TaxTMI 
TaxTMI 
2017 (1) TMI 1702
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....Respondent/Accused signature was found in black ink'. 3. Further, the First Appellate Court had proceeded to observe in the Judgment that P.W.1 had stated that it was correct to state that in three cheques apart from the signature, the amount details mentioned in the cheques were different ones and in the cheque dated 17.01.2008, his company's name was written and in other two cheques, their company's seal was affixed and the said three cheques were given by the Respondent/Accused at the same time and on the same date, the three cheques were presented for collection by their company. 4. Besides the above, the First Appellate Court in its Judgment, at paragraph 11, had proceeded to observe that it was evident that the present case was filed by the Appellant/Complainant by using the blank signed Cheques - Ex.P5 to P7, after filling up the same (by the Accused). Apart from that, the First Appellate Court had stated in the Judgment that the HDFC Bank Manager was not examined to show that the Respondent/Accused had no sufficient money in his account on 23.01.2008 and also that, the Account List of the Respondent/Accused was not filed by the Appellant and also that sinc....
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....,000/- (which is a part liability) and added further, the cheques do not represent the amount in entirety. 9. The Learned Counsel for the Appellant takes an emphatic plea that the trial Court had taken a wrong inference on seeing the seal of the Appellant/Company in two cheques and in fact, the relevant cheques were produced by the Respondent/Accused to the Appellant/Company with a request to draw the company's name and against this request, the Appellant's/Company's seal was affixed. That apart, the very fact of handing over of these cheques in question to the Appellant/Company by the Respondent/Accused is a proof that the Respondent owes such amount to the Appellant. 10. The Learned Counsel for the Appellant proceeds to take a stand that the Respondent/Accused had failed to examine any witness in order to produce any document to rebut the presumption under Section 138 of the N.I. Act. But, this crucial aspect of the matter was not taken in account by the First Appellate Court in a proper manner. 11. The Learned Counsel for the Appellant brings it to the notice of this Court that the Respondent/Accused had entered into contract with full knowledge of its impli....
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....rrectly observed in its Judgment that there was no relationship between the Appellant and the Respondent when in fact the same was established by evidence on record. 18. It is the contention of the Learned Counsel for the Appellant that the First Appellate Court had rendered a Judgment of Acquittal in the Criminal Appeal without analysing the documents and available evidence on record and also arrived at a conclusion based only on mere conjectures. 19. The Learned Counsel for the Appellant submits that the Appellant is engaged in providing numerous financial services viz., share trading and share brokering. Furthermore, the Appellant is registered with the National Stock Exchange. 20. It is represented on behalf of the Appellant that the Respondent/Accused, with a view to avail the services of the Appellant/Complainant, entered into a contract with the Appellant viz., member and constituent agreement on 18.12.2006, in and by which, the Respondent/Accused was made aware of the risks involved in the transactions. 21. The Learned Counsel for the Appellant brings it to the notice of this Court that the said agreement was exclusively dealing with Derivatives Market of the Na....
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..../Company seal was endorsed on the cheques. Therefore, there was no 'Material Alteration' in the cheques as per Section 87 of the Negotiable Instruments Act, in regard to the sum written in the cheques either in words or in figures. Moreover, when both parties are not disputing the signatures in the cheques, the ingredients of Section 139 of the Negotiable Instruments Act will squarely apply to the terms of the contract. 26. The Learned Counsel for the Appellant/Company points out that as per Ex.P3 - Risk Disclosure Document, Clause 1.3.6, it is for the Respondent/Accused to make a demand for the Contract Note. Further, the Respondent/Accused is to contact the Investors Grievance Cell of the National Stock Exchange and besides that, there is a Legally Enforceable Debt for which the cheques were given and also that the Respondent/Accused had countersigned the cheques and therefore, there is no 'Material Alteration'. 27. The Learned Counsel for the Appellant takes a plea that the Respondent/Accused had failed to establish the allegations that the cheques issued were of a different colour through a handwriting expert, as per Section 45 of the Indian Evidence Act, ....
