1. What is the Ordinary Course of Business Exception?

Under the law of evidence (for example, Section 34 of the Indian Evidence Act, 1872 and similar principles in common law jurisdictions), entries made in the regular course of business are considered relevant and admissible, even though they may technically fall under hearsay.

👉 In simple terms:
Records made routinely during business activities are presumed to be reliable because they are made systematically, contemporaneously, and without motive to lie.

🔹 2. Legal Basis (India)

📘 Under Indian Evidence Act, 1872

Section 34:

• Entries in books of account, regularly kept in business, are relevant.
• BUT: They cannot alone be sufficient to charge a person with liability.

🔹 3. Essential Conditions

For the exception to apply, the following must be satisfied:

✅ (1) Entry must be in a book/record

• Includes ledgers, registers, electronic records, etc.

✅ (2) Made in the regular course of business

• Routine, systematic practice.

✅ (3) Made contemporaneously

• At or near the time of the transaction.

✅ (4) By a person with knowledge or duty

• The person recording must have personal knowledge or a duty to record.

✅ (5) Books must be regularly maintained

• Not created for litigation purposes.

🔹 4. Rationale Behind the Rule

The exception exists because:

• Businesses rely on accurate records for survival
• Regular entries reduce chances of fabrication
• Lack of motive to falsify routine transactions

🔹 5. Important Case Laws (India)

🧑‍⚖️ 1. Chandradhar Goswami v. Gauhati Bank Ltd.

🔍 Facts:

• Bank relied on account books to recover money.

⚖️ Held:

• Entries in account books are relevant but not sufficient alone to fasten liability.

📌 Principle:

• Corroboration is necessary.

🧑‍⚖️ 2. Central Bureau of Investigation v. V.C. Shukla (Jain Hawala Case)

🔍 Facts:

• Diaries containing financial entries were used as evidence.

⚖️ Held:

• Loose sheets/diaries are not “books of account” under Section 34.

📌 Principle:

• Only regularly maintained books qualify.

🧑‍⚖️ 3. Hiralal Mahabir Prasad v. Mst. Bibi Jaini

🔍 Held:

• Entries alone are insufficient without independent evidence.

📌 Principle:

• Reinforces requirement of corroboration.

🧑‍⚖️ 4. Raja Ram v. Jai Prakash Singh

🔍 Held:

• Business records must be shown to be regularly and systematically maintained.

🔹 6. Position in Other Jurisdictions

🇺🇸 United States

Under Federal Rules of Evidence (Rule 803(6)):

• Business records are admissible if:
  • Made at or near the time
  • By someone with knowledge
  • Kept in regular course of business
  • Regular practice to make such records

🇬🇧 United Kingdom

Recognized under statutory reforms and common law:

• Focus on reliability and routine nature of records

🔹 7. Types of Records Covered

• Account books (ledger, cash book)
• Bank records
• Invoices and receipts
• Payroll records
• Electronic records (ERP systems, emails, etc.)

🔹 8. Limitations of the Exception

❌ Not sufficient alone to impose liability
❌ Must be corroborated
❌ Loose papers/irregular records excluded
❌ Suspicious or manipulated entries rejected

🔹 9. Difference from Hearsay Rule

🔹 10. Key Takeaways

• Business records are admissible but not conclusive
• Must be:
  • Regular
  • Systematic
  • Contemporaneous
• Corroboration is essential
• Courts are cautious about fabricated or irregular entries