​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Admissibility of Tape-Recorded Evidence Obtained Illegally

Tape-Recorded Conversation as Evidence
​Tape-recorded conversations are recognized as admissible evidence under Indian law provided certain safeguards are satisfied. Courts have treated such recordings as reliable forms of electronic or scientific evidence capable of proving relevant facts in judicial proceedings.
Even where the recording is obtained in an improper or illegal manner, the primary consideration remains whether the evidence is relevant and authentic.

R.M. Malkani v State of Maharashtra
In R.M. Malkani v State of Maharashtra, the Supreme Court held that tape-recorded conversations are admissible in evidence if the following conditions are fulfilled:

1. The conversation must be relevant to the matters in issue.
2. The identity of the voices recorded must be properly established.
3. The accuracy and authenticity of the recording must be proved by eliminating the possibility of tampering, erasure, or mutilation.

The Court observed that a contemporaneous tape-recorded conversation constitutes a relevant fact and is admissible under Section 8 of the Indian Evidence Act, corresponding to Section 6 of the Bharatiya Sakshya Adhiniyam, as part of the doctrine of res gestae.
The Court further compared tape-recorded evidence to a photograph of an incident because both preserve events as they actually occurred. In the case, there was no dispute regarding identification of voices or allegations of manipulation of the tape. The accused was also given full opportunity to test the genuineness of the recording. Therefore, the tape-recorded conversation was held admissible.

Shri N. Sri Rama Reddy v Shri V. V. Giri
In Shri N. Sri Rama Reddy v Shri V. V. Giri, popularly known as the Presidential Election Case, a tape-recorded conversation between a witness and the petitioner was produced in court to impeach the credibility of the witness.
The Supreme Court held that the tape itself constituted primary and direct evidence of what had been spoken and recorded. The Court recognized that tape-recorded statements could be used:

• to corroborate the testimony of a witness,
• to contradict statements made in court,
• to test the veracity of the witness, and
• to impeach the impartiality or credibility of the witness.

Thus, tape recordings were accepted as an important evidentiary tool in judicial proceedings.

Evidentiary Value of Tape Recordings
Tape-recorded evidence is treated as electronic evidence and possesses substantial evidentiary value when authenticity is established. However, courts insist upon safeguards to prevent misuse, fabrication, or manipulation.
The admissibility of such recordings generally depends upon:

• relevancy,
• authenticity,
• proper identification of speakers,
• continuity of custody, and
• proof that the recording has not been altered.

Conclusion
Under the Bharatiya Sakshya Adhiniyam, tape-recorded conversations may be admissible even if obtained improperly, provided they are relevant, genuine, and free from tampering. Judicial decisions such as R.M. Malkani and Sri Rama Reddy establish that tape recordings can serve as substantive evidence and may also be used for corroboration, contradiction, and testing the credibility of witnesses.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Document [Section 2(1)(d)]

Meaning of Document
​Section 2(1)(d) of the Bharatiya Sakshya Adhiniyam defines the term “document.” A document means any matter expressed, described, or otherwise recorded upon any substance by means of letters, figures, marks, or any other method, whether singly or combined, intended to be used for recording that matter. The definition also specifically includes electronic and digital records.
This definition is broad and covers every form of recorded information, whether in physical or electronic form. Therefore, anything capable of permanently recording information may qualify as a document under the BSA.

Inclusion of Electronic and Digital Records
One of the significant changes under the BSA is the express inclusion of electronic and digital records within the definition of a document. Information stored electronically through computers, smartphones, servers, websites, emails, or other digital devices is now clearly recognized as documentary evidence.
This amendment incorporates the interpretation given by the Supreme Court in Arjun Panditrao v. Kailash Kushanrao regarding Section 65B of the Indian Evidence Act, 1872. The purpose is to modernize the law of evidence and adapt it to technological developments.
For example, a video recording stored on a mobile phone qualifies as documentary evidence because it is information recorded upon a substance by electronic means.

Examples of Documents
The BSA recognizes several forms of documents. These include:

1. A writing is a document.
2. Words printed, lithographed, or photographed are documents.
3. A map or plan is a document.
4. An inscription on a metal plate or stone is a document.
5. A caricature is a document.
6. Electronic records such as emails, server logs, documents stored on computers, laptops, or smartphones, text messages, websites, location evidence, and voicemail messages stored on digital devices are also documents.

Thus, both traditional physical records and modern digital records are treated equally under the law.

Importance of the Expanded Definition
The expanded definition ensures that courts can effectively deal with modern methods of communication and storage of information. In contemporary times, many important transactions and communications occur digitally. Recognizing electronic and digital records as documents helps courts admit and evaluate technologically generated evidence.
This wider definition strengthens the legal framework by ensuring that documentary evidence remains relevant in the digital age.

Conclusion
Under Section 2(1)(d) of the Bharatiya Sakshya Adhiniyam, a document includes every form of recorded matter, whether physical or electronic. The inclusion of electronic and digital records marks a major advancement in Indian evidence law and reflects the growing importance of technology in legal proceedings. As a result, modern electronic records such as emails, mobile recordings, server logs, and digital messages are fully recognized as documentary evidence under the BSA.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Meaning and Nature of Evidence

Meaning of Evidence
​The word “evidence” is derived from the Latin term Evidera, which means to discover clearly, ascertain, or prove the facts in question. James Fitz James Stephen defined evidence as “the application of the practical experience of courts to inquire into the truth.”
In legal terminology, evidence signifies the means through which relevant facts are brought before the court. The primary instruments used for this purpose are witnesses and documents. Under the Bharatiya Sakshya Adhiniyam, evidence is broadly divided into oral evidence and documentary evidence.

