Bombay High Court
M/S. Jaimin Jewelery Exports Pvt. ... vs The State Of Maharasthra And Anr on 14 March, 2017
Bench: Anuja Prabhudessai
NI Actrevn432_2015.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL REVISION APPLICATION NO.432 OF 2015
1. M/s. Jaimin Jewelery Exports Pvt.
Ltd. A company incorporated under the
Companies Act, 1956.
2. Mr. Gautam Mehta
Age 60 years adult Indian Inhabitant
permanently residing at 52, Marble
Arch, G. Deshmukh Marg,
Peddar Road, Mumbai-400 026
3. Jaimin G. Mehta
Age 30 years, adult Indian Inhabitant
Permanently residing at
52, Marble Arch, G. Deshmukh Marg,
Peddar Road, Mumbai-400 026 ...Applicants
Versus
1. The State of Maharashtra
2.SBI Global Factors Ltd.,
A Company incorporated under The
Companies Act 1956
Having its registered office at
Metropolitan Building,
6th Floor, Bandra Kurla Complex,
Bandra (E), Mumbai 400 051. ...Respondents
.....
Mr. I.S. Thakur, with Mr. Sunil Kumar Rathod, Mr. Ravi S. Kotian
and Mr. C.S. Patil for the Applicants.
Mr. Yashpal Thakur for the Respondent No.2
Mr. J.H. Ramugade, APP for the Respondent No.1-State.
CORAM : SMT. ANUJA PRABHUDESSAI, J.
JUDGMENT RESERVED ON : 15th FEBRUARY, 2017.
JUDGMENT PRONOUNCED ON :14th MARCH, 2017.
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ORAL JUDGMENT :
By this revision application filed under Section 397 of the Code
of Criminal Procedure, the Applicants herein have challenged the judgment
and order dated 28th August, 2015 whereby the learned Sessions Judge
dismissed the Criminal Appeal No.338 of 2012 and thus, confirmed
conviction and sentence of the aforesaid Applicants under section 138 r/w.
141 of the Negotiable Instruments Act.
2. The Applicants are the original accused and shall be hereinafter
referred to as 'the accused' whereas the Respondent No.2 herein is the
complainant in C.C. No.821 of 2010 filed before the Metropolitan
Magistrate, 12th Court, Bandra and shall be hereinafter referred to as the
Complainant-company.
3. The Complainant-company was earlier known as Global Trade
Finance Facility. Pursuant to the order dated 15 th January, 2010 passed by
this Court in Company Petition, the Global Trade Finance Facility was
amalgamated with SBI Factors and Commercial Services Pvt. Ltd. As a
consequence of the amalgamation, the name of the Company was changed
to SBI Global Factors Ltd.
4. M/s. Jaimin Jewellery Exports Pvt. Ltd.(Accused No.1) was
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earlier a partnership firm with accused Nos.2 and 3 as its partners. The said
partnership firm was registered and incorporated under the Companies Act,
1956 as a private limited company on 20 th March, 2008. The accused Nos.2
and 3 are the Directors and authorised signatories of the accused No.1-
Company.
5. The case of the Complainant-company is that the accused No.1
had approached the Complainant-company for Trade Finance Facility. The
Complainant-company, considered the request of the accused No.1 and
sanctioned the Trade Finance Facility on 1st November, 2007. On 3rd
November, 2007 the Complainant-company and M/s. Jaimin Jewellery
Exports executed Global Accounts Receivable Agreement for Trade Finance
Facility. The accused No.2 stood as a guarantor and issued a letter of
guarantee dated 5th November, 2007 in favour of the Complainant-company.
Since M/s. Jaimin Jewellery Exports, a partnership firm was registered and
incorporated under the Companies Act, 1956 as a private limited Company,
a fresh Global Accounts Receivable Agreement for Trade Finance Facility(ies)
dated 26th November, 2008 was executed between the Complainant-
company and the accused No.1 herein.
6. The Complainant-company stated that accused in discharge of
their legally enforceable liability and debt towards repayment of above
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referred Trade Finance Facility(ies) due and payable to the Complainant-
company, issued five cheques. The details of which are as under :-
Sr. No. Cheque No. Cheque Date Amount in Rupees
1 747001 31/10/2009 1,00,00,000/-
2 747002 31/10/2009 1,00,00,000/-
3 747003 31/10/2009 1,00,00,000/-
4 747004 31/10/2009 1,00,00,000/-
5 747005 31/10/2009 50,00,000/-
7. The said cheques were drawn on Canara Bank, Overseas Branch,
Mumbai-400 021 as part payment in favour of the Complainant-company
and were duly signed by accused No.2 on behalf of accused No.1-Company.
8. The Complainant-company presented the cheques at Serial No.1
for encashment on 15th March, 2010. The cheque at Serial Nos. 2 and 3
were presented on 17th March, 2010 and 19th March, 2010, respectively
whereas the cheques at Serial Nos.4 and 5 were presented for encashment
on 20th March, 2010. All the said cheques were dishonoured for insufficient
funds.
9. The Complainant-company by statutory notice dated 13th April,
2010 called upon the accused to effect the payment within 15 days from the
receipt of the notice. The said notice was duly served upon the accused. By
reply dated 4th May, 2010, the accused denied their liability and claimed that
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the cheques were issued as security. The Complainant-company vide letter
dated 20th May, 2010 denied the contents of the said reply. The accused,
having failed and neglected to pay the cheque amount, the Complainant-
company filed a complaint under section 138 r/w. 141 of the Negotiable
Instruments Act (for short 'NI Act'). It was registered as C.C.
No.820/SS/2010.
10. The plea of the accused was recorded. The accused pleaded not
guilty and claimed to be tried. The Complainant-company in support of its
case examined CW-1 Shri Vimukt Nayak, Senior Officer, Legal who was a
authorised representative of the Complainant-Company. The Complainant-
company also examined CW2 Mr. Mahesh Malunjkar, Senior Officer, Legal,
and CW-3 Mr. Santosh Sawant, Senior Manager, Client Relationship and IT.
The statements of the accused were recorded under Section 313 of the Code
of Criminal Procedure. The defence of the accused as can be gathered from
the reply to the statutory notice as well as the tenor of the cross examination
is that the said cheques were not issued towards legally enforceable debt,
but the blank signed cheques were issued as collateral security of Trade
Finance Facility(ies).
11. The learned Magistrate after considering the evidence adduced
by the Complainant-company as well as the defence set up by the accused
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held that the evidence adduced by the Complainant-company proves that
Jaimin Jewellery Exports Pvt. Ltd., which was initially a partnership firm had
availed Trade Finance Facility from the complainant Company. The learned
Magistrate further held that the subject cheques were undisputedly signed
by the accused No.2. The learned Judge further held that the accused have
failed to prove the defence set up by them and have therefore, failed to
rebut the presumption under Section 118(a) and Section 139 of the NI Act.
12. The learned Magistrate therefore, held the accused guilty of the
said offences and sentenced the accused Nos.2 and 3 to suffer simple
imprisonment for a period of one year and further directed the accused Nos.
1 to 3 to pay compensation to the tune of Rs.4,56,00,000/- to the
Complainant-company within a period of three months from the date of the
judgment.
13. The said judgment was challenged in Criminal Appeal No.338 of
2012, which was dismissed by the learned Sessions Judge by judgment and
order dated 20th August, 2014. The accused have filed this revision
application challenging the legality and correctness of the said orders.
