TMI Blog2017 (4) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 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 Trade Finance Facility. The accused No.2 stood as a guarantor and issued a letter of guarantee dated 5th November, 2007 in favour of the Complainant-company. Since M/s. Jaimin Jewe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NI Act'). It was registered as C.C. No.820/SS/2010. 10. The plea of the accused was recorded. The accused pleaded not 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 Fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Directors of the accused No.1company cannot be held vicariously liable for the alleged offence. 17. Mr. I.S. Thakur, the learned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect the cases where recording of evidence had commenced as envisaged under section 145 (2) of the NI Act. He submits that since the judgment 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t adduced any evidence to show that the said cheques were issued towards security or that the said cheques were never intended to be presented for encashment. The evidence 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing questions : 15) In terms of the reference order, the following questions have to be decided by this Bench: (i) Whether a Power of Attorney holder can sign and file a complaint petition 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the transactions then he cannot be examined. However, where the attorney holder of the complainant is in charge of the business of the complainantpayee and the attorney holder alone is personally aware of the transactions, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remain present before the Court, nor to examine the complainant of his witness upon oath for taking the decision whether or not to issue process on the complaint under Section 138 of the N.I. Act. (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany that the principles enunciated in the said decision are restricted only to the complaints filed by an individual person and not by a juristic person. 38. At this stage, it would also be advantageous to refer to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already existing on the statute book as on the date of filing of the complaint, reiterated that the power of attorney is competent to file a complaint under section 138 of the NI Act and to depose before the Court provided he has knowledge 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate the source or ground of the information or belief, and give the name and address of, and sufficiently described for the purpose of identification, the person or persons from whom he had received such information. (3) When the statement rests 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 eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y alleged that the subject cheques dated 31st October, 2009 were issued by the accused No.2 as a Director of accused No.1 company towards repayment of trade finance facility. The evidence of CW1 Vimukt Nayak and CW2 Mahesh Malunjkar, Senior Officer, Legal reveals 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, request letter, and other documents pertaining to the transaction, including statement of account of the complainant company and the ledger account of the accused No.1 for the relevant period were deliberately suppressed since there were no outstanding 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance of probability. As stated earlier, the accused in discharging the burden is not obliged to examine himself. He can discharge the burden on the basis of the material on record, or by eliciting such material in the cross examination as to create doubt about 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, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue issued by the partnership firm as security. The question is about the genuineness of the case put forth by the Complainant-company. As stated earlier, in the instant case, the Complainant company had come with a specific case that the accused No.2 had issued 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said exparte judgment dated 16.11.2011 was delivered during the pendency of the criminal case, the complainant company had neither produced the said judgment before the trial court nor made any reference to the said suit. The complainant company had totally suppressed 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. ₹ 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 ₹ 4,40,43,466.31, whereas the amount mentioned in the subject cheques dated 31.10.2009 was ₹ 4,50, 00,000/. The demand in the statutory notice dated 13.4.2010 was also for an amount of ₹ 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 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curacy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity. Under Section 65B(4) of the Evidence Act, if it is desired to 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ched the credibility of CW2 and that they have not refuted the genuineness of the certificate issued by CW3. 68. It is pertinent to note that, CW1Vimukt Nayak, the power of attorney of the Complainant Company had neither produced the statement of account 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same was saved in the main server. He has stated that he does not know when such data was entered in the user terminal or as to how many persons had entered such data in user terminal. He has stated that he is not a system administrator and that apart from 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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