Oral Evidence
Oral evidence refers to statements made by witnesses before the court regarding matters under inquiry. Such statements may also be given electronically. Therefore, statements made through electronic means are also treated as oral evidence.
This provision is connected with Section 530 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, which permits examination of complainants and witnesses through electronic communication or audio-video electronic means.
Thus, oral evidence includes all statements made before the court, whether physically or electronically.

Documentary Evidence
Documentary evidence refers to documents produced before the court for inspection in support of a case. Under the BSA, electronic and digital records are also included within the definition of documents and are therefore treated as documentary evidence.
A document becomes evidence only when it is produced before the court for inspection. For example, a document voluntarily submitted by a party becomes documentary evidence. However, a handwriting sample obtained from an accused merely for comparison does not become evidence because it is not produced as a document for court inspection.

Deficiency in the Definition of Evidence
The statutory definition of evidence has often been criticized as incomplete because it includes only witness statements and documents. It does not expressly cover several important matters upon which judicial decisions may rest.
The definition excludes matters such as:

• Statements and admissions of parties
• Conduct and demeanor of witnesses
• Personal observations and knowledge of the judge
• Local inspections conducted by courts
• Facts of which courts take judicial notice
• Presumptions drawn by courts

For instance, a memorandum prepared by the court during local inspection forms part of the record and assists the judge in evaluating evidence, yet technically it does not fall within the narrow statutory definition of evidence.

Answer to the Criticism
The criticism is answered through the definition of the term “proved.” The BSA uses the broader expression “matters before it” instead of restricting itself to “evidence.” The term “matter” is wider and includes all materials that the court may properly consider.
In Alia Rai and Others v. Jhingur Tewari, the court observed that the legislature intentionally avoided using the word “evidence” in the definition of proved and instead used the broader term “matter before it.” This allowed courts to consider personal observations and other relevant materials while deciding cases.
Thus, although the statutory definition of evidence appears limited, it is supplemented by the wider concept of “matters before the court.”

Exhaustive Nature of the Definition
The Supreme Court has described the definition of evidence as exhaustive because every kind of evidence can ultimately be classified either as oral evidence or documentary evidence.
Although terms such as best evidence, hearsay evidence, primary evidence, secondary evidence, real evidence, and circumstantial evidence are not expressly mentioned in the definition, they can still be accommodated within oral or documentary evidence.
For example:

• An oral admission becomes oral evidence when testified to by a witness.
• A written admission becomes documentary evidence.
• A confession recorded and signed before the court becomes documentary evidence.
• Physical objects such as blood-stained clothes, weapons, and photographs may also be treated as documentary evidence because they permanently record facts connected with the case.

In Hardeep Singh v. State of Punjab, even a site chart prepared by a judge was treated as documentary evidence.

Conclusion
Evidence under the Bharatiya Sakshya Adhiniyam refers to the means through which relevant facts are brought before the court. It mainly consists of oral evidence and documentary evidence, including electronic and digital records. Although the statutory definition has been criticized for being incomplete, the broader expression “matters before the court” fills this gap. Ultimately, every form of evidence can be reduced to either oral or documentary evidence, making the definition practically comprehensive and exhaustive.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Real and Personal Evidence

Meaning of Real Evidence
​Evidence may be classified as either real evidence or personal evidence. Real evidence refers to any physical or material object produced before the court for inspection. It includes objects that are directly connected with the facts in issue and are examined by the court itself.
Real evidence generally consists of tangible things belonging to the class of material objects. For example, a weapon used in the commission of an offence, blood-stained clothes, fingerprints, or any object connected with the crime may be produced before the court as real evidence. Similarly, where contempt of court is committed in the direct presence of the court, it becomes direct real evidence of the fact.
The court may also conduct local inspection of places or objects, and such inspection forms part of real evidence because the judge personally observes the relevant facts.

Meaning of Personal Evidence
Personal evidence refers to evidence given through human agency. It mainly consists of statements made by witnesses before the court regarding facts perceived by them through their senses.
Such evidence is usually oral in nature and depends upon the testimony of individuals who possess knowledge about the facts in issue. Witnesses explain and prove the existence of relevant facts through their statements before the court.
Thus, while real evidence is derived from material objects, personal evidence is derived from human testimony.

Real Evidence under the Bharatiya Sakshya Adhiniyam
In the draft report of the Select Committee, real evidence was proposed to be included under a separate category called material evidence. However, this category was later omitted.
James Fitz James Stephen justified this omission by stating that introducing a separate category for real evidence would create unnecessary complications in the law of evidence.
As a result, real evidence does not expressly form part of the statutory definition of “evidence” under the BSA.

Reason for Exclusion from Definition of Evidence
The reason why real evidence is not separately included in the definition of evidence is that the court itself becomes the original perceiving witness of such facts. When a material object is produced before the court, the judge directly inspects and observes it.
Further, material objects are usually proved through oral testimony of persons connected with them. Therefore, real evidence indirectly falls within the scope of oral evidence because witnesses speak about the objects produced before the court.
The objects themselves are relevant facts, while the testimony explaining those objects constitutes oral evidence.

Illustration
If a knife alleged to have been used in a murder is produced before the court, the knife itself constitutes real evidence. The witness identifying the knife and explaining its connection with the crime provides personal evidence.
Similarly, if a court directly witnesses contempt committed in its presence, the observation of the judge itself becomes real evidence of the occurrence.

