Delhi District Court
Mlb Capital Pvt Ltd vs Saurabh Dua on 13 May, 2024
Date of institution: 18.02.2011
Date of judgment:13.05.2024
Final Decision: Acquitted
IN THE COURT OF MS. KATYAYINI SHARMA KANDWAL: MM : NI ACT-
03 (CENTRAL) : TIS HAZARI COURTS : DELHI
CT Case No. 524221/16
CNR NO. DLCT02-001121-2011
MLB CAPITAL PVT. LTD.
HAVING ITS REGISTERED OFFICE AT 301,
PRATAP CHAMBERS, GURUDWARA ROA,
KAROL BAGH, NEW DELHI-110005
BRANCH OFFICE AT 187, DDA CYCLE MARKET,
JHANDEWALAN, NEW DELHI-110055,
THROUGH THE BRANCH HEAD
MR. PANKAJ JAIN ............COMPLAINANT
V.
SH. SAURABH DUA
S/O SH. JOGINDER DUA
R/O H. NO. 99-UB, JAWAHAR NAGAR,
DELHI-110007 .............ACCUSED
COMPLAINT UNDER SECTION 138 NEGOTIABLE INSTRUMENTS
ACT, 1881
JUDGMENT
BRIEF STATEMENT OF REASONS FOR THE DECISION FACTUAL MATRIX
1. The present complaint has been filed by the complainant against the accused under section 138 Negotiable Instruments Act, 1881 (hereinafter "NI Act").
2. Briefly stated, the case of the complainant is that complainant company is a registered stock broker firm in market/cash segment and in the Futures & Options segment. That the accused was trading in securities through complainant's branch Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:53:00 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 1 of 19 office at Jhandewalan. That he entered into an agreement with complainant on 03.09.2007 pursuant to which he was allotted Customer Transaction ID No. C5SD01 through which he carried out frequent continuous transactions and accordingly, the balance outstanding against the accused in complainant's books of accounts on 25.09.2009, was of Rs.4,57,611.47/-. That the accused thereafter stopped transacting from the complainant's office. When the complainant approached the accused for the payment of the outstanding amount, he issued cheque bearing number 647040 dated 29.12.2010 for a sum of Rs. 4,57,611.47/-, drawn on Vijaya Bank, Kamala Nagar in favour of the complainant (hereinafter "cheque in question"). That at the time of issuance of the cheque in question, the accused had assured the complainant that the same would be honoured on presentation.
3. That the cheque in question was presented for encashment by the complainant and the same was returned unpaid with the remarks "funds insufficient" vide returning memo dated 01.01.2011. That the fact of dishonour of the cheque in question was brought to the notice of the accused but he failed to make the payment of the said cheque in question to the complainant. That the complainant sent a legal notice dated 14.01.2011 to the accused through their lawyer demanding the payment as per the dishonoured cheque. That the accused failed to pay the cheque amount within the prescribed period. Hence the present complaint under section 138 of NI Act.
