2017 (4) TMI 416 - HC - Indian Laws

Revision application granted, accused acquitted under NI Act, bail bonds discharged.

M/s. Jaimin Jewelery Exports Pvt. Ltd., Mr. Gautam Mehta, Jaimin G. Mehta Versus The State of Maharashtra & Others

The court allowed the revision application, setting aside the judgments of the lower courts. The accused were acquitted of the offence under Section 138 ... Conviction and sentence u/s 138 r/w. 141 of the Negotiable Instruments Act - Held that:- 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. It has to be borne in mind that section 65B only relates to the admissibility of electronic records. It authenticates the genuineness of the 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. 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. 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. Issues Involved:1. Competency of Power of Attorney to file and depose in the complaint.2. Issuance of cheques by the partnership firm versus the incorporated company.3. Admissibility and sufficiency of electronic evidence (statement of account).4. Legally enforceable debt or liability under Section 138 of the NI Act.Detailed Analysis:1. Competency of Power of Attorney to File and Depose in the Complaint:The accused argued that the complaint was filed by a Power of Attorney who lacked knowledge of the transaction. The court referred to the Supreme Court's decision in A.C. Narayanan (2014 AIR 630) which held that a Power of Attorney can file a complaint and depose, provided they have personal knowledge of the transaction. The court noted that the complaint and the affidavit did not explicitly assert that CW1 Vimukt Nayak had knowledge of the transaction. Nayak admitted in cross-examination that he had not witnessed the transaction, thus rendering him incompetent to depose as a witness. The court concluded that the principles laid down in A.C. Narayanan apply to complaints filed by both juristic and non-juristic persons.2. Issuance of Cheques by the Partnership Firm versus the Incorporated Company:The cheques in question were signed by accused No.2 as a partner of the erstwhile partnership firm, which had been incorporated as a private limited company. The court found that the cheques were issued before the incorporation of the company, negating the complainant's claim that they were issued on behalf of the incorporated company. This fact supported the defense's claim that the cheques were issued as security.3. Admissibility and Sufficiency of Electronic Evidence (Statement of Account):The complainant relied on a statement of account (Exh. 'FF') as evidence of the accused's liability. The court scrutinized the certificate under Section 65B of the Indian Evidence Act, which is necessary for the admissibility of electronic records. CW3, who issued the certificate, admitted he had no personal knowledge of the transaction and was not involved in the management of relevant activities, making him incompetent to issue the certificate. The court held that the statement of account was inadmissible and insufficient to prove the liability.4. Legally Enforceable Debt or Liability under Section 138 of the NI Act:The court emphasized that the complainant must prove beyond reasonable doubt that the cheques were issued towards an existing debt or liability. The complainant failed to produce invoices or any correspondence detailing the dues, and there was a discrepancy between the amount mentioned in the cheques and the amount claimed in a related summary suit. The court found that the complainant did not meet the burden of proof, and the accused successfully rebutted the presumption under Sections 118(a) and 139 of the NI Act.Conclusion:The court allowed the revision application, setting aside the judgments of the lower courts. The accused were acquitted of the offence under Section 138 read with Section 141 of the NI Act, and their bail bonds were discharged.