Conclusion
Real evidence and personal evidence are two important forms of proof under the Bharatiya Sakshya Adhiniyam. Real evidence consists of material objects physically produced before the court, whereas personal evidence is provided through human testimony. Although real evidence is not separately defined under the BSA, it remains highly significant because it allows the court to directly inspect objects connected with the facts in issue.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Direct and Circumstantial Evidence

Meaning of Direct Evidence
​Direct evidence refers to the statement of a person who testifies about facts personally perceived by him through his own senses. It is evidence that directly proves a fact in issue without requiring any inference. The actual production of a thing before the court for proof is also considered direct evidence.
The term “direct evidence” is used in two important senses.

Direct Evidence as Opposed to Hearsay Evidence
Direct evidence means evidence personally seen, heard, or perceived by a witness. The witness gives testimony based on his own observation and personal knowledge.
Hearsay evidence, on the other hand, is derivative evidence. It refers to statements made by a witness about what someone else told him regarding a fact. Under Section 55 of the BSA, direct evidence is preferred because it is based on personal perception, whereas hearsay evidence is generally inadmissible.
Thus, direct evidence stands in contrast to hearsay evidence because the witness himself has directly experienced the fact.

Direct Evidence as Opposed to Circumstantial Evidence
Direct evidence also differs from circumstantial evidence. Direct evidence directly establishes the fact in issue, whereas circumstantial evidence proves surrounding facts from which the court draws an inference regarding the main fact.
Circumstantial evidence does not directly prove guilt or liability. Instead, it establishes a chain of connected circumstances which collectively point toward the existence or non-existence of the principal fact.
Therefore, while direct evidence gives immediate proof, circumstantial evidence requires reasoning and inference.

Meaning of Circumstantial Evidence
Circumstantial evidence consists of facts and circumstances surrounding the event in issue. From these surrounding circumstances, the court infers the principal fact.
It seeks to establish the fact in issue indirectly through a series of connected facts. The strength of circumstantial evidence depends upon the completeness and consistency of the chain of circumstances.
Circumstantial evidence itself must also be proved through direct evidence given by persons who actually perceived those circumstances.

Kinds of Circumstantial Evidence
Circumstantial evidence is generally divided into two kinds:
1. Conclusive Circumstantial Evidence
Conclusive circumstantial evidence exists where the connection between the principal fact and the evidentiary fact is a necessary consequence of natural laws. In such cases, the inference becomes almost certain.

2. Presumptive Circumstantial Evidence
Presumptive circumstantial evidence exists where the inference drawn from the evidentiary facts is only probable and not absolutely certain. The court reaches its conclusion on the basis of probability and human conduct.

Illustration
Suppose A is charged with the murder of B.
If witness C states that he personally saw A stabbing B, this is direct evidence because the witness directly perceived the act of murder.
However, if C states that he saw A running away from the place where B’s dead body was found while carrying a blood-stained knife, this becomes circumstantial evidence. In this case, the court must infer from the surrounding circumstances that A committed the murder.
Thus, direct evidence proves the fact immediately, whereas circumstantial evidence proves it through inference from connected facts.

Conclusion
Direct evidence and circumstantial evidence are both important forms of proof under the Bharatiya Sakshya Adhiniyam. Direct evidence directly establishes the fact in issue through personal perception, while circumstantial evidence proves surrounding circumstances from which the court draws logical inferences. Although circumstantial evidence requires careful scrutiny, it can be sufficient for conviction if the chain of circumstances is complete and points only toward the guilt of the accused.

Malaysian Banking Law: Express Terms in the Banker–Customer Relationship
Comprehensive Study of Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail


Case Scenario
Rahman obtained a housing loan from a bank in Malaysia and charged his land to the bank as security. The loan agreement stated that:

• if Rahman defaulted in repayment; or
• resigned from his employment with the bank,

the entire loan would become payable “on demand.”
A few months later, Rahman resigned from his employment and stopped making installment payments. However, the bank did not immediately sue him. Instead, the bank later issued a formal letter demanding repayment.
Several years afterward, the bank applied for an order to sell Rahman’s charged land.
Rahman argued that:

• the bank’s action was already time-barred under the law of limitation because too much time had passed since the default.

The bank argued:

• the limitation period only started when the formal demand letter was issued because the contract expressly required a demand before legal action could be taken.

The issue before the court was:
👉 When did the cause of action actually arise?


Introduction
The banker–customer relationship is contractual in nature. Therefore, where parties expressly agree upon contractual terms, those terms will generally govern their relationship.
One important principle in banking law is:
Express contractual terms agreed between banker and customer will usually prevail because they reflect the intention of the parties.
This principle was clearly illustrated in Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail.


Facts of the Case
The defendant obtained a housing loan from Bank Pertanian Malaysia and charged his land as security.
The Charge Annexure contained several important express terms:

• failure to pay installments constituted default;
• resignation from employment with the bank also constituted default;
• repayment of the outstanding loan would become payable “on demand.”

The defendant resigned from the bank’s employment on 31 July 1983.
The bank later issued a formal letter of demand.
However, the statutory notice of default (Form 16D) was only issued almost eight years later.
The defendant argued:

• the bank’s claim was statute-barred because limitation time started running immediately after default.

The bank argued:

• limitation only began after the formal demand was issued because the agreement expressly required demand before legal proceedings could commence.

Issues Before the Court
The court had to determine:

1. Whether the “on demand” clause required a formal demand before legal action could arise;
2. When the cause of action actually accrued;
3. Whether the bank’s claim was barred by limitation law.

Decision of the Court
The High Court ruled in favour of the bank.
The court held:
✔ where the contract expressly states that repayment becomes payable “on demand,” a formal demand is an absolute requirement before the bank may sue.
Therefore:
✔ time only began running after the demand was made and repayment was refused.
The bank’s claim was therefore NOT time-barred.