14. Heard the learned counsel for the accused, the learned APP for
the Respondent No.1-State and the learned counsel for the Complainant-
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company.
15. Mr. I.S. Thakur, the learned counsel for the accused has
submitted that the complaint under Section 138 of the NI Act is filed by the
Power of Attorney. He has submitted that there are no averments in the
complaint that the Power of Attorney had knowledge of the transaction as he
had joined the Complainant-company at a much later stage. He contends
that the evidence of CW1 reveals that he had no knowledge of the
transaction. Relying upon the decisions of the Apex Court in A.C.
Narayanan & Anr. Vs. State of Maharashtra & Ors. 2014 AIR 630, and
A.C. Narayanan & Anr. Vs. State of Maharashtra & Ors.(2015) AIR SC
1198 he submits that CW1 Vimukt Nayak, the Power of Attorney was not
competent to file a complaint and depose on behalf of the Complainant-
company.
16. The learned counsel for the accused has submitted that the
cheques were issued by the partners of the erstwhile partnership firm and
not by the directors of the accused No.1. He submits that the Trial Court has
erred in assuming that the accused No.1-company was a drawer of the said
cheques. He has submitted that the accused No.1-Company was not a
drawer of the cheque and was not liable to pay the amount quantified in the
cheques. Hence, the accused Nos.2 and 3, who are the Directors of the
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accused No.1-company cannot be held vicariously liable for the alleged
offence.
17. Mr. I.S. Thakur, the learned counsel for the accused has further
submitted that the fact that the cheques were issued by a partner indicates
that the cheques were issued as security and were not intended to be
presented for encashment. He has submitted that the Complainant-company
herein had filed Summary Suit in respect of the same cause of action and
that the amount claimed in the said suit is less than the cheque amount. He
has submitted that except the statement of account at Exh. 'FF' the
Complainant-company had not produced any other documents to show that
the accused were liable to pay the cheque amount. He has submitted that
the provisions of Section 65 B of the Indian Evidence Act are not complied
with and statement at Exh. 'FF' itself is not admissible in evidence. He has
further stated that since the cheque is more than the actual liability the
provisions of Section 138 of the NI Act are not applicable.
18. Per contra Mr. Yashpal Thakur, the learned counsel for the
Complainant-company has submitted that the accused herein have been
convicted by the Trial Court and the conviction and sentence has been
upheld by the Appellate Court. He contends that in exercise of the revisional
powers the Court cannot reappreciate the evidence and cannot interfere
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with the findings unless the same are perverse and illegal.
19. The learned counsel for the Complainant-company has
submitted that the decision of the Apex Court in A.C. Narayanan is not
applicable to the facts of the present case as the issue involved in the said
judgment was with regard to authorisation given on behalf of individual
person to appear and depose before the Court. Whereas in the present case
the authorisation is given by the Complainant-company, which is a juristic
person. He has stated that the transaction between the Complainant-
company and the accused was based on documentary evidence. He has
further submitted that CW1- Vimukt Nayak who was duly authorised by the
Complainant-company had derived the knowledge on the basis of the
various documents which were executed by the accused and the
Complainant-company. He has submitted that the CW1 Vimukt Nayak
possessed requisite knowledge with regard to the said transaction and hence
he was competent to file the complaint and depose on behalf of the
Complainant-company.
20. Shri Yashpal Thakur, the learned counsel for the Complainant-
company has submitted that the complaint was filed in the year 2010 and
the judgment was delivered by the Trial Court on 13.3.2012. He submits
that the law laid down by the Apex Court in A.C. Narayan (supra) by
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judgment delivered on 13.9.2013 was not in force as on the date of the
impugned judgment dated 13.3.2012.
21. The learned counsel for the Complainant-company therefore
contends that the principles laid down by the Apex Court in A.C. Narayanan
(supra) cannot be made applicable retrospectively, when the the judgment
does not state either expressly or by implication that the same would be
applicable retrospectively. He submits that the said judgment, which affects
substantive rights of the parties, would apply prospectively.
22. He has submitted that in Dashrath Rupsingh Rathod Vs State
of Maharashtra (2014) 9 SCC 129, the Apex Court while dealing with the
issue of territorial jurisdiction with regard to filing of the complaint under
Section 138 of the NI Act had expressly observed that the judgment would
apply retrospectively but would not affect the cases where recording of
evidence had commenced as envisaged under section 145 (2) of the NI Act.
He submits that since the judgment in A.C. Narayanan (supra) is silent about
prospective and retrospective application of law, the judgment would apply
prospectively.
23. The learned counsel Shri Yashpal Thakur has further submitted
that in Ms Mandavi Cooperative Bank Ltd. Vs. Nimesh B. Thakur AIR
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2010 SC 1402 the Apex Court, whilst considering whether the newly
inserted provisions under sections 143 to 147 would apply prospectively or
retrospectively held that these provisions are not substantive but are
procedural in nature and hence, would apply to all pending cases. He has
further submitted that in Smt. Dayawati and Anr. Vs. Indrajit and Anr.
1963 SC 143 the Apex Court has observed that a Court of Appeal cannot
take into account a new law brought into existence after the judgment
appealed from has been rendered because the rights of the litigants in an
appeal are determined under the law in force at the date of original
proceedings. It has been held that a new law ought to be prospective and
not retrospective in its operation. In the light of the ratio laid down in the
aforesaid decision, the learned counsel Shri Yashpal Thakur submits that the
decision in the case of A.C. Narayanan (supra) which affects substantive
rights, cannot be made applicable retrospectively.
24. Mr. Yashpal Thakur has further submitted that the law laid down
by the Apex Court in A.C. Narayanan (supra) has been considered by this
Court in Girish Jaggal v/s. Mallikarjin Shippings Pvt. Ltd. 2015 ALL M.R.
(CRI) 68. It has been held in Girish Jaggal (supra) that the complaint
cannot be dismissed merely because there are no averment in the complaint
to the effect that the witness has personal knowledge of the transaction.
The learned counsel for the Complainant-company has submitted that the
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evidence of CW1-Vimukt Nayak that he has derived knowledge of the
transaction on the basis of the documents has gone unchallenged. He
therefore, urges that neither the complaint can be dismissed nor the
evidence of CW1-Vimukt Nayak, who is an authorised representative of the
Complainant-company can be discarded for want of averments in the
complaint.
25. The learned counsel for the Complainant-company has further
submitted that the accused have not disputed having availed Trade Finance
Facilities. He has submitted that the evidence adduced by the Complainant-
company has gone unchallenged. He has drawn my attention to the various
documents including the judgment in Summary Suit and has submitted that
the said documents clearly establish the liability of the accused. He has
submitted that the accused have admitted having issued the subject cheques.
Relying upon the decision in Rangappa Vs. Sri Mohna
Manu/SC/0376/2010 he submits that the onus was on the accused to
rebut the presumption under Section 139 of the NI Act. He submits that the
only defence raised by the accused was that the cheques were issued as a
security. He contends that the fact that the cheques were issued as a
security would not absolve the accuse of the liability under Section 138 of NI
Act. He has relied upon the judgment of this Court in Sai Auto Agencies
Vs/. Shaikh Yusuf Shaikh Umar Manu/MH/0126/2010, wherein it is held
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that the cheque given as a security, if dishonoured, can be the subject matter
of a prosecution under Section 138 of the NI Act.
