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Whether court can rely on documents which are not exhibited?

The witness was questioned in detail about in all 14 chequesreceived from the respondents against particular invoices and headmitted. Thus, there were questions in respect of the contents of the saiddocument i.e., letter dated 8.3.2004. The learned Magistrate ought to haveexhibited the said document. In respect of the reading this document andexhibition of this document in evidence, at the appellate stage, the learnedCounsel for the respondents has argued that this document was notexhibited because it was not signed by anybody. However, it is a fact thatthe said document was brought by the witness, the employee of thecomplainant but was called by the complainant. Therefore, in fact, he was a witness of the accused though hewas giving evidence for the prosecution.This particular letter was brought at the instance of the

accused and, therefore, the respondent ought not to have objected to theexhibition of the said document. The learned Counsel for the appellanthas also submitted that at the relevant time, the document was objectedas it was not signed. However, after going through the evidence of thewitnesses and the questions put to the witness in the cross-examination,this document ought to have been exhibited and read in the evidence.The learned Counsel obviously wanted this document to be exhibitedbecause the document discloses a chart divided under the five heads infive columns i.e., cheque numbers stating the numbers of all 14 cheques,dates of issuance of cheques, amount of the documents, name of thebank on which the cheque is drawn, the bill numbers i.e., against whichthe particular cheque was drawn. Thus, obviously, the learned Counselfor the appellant now wants to rely on this document to show that theissuance of the cheque by the respondents was against bill to bill and it was not as a part of running account.I am of the view that the learned Magistrate has committed an error23.

in not accepting these documents when the document was relied andbrought on record as the document was brought by the accused in thecross-examination, the document was written on the letterhead ofGarware Synthetics and it was received by the other party. After all,exhibition of document is a ministerial act of the Court. The stamp on thedocument was shown and accepted and the witness was fully aware ofthe contents of the document and the transaction and, therefore, whenquestions were allowed on the contents of the document and no objectionwas raised at the relevant time in respect of bringing the contents of thedocument on record, the learned Magistrate ought to have admitted thesaid document in the evidence and should have taken it on record byexhibiting it. Thus, when the contents in the document are brought onrecord then the document is required to be exhibited and read as a wholeto find out facts and ultimately to reach to the truth. Therefore, I am of theview that this particular document can be read as a whole, as submittedby Mr.Laddha, leaned Counsel for the applicant. Hence, the document is

to be read in the evidence but it cannot be read partially, it is to be read asa whole, in appeal.

IN THE HIGH COURT OF JUDICATURE AT BOMBAYCRIMINAL APPELLATE JURISDICTIONCRIMINAL APPLICATION NO.230 OF 2012

M/s.K.M. Enterprises

Vs.M/s.Garware Synthetics Ltd. & Ors.

CORAM: MRS.MRIDULA BHATKAR, J.DATE: SEPTEMBER 26, 2014Citation; 2015 ALLMR(cri)38

Applications for leave to appeal are allowed.Admit appeals.Appeals to be numbered accordingly. By consent, the appeals are calledout forthwith and heard finally, at the stage of admission2.In all these 13 appeals, the parties are same with same status i.e.,the appellant company is the original complainant and the respondentsare the original accused. All these criminal cases were filed under section138 of the Negotiable Instruments Act as the cheques issued by therespondents in favour of the complainant were dishonoured. Out of these13 cases, 9 cases are decided by the learned Metropolitan Magistrate, 30thCourt, Kurla, Mumbai by the judgement and order dated 29.11.2011 andthe other four matters are decided by the learned Metropolitan Magistrate,33rd Court, Ballard Pier, Mumbai by judgment and order dated 9.1.2014.In all these criminal cases, the respondents are acquitted and, therefore,these appeals are preferred by the original complainant challenging thesejudgments and orders of acquittal against the respondents.3.The complainant is a partnership firm and is in the business ofmanufacturing of plastic granules and Respondent No.1 is a registeredcompany. They are in the business of manufacturing plastic yarn. Thecomplainant is a supplier of the raw material to the respondent company.During the period from 2003 to 2004, a number of cheques were issued bythe respondent company in favour of the complainant firm after receivingraw material. However, on presentation of those cheques, they all weredishonoured for want of insufficient funds and thereafter the complainantfirm issued notices against the dishonour of all these cheques. However,the respondent company did not respond positively and refused to payand therefore these 13 cases were filed by the complainant firm againstthe respondent company under section 138 of the Negotiable InstrumentsAct. All the complaints were dismissed as the complainant could notprove its case on the point that the respondents were liable to pay legallydischargeable debt and, therefore, all these appeals were filed by the4.complainant firm.Mr.Laddha, learned Counsel appearing for the appellants, hassubmitted that the orders passed by the learned Metropolitan Magistrate,Kurla in the nine cases and the orders passed by the learned MetropolitanMagistrate, Ballard Pier, are erroneous, illegal and ought to be set aside.