4. In order to support his case, the authorized representative of the complainant, Mr. Pankaj Jain (hereinafter "the AR") was examined as CW-1 and tendered his affidavit as Ex. CW 1/1 into evidence wherein averments made in the complaint were reiterated. The complainant also placed reliance on the following documents:
Ex. CW 1/A Copy of Resolution dated 07.12.2010
MARK-A Account opening form
Ex. CW 1/A-2 Statement of accounts qua customer
account of the accused
Ex. CW 1/B Cheque bearing no. 647040 dated
29.12.2010 for a sum of Rs. 4,57,611.47/-
drawn on Vijaya Bank in favour of
Digitally signed by
KATYAYINI KATYAYINI
SHARMA
SHARMA KANDWAL
KANDWAL Date: 2024.05.13
15:53:17 +0530
CC No. 524221/16 MLB Capital v. Saurabh Dua Page 2 of 19
complainant
Ex. CW 1/C Return memo dated 01.01.2011
Ex. CW 1/D Legal demand notice dated 14.01.2011
Ex. CW 1/E Postal receipt
Ex. CW 1/F Receipt of courier
Ex. CW 1/G & Delivery reports of the courier and postal
Ex. CW 1/H department
Ex. CW1/D1 Contract Notes qua transactions in the
Demat account of the accused
Ex. CW1/D2 Mail information pertaining to the
contract notes
Ex. CW1/D3 Minutes of meeting of board of directors
of complainant company held on
07.12.2010
Ex. CW1/D4 Franchise agreement between AR of the
complainant and the complainant
company
5. Upon service of summons, the accused entered an appearance and notice of accusation under Section 251, Code of Criminal Procedure, 1973 (hereinafter referred to as "CrPC") was served upon the accused on 03.11.2011 to which he pleaded not guilty and claimed trial and his plea of defence was recorded. The plea of defence taken by the accused was as follows:
There is no liability towards the complainant. The cheque bear my signature. The rest of the particulars on the cheque have not been filled by me, infact this cheque was handedover to the complainant alongwith cheque no. 647038 and 647039 at the time of opening of the D-Mat account. I have not received the legal notice dated 14.01.2011 but in the envelope I have received a notice dated 20.04.2009. The cheque in question was not issued towards discharged of liability, I have not carried out any trading transaction in my D-Mat account.
6. Application filed under section 145(2) NI Act filed on behalf of accused seeking permission to cross-examine the complainant was allowed vide order dated 13.04.2012. Complainant evidence was closed vide order dated 17.01.2019.
Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:53:31 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 3 of 19
7. Statement of accused under section 313 CrPC was recorded on 26.04.2019 wherein the incriminating evidence were put to the accused. The accused reiterated his defence. He further stated as follows:
I do not know anything about the e-mail ID: [email protected] and neither did I provide this to the complainant. I also did not receive any contract notes sent physically by the complainant to me. The concerned official of the complainant had come to my home and I had opened an account with the complainant company. I do not specifically remember the date on which I had opened the said account. I do not anything about the customer transaction ID as mentioned above. Further no such amount as aforesaid got accrued in my name since I did not in the first place make any transactions as mentioned above.
8. Matter was thereafter fixed for defence evidence. Accused examined himself as DW-1 in defence evidence. He relied on the following documents in support of his defence:
Mark CW1/D1 Notice dated 20.04.2009 received by accused from the complainant company
9. Defence evidence was closed and the matter was listed for final arguments vide order dated 27.04.2023.
10. During the course of arguments, Ld. Counsel for complainant argued:
(i) that in view of the fact that the accused has admitted his signatures on the cheque in question, the presumptions under 118(a)/139 NI Act are attracted and the case is fit for conviction. That the accused at the time of framing of notice under section 251 CrPC as well as in his application under section 145(2) NI Act and recording of statement under section 313 CrPC admitted that the cheque in question was given by him to the complainant company at the time of opening of his Demat account;
(ii) That the defence that accused did not receive the legal demand notice is untenable as he has admitted that it was correctly addressed and no Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date:
2024.05.13 15:53:51 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 4 of 19 independent evidence to prove non-delivery of legal demand notice has been led;
(iii) That the defence of accused that he did not receive the contract notes cannot be believed as numerous transactions as evidenced by statements of account Ex. CW1/A2 and contract notes Ex. CW1/D1 took place between the parties and it was not feasible to send physical copy of each and every transaction to the accused. It was further submitted that all details regarding the transactions were sent to the email id of the accused;
(iv) That the franchise office of complainant company is also a branch office and that the only requirement of appointment of the authorised representative is that he must be aware of/have knowledge of the transaction in question;
(v) that the defence of accused that this Court does not have territorial jurisdiction to adjudicate upon the present matter is not tenable at this stage.