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.... is dismissed. Since we have only gone into the question whether on admitted facts, case for quashing has not been made out, the appellant will be at liberty to contest the matter in trial court in accordance with law." (ii) In the decision S. Arumugham v. Srinivasan [Crl. Appeal No. 2 of 2010, dated 19-9-2016], it is held that 'Complainant is to discharge the initial onus that cheque was given to him by the accused in discharge of 'Legally Enforceable Liability' and further he is to show that the cheque was issued in discharge of particular loan amount etc.' (iii) In the Judgment of this Court in between B. Uma Maheswari v. Petchiammal [Crl. A. No. 92 of 2008, dated 23-2-2015] at paragraph 18, it is observed as follows: "Considering the facts and circumstances of the case along with the above decisions, since the respondent/accused has not rebutted the presumption under Section 139 of the Act, the onus of proving that Ex.P.1 cheque has been issued for discharging subsisting liability is not shifted on the appellant. So the appellant/complainant has proved that Ex.P.1 cheque was issued by the respondent for discharging legally subsis....
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....ssible completion of an inchoate instrument cannot be construed as 'Material Alteration' of a negotiable instrument, as per decision Hitenbhai Parekh, Proprietor v. State of Gujarat 2010 Cri L.J. NOC 455 (Gow.)" (v) In the Judgment in between Spenser David v. Virjin Mary [Crl. Appeal No. 196 of 2009, dated 6-4-2010] at paragraphs 9 & 15, it is observed as follows: "9. As argued by the learned counsel appearing for the complainant, the proviso to Section 146 of the Negotiable Instruments Act reads as follows: "146.Bank's slip prima facie evidence to certain facts.- The Court shall, in respect of every proceeding under this chapter, on production of bank's slip or memo having thereon the official mark denoting that the cheque has been dishonoured, presume the fact of dishonour of such cheque, unless and until such fact is disproved". "15. While referring the proviso to Section 139, it is held that it has to be presumed that a cheque is issued in discahrge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. While referring....
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....the Bank. Therefore, if the claim of the Bank has arisen during the course of any business activity undertaken by the Bank, then the amount so claimed by the Bank would certainly come within the meaning of the word "debt" as defined in Section 2(g). Section 6(1) of the Banking Regulation Act, 1949, enables a Banking Company to engage in any one or more of the forms of business enumerated in clauses (a) to (o), in addition to the business of Banking. Sub-section (2) of Section 6 prohibits a Banking Company from engaging in any form of business other than those enumerated in sub-section (1). Therefore, if a transaction falls within any one of the forms of business covered by Section 6(1) of the Banking Regulation Act, 1949, it would certainly be a business activity undertaken by the Bank. Consequently, a claim that arises during the course of such a business activity undertaken by the bank, would come within the definition of the word "debt" in Section 2(g). Transaction in derivatives, fall within the category of "business activity undertaken by the Bank" as they are covered by Section 6(1) of the Banking Regulation Act, 1949." (iii) In the decision of the Hon'ble Suprem....
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....cheque by the Bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious set back. The Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a Civil Court is a long drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee." (vi) In the decision of the Hon'ble Supreme Court M.M.T.C Ltd. v. Medchi Chemicals & Pharma (P.) Ltd. [2002] 39 SCL 270 at special page 754, at paragraphs 14 & 15, it is observed as follows: "14. There is therefore no requirement that the Complainant must specifically allege in the complaint that there was a subsisting liability. The burden of proving that there was no existing debt or liability was on the respondents. This they have to discharge in the trial. At this stage, merely on basis of averments in the Petitions filed by them the High Court could not have concluded that there was no existing debt or liability. 15. Lastly it was submitted tha....