Paraphrased Explanation (Q&A Format)


Q1: What was the main issue in this case?
The main issue was:
👉 When does limitation time start running where a banking agreement says repayment is payable “on demand”?
The defendant argued:

• time started immediately upon default.

The bank argued:

• time only started after a formal demand was issued.

Q2: What does “on demand” mean in banking contracts?
The court held:
“On demand” means exactly what it says.
If the agreement expressly requires a demand:
✔ the bank must first issue a formal demand before legal action may begin.
Thus:

• default alone is insufficient;
• demand is a contractual condition precedent.

Q3: Why was the demand so important?
Because the parties themselves expressly agreed that:
✔ repayment only becomes enforceable upon demand.
The court emphasised:
Express contractual terms reflect the intention of the parties and must therefore be respected.


Q4: When did the cause of action arise?
The court held:
✔ the cause of action arose only after:

• the bank issued the demand; and
• repayment was refused.

Therefore:
✔ limitation time only started from the date of demand.


Q5: Why did the defendant lose?
The defendant lost because:

• the agreement expressly required demand;
• the bank complied with the contractual procedure;
• limitation had not expired.

Therefore:
✔ the bank was entitled to enforce the security and obtain an order for sale.


Important Legal Principles Established


1. Express Contractual Terms Prevail
Where banker and customer expressly agree on contractual terms:
✔ those terms govern the relationship.
The courts will usually enforce the parties’ intention.


2. “On Demand” Clauses Must Be Interpreted Literally
If the agreement says repayment is payable “on demand”:
✔ formal demand becomes legally necessary before action may be taken.


3. Demand May Be a Condition Precedent
A demand clause may operate as a condition precedent.
Meaning:
✔ the bank’s right to sue only arises AFTER demand is made.


4. Limitation Time Depends on Contractual Terms
The limitation period does not always begin immediately upon default.
Where the contract requires demand:
✔ limitation begins only after:

• demand is issued; and
• repayment is refused.

Connection with Earlier Banking Law Principles


Link with Joachimson v Swiss Bank Corporation
The court relied heavily on the contractual principles explained in Joachimson.
Atkin LJ emphasised:
✔ banker–customer relationships are governed by contractual intention.
Similarly, in this case:
✔ the court focused on the parties’ express agreement requiring demand.


Link with Banker–Customer Contractual Relationship
This case reinforces the principle that:
Banking relationships are fundamentally contractual.
Therefore:

• express terms;
• implied terms;
• banking agreements

all determine the parties’ legal rights and obligations.


Application to the Case Scenario
Applying the principles from Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail:

• The agreement expressly required demand ✔
• The bank issued a formal demand ✔
• Repayment was refused ✔
• Cause of action only arose afterward ✔

Therefore:
✔ limitation time only started after demand.
The bank’s claim remains valid and enforceable.


Critical Analysis (Simple Understanding)
This case highlights the importance of carefully drafted banking agreements. Courts will usually uphold express contractual terms because they reflect the commercial intention of the parties.
The decision also protects customers from sudden legal action because:
✔ banks cannot immediately sue where the contract requires prior demand.
At the same time, the decision protects banks by ensuring:
✔ limitation periods do not begin prematurely before the bank formally activates repayment obligations.
The case therefore balances:

• contractual certainty;
• fairness between bank and customer;
• commercial practicality.

Solution to the Case Scenario
The bank acted lawfully because:

• the agreement expressly required formal demand;
• the bank complied with that requirement;
• limitation only started after demand was issued.

Therefore:
✔ the bank was entitled to enforce the charge and obtain an order for sale.
Rahman’s argument that the claim was time-barred would fail.


Final Exam Rule (Very Important)
Where a banking agreement expressly provides that repayment is payable “on demand,” a formal demand becomes a condition precedent, and the bank’s cause of action only arises after such demand is made and repayment is refused.

​

Malaysian Banking Law: Nature of the Banker–Customer Relationship — Contractual Relationship


Introduction
The relationship between a banker and a customer is fundamentally contractual in nature. This means that the rights, duties, obligations, and liabilities between a bank and its customer arise primarily from the law of contract.
Almost every banking transaction is based on contractual principles. Whether the bank:

• opens an account;
• grants financing;
• transfers funds;
• issues banker’s drafts;
• provides letters of credit; or
• performs remittance services,

the legal relationship between the parties is governed by contractual obligations.
Thus:
The banker–customer relationship is essentially a legal contract between the bank and the customer.


Nature of the Contractual Relationship
The contractual relationship between a bank and customer may contain:

• express terms; and
• implied terms.

Express Terms
Express terms are terms that are:

• specifically agreed upon;
• written down; or
• clearly communicated between the parties.

Examples include:

• financing agreements;
• account opening forms;
• terms and conditions of banking facilities;
• restructuring agreements.

Implied Terms
Implied terms are obligations that exist even though they are not expressly written.
These terms arise:

• by law;
• banking custom;
• judicial decisions;
• commercial practice.

Examples include:

• the bank’s duty to honour valid cheques;
• the customer’s duty not to facilitate forgery;
• the bank’s duty to exercise reasonable care.

In practice, banking relationships are usually governed by BOTH express and implied terms.


The Leading Case: Joachimson v Swiss Bank Corporation
The most important judicial explanation of the banker–customer relationship was given by Atkin LJ in Joachimson v Swiss Bank Corporation.
This case remains one of the leading authorities in banking law.


Facts of the Case
The case concerned the legal nature of money deposited into a bank account and the obligations owed between the bank and the customer.
The court had to determine:

• whether deposited money remained the customer’s property;
• the nature of the bank’s repayment obligation;
• when repayment becomes due.