11. Per contra, Ld. Counsel for accused argued:
(i) That the complainant has failed to prove his case beyond reasonable doubt which is the burden of proof upon him and hence, the accused be acquitted.
(ii) That there are several contradictions in the case of complainant which raise reasonable doubts on the testimony of AR of the complainant and that the AR of complainant has failed to establish that he was duly authorized by the complainant company to prosecute the present case.
(iii) That as per the terms and conditions of agreement Mark-A (clause 13), any dispute between the parties could only have been referred to arbitration and that this court does not have jurisdiction to adjudicate the dispute arising out of agreement Mark-A;
(iv) That statements of account Ex. CW1/A2 and contract notes Ex.
CW1/D1 cannot be relied upon as the same are neither signed nor are they supported by certificate under section 65B of Indian Evidence Act, Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:54:10 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 5 of 19 1872 (hereinafter "IEA") which is a mandatory requirement. Further, that the authenticity or reliability of its contents is under cloud as it is nowhere mentioned who has prepared this document.
(v) That the accused did not place any orders with the complainant firm and CW-1 has failed in conclusively establishing this fact as no details of orders allegedly placed by accused, details of contract notes, sending of contract notes either by email or courier has come on record.
THE LAW APPLICABLE
12. Before delving into the facts of the case, it is apposite to bear in mind the law with respect to section 138, NI Act. In order to prove his case under section 138 NI Act, the complainant must prove the following facts-
(i) The accused issued a cheque on a bank account maintained by him;
(ii) The said cheque must have been issued, wholly or partly, in discharge of a 'legal debt or other liability';
(iii) The said cheque was presented before the bank within 3 months from the date of issuance and was dishonoured;
(iv) The payee issued a legal demand notice, within 30 days of receipt of information of dishonour of the cheque;
(v) The drawer failed to make payment within 15 days of receipt of the said legal demand notice.
It is only when all the above-mentioned ingredients are satisfied that the person who has drawn the cheque can be set to have committed an offence u/s 138 NI Act.
13. Further, the NI Act raises two important legal presumptions in favour of the holder of the cheque as soon as the execution of cheque is proved. As per Section 118(a) NI Act, it shall be presumed that every negotiable instrument was 'made, accepted, transferred, negotiated or endorsed for consideration, unless the contrary is proved'. Furthermore, as per section 139 NI Act, it shall be presumed that 'the holder of cheque, received the cheque for the discharge, in whole or in part, of any debt or other liability, unless the contrary is proved.' Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:54:24 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 6 of 19
14. The Hon'ble Supreme Court of India in Basalingappa v. Mudibasappa, (2019) 5 SCC 418 : 2019 SCC OnLine SC 491 at page 422 held as follows:
(i) Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
(ii) The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise the probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
(iii) To rebut the presumption, it is open for the accused to rely on evidence led by him or accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to the circumstances upon which they rely.
(iv) That it is not necessary for the accused to come in the witness box in support of his defence, Section 139 imposed an evidentiary burden and not a persuasive burden.
ANALYSIS/REASONING
15. At the very outset, it is pertinent to note that in the present matter the cheque in question i.e. Ex.CW1/B was issued on 29.12.2010 and was dishonored vide return memos Ex. CW 1/C dated 01.01.2011 with the reason 'funds insufficient'. Thereafter, a legal notice (Ex.CW1/D) was sent by the complainant on 14.01.2011 to the accused. The accused in his notice framed under section 251 CrPC admitted his signatures on the cheque in question. The present matter was instituted by the complainant on 18.02.2011.
16. The case of the complainant is that the accused invested/traded in securities through their firm and had an outstanding liability equivalent to the cheque in question at the time when he stopped trading in 2009 through the complainant Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:54:37 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 7 of 19 firm. Thereafter, the accused issued the cheque in question, which subsequently got dishonored upon presentation. Therefore, the presentation of the cheque in question and its dishonorment stand proved. It is also established that the cheque in question belongs to accused and even the signatures have been proved. Once these facts are established, a presumption of the cheque having been issued in discharge of a legally existing liability and drawn for good consideration arises by virtue of Section 118(a) and Section 139 of the NI Act.