26. The learned counsel for the Complainant-company has further
submitted that even though the accused have not adduced any evidence to
show that the said cheques were issued towards security or that the said
cheques were never intended to be presented for encashment. The evidence
adduced by the Complainant-company coupled with the fact that the
accused have not rebutted the presumption is sufficient to hold that the
cheques were issued towards discharge of existing liability.
27. The learned counsel for the Complainant-company has
submitted that even otherwise filling up of the amount in a blank cheque is
permissible under Section 20 of the NI Act and filling up of blank cheque
does not amount to alteration under Section 87 of the NI Act. He has placed
reliance on the decision of the Court in Purshottam MAniklal Gandhi Vs.
MAnohar K. Deshmukh 2007 (4) Bom CR 404. He has next contended that
the Complainant -company had continued the business of the partnership
firm and hence would not be absolved of the liability of the partnership firm.
He has relied upon the decision of Allahabad High Court Ram Chandra
Agarwal Vs. State of UP 2014 ALL MR (CRI) Journal 312. He has submitted
that the Complainant-company has established all the essential ingredients
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of the offence punishable under Section 138 of the NI Act. The order of the
Trial Court as well as the Appellate Court is neither perverse nor illegal and
hence, the same cannot be interfered with.
28. I have perused the records and considered the submissions
advanced by the learned counsel for the accused and the learned counsel for
the Complainant-company. It is not in dispute that the Complainant-
company was earlier known as Global Trade Finance Limited. By order
dated 15th January, 2010 at Exhibit 'A' the same has been amalgamated with
the SBI Factors and Commercial Services Pvt. Ltd. It is also not in dispute
that the accused No.1, was earlier a partnership firm and that the accused
Nos.2 and 3 were its partners. On 20 th March, 2008, the said partnership
firm had been incorporated under Companies Act as a private limited
company with accused Nos.2 and 3 as its Directors.
29. The accused were prosecuted for offences punishable under
Section 138 read with 141 of the Negotiable Instruments Act for dishonour
of five subject cheques, which according to the Complainant-company were
issued towards repayment of Trade Finance Facilities availed by the accused.
The said complaint was filed by Mr. Vimukt Nayak, the Power of Attorney of
the Complainant-company based on the resolution dated 26.3.2010 (Exh-C)
passed by the Board of Directors of the Complainant-company. Since the
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accused have challenged the competency of CW1 to file the complaint and to
depose as a witness of the complainant for want of assertion that he had
knowledge of the transaction, it would be necessary to refer to the judgment
of three Judge Bench of the Apex Court in A.C. Narayanan 2014 AIR (SC)
630.
30. The Division Bench of the Apex Court while considering Appeal
No.73 of 2007 with regard to interpretation of Section 142(a) of N.I.Act had
observed that in view of difference of opinion among various High Courts as
well as the decision in MMTC Ltd. & Anr vs. Medchl Chemicals and Pharma
(P) Ltd. & Anr. (2002) 1 SCC 234 and Janki Vasudev Bhojwani & Anr. vs.
Indusind Bank Ltd. (2005) 2 SCC 217, the matter should be considered by a
larger Bench in order to render an authoritative pronouncement.
31. The three Judge Bench of the Apex Court in A.C.Narayanan
tagged Cri. Appeal No.2724 of 2008 alongwith Criminal appeal No.73 of
2007 and in terms of the reference order formulated the following
questions :
15) In terms of the reference order, the following questions have to be
decided by this Bench:
(i) Whether a Power of Attorney holder can sign and file
a complaint petition on behalf of the complainant?/
Whether the eligibility criteria prescribed by Section
142(a) of NI Act would stand satisfied if the complaint
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petition itself is filed in the name of the payee or the
holder in due course of the cheque?
(ii) Whether a Power of Attorney holder can be verified
on oath under Section 200 of the Code?
(iii) Whether specific averments as to the knowledge of
the Power of Attorney holder in the impugned
transaction must be explicitly asserted in the complaint?
(iv) If the Power of Attorney holder fails to assert
explicitly his knowledge in the complaint then can the
Power of Attorney holder verify the complaint on oath
on such presumption of knowledge?
(v) Whether the proceedings contemplated under
Section 200 of the Code can be dispensed with in the
light of Section 145 of the N.I. Act which was
introduced by an amendment in the year 2002?"
32. While deciding whether there was any conflict between the
decision in M.M.T.C.Ltd. and Anr. Vs. Medchl Chemicals and Pharma (P)
Ltd. and Anr. (2002) 1 SCC 234 and Janki Vashdeo Bhojwani and Anr. vs
Indusind Bank Ltd. and Ors., (2005) 2 SCC 217 the Apex Court after
considering the factual details and ultimate dictum laid down in both the
decisions held as under:
"19. As noticed hereinabove, though Janki Vashdeo
Bhojwani (supra), relates to powers of Power of Attorney
holder under CPC but it was concluded therein that a plaint
by a Power of Attorney holder on behalf of the original
plaintiff is maintainable provided he has personal knowledge
of the transaction in question. In a way, it is an exception to
a well settled position that criminal law can be put in motion
by anyone [vide Vishwa Mitter (supra)] and under the
Statute, one stranger to transaction in question, namely,
legal heir etc., can also carry forward the pending criminal
complaint or initiate the criminal action if the original
complainant dies[Vide Ashwin Nanubhai Vyas vs. State of
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Maharashtra (1967 1 SCR 807. Keeping in mind various
situations like inability as a result of sickness, old age or
death or staying abroad of the payee or holder in due course
to appear and depose before the Court in order to prove the
complaint, it is permissible for the Power of Attorney holder
or for the legal representative(s) to file a complaint and/or
continue with the pending criminal complaint for and on
behalf of payee or holder in due course. However, it is
expected that such power of attorney holder or legal
representative(s) should have knowledge about the
transaction in question so as to able to bring on record the
truth of the grievance/offence, otherwise, no criminal justice
could be achieved in case payee or holder in due course, is
unable to sign, appear or depose as complainant due to
above quoted reasons. Keeping these aspects in mind, in
MMTC (supra), this Court had taken the view that if
complaint is filed for and on behalf of payee or holder in due
course, that is good enough compliance with Section 142of
N.I. Act".
........
23) In the light of the discussion, we are of the view that the
power of attorney holder may be allowed to file, appear and
depose for the purpose of issue of process for the offence
punishable under Section 138 of the N.I. Act. An exception to the
above is when the power of attorney holder of the complainant
does not have a personal knowledge about the transactions then
he cannot be examined. However, where the attorney holder of the
complainant is in charge of the business of the complainant-payee
and the attorney holder alone is personally aware of the
transactions, there is no reason why the attorney holder cannot
depose as a witness. Nevertheless, an explicit assertion as to the
knowledge of the Power of Attorney holder about the transaction
in question must be specified in the complaint. On this count, the
fourth question becomes infructuous.
...
24) In view of the discussion, we are of the opinion that the
attorney holder cannot file a complaint in his own name as if he
was the complainant, but he can initiate criminal proceedings on
behalf of his principal. We also reiterate that where the payee is a
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proprietary concern, the complaint can be filed (i) by the
proprietor of the proprietary concern, describing himself as the
sole proprietor of the "payee"; (ii) the proprietary concern,
describing itself as a sole proprietary concern, represented by its
sole proprietor; and (iii) the proprietor or the proprietary concern
represented by the attorney holder under a power of attorney
executed by the sole proprietor.
