TaxTMI 
TaxTMI 
2017 (4) TMI 416
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....e 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 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 e....
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....t guilty and claimed to be tried. The Complainant company in support of its case examined CW1 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 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 ....
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....ed 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 ....
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....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 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 sub....
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.... 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 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 ....
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....ion on behalf of the complainant?/ Whether the eligibility criteria prescribed by Section 142(a) of NI Act would stand satisfied if the complaint 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 detail....
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....ransactions, 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 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 disti....
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....ct. (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 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 A....
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.... 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 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 cou....
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....ledge 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 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 ....
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.... 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 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....
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....s 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 1st November, 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 visàvis the certificate of incorporation (Exh.'J') reveals that M/s. Jaimin Jewellery Exports, which was a ....
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....ing 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. 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....
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....ut existence of legally enforceable debt or liability. 57. In this regard, it is pertinent to note that CW1Vimukt 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, 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....
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....ssued 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....
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....ressed 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 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 ....
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....o 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. 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 a....
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....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. 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 positio....
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....system administrator no 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 e....