Atkin LJ’s Explanation of the Relationship
Atkin LJ explained that when a customer deposits money into a bank:
❌ the bank does NOT hold the money on trust for the customer.
Instead:
✔ the bank becomes the borrower of the money.
The customer becomes:
✔ a creditor of the bank.
Thus:
Money deposited into a bank account legally becomes the bank’s money, while the customer obtains a contractual right to repayment.


Main Principles Established in Joachimson


1. Bank Receives and Collects Money for Customer
The bank undertakes:

• to receive deposits;
• to collect cheques and bills;
• to credit proceeds into the customer’s account.

2. Deposited Money Is Not Held on Trust
Once deposited:
✔ ownership of the money passes to the bank.
The bank may:

• use;
• lend; or
• invest

the money as part of its banking business.
The customer merely acquires:
✔ a contractual right to repayment.


3. Bank Becomes Debtor; Customer Becomes Creditor
The relationship is therefore:
debtor–creditor relationship
The bank owes a debt to the customer equal to the account balance.


4. Repayment Must Be Demanded
The bank is not automatically required to repay money unless:

• the customer makes a demand;
• during banking hours;
• at the branch where the account is maintained.

Thus:
✔ demand is necessary before the bank’s repayment obligation becomes enforceable.


5. Bank Must Honour Valid Written Orders
The bank undertakes to honour:

• cheques;
• payment instructions;
• written orders

provided:
✔ sufficient funds are available.


6. Bank Must Give Reasonable Notice Before Closing Relationship
Atkin LJ also explained that:
✔ a bank should not abruptly terminate the banking relationship without reasonable notice.
This is because outstanding cheques or payment instructions may still exist.


7. Customer Also Owes Duties
The customer owes obligations to the bank as well.
The customer must:

• exercise reasonable care when signing cheques;
• avoid facilitating forgery or fraud;
• comply with banking procedures.

Single and Indivisible Banking Relationship
Although banks and customers may enter into separate transactions such as:

• loans;
• securities sales;
• guarantees;
• remittances,

the overall banker–customer relationship is generally treated as:
one continuous and indivisible contractual relationship.
The banking contract continues:

• until terminated by agreement;
• closure of account;
• insolvency;
• death; or
• other legal means.

How the Contract Is Formed
Like ordinary contracts, banker–customer relationships arise through:

• offer; and
• acceptance.

Usually:

• the customer applies to open an account (offer);
• the bank accepts the application (acceptance).

Once accepted:
✔ the contractual relationship begins.
This principle links with earlier cases discussed regarding:

• when customer status arises;
• immediate creation of banker–customer relationships.

Connection with Earlier Cases


Link with Commissioners of Taxation v English Scottish and Australian Bank Ltd
This case established:
✔ customer relationship may arise immediately once the bank accepts funds.
Joachimson explains:
✔ the legal contractual consequences once that relationship exists.


Link with Woods v Martins Bank Ltd
Woods recognised that:
✔ banking relationships may arise through negotiations and contractual dealings even before formal account opening.
Joachimson supports this by emphasising:
✔ banking relationships are fundamentally contractual.


Link with Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd
Bekalan Sains demonstrates:
✔ once contractual banking obligations exist, BOTH bank and customer must comply with their obligations.
A customer who breaches contractual obligations cannot insist upon continued financing facilities.


Application (Simple Example)
Suppose:

• Ali opens a current account with a bank;
• deposits RM10,000;
• later issues a cheque for RM5,000.

Legally:
✔ the RM10,000 becomes the bank’s money;
✔ the bank owes Ali a debt of RM10,000;
✔ Ali has the contractual right to demand repayment;
✔ the bank must honour Ali’s cheque if sufficient funds exist.
However:
✔ Ali must sign cheques carefully and avoid negligence that may facilitate fraud.


Critical Analysis (Simple Understanding)
The contractual theory of banking is extremely important because it explains:

• why banks can use deposited money for lending;
• why customers are treated as creditors rather than owners of deposited funds;
• why banks owe repayment obligations;
• why banking duties arise from contractual arrangements.

The relationship is therefore not merely social or administrative — it is a legally enforceable commercial contract.
Modern banking services such as:

• online banking;
• electronic transfers;
• digital payments;
• financing facilities

all continue to operate based on these fundamental contractual principles.


Solution to the Case Scenario
Applying the principles from Joachimson v Swiss Bank Corporation:

• Customer deposited money ✔
• Bank accepted the account ✔
• Contractual relationship formed ✔
• Bank became debtor ✔
• Customer became creditor ✔

Therefore:
✔ both parties became legally bound by contractual duties and obligations.


Final Exam Rule (Very Important)
The banker–customer relationship is fundamentally contractual in nature. Once a bank accepts deposits or opens an account, the bank becomes debtor to the customer, while the customer becomes creditor of the bank, and both parties become bound by express and implied contractual obligations.

​

Malaysian Banking Law: Definition of Banker, Banking Business and Customer Relationship


Introduction
Banking law governs the legal relationship between banks and their customers. In order to understand banking law properly, it is necessary first to understand the meaning of important concepts such as:

• bank;
• banker;
• banking business; and
• customer.

These concepts are important because many legal rights, protections, duties, liabilities, and statutory privileges depend upon whether a person or institution is legally recognised as a banker or customer.
Modern banking has evolved significantly from traditional banking activities. Banks today are no longer confined to merely receiving deposits and granting loans. They now provide numerous financial services including:

• credit and charge cards;
• digital banking;
• electronic fund transfers;
• trade financing;
• investments;
• insurance services;
• custodial services;
• mobile payment systems; and
• investment banking services.

Because of this expansion, banks today are often described as financial service providers.