He submitted that the learned Metropolitan Magistrates have believed thatall the cheques were issued in favour of the complainant. The respondentshave also not denied that the cheques were issued by Santosh Borkar orSunder Mollya and Mr.S.D. Barve on behalf of the company of therespondents. He submitted that when the learned Judge believed that thecheques were issued by the respondents, then, he should have relied onthe presumption under section 118 of the Negotiable Instruments Act andThealso under section 139 of the Negotiable Instruments Act.presumption is to be first read under section 118 independently and then,should have been alongwith the presumption under section 139 of theNegotiable Instruments Act as it is a special provision supporting theobject of section 138 of the Negotiable Instruments Act.The learnedMetropolitan Magistrate, Kurla has rejected the case of the complainantmainly on two grounds: one that Santosh Borkar is not an authorisedThe learned Magistrate, Kurla held that as per thecomplaints.signatory so, he should have been made an accused in the originalrequirement of section 138, a person who is a signatory, is to be heldresponsible for dishonour of the cheque. He submitted that the view takenby the learned Metropolitan Magistrate, Kurla that as Santosh Borkar wasnot an authorised signatory, the case should fail on this count, is notconsistent with the settled position of law, especially the ratio laid down inthe case of Laxmi Dyechem vs. State of Gujarat1.He submitted thatsubstitution of new authorised signatories is also cannot be a ground tojustify dismissal of the complaints. The Hon'ble Supreme Court has heldthat this amounts to constituting offence under section 138 of theNegotiable Instruments Act.He further submitted that as once it isaccepted that the cheques were issued and they were bounced for want of1 2012 (12) JT 65insufficient funds or stop payment instructions without any explanation bythe drawer, then, the Courts ought to have been completely relied onInpresumption under section 138 of the Negotiable Instruments Act.support of this, he relied on Rangappa vs. Mohan & anr,2 Vinod Tanna &Ors. vs. Zahir Siddiqui3 (paragraph 2 thereof).5.He further submitted that secondly the learned MetropolitanMagistrate, Kurla, held that no ledger account has been produced by thecomplainant i.e., the appellant and, therefore, the complainant did notprove that it was a legally dischargeable liability. The complainant in thecross-examination was questioned that if he could produce ledgeraccount, then, he should have produced it on the next date. However, hedid not produce the same. The finding of the learned Judge whileassessing this evidence that the cheques issued by the accused werenot against the amounts which were claimed in the respective invoices iserroneous. The learned Counsel submitted that this finding of the learnedMetropolitan Magistrate is contrary to the facts and law.The learnedMetropolitan Magistrate should have accepted that there is a running