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....plaint that Rs. 15,00,000/- is due from the Respondent, on the evidence of P.W.1 (in his proof affidavit) refers to a sum of Rs. 15,47,440/- due to be paid by the Respondent/Accused. As such, it is represented on behalf of the Respondent that the Appellant/Complainant is improving his case in instalment. 34. The Learned Counsel for the Respondent brings it to the notice of this Court that P.W.1 (in his sworn affidavit) at paragraph 4 had stated that the Respondent/Accused as part loan amount of Rs. 10,00,000/- from and out of the outstanding amount had issued three cheques [in HDFC Bank Account Cheques, Namakkal Branch] viz., (i) Cheque bearing No.177366 dated 17.1.2008 for a sum of Rs. 2,50,000/-; (ii) Cheque bearing No.177367 dated 18.1.2008 for a sum of Rs. 2,50,000/-; (iii) Cheque bearing No.177368 dated 21.1.2008 for a sum of Rs. 5,00,000/- and he informed to present the same cheques in the Bank and to collect the amount. 35. The Learned Counsel for the Respondent refers to the evidence of P.W.1 (in cross examination) that the three cheques were issued by the Respondent/Accused at the same time and further P.W.1 had deposed that under the three cheques, the signature of ....
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....ed by this court." 37. The Learned Counsel for the Respondent relies on the Judgment of this Court in between A. Thayalan v. S.S. Mani [Crl. Appeal Nos. 483 & 484 of 2018, dated 8-10-2014], (CDJ 2014 MHC 4369) wherein at paragraph 49, it is laid down as follows: "49. .... In this connection, this Court pertinently points out that under Section 34 of the Indian Evidence Act, 1872 the entries in 'Books of Accounts' kept in the course of business are relevant and as such, they are admissible whenever they refer to a matter into which a Court of Law is to enquire. Further, such entries, though admissible, are not alone, sufficient to charge a person with liability unless corroborated by other evidence, as per decision Kandaswami v. Theagaraja, AIR 1968 Madras 203. That apart, this Court aptly points out the decision Experor v. Narbada Prasad, ILR (1929) 51 All 864 wherein it is held that 'Account books are admissible in evidence without any formal proof that they were regularly kept in the course of business.' Admittedly, the Appellant/Complainant had categorically stated, in his evidence, that he would show profits in construction materials in his Income Ta....
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....ouring the accused should always be accepted. This Court in the case of Chandrappa v. State of Karnataka,(2007) 4 SCC 415, at page 432 observed as follows : "42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded. (2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law. (3) Various expressions, such as, "substantial and compelling reasons", "good and sufficient grounds", "very strong circumstances", "distorted conclusions", "glaring mistakes", etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of "flourishes of language" to emphasise the reluctance of an appellate court to interfere with acquittal than to curt....
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....tute, a member of a Stock Exchange is required to maintain books of accounts in a particular manner, he would be required to do so, as non-compliance of the mandatory provisions of the Rules may entail punishment. It is not in dispute that transactions comprising purchases and sales of shares by investors is a matter of confidence. Both parties would have to rely upon one another. For the said purpose, the courts of law may also take judicial notice of the practice prevailing in such business. The learned Appellate Judge rightly did so. 35.The definite case of the second Respondent was that the cheque dated 17.8.1992 was issued by the Appellant in discharge of his debt. The said liability by way of debt arose in terms of the transactions. For proving the said transactions, the Second Respondent filed books of accounts. The books of accounts maintained by the Second Respondent were found to be not reflecting the correct state of affairs. A discrepancy of more than Rs. 14,00,000/- was found. 36.It was for the Appellant only to discharge initial onus of proof. He was not necessarily required to disprove the prosecution case. ..." Also, in the aforesaid decision at pages 54, 5....
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....l." 52. ...... The Appellant clearly said that nothing is due and the cheque was issued by way of security. The said defence has been accepted as probable. If the defence is acceptable as probable the cheque therefor cannot be held to have been issued in discharge of the debt as, for example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. 54. In any event the High Court entertained an appeal treating to be an appeal against acquittal, it was in fact exercising the revisional jurisdiction. Even while exercising an appellate power against a judgment of acquittal, the High Court should have borne in mind the well-settled principles of law that where two views are possible, the appellate court should not interfere with the finding of acquittal recorded by the court below." Discussions: 39. The plea of the Appellant/Complainant in his Complaint (before the trial Court) is that the Respondent/Accused had issued three cheques dated 17.01.2008, 18.01.2008 and 21.01.2008 drawn on HDFC Bank Ltd., PSK Towers, 127-C-3, Salem Road, Namakkal-637 001 bearing Nos.177366, 177367 and 177368 for....
