TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 416
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....a 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 15th 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 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 20th March, 2008. The accused Nos.2 and 3 are the Directors and authorised signatories of the accused No.1Company. 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 T....
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....k, 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 CW3 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 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....
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....ues 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 with the findings unless the same are perverse and illegal.....
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.... learned counsel Shri Yashpal Thakur has further submitted that in Ms. Mandavi Cooperative Bank Ltd. Vs. Nimesh B. Thakur AIR 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 C....
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.... 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 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. ....
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.... 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 un....
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....n 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 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 validi....
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.... 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 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 ....
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....s 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....
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....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 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 qu....
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....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 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 shou....
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....rms 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 visàvis 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.1Company. The Complainant company and....
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....ord 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. CW3Santosh Sawant, Senior Manager Client Relationship and I.T has deposed that the accused had availed trade finance facility from the 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 comp....
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....indicate that he had knowledge of the transaction. In such circumstances, 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 ....
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....ically 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 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 in....
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....ompany in the said suit was that as on 5.5.2010 the accused were liable to pay a sum of 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 S....
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....he 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. 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 genui....
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....o show that said Kailash and Dattaram were authorised to sign the said statement on behalf of the Complainant company. 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 or....
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....he 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 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 do....