25) Similar substantial questions were raised in the appeal arising
out of S.L.P (Crl.) No. 2724 of 2008, which stand answered as
above. Apart from the above questions, one distinct query was
raised as to whether a person authorized by a Company or Statute
or Institution can delegate powers to their subordinate/others for
filing a criminal complaint? The issue raised is in reference to
validity of sub-delegation of functions of the power of attorney. We
have already clarified to the extent that the attorney holder can
sign and file a complaint on behalf of the complainant-payee.
However, whether the power of attorney holder will have the
power to further delegate the functions to another person will
completely depend on the terms of the general power of attorney.
As a result, the authority to sub- delegate the functions must be
explicitly mentioned in the general power of attorney. Otherwise,
the sub-delegation will be inconsistent with the general power of
attorney and thereby will be invalid in law. Nevertheless, the
general power of attorney itself can be cancelled and be given to
another person.
26) While holding that there is no serious conflict between the
decisions in MMTC (supra) and Janki Vashdeo Bhojwani (supra),
we clarify the position and answer the questions in the following
manner:
(i) Filing of complaint petition under Section 138 of
N.I Act through power of attorney is perfectly legal
and competent.
(ii) The Power of Attorney holder can depose and
verify on oath before the Court in order to prove the
contents of the complaint. However, the power of
attorney holder must have witnessed the transaction
as an agent of the payee/holder in due course or
possess due knowledge regarding the said
transactions.
(iii) It is required by the complainant to make specific
assertion as to the knowledge of the power of attorney
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holder in the said transaction explicitly in the
complaint and the power of attorney holder who has
no knowledge regarding the transactions cannot be
examined as a witness in the case.
(iv) In the light of Section 145 of N.I Act, it is open to
the Magistrate to rely upon the verification in the
form of affidavit filed by the complainant in support
of the complaint under Section 138 of the N.I Act and
the Magistrate is neither mandatorily obliged to call
upon the complainant to remain present before the
Court, nor to examine the complainant of his witness
upon oath for taking the decision whether or not to
issue process on the complaint under Section 138 of
the N.I. Act.
(v) The functions under the general power of attorney
cannot be delegated to another person without specific
clause permitting the same in the power of attorney.
Nevertheless, the general power of attorney itself can
be cancelled and be given to another person."
33. It is sought to be contended that the reference in A.C.
Narayanan (supra) was made in Criminal Appeal No.73 of 2007, which was
arising from a complaint filed by an individual person. Seeking to make
distinction between complaints filed by juristic and non-juristic person, the
learned counsel for the Complainant-company has sought to contend that
the ratio laid down by the Apex court in A.C Narayanan (supra) is not
applicable to the complaints filed by a juristic person.
34. A plain reading of the judgment in A.C.Naraynan (supra)
reveals that though the reference was in Criminal Appeal No.73 of 2007, the
Apex Court had tagged and heard Criminal appeal No.2724 of 2008 along
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with criminal appeal no.73 of 2007. The Criminal Appeal No.2724 of 2008
relates to the complaint under section 138 of the NI Act filed by the Power of
Attorney on behalf of the Company. The decisions in A.C. Narayanan
(supra) 2014 AIR SC 630 and 2015 AIR SC 1198 reveal that both these
appeals were heard together as they involved common question of law.
Hence, the distinction sought to be drawn by the learned counsel Shri
Yashpal Thakur is factually incorrect.
35. It is pertinent to note that in the aforesaid decision the Apex
Court has interpreted Section 142 (a) of the NI Act, which provides that no
Court shall take cognizance of any offence punishable under section 138
except upon a complaint, in writing, made by the payee or, as the case may
be, the holder in due course of the cheque. This section prescribes the
procedure for taking cognizance of offences punishable under Section 138 of
the NI Act. This section which is an exception to the general rule that
anyone can set the criminal law in motion, mandates that no court shall take
cognizance of an offence under Section 138 of NI Act unless the complaint is
made in writing by a payee or by a holder in due course, as the case may be.
36. It is thus, evident that the payee / holder in due course of the
cheque is alone competent to file a complaint under section 138 of the
N.I.Act. In case the payee is a company, the complaint should necessarily be
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filed in the name of the company. However, company being a juristic person
it can act only through a representative authorised by the Board of Directors
either by a resolution or by executing a power of attorney.
37. In A.C. Narayanan (supra), the Apex Court after considering the
scope of Section 138, 142 and 145 of N.I.Act, has held that the payee or the
holder in due course can authorise his constituted attorney to make a
complaint under Section 138 of the Act and depose on oath before the Court
provided constituted attorney has witnessed the transaction as an agent of
the payee/holder in due course or possesses due knowledge of the
transaction. It is to be noted that the Act does not prescribe a separate
procedure for the complaints filed by juristic and non-juristic person.
Furthermore, the Apex Court has not made any such distinction in A.C.
Naraynan (supra). Hence, it is not possible to accept the contention of the
learned counsel for the Complainant-company that the principles enunciated
in the said decision are restricted only to the complaints filed by an
individual person and not by a juristic person.
38. At this stage, it would also be advantageous to refer to the
provisions under Sections 118(a) and 139 of the NI Act. Section 118(a) of
the NI Act raises a presumption that until contrary is constituted attorney of
the proved; every negotiable instrument was made or drawn for
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consideration, whereas Section 139 of the NI Act raises a presumption that
unless the contrary is proved, the holder of the cheque received the cheque
for the discharge of whole or part of any debt or liability. The presumptions
under Sections 118(a) and 139 of the NI Act are rebuttable in nature. The
presumption under these provisions need not be rebutted only by adducing
direct evidence but can be rebutted on the basis of the facts elicited in the
cross examination. Suffice it to say that the power of attorney will not be
competent to depose in respect of a transaction of which he has no
knowledge. As a result thereof, the accused will be precluded from
effectively cross examining the power of attorney and eliciting the required
material to dislodge the statutory presumption. It is therefore imperative
that the power of attorney authorised by an individual or juristic person has
knowledge of the transaction. In the light of above, the contention of the
learned counsel Shri Yashpal Thakur that the power of attorney appointed
by a juristic person need not have personal knowledge of the transaction
needs to be rejected.
39. In my considered view, the principles laid down in A.C.
Narayanan that the power of attorney who files complaint for the offence
punishable under section 138 of NI Act and deposes on behalf of the payee
must essentially have personal knowledge of the transaction are also
applicable to complaints filed by a juristic person.
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40. It is to be noted that there were divergent views between
various High Courts on the question whether the power of attorney could
depose on behalf of the principal. In Dr. Pradeep Mohanbhai Vs. Mingel
Karlos Dais 2000 volume 102(1) Bombay L.R. 908 this High Court has held
that a power of attorney can file a complaint under section 138 of the NI Act
but cannot depose on behalf of the complainant. He can only appear as a
witness. Similar view was taken by the Rajasthan High Court in
Shambhudatta Shastri Vs. State of Rajasthan 1986 (2) WLN 713 and
Ramprasad Vs. Harinarayan & ORs AIR 1998 Rajasthan 185. Whereas a
contrary view was taken by this High Court in Humberto Luis & Anr. Vs.
Floriano Luis Armando Luis and Anr. 2000 (2) BOM.C.R. 754. The Apex
Court in Janki Bhojwani vs. Indusind Bank Ltd. (2005 ) 2 SCC 217 has held
that the view taken by the Rajasthan High Court in the case of Shamhudatta
Shastri followed and reiterated in the case of Ramprasad is the correct view.
