Ex Parte Defendant Cannot Escape Liability When Loan Receipt Is Admitted: Delhi HC

The Delhi High Court has overturned a Trial Court decree that dismissed a recovery suit on technical grounds, ruling that a defendant's failure to lead evidence after admitting the receipt of funds is fatal to their defense of an 'amicable settlement.' In a sharp rebuke of an overly technical approach toward bank statements, the court held that formal proof of electronic records becomes secondary when the transaction itself is not effectively disputed in the pleadings.

A Single Judge bench of Justice Amit Bansal was hearing a Regular First Appeal filed under Section 96 read with Section 151 of the Code of Civil Procedure, 1908. The appeal challenged a 2015 judgment of a Trial Court which had dismissed a suit for the recovery of Rs. 10,00,000/- despite the defendant having been proceeded ex parte and the plaintiff's testimony remaining unrebutted.

Key Takeaways

Admissions Overpower Technicalities

If a defendant admits to receiving a sum of money in their written statement, the need for stringent proof of bank statements under Section 65-B of the Indian Evidence Act, 1872 or the Bankers’ Book Evidence Act is significantly diminished.

Burden of Proof on Special Defenses

When a party admits receipt of funds but claims an 'adjustment' or 'settlement,' the burden of proof shifts entirely to them to prove that specific settlement through evidence.

Consequences of Abandoning Proceedings

Failing to cross-examine a plaintiff or enter the witness box after filing a written statement allows the court to draw an adverse inference and treat the plaintiff's deposition as unrebutted truth.

Court Observations on Evidentiary Standards

The High Court found that the Trial Court erred in de-exhibiting the statement of account on the grounds that the original was not produced or proved in accordance with law. The Court noted that since the respondent, in her written statement, did not deny the receipt of Rs. 10,00,000/- but merely claimed it was to be adjusted against another transaction, the technical requirement of proving the bank statement was redundant.

Regarding the rejection of the TDS Certificate (Form 16A), the Court observed that although it was issued in the name of a proprietary concern, the document explicitly recorded the defendant as the 'deductor.' The Court, in its reasoning, observed: "In the opinion of this Court, the proving of the bank statement would have been necessary if the respondent had denied the receipt of the sum of Rs.10,00,000/- from the appellant. The respondent in her written statement, did not deny the receipt of Rs.10,00,000/- from the appellant and took the defense that the said amount was to be adjusted towards another transaction between the parties."

The Court further highlighted that the respondent's failure to reply to the legal notice and her subsequent disappearance from the proceedings after filing the written statement left the appellant's testimony unchallenged.

Directions Issued

The Court has following directions:

"The impugned judgment and decree dated 28th November, 2015 passed by the Trial Court is erroneous and unsustainable and is consequently set aside. Resultantly, the suit is decreed in favour of the appellant and against the respondent for a sum of Rs. 10,00,000/- along with interest @ 6% per annum, from the date of filing of the suit till the date of realization. Decree sheet be drawn accordingly."

Ratio

When a defendant admits the receipt of a specific sum but pleads a subsequent oral settlement or adjustment against a separate business transaction, the onus lies strictly on the defendant to prove such settlement. In the absence of cross-examination of the plaintiff and failure of the defendant to lead evidence, the plaintiff’s unrebutted testimony supported by bank entries and TDS certificates even if marked as copies is sufficient to decree a suit for recovery.

Background

The appellant, a proprietor dealing in kiryana items, claimed to have advanced a 'friendly loan' of Rs. 10,00,000/- to the respondent via banking channels in February 2012. When the respondent failed to repay the amount despite a legal notice, a recovery suit was filed. The respondent filed a written statement contending that the money was not a loan but part of a business deal involving the purchase of cloves, which was allegedly settled in 2013 through an adjustment of goods.

However, after filing the statement, the respondent stopped appearing and was proceeded ex parte. The Trial Court dismissed the suit, relying on precedents like Gopal Krishnaji Ketkar v. Mohamed Haji Latif & Ors. ( "AIR 1968 SC 1413": 1968 CaseBase(SC) 30) and Trimbak Narayan Hardas v. Babu Lal Motaji, holding that the plaintiff failed to prove the bank statements as per Section 65-B of the Indian Evidence Act, 1872 and failed to properly identify the borrower due to clerical errors in the affidavit of evidence. The High Court set aside this 'unduly technical' approach, holding that the admission of the transaction in the written statement was the highest form of proof.

Case Details:
Case No.: RFA 68/2016 & CM APPL. 81343/2025
Case Title: PREM PRAKASH MODI v. MADHU GOEL
Appearances:
For the Petitioner(s): Mr. Hitender Kapur and Mr. Yatin Dhawan, Advocates.
For the Respondent(s): Mr. R.K. Rathore, Mr. Rakesh Chander Agrawal and Mr. Kartik Kumar Agarwal, Advocates.

Source: 2026 CaseBase(DEL) 7509