearing and was proceeded ex parte on 6 February 2015.
In her written statement, the respondent denied a loan and called the dealings commercial: she said a firm had bought 50 bags of cloves stored at a cold storage in Sonipat that were withheld, and that in 2013 the parties settled by adjusting the outstanding amount against the value of the cloves. On 28 November 2015 the trial court dismissed the claim, holding that the computer-generated statement of account was not proved under Section 65B of the Evidence Act, that the Form 16A was issued by a non-party, and that the pleadings were vague and inconsistent.
The Key Question Before the Court
Where a defendant does not deny receiving the money but pleads that it was adjusted against another transaction, must the plaintiff still formally prove his bank statement, and who bears the burden of proving the adjustment?
An Admitted Receipt Shifts the Burden to the Borrower
Justice Amit Bansal noted that the respondent never cross-examined the appellant, so his testimony stood unrebutted, and observed: “There is no reason to disbelieve the deposition of appellant/plaintiff.” More importantly, “the proving of the bank statement would have been necessary if the respondent had denied the receipt”. She had not; her defence was that the amount had been adjusted against a different deal. Receipt of the money was therefore established even if the bank statement were disregarded. The Form 16A, which named the respondent as the deductor, also went unchallenged in cross-examination.
Having set up an adjustment, the respondent had to prove it: “it was incumbent upon the respondent to enter the witness box and to lead evidence” in support. She led none, so the trial court should have rejected that defence outright. The Court concluded that “the appellant had discharged its onus to prove that the sum of Rs.10,00,000/- was advanced”, and held the trial court’s judgment and decree erroneous and unsustainable.
What the Court Actually Held
- The appellant’s evidence went unrebutted because the respondent did not cross-examine him.
- Since the respondent did not deny receiving the money, formal proof of the bank statement under Section 65B was not necessary to establish the payment.
- A defendant who admits receipt but pleads adjustment against another transaction must prove the adjustment; the respondent led no evidence and the plea failed.
- The trial court’s decree of 28 November 2015 was set aside, and the suit was decreed for Rs 10,00,000 with interest at 6% per annum from the date of filing till realisation.
Why This Judgment Matters
- It clarifies when technical proof of electronic records is unnecessary because the underlying fact is not in dispute.
- It places the burden squarely on a borrower who admits receipt but claims settlement or set-off.
- It is useful for the many informal ‘friendly loan’ recovery suits filed between traders and acquaintances.
What Should Advocates Take Away From the Judgment?
For Lenders
- Pay by bank transfer and keep TDS or interest records; they help prove the transaction.
- If the borrower admits receiving the money, the focus shifts to whether he proves repayment or adjustment.
For Counsel
- Read the written statement for implied admissions of receipt before spending effort on Section 65B proof.
- Defendants pleading adjustment or set-off must step into the witness box and prove it.
- Unrebutted testimony carries weight; failure to cross-examine can be decisive on appeal.
Key Takeaways
- A plea of adjustment admits receipt and must be proved by the defendant.
- Section 65B proof is needed only for facts actually in dispute.
- Unchallenged testimony can be accepted as proof.
- The decree carries 6% interest from the date of the suit.
Frequently Asked Questions
Why did the lender lose in the trial court?
The trial court held that his computer-generated statement of account was not proved under Section 65B, the TDS certificate was issued by a non-party, and his pleadings were inconsistent.
Why did the High Court reverse?
Because the borrower never denied receiving the money and instead claimed an adjustment, which she did not prove; the lender’s unrebutted testimony and the unchallenged Form 16A were enough.
What interest was awarded?
Interest at 6% per annum on Rs 10,00,000 from the date of filing of the suit until realisation.
Conclusion
After more than a decade, the lender has a decree. The judgment shows that a borrower who admits taking money but pleads a settlement must prove it, and that technical objections about electronic records lose force when the payment itself is not in dispute.
Practical takeaway: In loan recovery suits, look for admissions of receipt in the defence; they shift the burden onto the borrower.
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