The Apex Court has held that the view taken in the case of Floraino Luis
cannot be said to have laid down a correct law and accordingly overruled
the same. Thus, the controversy over the issue whether the power of
attorney could file a complaint and whether he could depose on behalf of
the complainant was set to rest by the Apex Court in Janki Bhojwani(supra).
This decision clearly sets out that the power of attorney is entitled to file a
complaint and depose provided he has personal knowledge of the
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transaction in question.
41. In A.C. Narayanan, (supra) the Apex Court while interpreting
the provisions of section 142 (a) and 145 which are procedural in nature
and were already existing on the statute book as on the date of filing of the
complaint, reiterated that the power of attorney is competent to file a
complaint under section 138 of the NI Act and to depose before the Court
provided he has knowledge of the transaction in question. The Apex Court
has neither laid down a new proposition of law on the subject nor upset the
settled position of law. The said decision also does not affect any vested or
substantial right of the parties. Hence, there is no merit in the contention of
the learned counsel Shri Yashpal Thakur that the principles enunciated in
A.C. Narayanan (supra) operate prospectively and not retrospectively.
42. In Girish Jaggal (supra) the accused had sought quashing of
proceedings under Section 138 of the NI Act on the ground that the
complaint did not contain specific assertion that the power of attorney
holder had the knowledge of the transaction. The Single Judge of this Court
held that the defect if any, can always be rectified even at a subsequent stage
and therefore the complaint cannot be quashed on the sole ground that the
complaint does not contain a specific assertion as to the knowledge of
transaction. In the present case, the Complainant-company had not tried to
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rectify the defect and the case has well passed the stage of rectification.
Hence, the said Judgment is not applicable to the facts of the case.
43. Now coming to the merits of the present case, the complaint
under section 138 of the NI Act was filed by CW1 Vimukt Nayak, who was
authorised by the Board of Directors of the Complainant-company. The said
complaint does not contain any assertion as to the knowledge of CW1
Vimukt Nayak in respect of the transaction in question. It is further to be
noted that CW1 Vimukt Nayak had given his evidence on affidavit in terms
of Section 145 of the NI Act. In paragraph 13 of the said affidavit the power
of attorney-CW1 Vimukt Nayak has asserted that the contents of the
complaint are true and correct, without making a specific assertion as to his
knowledge. Nevertheless, the verification clause of the affidavit he has
stated as under:
"VERIFICATION
I, Vimukt G. Nayak, aged 31 years, working as Sr.
Legal Officer with the Complainant Company, SBI Global
Factors Ltd. (erstwhile known as Global Trade Finance Ltd.,)
the Complainant herein do solemnly affirm and say that
whatever is stated in the aforementioned paragraphs is true to
my knowledge and belief and I believe the same to be true and
correct."
44. At this stage it would be relevant to refer to paragraphs 3 to 5 of
the Chapter VII of the Criminal Manual, which read as under :
"3. (1) Every person making an affidavit shall state his full name,
father's name, surname, age, profession or trade and place of
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residence and shall give such other particulars as will make it
possible to identify him clearly.
(2) The affidavit shall be signed by him in his own hand or he
shall make his finger impression thereon.
4. Unless it is otherwise provided, an affidavit may be made by any
person having knowledge of the facts deposed to.
5.(1) Every affidavit should clearly specify what portion of the
statement is made on the declarant's knowledge and what portion
of the statement is made on his information or belief.
(2) When a particular portion is not within the declarant's own
knowledge but it is stated from information obtained from
others, the declarant must use the expression "I am informed"
and if it is made on belief should add "I verily believe it to be
true." He must also state the source or ground of the information
or belief, and give the name and address of, and sufficiently
described for the purpose of identification, the person or persons
from whom he had received such information.
(3) When the statement rests on facts disclosed in documents or
copies of documents procured from any Court or other person,
the declarant shall state the source from which they were
procured and his information, or belief, as to the truth of the
facts disclosed in such documents."
45. In A.K.K. Nambiyar Vs Union of India and Anr. AIR 1970 SC
652 the Apex Court has observed that :
"The reason for verification of affidavits are to enable the Court
to find out which facts can be said to be proved on the affidavit
evidence of, rival parties. Allegations may be true to knowledge
or allegations may be true to informations received from
persons or allegations may be based on records. The importance
of verification is to test the genuineness and authenticity of
allegations and also to make the Deponent responsible for
allegations. In essence verification is required to enable the
Court to find out as to whether it will be safe to act on such
affidavit evidence. "
46. These principles have been followed by the Bombay High Court
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in Rajendra Gandhi Vs STate of Maharashtra 1989 (1) Bom CR 337.
47. It is thus clear that filing of an affidavit is not an empty
formality. The mandate is that the affidavit should clearly state what portion
of the statement is made on declarants' knowledge and what portion of
statement is made on his information and belief. When a particular portion
is not within the declarant's own knowledge but is based on information
obtained from others or is based on documents, the declarant should
disclose the source of information or belief.
48. In the instant case, the verification clause of the affidavit filed by
CW1-Vimukt Nayak indicates that all the facts stated in the affidavit were
true to his knowledge. It is however to be noted that CW1-Vimukt Nayak
has stated in his cross examination that he had not witnessed the
transaction. He has admitted that his knowledge of the transaction was
based on the documents, which he had seen for the first time on 13.4.2010
i.e. at the time of issuance of the statutory notice. The verification clause
does not disclose that the knowledge of this witness was based on records.
He had also not disclosed the source of information as required in paragraph
5(3) of Chapter 7 of the Criminal Manual. The affidavit of CW3 also suffers
from similar defects. The affidavit of CW2 is also defective as it does not
contain any verification clause and the affidavit does not disclose whether
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the contents of his affidavit are true to his knowledge or based on records.
49. Be that as it may, the admissions as elicited in the cross
examination of CW1 reveal that he did not have personal knowledge of the
transaction in question. He was therefore, not competent to depose as a
witness. It may be mentioned here that CW2 has also deposed on behalf of
the complainant-company without there being any authorisation in his
favour. He has not only produced the statement of account at Exh.'FF' but
has reiterated the contents of the complaint and has tried to plug in the
loopholes by producing some of the documents, which were not produced by
CW1. This witness also did not have the knowledge of transaction and was
not competent to depose on behalf of the Complainant-company.
50. Now coming to the facts of the case, the Complainant-company
has specifically alleged that the subject cheques dated 31st October, 2009
were issued by the accused No.2 as a Director of accused No.1 company
towards repayment of trade finance facility. The evidence of CW1 Vimukt
Nayak and CW2 Mahesh Malunjkar, Senior Officer, Legal reveals that M/s.
Jaimin Jewellery Exports, a partnership firm, had approached the
Complainant-company for Trade Finance Facilities. The Complainant-
company had considered the request of M/s. Jaimin Jewellery Exports and
sanctioned Trade Finance Facilities vide sanction letter dated 1 st November,
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2007 (Exhibit 'D'). The terms and conditions set out in the said trade
finance facility are set out in the said sanction letter at Exhibit 'D'.
Thereafter Global Account Receivable Management agreement for Trade
Finance Facilities (Exhibit-'F') dated 3rd November, 2007 was entered into
between the complainant-company Global Trade Finance Facility Ltd. and
M/s. Jaimin Jewellery Exports. The accused No.2 issued a letter of
guarantee dated 5th November, 2007 at Exhibit-'H' and thereby he
unconditionally guaranteed as primary obliger to pay to the Complainant-
company the outstanding/unpaid amount under the Trade Finance Facilities
together with all interest due therein, cost charges and other expenses.