account due to the business between the complainant and the accusedand, therefore, the amounts which were paid and which were accepted bythe complainant in the cross-examination where the amounts for thesupply of goods which were different than the goods against which the2 (2010) 11 SCC 4413 (2002) 7 SCC 541impugned bills were placed. The fact that due to the running account, theamounts were paid time to time and therefore, the complainant gaveadmission or the payment of those amounts by the company of theaccused to the complainant company. However, it was never against theinvoices/bills which were the subject matter of the respective criminalcases. In support of his submissions, he relied on the notices issued byhim and the reply given by the respondents to the notices. He submitted inthe reply, neither there is mention of sufficient funds nor there is anexplanation as to why the cheques were issued. Further, no reasons weregiven for the stop payment. Non cancellation of cheques is the mostimportant fact. He argued that in the statement of the accused undersection 313 also, the accused had an opportunity to explain about the stoppayment, but, there is no whisper of the reasons of stop-payment or aboutinsufficient funds. Under such circumstances, the learned Judges ought tohave accepted the case of the complainant. He further submitted that allthe admissions of the payments are given by the complainant in the cross-examination in respect of payment made in 2003.However, all thecheques were issued in the year 2004. The value of the goods supplied,as per the bills, in all the 9 cases before the learned MetropolitanMagistrate, Kurla was Rs.52,73,128/- and the value of cheques issued isRs.50,50,690/-; and in the cases before the learned MetropolitanMagistrate, Ballard Pier, the value of the goods supplied wasRs.30,82,701/- and the value of the cheques which were issued anddishonoured was Rs.31,32,581/- approximately. Thus, approximately, thevalue of the total amounts in the cheques is Rs.81,83,271/-. He furthersubmitted that the test of pre-ponderance of probability is that whetheranything is elicited in the cross-examination to arrive at a pre-ponderanceof probabilities. However, considering the cross-examination of thecomplainant, no such material has come on record and moreover, theaccused himself did not enter the box and offer any explanation to thateffect and, therefore, the defence of pre-ponderance of probability failed.There was no rebuttal of presumption under section 138 of NegotiableInstruments Act and, therefore, the judgment should have been set aside.Mr.Kyadiguppi, learned Counsel for the respondents, submitted that6.as per the case of the complainant the cheque payment was made bill tobill and, therefore, all the cases were filed against a particular bill and thebouncing of the said particular cheque issued against it. The case of thecomplainant from the beginning is not based on a running account but wason bill to bill payment. However, the complainant changed his stand and itwas argued that the complainant and the accused were having runningaccount and, therefore, the cheque was issued against the outstandingamount.In the affidavit, the complainant has stated about a runningaccount. The cross-examination in Appeal No.237 of 2012, he pointedout, was completed on 21.6.2007 and the complainant gave admission

that still their business relations continued and were in existence. It is thecase of the complainant that bills were raised within 30 to 40 days.However, as per the case of the complainant, there is a delay in paymentfor more than 12 months. The complainant gave admission that amountsin cash were accepted so also the amounts were paid by cash or chequesin the accounts of the complainant company directly by the accused. Thus,these accommodation cheques were kept upto the expiry date of thecheques and then fresh cheques were issued. This arrangement wasagreed between the parties. He submitted that as it was an adjustmentbetween the parties, it was immaterial as to who signed the cheque and,therefore, the cheques were signed by Santosh Borkar. In such an event,he pointed out that Santosh Borkar was a necessary person as anaccused. He referred the cheques on which Mr.Barve and Mr.Mollya hadsigned.However, Mr.Mollya is made an accused but Mr.Barve is notmade an accused like Mr.Borkar. He submitted that when the signatoriesare not accused and the present respondents being non-signatory, cannotbe convicted.He submitted that the complainant had admitted in thecross-examination in each case about various payments received by himfrom the applicant/accused in his accounts. Therefore, it was necessaryon the part of the complainant to prove the balance amount in the account.Every year, there was no confirmation of the accounts and in the casesbefore the learned Metropolitan Magistrate, Kurla, the applicant/accuseddid not produce ledger accounts. The cheques were rotation cheques andIn support of his submissions, he relied on two documents, i.e.,7.it was a practice.letters written by the complainant company to the accused dated17.3.2004 and 7.4.2004 in criminal Appeal No.236 of 2012 by which theexpired cheques were returned by the complainant to the accused. Healso relied on a letter dated 25.8.2004 sent by the lawyer of the accusedto Mr.Amit Ghag, the lawyer of the complainant suggesting settlement,after receiving notice. He submitted that it was not an admission of thedebt or the payment as claimed but it was just a suggestion for amicablesettlement. He submitted that the mode of payment was by way of postdated cheques. He differentiated the four cases decided by the learnedMetropolitan Magistrate, Ballard Pier in Application No.130 of 2014 andother connected cases. He submitted that if the complainant's liability isbased on running account, then the case collapses. He further submittedthat the deviation from complaints is permissible but not entirely to theextent of making out altogether different case and so the theory of runningaccount is an after-thought and on this count alone, the appeals of thecomplainant are to be dismissed.Both the learned Magistrates haverightly held the judgment in favour of the accused and have dismissed thecases and acquitted the respondents from all the charges under section138 of the Negotiable Instruments Act.All these appeals are heard together as common issues are8.involved and are decided by common reasoning. The criminal cases whichwere decided by the learned Metropolitan Magistrate, Kurla weredismissed mainly on two counts - one, that there is no proper authorisation