17. The effect of the presumption has been explained in a catena of judgments, including the decisions in, Hiten P. Dalal v. Bratindranath Banerjee (2001) 6 SCC 16 and RohitbhaiJivanlal Patel v. State of Gujarat &Anr (2019) 18 SCC
106. It has been held time and again that the said presumption is a rebuttable one and its only effect is to shift the initial burden of proof on the accused. When the presumption is raised in favor of the complainant, the burden shifts upon the accused to disprove the case of the complainant by rebutting the presumption raised in favour of the complainant. It is well settled that in order to rebut the presumption and shift back the burden of proof on the complainant, the accused is only required to raise a probable defence and he cannot be expected to discharge an unduly high standard of proof. Therefore, the standard of proof for rebutting the presumption under Section 139 NI Act is "preponderance of probabilities". The accused has to make out a fairly plausible defence which is acceptable to the Court. The accused can do the same, either by leading direct evidence in his defence or by raising doubt on the material/evidence brought on record by the complainant.
18. Hon'ble Supreme Court in Kumar Carpets v. Sharma Exports (2009) 2 SCC 513 held as follows:
"The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non-existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial.
Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:54:50 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 8 of 19
The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the accused should disprove the non-existence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the court may either believe that the consideration and debt did not exist or their non- existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist."
19. To sum up the above mentioned judgment, to disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or their non-existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. However, at the same time, it is also to be remembered that bare denial of the existence of legally enforceable debt or other liability cannot be said to be sufficient to rebut the presumption and something which is probable has to be brought on record to shift the burden back to the complainant. Keeping these basic principles in mind, this Court shall now proceed to deal with the defence taken by the accused and examine whether the accused has been able to rebut the presumption arising in favour of the complainant.
LEGAL DEMAND NOTICE NOT SERVED
20. One of the defence taken by the accused is that legal demand notice Ex. CW 1/D was not served upon him. At the stage of framing of notice under section 251 CrPC as Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:55:02 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 9 of 19 well as at the time of recording of his statement under section 313 CrPC, the accused had stated that he received an envelope from the complainant in 2011 but that inside the envelope, the complainant had sent notice dated 20.04.2009 (Mark CW1/D1) and not the legal demand notice (Ex. CW1/D). Therefore, it is not disputed that the legal demand notice was correctly addressed by the complainant. Hence, the complainant has proven that the legal demand notice had been correctly addressed and posted by him as evident from postal receipt (Ex. CW1/E), courier receipt (Ex. CW1/F) and tracking report (Ex. CW1/G). Since no independent evidence regarding non-receipt of legal demand notice has been led by the accused, mere statement that the contents of envelope received by him did not contain the legal demand notice Ex. CW1/D is not sufficient. Any reasonable man who receives a notice dated 2009 in 2011 is expected to take steps to bring all facts on record by either replying to the notice or sending a written communication to the sender to provide him with clarifications. Since the accused has failed to adduce any evidence to substantiate his statements, this plea of defence does not inspire the confidence of this Court. Further, considering that the legal demand notice has been properly addressed and posted by the complainant, the same is presumed to have been delivered under section 114 of the Indian Evidence Act, 1872 (hereinafter "IEA") and Section 27 of General Clauses Act as well as in view of the law laid down in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 3 SCC (Cri) 236, wherein it was held as follows:
"A person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act."
IDENTITY OF COMPANY/AR NOT CONCLSIVELY ESTABLSIHED
21. Another defence taken by the accused is the authority of the authorized representative to prosecute the present case on behalf of the complainant company Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:55:12 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 10 of 19 has not been sufficiently established and neither has the identity of the complainant company been established. It was argued that the memorandum of association and articles of association of the complainant company have not been placed on record by their authorized representative. It was also argued that while the authorized representative was in charge of a franchisee of the complainant company, he has been stated to be a branch manager of one of the branches of the complainant company.