51. The evidence of these two witnesses vis-à-vis the certificate of
incorporation (Exh.'J') reveals that M/s. Jaimin Jewellery Exports, which
was a partnership firm, was incorporated as a Private Limited Company on
28th March, 2008 and the said Company continued carrying on the business
of the partnership firm. The accused Nos.2 and 3 who were earlier the
partners of M/s. Jaimin Jewellery Exports were now the Directors of the
accused No.1-Company. The Complainant-company and accused No.1-M/s.
Jaimin Jewellery Exports Pvt. Ltd., herein had entered into and executed
Global Account Receivable Management Agreement dated 26 th November,
2008 at Exhibit 'G'. The Memorandum of Association and Articles of
Association dated 11th February, 2008 and 18th February, 2008 respectively
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are at Exhibit 'B'.
52. The Directors of the accused No.1-company had resolved that
the accused No.1-company would avail Trade Finance Facilities sanctioned
by the Complainant-company upto credit maximum funding limit to INR
4,24,00,000/- vide letter dated 19th November, 2008. The said resolution is
at Exhibit-'CC'. The accused No.3, the Director of the accused No.1-company
issued a letter of guarantee at Exhibit- 'I' in favour of the Complainant-
company giving an unconditional guarantee as a primary obliger (and not
merely as surety) to pay the outstanding/unpaid amount under the Trade
Finance Facilities together with all interest due therein, cost charges and
other expenses.
53. CW1-Vimukt Nayak had deposed that the accused No.2 had
issued the subject cheques at Exh.'K', 'L', 'M', 'N' and 'O' on behalf of the
accused No.1 company towards repayment of the dues of Trade Finance
Facilities. CW1-Vimukt Nayak has deposed that the accused had forwarded
the subject cheques along with a covering letter. He has admitted not having
produced the said covering letter on record. CW1-Vimukt Nayak has also
admitted in the cross-examination that the accused No.1 company was
required to produce invoices in respect of the goods supplied to their buyers.
He has admitted that based on such invoices the Complainant Company was
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providing funds under trade finance facility to the accused Company. He has
denied the suggestion that the invoices, request letter, and other documents
pertaining to the transaction, including statement of account of the
complainant company and the ledger account of the accused No.1 for the
relevant period were deliberately suppressed since there were no
outstanding dues payables by the accused No.1 -company.
54. CW2 Mahesh Malunjkar, the senior officer (Legal) of the
Complainant-company has deposed that the Complainant-company has
maintained the books of account in respect of the trade finance facility in
their ordinary and usual course of business. He has produced printout of
electronic record signed by Kailash Varodia, Senior Manager (Client
Relationship) and Dattaram Patarpenkar (Chief Manager Client relationship
of the Complainant-company). The said statement of account is at Exh-'FF'.
He has denied the suggestion that the Complainant-company had obtained
blank signed cheques at the time of execution of the trade finance
agreement. He has denied that the employees of the said company had
filled in the date and the amount of the said subject cheques and that the
Company has misused the said cheques.
55. CW3- Santosh Sawant, Senior Manager-Client Relationship and
I.T has deposed that the accused had availed trade finance facility from the
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Complainant company. He has stated that the Complainant-company
maintains details of the transaction. He has stated that the statement of
account of the accused No.1 for the period from 1.4.2005 to 28.2.2011 and
1.3.2011 to 16.3.2011 shows that an amount of Rs.4,88,18,080.69 is due
and payable to the Complainant-company. He has stated that the statement
of account at Exh.'FF' is the printout taken from the computer maintained by
the Complainant-company. He has stated that the staff of the Complainant-
company company has lawful control over the use of the computer and that
the details of the transaction of the accused with the Complainant-company
were regularly fed in the computer during the ordinary course of the said
activities. He has stated that throughout the material part of the aforesaid
period, the computer was operating properly and that the printouts of the
statement of account at Exh. 'FF' contained true and correct information fed
in the computer. He has further deposed that the company used to maintain
books of accounts in respect of trade finance facilities granted to the
accused. He has further stated that certified true copy of the statement of
account was signed by Kailash Varodia and Dattaram Patarpenkar. He has
produced the certificate purported to be under sub section 4 of section 65 B
of the Indian Evidence Act and has stated that contents of the said certificate
are true and correct.
56. The case of the Complainant-company, as emerged from the
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complaint and the evidence of CW1 and CW2, was that the accused no.2
had issued the subject cheques towards payment of outstanding dues in
respect of trade finance facility. Whereas the accused had raised a specific
defence that the Complainant-company had misused the blank signed
cheques, which were obtained as security at the time of execution of Trade
Finance Agreement. Since the accused had admitted having issued the
subject cheques, the statutory presumption as contemplated under section
118 (a) and 139 of the Act was in favour of the Complainant-company and
the onus was on the accused to rebut the initial presumption. Needless to
state that the accused is not required to prove his defence beyond reasonable
doubt as is expected of the Complainant but is expected to discharge the
burden on preponderance of probability. As stated earlier, the accused in
discharging the burden is not obliged to examine himself. He can discharge
the burden on the basis of the material on record, or by eliciting such
material in the cross examination as to create doubt about existence of
legally enforceable debt or liability.
57. In this regard, it is pertinent to note that CW1-Vimukt Nayak has
admitted in his cross-examination that he has not witnessed the transaction.
He has also admitted that he is not aware as to when and to whom the said
cheques were handed over. Similarly, the evidence of CW2 also does not
indicate that he had knowledge of the transaction. In such circumstances,
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the accused were precluded from cross-examining these witnesses and
eliciting material to rebut the statutory presumption under section 118(a)
and 139 of the NI Act.
58. Be that as it may, a perusal of the subject cheques reveals that
the subject cheques dated 31st October, 2009 were issued under the
signature of accused No.2 as a partner of M/s. Jaimin Jewelery Exports. It is
pertinent to note that the said partnership firm M/s. Jaimin Jewelery Exports
was already incorporated as a company on 20th March, 2008. Thus, as on
31st October 2009 i.e. the date appearing on the face of the subject cheques,
the Partnership firm was not in existence and the accused no.2 was no longer
a partner but was a director of the said company. The fact that the cheques
were signed by the accused No.2 as a partner of M/s. Jaimin Jewelery
Exports gives rise to an inference that the said cheques were issued on behalf
of the partnership firm prior to 20th March 2008. This fact coupled with
non-production of covering letter negates the case of the complainant that
the cheques were issued by the accused no.2 on behalf of the Company on
the date mentioned on the cheques and thus probabalises the defence of
issuance of signed blank cheques as security.
59. Both the Courts have rendered a finding that the Partnership
firm was incorporated as a Company without affecting their rights and
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liabilities under the agreement. It was therefore held that the liability of the
partnership firm or the accused No.1-Company does not cease due to the
change in its constitution. Relying upon the provisions of sections 20 and 87
of the NI Act the learned Sessions Judge has held that the accused cannot be
absolved of the liability of the section 138 of the NI Act merely because they
had delivered signed blank cheques to the Complainant-company or because
the Complainant-company had filled in the contents of the cheque. The
learned Judge has held that under section 20 of the NI Act it is permissible
for the holder of the cheque to fill in the date and specify the amount and
such changes do not amount to alteration within the meaning of section 87
of the NI Act.
