TaxTMI 
TaxTMI 
1996 (8) TMI 518
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....e respondent, the documents were re-presented to Banque Leumi, Paris on 13.7.90. On 9.4.91, on the instructions of the respondent, a telex was sent to Banque Leumi, Paris to transfer the documents to another French Bank, namely, Society Lyonnaise De Banque, Lyon, France, and on the same day, fresh Bills of Exchange dated 6.3.91 were sent to the French Bank at the request of the respondent. In these Bills of Exchange, there was no clause for co-acceptance by the French Bank which, however, returned the documents unpaid on 9.8.91. 3. On 26th August, 1991, respondent forwarded a fresh set of Bills of Exchange for being sent to the French Bank. The Bills of Exchange, on their face, specifically provided for acceptance by the Buyer and co-acceptance by the French Bank. 4. It appears that the Buyer, namely, M/s STE Kolori went under liquidation and an order was passed by the Commercial Court at Lyon, France for winding up the firm. The Court also appointed a Liquidator who wrote to the respondent to file its claim. 5. On 1st January, 1992, Napean Sea Rood Branch of the appellant at Bombay wrote a letter to the French Bank that payment of the Bills of Exchange forwarded to it ear....
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....had to be obtained. It was pointed out to the Commission that the letter dated 26th August, 1991 which was placed on the record by the respondent and in which a specific mention was made that co- acceptance from French Bank had to be obtained, was a letter forged by the respondent to obtain a decree in its favour. The appellant contended that this letter was never issued to the appellant. The letter dated 26.8.91 which was actually issued to them did not contain any direction for obtaining co-acceptance by the French Bank. The Commission in its judgment dated 13.12.94 (disposing of the review application) has considered both the letters and has reproduced the contents thereof but it did not go into the question whether the letter filed by the respondent was a forged letter or not. 8. The relevant portion of the findings recorded by the Commission in its judgment passed on the review application is quoted below :- " The Opposite Party - Bank - has alleged that the letter of 26th August, 1991 from the Complainant to the Opposite Party - Bank which was the letter with which the Bills of Exchange were submitted to the Opposite Party - Bank - for collection, did not specifically d....
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....ts contention. We did not think it necessary to go into this question. We only pointed out to the Complainant that in the ordinary course of correspondence, in its letter of No.2776 the Complainant should have stated that this was in continuation of its previous letter No.2775 and that the letter No.2776 was necessitated by the omission in the letter No.2775 of the vital directions regarding co-acceptance of the Bills of Exchange. We did not get a satisfactory answer to this question. We have also once again gone through the records of the case, the oral arguments and the written submission made by the parties at the rehearing limited to the question of the letter No.2776 being a forgery and its effect on the findings corded in the order of this Commission of 16th November, 1993. It will be observed from the order that the Bills of Exchange clearly specified that the same were to be co-accepted by the foreign bank besides being accepted by the buying French Firm. In these circumstances it was the duty of the Opposite Party Bank to ensure co-acceptance by the foreign Bank. The responsibility of the Bank to obtain co-acceptance of the Bills of Exchange is also manifest from the....
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.... or the Banks would, Therefore, depend on a correct reading and interpretation of the ICC Rules which, we unhesitantly say, at the outset, were misread, misunderstood and misinterpreted by the Commission. 11. Clause B of the ICC Rules which came into force with effect from January l, 1979 contains Definitions some of which (which are relevant for this case) are reproduced below :- "1. (i) "Collection" means the handling by banks'on instructions received of documents as defined in (ii) below, in order to a) obtain acceptance and/or, as the case may be, payment, or b) deliver commercial documents against acceptance and/or, as the case may be, against payment, or c) deliver documents on other terms and conditions. (ii) "Documents" means financial documents and/or commercial documents: (a) "financial documents" means bills of exchange, promissory notes, cheques, payment receipts or other similar instruments used for obtaining the payment of money; (b) "Commercial documents' means invoices, shipping documents, documents of title or other similar documents, or any other documents, whatsoever, not being financial documents. 2. The "parties thereto" ar....
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....of any signatory to sign the acceptance. 12. Clauses 2 and 3 specify the parties to the transaction for purpose of "Collection" as defined in Sub-clause 1(i) of Clause B. These parties are the "Principal" who entrusts the operation of "Collection" to his Bank. This, in the instant case, would be the respondent as the respondent entrusted the operation of "Collection" to the appellant. The other party is the "Remitting Bank", namely, a Bank to whom the operation of "Collection" is entrusted by the "Principal". In the instant case, the "Remitting Bank" would be the appellant as it was this Bank to whom the respondent had entrusted the job of "Collection". Another Bank which is involved in the whole transaction is the "Collecting Bank". According to the definition, this would be a Bank other than the "Remitting Bank". There is, yet, a third Bank, namely, the "Presenting Bank" which, according to the definition, is, in fact, the "Collecting Bank" making presentation to the "Drawee". "Drawee" has been defined in Sub-clause 3 of Clause 8 as the person to whom presentation is made according to the collection order. Although, in the definition, there are three banks, namely, the "Remitt....