Why Banks Are Called Financial Service Providers
Traditionally, banks mainly:

• accepted deposits;
• honoured cheques; and
• granted loans.

However, modern banks now perform a wide variety of financial activities beyond traditional deposit-taking and lending. These include:

• foreign exchange transactions;
• investment products;
• securities trading;
• electronic payment systems;
• internet banking;
• trade finance;
• wealth management;
• insurance products;
• financing facilities;
• trustee services.

As a result, the modern bank functions as a broad financial intermediary providing multiple financial solutions rather than merely operating as a traditional lender.
Hence:
Modern banks are commonly referred to as financial service providers because they provide diversified financial and investment services beyond traditional banking functions.


Importance of Defining “Bank” and “Banker”
It is important to determine who qualifies as a banker because:
First:
The banker–customer relationship possesses unique legal characteristics different from ordinary commercial relationships.
Second:
Numerous statutes refer specifically to:

• banks;
• bankers; or
• banking business.

Therefore, legal rights and obligations often depend upon whether an institution legally falls within the definition of a banker or bank.


Common Law Definition of a Bank
At common law, there is no single exhaustive definition of “bank” or “banking.”
In Bank of Chettinad Ltd of Colombo v IT Commissioners of Colombo, the Privy Council observed that the meaning of “bank” and “banking” changes over time and differs between countries depending on economic and social conditions.
Similarly, in Bank of New South Wales v Commonwealth, Dixon J explained that banking is impossible to define comprehensively because banking practices evolve from country to country and across different historical periods.
Thus:
The meaning of banking is flexible and evolves according to commercial and social developments.


Banking as Part of Modern Commerce
In Commonwealth of Australia v Bank of New South Wales, the court described banking as involving:

• creation and transfer of credit;
• lending activities;
• investment transactions;
• related financial operations.

In Commercial Banking Co of Sydney Ltd v Federal Commissioner of Taxation, lending money was recognised as the principal business of banks.
However, in Re Securitibank (in liquidation), certain merchant banking activities alone were held insufficient to constitute banking business because the companies lacked essential banking characteristics.


Essential Characteristics of Banking
Australian Approach
In State Savings Bank of Victoria v Permewan Wright & Co Ltd, the court described banks as financial reservoirs receiving deposits and re-lending money.
Isaac J stated that the essential characteristics of banking are:

• receiving deposits repayable upon agreed terms;
• utilising deposited money through lending.

The court also clarified that many banking methods such as:

• cheques;
• current accounts;
• letters of credit;
• telegraphic transfers;
• secured loans

are merely auxiliary features rather than absolutely essential characteristics.


English Approach
In United Dominions Trust Ltd v Kirkwood, the Court of Appeal identified three traditional characteristics of banking:

1. Conducting current accounts;
2. Paying cheques drawn on the bank;
3. Collecting cheques for customers.

Diplock LJ stated that a banker normally accepts money into running accounts where funds are regularly deposited and withdrawn.
Lord Denning MR further explained that banking is easier to recognise than precisely define. Reputation, commercial standing, stability, and probity are also relevant considerations.


Modern Position on Banking Business
Modern banking practices have reduced the importance of traditional cheque-based activities because electronic banking and digital transfers now dominate financial transactions.
Consequently:
Modern banking law increasingly focuses on the substance of financial intermediation rather than traditional cheque functions alone.


Textual and Academic Definitions of Banker
Paget’s Law of Banking
Paget explains that a banker ordinarily:

• accepts current accounts;
• honours cheques;
• collects cheques for customers.

If these services are offered generally to the public, the institution may qualify as a bank.


Halsbury’s Laws of England
Halsbury defines a banker as:
An individual, partnership, or corporation whose predominant business consists of receiving money on deposit or current account and dealing with cheque payments and collections.


Dr HL Hart’s Definition
Dr HL Hart defines a banker as:
A person or company receiving money and collecting instruments for customers while undertaking to honour cheques drawn against available balances.
These definitions are excellent descriptions of traditional deposit banking, although modern banking now extends far beyond those functions.


Statutory Definitions in Malaysia
Under the repealed Banking and Financial Institutions Act 1989 (“BAFIA”), banking business included:

• accepting deposits;
• paying and collecting cheques;
• providing finance.

The Financial Services Act 2013 (“FSA 2013”) largely preserves this definition.
Under section 2(1) FSA 2013:

• a “licensed bank” means a person licensed under section 10 to carry on banking business;
• “banking business” includes:
  • accepting deposits;
  • paying and collecting cheques;
  • provision of finance.

The FSA 2013 also distinguishes between:

• licensed businesses; and
• approved businesses.

Authorised Person vs Approved Person
Under FSA 2013:
Licensed / Authorised Person
A person licensed under section 10 to conduct:

• banking business;
• insurance business;
• investment banking business.

Approved Person
A person approved under section 11 to conduct specific regulated businesses such as:

• payment systems;
• money broking;
• financial advisory;
• insurance broking.

Thus:
Licensed persons conduct core banking or insurance businesses, whereas approved persons conduct specialised regulated financial activities.


Judicial Interpretation of Banking Business
Malaysian and English courts have debated whether all traditional banking functions must exist before an institution qualifies as carrying on banking business.
Some earlier English authorities insisted that:

• current accounts;
• cheque payments;
• cheque collection

were essential.
However, other courts recognised that institutions may still conduct banking business without operating full current account services.
This tension reflects the evolution of banking practices.


Modern Malaysian Position on Banking Business
Malaysian courts generally interpret the statutory definition conjunctively.
In Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd, the court held that:

• merely providing financing alone does not constitute banking business;
• all statutory elements should generally be read together.