60. It is to be noted that section 20 of the NI Act permits the payee
to filling the amount as well as the date in blank signed cheques and thus
complete the inchoate instrument delivered to him. Such filling up of the
date and the amount does not constitute alternation within the meaning of
section 87 of the NI Act. There is absolutely no dispute about this
proposition. It is also not in dispute that a mere statement that the cheque
was issued towards security does not absolve liability under section 138
N.I.Act. The question in the present case is not about the applicability of
section 20 of NI Act or the liability of the partnership firm after the
incorporation of the Company or the liability of the Accused No.1 -Company
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in respect of the cheque issued by the partnership firm as security. The
question is about the genuineness of the case put forth by the Complainant-
company. As stated earlier, in the instant case, the Complainant-company
had come with a specific case that the accused No.2 had issued the subject
cheques on behalf of the Complainant-company towards payment of
outstanding dues. Whereas the accused had questioned the genuineness of
the claim and raised a probable defence that the Complainant-company had
filled in the amount and the date in the blank signed cheques which were
given as security. Though the Complainant-company had specifically denied
the defence raised by the accused, a perusal of the subject cheques reveals
that the same were issued by the accused no.2 not as a director of the
Company but as a partner of the Partnership firm. This fact not only negates
the case of the Complainant company but leads to an inference that the said
cheques were issued when the partnership firm was in existence and thus
probabalises the defence that the same were given as security. The accused
having proved their defence by preponderance of probability, the onus was
on the Complainant-company to prove that the amount quantified in the
cheque was the existing and subsisting liability.
61. The complaint as well as the evidence of CW1 and CW2 does
not indicate that before quantifying the amount due, the Complainant-
company had called upon the accused to pay the said specified dues. There
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are no documents or any correspondence between the Complainant-
company and the accused in respect of the dues which were payable. Cw1
has also admitted in the cross-examination that the funds under the trade
finance scheme were released on the basis of the invoices submitted by the
accused. The Complainant-company has not produced the invoices based on
which the funds were released. The Complainant-company had not
furnished to the accused the details of the amount released as per the
invoices or the amount due as per the entries made in the statement of
account. The Complainant-company has also not produced ledger account
for the relevant period.
62. The learned Judge has held that though the accused had
disputed the liability, they had not applied under section 91 of Cr.P.C. for
seeking production of invoices and other documents. The learned Judge has
also held that the accused No.2 did not examine himself to rebut the
presumption. Suffice it to say that the learned judge has failed to consider
the well-settled principle that the accused has a right to remain silent.
Furthermore, the accused need not examine himself for discharging the
burden of proof placed upon him under a statute. He can discharge his
burden by preponderance of probabilities based on the material already on
record or brought on record through cross-examination. This is the dictum
laid down by the Apex Court in Rangappa (supra). In such circumstances,
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the learned judge has totally erred in drawing an adverse inference and
discarding or disbelieving the defense of the accused merely on the ground
that the accused had not stepped into the witness box or had not sought
production of documents.
63. The learned Counsel for the Complainant Company has
produced a copy of the Judgment dated 16.11.2011 passed by this Court in
Summary Suit No. 1730 of 2010. He has submitted that the said judgment
amply proves the liability of the accused and fortifies the contention of the
complainant company that the cheques were issued towards payment of
existing debt and/or liability. It may be mentioned that though the said ex-
parte judgment dated 16.11.2011 was delivered during the pendency of the
criminal case, the complainant company had neither produced the said
judgment before the trial court nor made any reference to the said suit. The
complainant company had totally suppressed the fact of filing of the suit.
64. It is also to be noted that in the said summary suit, the
complainant company had sought recovery of an amount of Rs.
Rs.4,40,43,566.31 in respect of the invoices. It was the case of the
complainant company that the accused had failed to pay said amount despite
notices dated 5th May, 2010. Thus the case of the complainant company in
the said suit was that as on 5.5.2010 the accused were liable to pay a sum of
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Rs.4,40,43,466.31, whereas the amount mentioned in the subject cheques
dated 31.10.2009 was Rs. 4,50, 00,000/- . The demand in the statutory
notice dated 13.4.2010 was also for an amount of Rs.4,50,00,000/-. It is
thus evident that the amount mentioned in the cheques exceeds the amount
claimed in the suit. The complainant company has not explained this
discrepancy. The absence of explanation negates the contention of the
complainant company that the amount quantified in the cheque was in fact
the existing debt or liability.
65. Be that as it may, the issue in the case in hand was whether the
Complainant had proved that the cheques were issued by the Accused
towards legally enforceable debt or liability. In this regard the Complainant-
company has relied upon the statement of account of account at Exh.'FF', a
print out of electronic records allegedly maintained by the Complainant-
company in the course of business. In the case of Anwar P.V. Vs. P.K. Basheer
and Ors. Apex Court has held as under:
"Any documentary evidence by way of an electronic record under the
Evidence Act, in view of Section 59 and 65A and 65A, can be proved
only in accordance with the procedure prescribed under Section 65B.
Section 65B deals with the admissibility of the electronic record. The
purpose of these provisions is to sanctify secondary evidence in
electronic form, generated by a computer. It may be noted that the
Section starts with a non obstante clause. Thus, notwithstanding
anything contained in the Evidence Act, any information contained in
an electronic record which is printed on a paper, stored, recorded or
copied in optical or magnetic media produced by a computer shall be
deemed to be a document only if the conditions mentioned under sub-
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Section (2) are satisfied, without further proof or production of the
original. The very admissibility of such a document, i.e., electronic
record which is called as computer output, depends on the satisfaction
of the four conditions under Section 65B(2). Following are the specified
conditions under Section 65B(2) of the Evidence Act:
(i) The electronic record containing the information should
have been produced by the computer during the period over
which the same was regularly used to store or process
information for the purpose of any activity regularly carried
on over that period by the person having lawful control over
the use of that computer;
(ii) The information of the kind contained in electronic
record or of the kind from which the information is derived
was regularly fed into the computer in the ordinary course of
the said activity;
(iii) During the material part of the said period, the
computer was operating properly and that even if it was not
operating properly for some time, the break or breaks had
not affected either the record or the accuracy of its contents;
and
(iv) The information contained in the record should be a
reproduction or derivation from the information fed into the
computer in the ordinary course of the said activity.
Under Section 65B(4) of the Evidence Act, if it is desired to give a
statement in any proceedings pertaining to an electronic record, it is
permissible provided the following conditions are satisfied:
(a) There must be a certificate which identifies the electronic
record containing the statement;
(b) The certificate must describe the manner in which the
electronic record was produced;
(c) The certificate must furnish the particulars of the device
involved in the production of that record;
(d) The certificate must deal with the applicable conditions
mentioned under Section 65B(2) of the Evidence Act; and
(e) The certificate must be signed by a person occupying a
responsible official position in relation to the operation of the
relevant device.
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It is further clarified that the person need only to state in the certificate
that the same is to the best of his knowledge and belief. Most
importantly, such a certificate must accompany the electronic record
like computer printout, Compact Disc (CD), Video Compact Disc (VCD),
pen drive, etc., pertaining to which a statement is sought to be given in
evidence, when the same is produced in evidence. All these safeguards
are taken to ensure the source and authenticity, which are the two
hallmarks pertaining to electronic record sought to be used as evidence.
Electronic records being more susceptible to tampering, alteration,
transposition, excision, etc. without such safeguards, the whole trial
based on proof of electronic records can lead to travesty of justice.
Only if the electronic record is duly produced in terms of Section 65B of
the Evidence Act, the question would arise as to the genuineness thereof
and in that situation, resort can be made to Section 45A - opinion of
examiner of electronic evidence.