22. It is clear upon reading the cross-examination of the AR of the complainant that at no stage was he directed to place on record memorandum of association and articles of association of the complainant company. It has merely been suggested by the accused that after leaving the services of the company, the AR of the complainant company did not have any authority to continue with the present complaint. However, apart from this mere suggestion, the defence has not brought on record any case law in support of its submissions to show that a person who is not an employee of the complainant company, but is managing one of the franchisee of the company, cannot be authorized by it to prosecute the complaint on its behalf. It is a settled position of law that when the payee is a company, the requirement for appointment of its authorized representative is whether such person has due knowledge of the transaction in question. No suggestion has been made to the AR that he does not have personal knowledge of the transaction in question as alleged. CW-1 has also brought on record minutes of meeting of the board meeting (Ex. CW1/D3) in which he was appointed as the AR of the complainant company. The defence has not contested the veracity of the aforesaid document or its contents. Even for the sake of argument of there was any lack of statutory compliance under the Companies Act, it would invite penalties prescribed under that Act against the Complainant company. However, it will not, of itself make the proceedings under section 138 of the Negotiable Instruments Act to be non-maintainable. No provision or precedent has been cited on behalf of the defence to the effect that the instant proceedings would be non-maintainable only due to the foregoing reason. A company is a juristic person and for the purposes of transacting its business, it would require authorising a natural person. The accused has not been able to show that the act of the Complainant Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:55:24 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 11 of 19 company appointing an authorised representative is ultra vires the Memorandum of Association or the Articles of Association of the Complainant company, so as to be beyond the scope of subsequent ratification. In such a situation, the complainant company is entitled to the benefit of the doctrine of Indoor Management and the challenge to the validity of appointment of the AR is without merits. Even if it be considered, arguendo, that the initial appointment of the AR was invalid, it has been held in M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234 that the defect in authorisation can be cured by the company at a subsequent stage. The complainant company has not, throughout the pendency of the case, despite having knowledge of its institution, ever expressly objected to the appointment or the acts of its AR. Therefore, any defect in the appointment of the AR or the acts undertaken by the AR stands cured in the instant case by implied ratification by the complainant company within the meaning of section 196 read with section 197 of the Indian Contract Act, Waterbase Ltd. vs Karuturu Ravendra 2002 (1) ALD Cri 689 relied upon.
23. Therefore, this defence of accused is liable to be rejected.
THIS COURT DOES NOT HAVE JURISDICTION IN THE PRESENT MATTER
24. Another defence of the accused is that this court does not have any territorial jurisdiction to try this case. Defence placed reliance on clause 13 of account opening form (Mark-A) which states that any claims/disputes between the parties have to be referred to arbitration as per the Rules, Regulations and Byelaw of the Securities and Exchange Board of India.
25. Apart from taking this defence during the final arguments, there has been no whisper of lack of jurisdiction of the present court by the accused at any stage of the trial neither has the summoning order been challenged by the accused before any appellate court on this ground. The defence has not produced any case law to show that a party is debarred from instituting a case under section 138 of NI Act when the agreement between them prescribes arbitration as the mode of settlement of disputes.
Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:55:38 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 12 of 19
Moreover, Hon'ble Delhi High Court in Newton Engineering and Chemicals Limited and Others v. Uem India Pvt. Ltd. 2023 SCC OnLine Del 7464 has relied on Sri. Krishna Agencies v. State of A.P., (2009) 1 SCC 69 to hold that arbitration proceedings and proceedings under section 138 of the NI Act are separate independent proceedings arise from separate causes of action. It held as follows:
"It is clear from the above that the arbitration proceedings as well as the proceedings under Section 138 of the NI Act arise from separate causes of action and the pendency of the arbitration proceedings would not affect the proceedings under Section 138 of the NI Act. There is no merit in the contention of the petitioners that the complaint under Section 138 of the NI Act is not maintainable in view of the ongoing arbitration proceedings between the parties."