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.... under Article 15 it is the presenting Bank which is responsible for seeing that the form of acceptance of a Bill of Exchange appears to be complete and correct. Under Item C "General Provisions and Divisions" of the above Rules "All documents sent for collection must be accompanied by a collection order which has to be made by the Bank in accordance with the instructions of the client or the principal". The opposite party Bank failed to do so. We reject its plea that it was not responsible to obtain the co-acceptance of the Bank and there was no deficiency of service on its part." 16. A mere perusal of the above passage of the Commission's judgment indicates that the Commission fell into a serious error in treating the "Remitting Bank" as the "Collecting Bank" and, then, fastening liability on the appellant by observing that the appellant had not acted in accordance with Article 15 of the ICC Rules under which it was the responsibility of the "Presenting Bank" to see that the "Documents" were accepted in accordance with the instructions of the "Principal". The Commission thus treated appellant not only as the "Remitting Bank" but also as the "Collecting Bank" and 'Prese....
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....the respondent and that the only letter issued by the respondent was letter No.2775 dated 26th August, 1991. The contents of both the letters have already been reproduced by the Commission in its judgment by which the review application has been disposed of which would indicate that in the letter No.2775, there is no requirement to obtain co-acceptance by the French Bank whereas in the other letter, namely, letter No.2776, this condition has been specifically mentioned. 20. By filing letter No.2775 of 26.8.91 along with the Review Petition and contending that the other letter, namely, letter No.2776 of the even date, was never written or issued by the respondent, the appellant, in fact, raised the plea before the Commission that its judgment dated 16.11.93, which was based on letter No. 2776, was obtained by the respondent by practising fraud not only on the appellant but on the Commission too as letter No.2776 dated 26.8.91 was forged by the respondent for the purpose of this case. This plea could not have been legally ignored by the Commission which needs to be reminded that the Authorities, be they Constitutional, Statutory or Administrative, (and particularly those who have ....
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....n was adopted in Rembert vs. State 25 Am. Rep. 639. In another case, namely, State vs. Phelps 34 Am. Dec. 672, it was laid down that forgery is the false making of any written instrument, for the purpose of fraud or deceit. This decision appears to be based on the meaning of forgery as set out in Tomlin's Law Dictionary. 28. From the above, it would be seen that fraud is an essential ingredient of forgery. 29. Forgery under the Indian Penal Code is an offence which has been defined in Section 463, while Section 464 deals with the making of a false document. Section 465 deals with the making of a false document. Section 465 prescribes punishment for forgery. "Forged document" is defined in Section 470 while Section 471 deals with the crime of using as genuine, the forged document. 30. Forgery and Fraud are essentially matters of evidence which could be proved as a fact by direct evidence or by inferences drawn from proved facts. 31. The Privy Council in Satish Chandra Chatterjee vs. Kumar Satish Kantha Roy & Ors. Air 1923 PC 73, laid down as under: "Charges of fraud and collusion like those contained in the plaint in this case must, no doubt, be proved by those wh....
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....ed now to consider whether forgery and fraud are established. This we are doing in view of the facts and circumstances of this case otherwise we would have either remanded the case to the Commission or directed the respondent toe approach the Civil Court. 36. Paragraphs 2, 3, 4, 5, and 6 of the Review Application filed by the appellant before the Commission are as under: "2. In brief, the case of the complainant before this Hon'ble Commission was that it had by its letter of the 26th August, 1991, which letter enclosed the bills of exchange in question, gave specific instruction to the Opposite Party - -- the Bank -- for securing a co- acceptance by Societe Lyonnaise de Banque (the French Bank) before handing over the documents of title to the goods. Based upon this letter, the veracity of which was not questioned y the Opposite Party at that stage in the circumstances indicated hereinafter, this Hon'ble Commission was pleased to hold that the Opposite Party was responsible for not carrying out the instructions contained in the letter dated 26th August, 1991, (Exhibit A to the Complaint) and thereby liable in damages caused to the Complainant. It is correct that th....
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....that the said letter dated 26th August, 1991 annexed as Exhibit "A" to the Complaint was not received by the Bank is annexed hereto and market Annexure "II". 5. A perusal of this letter shows that the material instructions in relation to co-acceptance by the French Bank are absent in this letter. The Opposite Party is advised to stated that considering the fact that a letter dated 26th August, 1991, bearing REF:SF:E:2775 was given as a covering letter to the Bank, it is inconceivable that a second letter also as a covering letter would be given to the Bank. The letter of 26th August, 1991 stated that it is "....enclosing fresh set of drafts....". There are some other discrepancies between this letter and the letter produced by the Complainant, as hereafter set out. 6. The Opposite Party further submit that the xerox copy of the purported letter produced before this Hon'ble Commission by the Complainant purports to bear and initial on the right-hand side of the letter. The Opposite Party submits that this initial is not of any of the officials of the Napean Sea Road Branch of the bank at the relevant time. The Opposite Party is, therefore, advised to submit that this lette....