The Evidence Act does not contemplate or permit the proof of an
electronic record by oral evidence if requirements under Section 65B of
the Evidence Act are not complied with, as the law now stands in India."
66. In the instant case, the accused had challenged the admissibility
of the statement at Exh.'FF' on the ground that CW2 was not the author of
the said statement. He had not signed the said statement and had no
knowledge about the entries made in the said statement. It was further
alleged that CW3, who had issued the certificate purported to be under sub-
section 4 of section 65B, was not competent to issue such certificate. It was
further stated that the said certificate did not contain the details required
under clauses (a) to (c) of sub section 4 of section 65B of the Indian
Evidence Act.
67. The learned Magistrate while rejecting contentions has held that
Section 65B of the Indian Evidence Act nowhere mandates that the
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certificate is required to be issued only by the person having access to the
system. The learned Magistrate has further held that since CW3 was
working as Head IT, it can be gathered and concluded that he had control
and lawful access over the entire computer system of the Complainant-
company. The learned Sessions Judge has not addressed the question as to
whether CW3 was competent to issue the certificate as envisaged under Sub
Section 4 of Section 65 B of the Indian Evidence Act. Nevertheless, the
learned Sessions Judge has relied upon the evidence of CW2 and CW3 by
holding that the accused have not impeached the credibility of CW2 and that
they have not refuted the genuineness of the certificate issued by CW3.
68. It is pertinent to note that, CW1-Vimukt Nayak, the power of
attorney of the Complainant Company had neither produced the statement
of account nor made any reference to such statement of account. The
accused were therefore precluded from cross examining accused No.1 and
eliciting such material as to refute the genuineness of the statement at
Exh.'FF'. A perusal of the certificate shows that the same was signed and
certified by Kailash Varodiya and Dattaram Patarpenkar. The Complainant-
company has neither examined said Kailash Varodiya and Dattaram
Fatarpenkar nor produced any material to show that said Kailash and
Dattaram were authorised to sign the said statement on behalf of the
Complainant-company.
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69. It may be mentioned here that section 65B only relates to the
admissibility of electronic records. This amended provision prescribes the
mode for proof of contents of electronic records. The very admissibility of
electronic records depends upon the satisfaction of the conditions stipulated
in the section. Sub section 4 of section 65 B provides that when a statement
has to be produced in evidence, it should be accompanied by a certificate
containing the details specified in clauses (a) to (c) of Sub section 4 of
Section 65 B. This certificate must be signed by a person "occupying a
responsible official position in relation to the operation of the relevant
device or the management of the relevant activities".
70. CW2, who has produced the statement at Ex.FF, has admitted
that he had not obtained the print out at Ex.'FF. CW2 had not signed the
said statement and had admittedly no knowledge of the transaction. CW2
had not produced any document to prove that the said statement was a print
out of a computer/electronic records maintained by the Company in the
ordinary course of business. It is also to be noted that the statement at EX.
FF was not accompanied by a certificate as contemplated under sub section
4 of section 65B of the Indian Evidence Act. The statement at Exh.'FF' was
therefore not admissible in the absence of such certificate.
71. The Complainant-company had tried to rectify this defect by
examining CW3 who was examined at the stage of final hearing. He has
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produced the certificate purported to be under sub-section 4 of section 65B
of the Indian Evidence Act. No reason has been assigned by the
Complainant-company for not producing the said certificate alongwith the
statement at Exh.'FF' and this fact leads to an inference that the said
certificate was created subsequently to fill in the lacuna in the evidence of
CW2.
72. Be that as it may, CW3 has deposed that he is looking after the
maintenance of computer system of the Complainant-company since 2008-
2009. He has deposed that apart from the maintenance work, he is not
allotted any other work relating to information and technology. He has
deposed that accounts of the Complainant-company are maintained and
prepared by Operation Department and Client Relationship Department. He
has admitted that he has not prepared statements of any of the clients of the
Complainant-company. He has stated that he has no personal knowledge
about the transaction. He has further stated that he had not personally
verified the balance, which was due and payable by the accused to the
complainant company as on 16.3.2011. He has stated that employee of the
Complainant-company used to prepare and enter the statement at the user
terminal and the same was saved in the main server. He has stated that he
does not know when such data was entered in the user terminal or as to how
many persons had entered such data in user terminal. He has stated that he
is not a system administrator and that apart from system administrator no
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other person has access to the server. He has deposed that he had not
retrieved the information from the main server in respect of the present
transaction.
73. A conjoint reading of evidence of CW2 and CW3 reveals that
both these witnesses had no personal knowledge about the transaction.
They were not entrusted with the duty of maintaining the records of the
company. They had not prepared the statement of account and had no
knowledge about the genuineness of the entries reflected in Exh.'FF'. The
evidence of CW3 clearly indicates that apart from the system administrator
no other person had access to the server. His evidence does not indicate that
he was involved in the management of the relevant activities. The evidence
of CW3 therefore, does not indicate that he was occupying an official
position in relation to the operation of the device and was not entrusted
with a duty of the management of the relevant activities. In short, the
Complainant Company had failed to prove the source and authenticity of the
statement as well as the competency of CW3 to issue the certificate. In this
fact situation, the findings of both the courts below are totally erroneous and
contrary to the evidence on record and the relevant provisions of law and
have thus resulted in miscarriage of justice.
74. It has to be borne in mind that section 65B only relates to the
admissibility of electronic records. It authenticates the genuineness of the
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copy/computer printout and thus absolves the parties from producing the
original. This section only makes the computer output admissible on
complying with the requirements of the section. It does not prove the actual
correctness of the entries and does not dispense with the proof or
genuineness of entries made in such electronic records. Furthermore, there
is no presumption regarding the genuineness of the entries in electronic
records. Hence, it was necessary for the Complainant Company to prove the
correctness of the entries. In the instant case, the witnesses examined by
the complainant did not have any personal knowledge regarding the entries
made in the said statement at Exh.'FF' and were therefore not competent to
depose about the correctness of the entries.
75. It is also to be noted that section 34 of the Evidence Act
stipulates that the entries in account books regularly kept in course of
business are relevant piece of evidence and admissible. The section further
states that such entries cannot be the sole basis of fixing liability on any
person. In the instant case, apart from statement at Exh.'FF' the complainant
company had not produced any other material to prove that the liability of
the accused in respect of the amount specified in the subject cheques.
Hence, the accused could not have been held guilty of the offence solely on
the basis of the said statement.
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76. The offence under section 138 of the NI Act though technical, is
punitive in nature. Hence, once the accused had rebutted the initial
presumption it was imperative upon the complainant to prove beyond
reasonable doubt that the cheques were issued towards the existing debt or
liability. In the instant case, the complainant has failed to discharge this
burden. As a consequence thereof, the accused could not have been held
guilty of the said offence.
77. Under the circumstances and in view of discussion supra, the
impugned orders have resulted in miscarriage of justice and this necessitates
exercise of revisional powers. Hence, the Revision Application is allowed.
The Judgment and order dated 13/03/2012 passed by the learned
Metropolitan Magistrate 12th Court, Bandra at Mumbai in C.C.
No.821/SS/2010 and the judgment and order dated 28.8.2015 passed by
the Sessions Court, Greater Bombay in Criminal Appeal No.338 of 2012 are
hereby set aside. Consequently, the accused are acquitted of offence under
section 138 read with 141 of the NI Act. Their Bail bonds stand discharged.
(ANUJA PRABHUDESSAI, J.)
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