26. Since it has been held that arbitration proceedings and proceedings under section 138 of the NI Act are separate independent proceedings arise from separate causes of action, even if arbitration proceedings were not undertaken by the complainant company for adjudication of disputes between them, the present proceedings cannot be held to be non-maintainable. In view of the same, even this defence of the accused is liable to be rejected.
TRANSACTIONS NOT PROVEN CONCLUSIVELY
27. Another defence consistently taken by the accused is that he never did any transaction through his account with the complainant company. The accused has admitted that he opened a Demat account with the complainant company and also handed over the cheque in question at the time of opening of the Demat account but stated that no trading whatsoever was carried out by him through this account. It was also submitted on his behalf that he never received any communication from the complainant company and also did not receive any contract notes from the complainant either through email or through post/courier. He also denied the email ID upon which the contract notes were allegedly sent as his email ID. It was submitted by Ld. Counsel for accused that the complainant has failed to prove the Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:55:53 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 13 of 19 transactions conclusively and that the evidence on record is not sufficient to presume the transactions in question.
28. Several suggestions/questions were put forth to CW-1 pertaining to the transactions in question. It has been admitted by CW-1 that the contracts for carrying trade were received by him or one Mr. Girish but could not tell the exact number of contracts received by them. It was further stated that all the contract notes were mailed to the accused at his mail ID [email protected] and the suggestion that the aforesaid email ID does not belong to the accused was denied stating that the email ID was provided by the accused at the time of opening of the Demat account with the company. However, when CW-1 was confronted with account opening form (Mark- A), he stated that the aforesaid email ID is not mentioned on it. No independent evidence was adduced regarding any alternate email ID or contact number of the accused on which the information was sent to him. Hence, it is clear that the information regarding the transactions carried out in his account or the contract notes was not provided to the accused electronically.
29. CW-1 also stated that the contract notes were also sent to the accused physically and/or by post/courier. However, he admitted that he did not get any signatures from the accused of having received the contract notes and did not produce the courier receipts with respect to sending of contract notes to the accused by post/courier. Despite express suggestion by Ld. Counsel for accused that contract notes were never sent to the accused by the complainant and that is why courier receipts have not been placed on record, no effort whatsoever was made by the complainant company to adduce evidence regarding sending of contract notes to the accused through post. Therefore, the fact that the contract notes had been delivered to the accused either by email or by post, has not been conclusively proven by the complainant.
30. Complainant company has relied on statement of accounts Ex. CW1/A-2 and contract notes CW1/D1 to prove that trades were carried out by the accused in his account. Perusal of contract notes CW1/D1 shows that the same nowhere bear the stamp of the complainant company. Admittedly, statement of accounts Ex. CW1/A-2 Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:56:06 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 14 of 19 is electronically generated document. At this juncture, Section 34 of the IEA, assumes importance. Section 34 states as follows:
"34. Entries in books of account when relevant.--Entries in the books of account, including those maintained in an electronic form, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."
Therefore, it is clear that the statute provides that entries in books of accounts regularly kept in the course of business are relevant but shall not alone be sufficient evidence to charge any person with liability. Therefore, the complainant cannot solely rely on statement of accounts Ex. CW1/A-2 to prove the outstanding liability of the accused on the date of presentation of the cheque in question.