Thus:
Providing financing alone does not automatically amount to carrying on banking business requiring a banking licence.


Development Finance Institutions Are Not Necessarily Banks
In Sabah Development Bank Bhd v SKBS (Sabah) Sdn Bhd, the court held that development finance institutions are specialised financial institutions rather than banks.
The court explained that:

• using the word “bank” does not automatically make an institution a bank;
• institutions must actually perform essential banking functions.

The institution in that case mainly provided:

• development financing;
• trade financing;
• long-term capital financing.

It did not operate:

• current accounts;
• cheque payment systems;
• cheque collection services.

Therefore, it was not considered a banker in the traditional sense.


Can Non-Banks Give Loans?
Yes.
Numerous cases confirm that:
Providing loans or financing alone does not necessarily amount to carrying on banking business.
Examples include:

• Vernes Asia Ltd v Trendale Investment Pte Ltd;
• Light Style Sdn Bhd v KFH Ijarah House (Malaysia) Sdn Bhd;
• Koh Kim Chai v Asia Commercial Banking Corporation Ltd.

Thus:
✔ finance companies;
✔ development finance institutions;
✔ investment firms
may provide financing without necessarily being licensed banks.


Meaning of Customer
Unlike “banker,” Malaysian statutes generally do not define “customer.”
The FSA 2013 defines “depositor” but not “customer.”
In the United States, the Uniform Commercial Code defines customer broadly to include:

• account holders;
• persons for whom banks collect items.

Judicial Principles on Customer Relationship
Courts developed various principles determining when banker–customer relationships arise.


Intention to Create Relationship
In Robinson v Midland Bank Ltd, the court held:
Banker–customer relationships arise only where both parties intend to create such relationships.


Account Relationship
In Great Western Railway Co v London and County Banking Co Ltd, Lord Davey stated:
Some form of account relationship is generally necessary before customer status arises.


Duration Not Essential
Earlier courts believed customer relationships required duration.
However, in Commissioners of Taxation v English Scottish and Australian Bank Ltd, the House of Lords held:
Duration is not essential.
A customer relationship may arise immediately upon the first deposit or collection transaction.


Immediate Customer Status
In Ladbroke & Co v Todd, the court held:
A person may become a customer even before drawing any funds.
Similarly, in Oriental Bank of Malaya v Rubber Industry (Replanting Board), a fraudster who opened an account using forged documents was still considered a customer because the bank accepted the account relationship.


Walk-In Customers and Casual Services
Courts distinguish between:

• casual services; and
• actual banking relationships.

In Barclays Bank Ltd v Okenarhe, merely cashing a cheque for a non-account holder did not create customer status.
However, in Kehar Singh all Jasa Singh v Standard Chartered Bank, a walk-in customer purchasing a bank draft was still owed a duty of care because a banking transaction existed.
Thus:
Formal account ownership is not always necessary before banking duties arise.


Banks as Customers
In Importers Co Ltd v Westminster Bank Ltd, one bank collecting cheques for another bank was held to be acting for a customer.
Thus:
A bank itself may become a customer of another bank.


Rights and Obligations in Banker–Customer Relationships
Once the banker–customer relationship exists:

• both parties owe legal obligations.

Banks owe duties such as:

• honouring valid mandates;
• exercising reasonable care;
• maintaining confidentiality.

Customers owe duties such as:

• repayment;
• compliance with financing conditions;
• payment of interest.

Loan Restructuring and Banking Rights
In Bekalan Sains P & C Sdn Bhd v Bank Bumiputra Malaysia Bhd, the court held:
A bank may lawfully withhold further drawdowns where the borrower breaches repayment or restructuring obligations.
The case established that:

• restructuring arrangements are conditional;
• conditions precedent must be fulfilled;
• banks may protect themselves against defaulting borrowers.

Overall Definition of Banker
Based on common law, statutory law, academic writings, and judicial decisions:
A banker is a person, corporation, or licensed financial institution whose primary business involves receiving deposits or funds from the public, managing customer accounts, facilitating payment and collection transactions, providing financing or credit facilities, and conducting financial intermediation services under legal and regulatory supervision.
Modern banking law recognises that banking extends beyond traditional cheque-based functions and now encompasses broader financial service activities.

​

KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Status of Evidence Obtained by Illegal Means

General Position under Indian Law
The general approach of the Indian legal system is that evidence does not become inadmissible merely because it has been obtained illegally or improperly. The Bharatiya Sakshya Adhiniyam primarily focuses on the relevancy of facts rather than the manner in which evidence is collected. Therefore, if evidence is relevant and genuine, it may still be admitted even though it was procured through unlawful or irregular methods.
However, such evidence must not violate constitutional safeguards, especially the protection against self-incrimination guaranteed under Article 20(3) of the Constitution of India.

Relevancy as the Test of Admissibility
Indian courts have consistently maintained that relevancy is the primary criterion for admissibility of evidence. Since the BSA does not expressly prohibit the use of illegally obtained evidence, courts generally admit such material if it assists in determining the truth and its authenticity is established.
The illegality involved in obtaining the evidence may affect the weight or credibility attached to it, but ordinarily does not bar its admissibility.

State (N.C.T. of Delhi) v Navjot Sandhu @ Afsan Guru
In State (N.C.T. of Delhi) v Navjot Sandhu @ Afsan Guru, the Supreme Court examined intercepted telephone conversations obtained allegedly in violation of the Telegraph Act and related rules.
The Court held that non-compliance with the provisions of the Telegraph Act or Rule 419A does not by itself make the intercepted conversations inadmissible in evidence. The Court pointed out that the Telegraph Act does not contain any specific rule excluding such evidence. Therefore, the intercepted telephonic communication remained admissible despite procedural irregularities.