and the complainant failed to prove that it is a legally dischargeableliability. However, the learned Metropolitan Magistrate, 30 th Court, BallardPier, Mumbai has rejected the cases of the complainant only on thesecond count that the complainant has failed to prove that there is alegally dischargeable liability.The learned Metropolitan Magistrate,Ballard Pier, Mumbai has held that the cheques were signed by thepersons other than the accused, so that is a valid ground to reject thecase of the complainant.For example, in the cases before theMetropolitan Magistrate, Kurla, some cheques were signed by SantoshBorkar alone and some cheques were signed by Santosh Borkar andSunder Mollya and S.D. Barve of the respondent company. In the casesat Ballard Pier Court, one cheque was signed only by Mollya and Barve.Thus, it is to be noted that in all these cases, though Santosh Borkar andBarve, were the signatories of some of the cheques, are not madeaccused by the complainant. The explanation given by the complainant issimple and can be accepted that those persons who have signed thecheques, were in employment of the respondent-company and so theywere authorised to sign. However, as the accused persons, who are theDirectors of the company are liable to pay as the complainant companyhas claim against the respondent company and its Directors. The learnedMetropolitan Magistrate, Kurla, while dismissing the complaints, haserroneously held that the cases should have been filed against Borkar orBarve. As per the admission given by PW2, the bank employee, he wasnot an authorised signatory to these cheques issued of the Sangli UrbanCooperative bank.The learned Metropolitan Magistrate, Kurla ought tohave appreciated that the bank memos, which were produced by thecomplainant, disclosing the reason for dishonouring the cheques wereeither 'funds insufficient' or 'stop payment'. Nowhere it was mentioned thatthe cheques were dishonoured because they were not signed by theauthorised signatory. That apart, the Supreme Court in the case of LaxmiDyechem (supra) has considered this issue at length. The instances ofgiving different reasons of dishonour of the cheques are taken intoaccount extensively by the Supreme Court and it held that the reasonswhich are given for insufficient funds or different terminologies which areused by the bank at the time of dishonouring of the cheques are to beconsidered cumulatively as the reason to dishonour the cheque isinsufficient funds and they are to be cumulatively considered that it is adishonour of cheque within the meaning of section 138 of the NegotiableInstruments Act. The drawer in order to avoid the payment is likely tochange his signature or deliberately may commit some mistake and,therefore, the cheque can be bounced, when the funds are insufficient. Inparagraph 15 of the judgment in Laxmi Dyechem (supra), the SupremeCourt has observed thus:Just as dishonour of a cheque on the ground that the account hasbeen closed is a dishonour falling in the first contingency referred tounder section 138, so also dishonour on the ground that thesignatures do not match or that the image is not found, which too,implies that the specimen signatures do not match with thesignatures on the cheque, would constitute a dishonour within themeaning of section 138 of the Negotiable Instruments Act. .....