31. Ld. Counsel for accused has argued that such electronically generated documents cannot be admitted in evidence as they are not supported by a certificate under section 65B of the IEA. There is no dispute regarding the fact that statement of accounts Ex. CW1/A-2 is electronically generated, however, despite being an electronic record, the certificate under Section 65B IEA has not been furnished, which is a mandatory requirement. Hon'ble Delhi High Court in Samsung (India) Electronics (P) Ltd. v MGR Enterprises, 2019 SCC Online Del 8877, held as follows:
"Further, the petitioner company has placed on record the customer/ledger statement of account of the respondent firm maintained by them from 1st January 2011 to 30th November 2011 in order to show the liability. The same has been produced in the form of a computer printout which is a secondary evidence of the electronic record of data purportedly stored in the computer of the petitioner company. The petitioner company has not provided a certificate under Section 65B of the Evidence Act to prove the same and hence the ledger is inadmissible in evidence. Learned counsel for the petitioner contends that since no objection was raised qua the mode of proof at the time of exhibiting the copies of the ledger account and the same are duly exhibited, proved and admissible in evidence. This contention of learned counsel deserves to KATYAYINI Digitally KATYAYINI signed by SHARMA SHARMA KANDWAL Date: 2024.05.13 KANDWAL 15:56:18 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 15 of 19 be rejected as in the absence of a certificate under Section 65B of the Evidence Act a computer generated document is inadmissible in evidence."
(emphasis supplied)
32. Therefore, it is clear that even if the accused did not raise any objection on the mode of proof at the time of cross- examination, the objection regarding the admissibility of a document, which goes into the root of the matter, can be taken at any stage.
33. The Hon'ble Supreme Court in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, (2020) 7 SCC 1 has, in detail, dealt with the question regarding the admissibility of electronic evidence. It was held by the court that production of the certificate under section 65B is a condition precedent and is at the very core of admissibility of electronic records. It was held as under:
"We may reiterate, therefore, that the certificate required under Section 65B(4) is a condition precedent to the admissibility of evidence by way of electronic record, as correctly held in Anvar P.V. (supra), and incorrectly "clarified" in Shafhi Mohammed (supra). Oral evidence in the place of such certificate cannot possibly suffice as Section 65B(4) is a mandatory requirement of the law. Indeed, the hallowed principle in Taylor v. Taylor (1876) 1 Ch.D 426, which has been followed in a number of the judgments of this Court, can also be applied. Section 65B(4) of the Evidence Act clearly states that secondary evidence is admissible only if lead in the manner stated and not otherwise. To hold otherwise would render Section 65B(4) otiose."
(emphasis supplied)
34. Hence, it is clear that the Apex Court has clearly held that production of certificate under section 65B is a mandatory requirement. Though the court has also held that such mandatory requirement of certificate can only be relaxed in certain cases, where for instance, a party may be unable to produce the requisite certificate due to refusal by a third party but in general cases, for an electronic evidence to be admissible as evidence, it is required to have aforementioned certificate unless the party can, by cogent evidence, prove that the circumstances leading to non-production of such Digitally signed by KATYAYINI KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:56:29 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 16 of 19 certificate were beyond its control. The certificate under Section 65B assures the authenticity of the electronic record.
35. Ld. Counsel for the accused has confronted CW-1, as a response to which several suggestions have been made to CW-1 pertaining to statement of accounts (Ex. CW1/A-2) as well as contract notes (Ex. CW1/D1) being forged and fabricated. It was further suggested that the accused has not traded from the account on the basis of the present complaint has been filed and that illegal and fraudulent transactions have been carried out in the account of the accused. It was also suggested that the accused never visited the office of complainant for the purpose of trading and that the amount of money deposited by accused in his account was siphoned off by making illegal trade of shares in his account.