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....lainant. Exhibit 'B' hereto which is the relevant page of the Outward Register not only shows the entry of the said letter bearing Reference No. SF:F: 2775 but also the entry of the aforesaid letter bearing SF:E: 2776. (e) From the aforesaid it is evident that there were to letters both dated 26th August, 1991 which were addressed by the Complainant to the Opponent. (f) The Complainant says that pursuant to the filing of the original complaint, the Complainant's Advocates gave inspection of the documents, referred to and relied upon by the Complainant, to the Opponents Advocate. The said inspection was taken on 14th October, 1992 and at the said time the carbon copy of the letter dated 26th August, 1991 bearing Reference No.SF:E: 2776 was inspected by the Opponents Bank. The fact of the inspection having been taken has been recorded by the Opponents Advocated in their letter by the dated 16th October, 1992 which is annexed hereto and marked Exhibit 'D'. (g) The Complainant states that after the said Review Application was served upon the Complainant, the Complainants Advocate addressed a letter dated 28th December, 1993 to the Opponents Advocates pointi....
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....y has further realised that the Complainant has played a calculated fraud with an intention to secure an order from this Hon'ble Commission. the Complainant has all along played a fraud on this Hon'ble Commission in making it believe that the Bills of Exchange have been forwarded by the alleged letter dated 26th August, 1991 bearing No. 2776 annexed as Exhibit "A" to the Complaint. Having now read the tenor of the Reply of Complainant, the Opposite party has realised that the Complainant has with mischievous and malafide intent in its pleadings before this Hon'ble Commission cleverly avoided making reference to the different letters said to have been delivered to the Opposite Party and the aforesaid fact is clear and evident by the language of he pleadings. The Opposite Party further submits that after going through the said reply of the complaint to the Review Petition it has become very clear that the Complainant has deliberately played a fraud and now put forward a false case in the said reply to further perpetrate the said fraud. The Opposite Party submits the letter bearing No. 2775 dated 26th August, 1991 and the said letter bearing No. 2776 dated 26th August, 199....
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....o the filling of the Review Application the Opposite Party obtained verification from the officers and staff members attached to the Nepean Sea Road Branch of the Opposite Party who certified and stated that the alleged initial on the alleged office copy of the Complainant is not their initial. The Opposite Party states and submits that the mere fact that a rubber stamp appears on the alleged letter cannot be itself confer any authenticity. It is pertinent to note that the Complainant has obtained and alleged acknowledgment on the officer copy of the alleged letter 26th Aug. 1991 bearing reference No. 2776 when, in fact no such letter was delivered by the Complainant to the Opposite Party. It is further pertinent to note that the Complainant did not think it fit or necessary to obtain any acknowledgement on office copy of letter dated 26th August, 1991 bearing No. 2775 when the original documents i.e. the Bills of Exchange were delivered to the Opposite Party therewith but the complainant has allegedly obtained and acknowledgement on the alleged letter dated 26th August, 1991 bearing No. 2776. Copy of Statement signed by the Officers and staff members at the Nepean Sea Road Branch ....
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....nce to the earlier letter or without making any mention about the submission of the earlier letter to the Opposite Party. The Opposite Party submits that the absence of continuity of reference to the earlier letter cannot be termed as an omission, as alleged, by the Complainant, particularly who, according to the Complainant itself the second letter is intended to be substitution of the contents of the earlier letter. 21. With reference to paragraph 21 to 24 of the said Reply, it is pertinent to note that the Complainant says tat the Complainant was willing to have the goods delivered to the Buyer not only letter acceptance of the Bills of Exchange by the Buyer but also co-acceptance by the foreign bank. The Complainant has, till date no brought to the notice of the Opposite Party and/or this Hon'ble Commission the basis of the aforesaid statement, as to whether there is any agreement between the complainant and the foreign Buyer, or the Complainant and the foreign bank for co-acceptance. There is no documentary or any evidence brought in by the Complainant to show any alleged contract for co-acceptance. In the absence of the foreign bank being party to the present proceedin....
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....the letter NO. 2775 dated 26th August, 1991 should be treated as cancelled; (vi) The respondent had corresponded with the appellant and had even given a notice dated 26.3.92 through its counsel to the appellant claiming the amounts due under the Bill of Exchange on the ground of negligence but nowhere does the respondent says that the letter No. 2776 dated 26th August, 1991 was substitution of letter No. 2775 of that date: (vii) Even the original complaint filed before the Commission , the respondent does not say anywhere that they had issued letter No. 2776 of 26th August, 1991 in substitution of the letter NO. 2775 of that date. (viii) The plea that letter NO. 2776 was issued in substitution of letter no. 2775 was asserted by respondent for the first time in review proceedings when the appellant filed this letter before the commission. The respondent's silence still the stage, therefore, becomes eloquent indicating that this letter was no in existence till then: (ix) What was the mode of payment agreed upon between the respondent and the buyer in France has not been indicated. Nor has any correspondence, or for that matter, any agreement in writing between the res....