1993 Supreme(Bom) 213

IN THE HIGH COURT OF BOMBAY
(SPECIAL COURT)
(Trial of offences relating to transactions in securities at Bombay)
S.N. Variava, J.
Bratindranath Banerjee, Director, Standard Chartered Bank ... Complainant.
Versus
Hiten P. Dalal ... Accused.
Criminal Application No. 1 of 1992, decided on 28 / 29 30-4-1993.
Advocates appeared :
k.g. menon with Aspy Chinoy and Sanjog Parab i/b Maneksha Sethna Co., for the complainant.
Ramakant Ovalekar with Amit K. Desai and M.S. Parekh i/b Purnanand Co., for the accused.

Headnote:Section 23-Negotiahle Instruments Act, 1881, Section 138-Proceedings under Section 138, Negotiable Act, 1881-Maintainable in case of fraudulent transaction-They are not barred under Section 23, Contract Act.

       Section 211-Negotiable Instruments Act, 1881, Sections 138 and 142 (a) - Cheque-Dishouour of-Charges can be framed on facts of case.

       Section 211-Evidence Act 1872, Sections 3 and 59-Prosecution-Additional evidence by-Evidence is rebuttal of points in cross-examination of defence can be introduced.

       Section 235 (2)-Punishment--Question of.

       It is held by the court that there cannot be better case where a strict sentence must be imposed-Accused be punished with rigorous imprisonment for a term of one year and a fine of Rs. 1 lakh, in default to undergo further R.I. for a term of 3 months.

       Sections 3 and 59-Ready Forward Transaction--Essential elements of Whether deals in dispute Ready Forward Transaction ?

       Held, DW-l was then cross examined on the second transaction i.e. Ex 16. To be remembered that he had claimed that this was also a Double Ready Forward Transaction. He admits that as per his records State Bank of India was to sell securities of Rs. 500 crores and purchase securities of Rs. 550 crores. He admits that between two Banks the only transfer of fund is a sum of Rs. 7.89 crores. He admits that there is no other lending or borrowing between these two Banks.

       He admits that even in respect of these transactions, there is no SLR implications. Thus even in respect of these transactions, it is established that none of the elements necessary for a Ready Forward Transactions were existing. Yet his Bank has received a profit of Rs. 2. 4 crores in the transaction. He is also asked whether his Bank would have entered into such a transaction. He answers that the State Bank of India would never have entered into such a transaction.

       That is not all. It is now pointed out in him that in respect of transactions under these Deal Slips, the State Bank of India had in fact paid (by way of Pay Order) a sum of Rs. 327 crores to Standard Chartered Bank. A payment would only be made if there was out right purchase or sale. If this was a Double Ready Forward Transaction, there would be no question of actually paying such a large sum.

       All the witnesses who have been asked have stated that in a Ready Forward Transaction the same stock of the same value has to be returned.

       Sections 3, 59, 60 and 115-Accused-Acting as broker of complainant Shown by accepting liability for huge amount without protest.

       Sections 3, 61-Alteration in deal ship-Effect of

       Held, in respect of Deal Bill No. 7322 dated 28th November, 1991, the difference in Contract Rate and Delivery Rate Works out to Rs. 3,82,63, 750/-. On record is a cheque dated 27th November, 1991 (part of Ex. 22) for this exact amount. These cheques have been brought on record by the accused. If the- changes and alteration were made on a later date, then on the day of entering into the transactions, cheques for the exact amount of differences could not have been issued by the accused, This establishes that the changes and alterations were made on the date of the transaction itself and that the accused has accepted his liability for these differences and paid cheques towards these liabilities.

       Section 61 - Document-Marking of Exhibition-Not mean contents also proved.

       Section 65 (g)-Scope of.

       Under section 65 (g) of the Evidence Act, when the original consists of numerous records or other documents which cannot conveniently be examined in Court and the fact which has to be proved is a general result of the whole collection, then secondary evidence of the existence and contents of documents can be given. The explanation to this Section makes it clear that under sub-section (g) evidence can be given of the general nature of documents of any person who has examined them and who is skilled in the examination of such documents.

       Sections 102 and 114 (g)-Fact-Proving of.

       When not to prove a fact, no adverse inference can be drawn.

       Sections 102 and 114 (g)-Relevant records-Non-production-Court can draw inference.

       Section 118-Evidence Act, 1872, Section 102-Contract Act, 1872, Section 25-Cheque-Issue of-Consideration for-Its proof not necessary.

       Section 118-Contract Act, 1872, Section 25-Presumption under-Applicability of.

       Held-Under Section 118, there is a presumption that every negotiable instrument was made and drawn for consideration and that every such instrument when it was accepted, endorsed, negotiated or transferred was accepted, endorsed negotiated or transferred for consideration. This until the contrary is proved. The contention that presumptions under Section 118 of the Negotiable Instruments Act do not apply to criminal trials, is not acceptable. Chapter XVII which has been incorporated in the Negotiable Instruments Act does not provide that presumption under Section 118 will not apply to a criminal trial.

       Sections 118 and 139-Evidence Act. 1872, Section 114-Statutory presumption-Court not empowered to render it sterile by process of convoluted logic nr by giving benefit of doubt.

       To be remembered that in cases of statutory presumptions the Court is compulsorily bound to draw the presumption raised by the statute. Therefore, for the presumption to be rendered sterile the facts must clearly take out that the ingredients of the offence are absent. A Court cannot render a statutory presumption sterile by a process of convoluted logic or by giving benefit of doubt. Even in case of statutory presumptions jaw the accused discharges the burden and the quantum and nature of proof required, will undoubtedly vary according to circumstances of each case.

       Section 138 - Cheque - Dishonour of-Liability of-Liabilitys non-existence to be proved by accused.

       Sections 138 and 142 - Cheqne-Dishonour of-Its liability-Reasons for dishonour immaterial.

       Sections 138 and 142 (a) - Cheque-Dishonour of.

       Complaint filed by Director of Bank maintainable and valid.

       Section 142 (2) - Contract Act, 1872, Section 25-Cheque-Issue of Right to complaint given to holder in due course knowing consideration or liability.

       SPECIAL COURTS ACT, 1979

       Sections 3, 5 and 6-Criminal Procedure Code. 1973. Section 6-Securities-Transaction in-Offence relating to-Special Courts jurisdiction depends on facts as averred.

       Sections 4 and 6 - Notification under-What will he its effect of liability of payment?

       Held-The Notification under the Special Courts Act did not have absolved the accused of his obligation to make payment. This because unlike as in a case of insolvency, under the Special Courts Act. neither on the coming into force of the ordinance or the Act nor on the person being notified, do contract and obligation under various agreements come to can end. This is very clear from Section 4 of the Act which empowers the custodian to cancel any contract or agreement entered into between 1st April, 1991 and the promulgation of the ordinance provided the same is entered into frequently or to defeat the provisions of the ordinance. Thus contracts which have not been entered into fraudulently or to defeat the provisions of the ordinance, can still be performed.

       Interpretation of-It should not be one which should under nugatory or virtually in affective provisions.

       The interpretation which must be given would have to be one which would further the purpose of the section and curb the unhealthy practice. The interpretation should not be one which should render nugatory or virtually ineffective the provisions of the Chapter XVII. It must also be remembered that these provisions are in respect of cheques. The Negotiable Instruments Act defines a cheque as a bill of exchange drawn on a banker. Under Section 5 of the Negotiable Instruments Act, a bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order, of a certain person or to the bearer of the instrument.