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....s as under: '(ac) "derivative" includes - (A) a security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security; B) a contract which derives its value from the prices, or index of prices, of underlying securities;]' 44. Furthermore, Section 18-A under the caption 'Contracts in Derivative' enjoins as under: "18-A. Contracts in derivative.- Notwithstanding anything contained in any other law for the time being in force, contracts in derivative shall be legal and valid if such contracts are- (a)traded on a recognised stock exchange; (b) settled on the clearing house of the recognised stock exchange, in accordance with the rules and bye-laws of such stock exchange.]" 45. That apart, Section 45-U(a) of the Reserve Bank of India Act, 1934, reads as follows: '(a) "derivative" means an instrument, to be settled at a future date, whose value is derived from change in interest rate, foreign exchange rate, credit rating or credit index, price of securities (also called "underlying"), or a combination of m....
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....he mere production of the extracts of the account books would not amount to a proof of those extracts and they are to be established by evidence as per decision Ishwar Dass Jain v. Sohan Lal AIR 2000 SC 426. 50. Indeed, the entries in Books of Accounts regularly kept in the course of Business, are relevant in all proceedings in a Court of Law but these entries are not by themselves sufficient to charge any person with liability, as per decision of the Hon'ble Supreme Court in State of A.P. v. Cheemalapati Ganeswara Rao AIR 1963 SC 1850. It is true that Section 34 of the Indian Evidence Act, 1872 does not speak of any particular form of corroborative evidence. In fact, Section 34 does not mean there ought to be an independent evidence to prove each and every transaction entered in a book of account. What is essential to be borne in mind in each case is whether besides the entries in a book of account, there is any evidence to prove that the transactions referred to in those entries actually took place. Such a corroboration can be provided through the evidence of a person who wrote the books of account and in whose presence the transactions took place, as per decision Dwarka D....
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.... course according to equity, good conscience, fair play and Justice. 54. In the present case, although it is represented on behalf of the Appellant/Company that as per Clause 1.3.6 of the Risk Disclosure Document, it is for the Respondent/Accused to make a demand for the Contract Note, yet, this Court is of the considered opinion that if the Contract Note is exhibited, then, it will throw light in regard to the factual aspects of the subject matter in issue between the parties. 55. In so far as the Statement of Accounts is concerned, notwithstanding the fact that on the side of the Appellant, a plea is taken that Clause 1.3.10 of Risk Disclosure Document speaks of the signing of Statement of Accounts to the Respondent/Accused and not to the Company Law Board, this Court opines that since Ex.P4 -Statement of Accounts does not contain the signature of the Respondent/Accused with date original account book to support the entries found therein and ought to have been produced and filed before the trial Court as an Exhibit. However, such a course was not resorted to and therefore, Ex.P4 does not carry any weight in Law. 56. A perusal of the Judgment of the First Appellate Court ....
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....ill up the loopholes or lacunae in the prosecution evidence. A miscarriage of Justice might have occurred where an Accused would have been acquitted. However, an Appellate Court can exercise its plenitude of his discretionary power to prevent an Accused to escape from the clutches of Law. Ultimately, the Deliverance of Substantial Cause of Justice is to be borne in mind by an Appellate Court. 59. In view of the aforesaid detailed discussions and also this Court, taking note of the entire attendant facts and circumstances of the case in an integral manner, is of the earnest view that based on the materials available on record, it is not possible for this Court to pronounce a Judgment and therefore, opines that 'Remand' of the matter is just, fair and necessary, otherwise there will be an aberration of Justice. Further, this Court opines that Contract Note is to be marked through the evidence of proper witness on behalf of the Appellant/Complainant in the main case. The original Account Books to prove the entries made therein ought to be produced in the present case on behalf of the Appellant to prove the transaction in question between the parties as, bona fide, real and ....