36. However, the complainant has neither led any further evidence nor adduced any other document to show that the statement of accounts Ex. CW1/A-2 was genuine and reflected true and correct entries pertaining to the transactions between the parties. No evidence was adduced to prove that the contract notes Ex. CW1/D1 contain trades that were carried out at the instructions of the accused. No evidence regarding any communication received by the complainant regarding trades as ordered or any communication provided to the accused regarding confirmation of trades as ordered by him, has been placed on record. Once the complainant is confronted with questions on statement of accounts Ex. CW1/A-2 and contract notes CW1/D1, the complainant could have adduced evidence to show that the trading in the Demat account of the accused were carried out at his instructions. The complainant company could have produced transfer of information regarding alleged trades, to and from them either through email or post/courier, but no such exercise was undertaken by the complainant, despite ample opportunities. The complainant company could have also examined the person who prepared the contract notes CW-1/D1 to prove their authenticity. Furthermore, at the stage of cross-examination of accused when several suggestions made by Ld. Counsel for complainant regarding transfer of funds by the accused from his bank account to his Demat account through cheques and bank transfers were denied by the accused, the complainant could have summoned and examined bank witnesses to show that the accounts from which the amounts were so Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:56:39 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 17 of 19 received belonged to the accused or that the cheques through which the amounts were deposited in the Demat Account were drawn on the bank account of the accused. However, no such steps were taken by the complainant company and no witness was examined to prove their authenticity and veracity.
37. Once the accused has raised a probable defence by questioning the validity and the authenticity of statement of accounts Ex. CW1/A-2 and contract notes CW1/D1 itself and has denied any payment made from his bank account to his Demat account, it was imperative that the complainant takes further steps to prove the authenticity and genuineness of the same but it was not done.
38. It is a settled position of law that the case of the complainant should stand on its own legs. It cannot take advantage of the weakness of the defence, nor can the court, on its own make out a new case for the prosecution and convict the accused on that basis. It has been held by the Hon'ble Supreme Court in Rahul Builders v. Arihant Fertilizers and Chemicals and Another (2008) 2 SCC 321, the NI Act envisages application of the penal provisions which needs to be construed strictly. Therefore, even if two views in the matter are possible, the Court should lean in favour of the view which is beneficial to the accused. This is more so, when such a view will also advance the legislative intent, behind enactment of this criminal liability.
39. It is important to underscore the established canon of criminal law that in order to pass a conviction in a criminal case, the accused "must be" guilty and not merely "may be"
guilty. The mental distance between "may be" guilty to "must be" guilty is a long one and must be travel not on surmises and conjectures, but by cogent evidence. In this case, after the accused successfully rebutted the presumption of consideration by raising a doubt on the very factum of the transaction in question. The accused has clearly presented a case which is superior in way. As per the settled law, this is all that what is required, as preponderance of probabilities is not a rigorous standard of proof, but only so much evidence as makes the court lean in favour of one side and not the other. Consequently, the benefit of doubt must go to the accused. The material on record does not suggest that the accused "must be" guilty whichever way one looks at it.
Digitally signed KATYAYINI by KATYAYINI SHARMA SHARMA KANDWAL KANDWAL Date: 2024.05.13 15:56:51 +0530 CC No. 524221/16 MLB Capital v. Saurabh Dua Page 18 of 19
40. Concluding the points discussed above, in the present case the accused has raised probable defence and has discharge the burden and at the same time complainant has failed to prove positively the transaction of alleged loan. Accordingly, I hold that the complainant has failed to prove his case. The accused has been able to rebut presumption under Section 118 and 139 NI Act arising in favour of the complainant.
41. In light of foregoing reasons, I accordingly return a finding of not guilty against the accused Saurabh Dua. The accused is hereby acquitted for the offence as punishable under Section 138 NI Act.
42. A copy of this order be placed on the official website of the District Courts.Digitally signed by
KATYAYINI KATYAYINI
SHARMA
SHARMA KANDWAL
KANDWAL Date: 2024.05.13
15:57:05 +0530
ANNOUNCED IN OPEN COURT KATYAYINI SHARMA KANDWAL
ON 13.05.2023 MM-03(NI ACT), CENTRAL
THC, DELHI/13.05.2023
(THIS JUDGMENT CONTAINS 19 PAGES AND EACH PAGE IS SIGNED BY ME) CC No. 524221/16 MLB Capital v. Saurabh Dua Page 19 of 19