Magraj Patodia v R.K. Birla
In Magraj Patodia v R.K. Birla, a witness who produced certain documents could not satisfactorily explain how he obtained them. Nevertheless, the Supreme Court held that a document procured through improper or illegal means does not become inadmissible if its relevance and genuineness are proved.
Thus, the focus remained on authenticity and relevance rather than the legality of procurement.

Bharati Tamang v Union of India
In Bharati Tamang v Union of India, the Court reaffirmed that relevancy is the true test of admissibility. Unless there is an express or implied constitutional or statutory prohibition, evidence obtained through illegal search or seizure cannot automatically be excluded.
The Court emphasized that Indian law does not generally follow the strict exclusionary rule adopted in some foreign jurisdictions.

Madhu v State of Karnataka
In Madhu v State of Karnataka, the Court held that evidence collected by improper means remains admissible if it is relevant and genuine. However, courts must scrutinize such evidence carefully and ensure that no prejudice has been caused to the accused or affected party.
Thus, the Court adopted a cautious but practical approach.

Jagjit Singh v State of Haryana
In Jagjit Singh v State of Haryana, video recordings of television broadcasts showing the conduct of certain legislators were relied upon in proceedings under the Tenth Schedule relating to disqualification.
The recordings were authenticated by television channels regarding their contents and origin. Since the concerned members failed to specifically challenge the genuineness of the recordings and merely made general denials, the Speaker was justified in relying upon them.
This case demonstrated judicial acceptance of electronic evidence even when questions were raised regarding its procurement.

Yashwant Sinha v CBI (Rafale Review Case)
In Yashwant Sinha & Ors. v CBI, review petitions concerning the Rafale deal were supported by documents published in The Hindu newspaper. The Attorney General argued that the documents had been illegally removed from the Ministry and therefore should not be relied upon.
The Supreme Court rejected this objection and accepted the review petitions. Justice K.M. Joseph observed that under both English and Indian common law, the manner in which evidence is obtained is generally not decisive for admissibility. What primarily matters is the relevance of the material.
The Court clarified that illegally procured evidence may still be considered by courts unless specifically barred by law.

Constitutional Limitation
Although illegally obtained evidence is generally admissible, courts cannot permit evidence gathered in violation of constitutional protections such as Article 20(3), which protects an accused from being compelled to be a witness against himself.
Therefore, evidence obtained through coercion, compulsion, or forced self-incrimination may be excluded.

Conclusion
​Under the Bharatiya Sakshya Adhiniyam, the admissibility of evidence primarily depends upon its relevance and authenticity rather than the legality of the method by which it was obtained. Indian courts have repeatedly held that illegally or improperly collected evidence may still be admitted unless there is a specific constitutional or statutory prohibition. At the same time, courts remain cautious while evaluating such evidence and ensure that constitutional protections and principles of fairness are not violated.

​KembaraXtra – Bharatiya Sakshya Adhiniyam (BSA) – Original and Hearsay Evidence

Original Evidence
​Original evidence refers to evidence given by a witness based on his own personal knowledge and direct perception. It is evidence that the witness has himself seen, heard, perceived, or experienced through his own senses. Such evidence is also known as direct evidence because it comes directly from the person who personally observed the fact in issue.
For example, if a witness states that he personally saw A stabbing B, such testimony is original evidence because it is based upon the witness’s own observation.
Original evidence is generally regarded as more reliable because the witness directly perceived the occurrence and can be cross-examined regarding his observations.

Hearsay Evidence
Hearsay evidence refers to evidence which is not based on the personal knowledge of the witness but is derived from what he has heard from another person. In such cases, the witness merely reports statements or information received from a third person instead of narrating facts personally observed by him.
Thus, hearsay evidence is indirect in nature.
For example, if a witness states, “C told me that he saw A stabbing B,” the statement becomes hearsay because the witness himself did not see the incident and is merely repeating what another person said.

Meaning of the Word “Hearsay”
The word “hearsay” is capable of different meanings and is often considered ambiguous. According to Sir James Fitz James Stephen, the term has three distinct meanings:

1. It means whatever a person is heard to say.
2. It means whatever a person declares on information received from someone else.
3. Sometimes it is used almost synonymously with irrelevant evidence.

Therefore, hearsay evidence generally means evidence where a witness reports not what he himself perceived through his own senses, but what he learned through another person.

Nature of Hearsay Evidence
In hearsay evidence, the actual source of knowledge is some third person who is not before the court. Since that original source cannot usually be cross-examined, hearsay evidence is considered less trustworthy and is generally inadmissible.
The rule against hearsay is based on the principle that evidence should ordinarily be direct and capable of being tested through cross-examination.
However, certain exceptions to the hearsay rule exist under the Bharatiya Sakshya Adhiniyam, such as dying declarations, admissions, confessions, and statements forming part of res gestae.

Difference between Original and Hearsay Evidence
Original evidence is based on the direct personal knowledge of the witness, whereas hearsay evidence is based upon information received from another person.
Original evidence comes from immediate observation through the witness’s own senses, while hearsay evidence depends upon repetition of statements made by others.
Original evidence is generally admissible and carries greater evidentiary value, whereas hearsay evidence is ordinarily inadmissible unless it falls within recognized exceptions.

Conclusion
Under the Bharatiya Sakshya Adhiniyam, original evidence is preferred because it is direct, reliable, and capable of verification through cross-examination. Hearsay evidence, being indirect and dependent upon third-party statements, is generally excluded due to the risk of inaccuracy or fabrication. Nevertheless, the law recognizes certain exceptions where hearsay evidence may become admissible in the interest of justice.