.....There is in our view, no qualitative difference between thesituation where the dishonour takes place on account of substitutionby a new set of authorised signatories resulting in the dishonour ofthe cheques already issued and another situation in which thedrawer of the cheque changes his own signatures or closes theaccount or issues instructions to the bank not to make payment.In the present cases, many cheques were signed by witness PW39.Santosh Borkar, who was accounts executive of Garware SyntheticsLimited at Mira Road, Thane.The cases decided by the learnedMetropolitan Magistrate, Kurla, Mumbai has held that the cheques werenot signed by the authorised signatory as Mr.Borkar was not authorisedsignatory nor Mr.Borkar is made an accused. All the complaints fail as thecomplainant could not bring the case under the ambit of section 138 of N.I.Act.On this point, the evidence of PW2 Bipin Mukundlal Shah andevidence of Borkar is to be seen. Mr.Shah was working as an officer inSangli Cooperative Bank Limited, Fort branch, Mumbai. Garware Nylonsopened account No.1037 in the name of Garware Synthetics Limited on16.9.1999 and as per their record, Mr.Nihar Garware can singly operateHowever, on 24.2.2003, Garwareaccount jointly either two of them.the account and P.N. Murthy, Barve and Mollya have to operate the saidSynthetics informed change of operations of the said account and as pertheir record, Mr.Borkar was not an authorised signatory for operating thesaid account. He also said that the subject matter of the said chequeswhen deposited for clearance, there was no sufficient balance in theaccount of Garware Synthetics Limited and as it was found insufficient,they did not verify further about the authorisation of the signature orwhether the signature differs. He has further submitted that if there is asufficient balance in the account of the drawer then the bank officersfurther verify the signature of the cheques and as there were no sufficientfunds they did not verify the signatures. On this background, evidence ofMr.Borkar, though is inconsistent, it cannot be said to be false.Headmitted that he signed all those cheques. He said that he has mentionedthat he is an authorised signatory of Garware company. He has authorityto sign the cheques and issued the cheques and therefore he has signedthose cheques he was told. He deposed that he did not know whetherGarware company had informed the bank about his authorisation or not.He is not aware whether there is any resolution in his name to operate thebank account or not is passed or not? Thus, the evidence of the PW2 onthe authorisation of signatory is true and hence, reliable evidence ofMr.Borkar on that point that he was asked to issue the cheques and hebelieved that he was authorised to sign and issue the cheques, cannot bedoubted. Mr.Borkar was instructed to sign the cheques and issue thecheques. He has deposed that at one place, these being accommodationcheques, he was asked to sign. Naturally, he was not aware about theinternal decisions of the Board of Directors of the company whether theypassed any resolution authorising him or not.He had no knowledge.Thus, he bonafide signed the cheques and issued them to the party i.e.,

the complainant. Under such circumstances, when the employee of aparticular company is given an understanding that he is authorised to signand issue the cheques and he acts accordingly under the bonafide belief,then, that cheque is to be considered, if bounced, as covered under therequirement of section 138 of the NI Act. Considering the ratio laid downby the Supreme Court in Laxmi Dychem (supra), if the cheques aresigned and issued under the instructions of the Board of Directors of thecompany and if dishonoured for want of insufficient funds, then thedefence that signature differs is not available to the drawer of the chequesin the proceedings under section 138 of the NI Act. It is unlikely on thepart of the drawee to have knowledge of the internal resolutions of theaccused company as to in whose favour they were passed givingauthorisation. The Supreme Court thus wanted to plug in this possiblemischief on the part of the drawer to escape the liability under section 138of the N.I. Act. The drawer can deliberately change his signature with aview to avoid the liability to pay and postpone the payment and so alsoimmediate payment.may direct any employee in his establishment to sign the cheques to avoidThus, in the present case, in a similar situationwhere Mr.Borkar was not authorised to sign and issue the cheques on thepoint of evidence of Mr.Borkar, cannot be said to be false.The factremains that he was not an authorised signatory. The evidence of the bankofficer (PW2) is to be accepted on this point and the learned MetropolitanMagistrate, Kurla, though has believed and held that Mr.Borkar was notauthorised signatory, he failed to appreciate that the cheques werebounced for want of funds insufficient and therefore, such dishonouring ofthe cheques was very much covered under section 138 of the Act.LEGALLY DISCHARGEABLE LIABILITY10.It is useful to reproduce a chart with material details of the 9 cases,as under:(APPLICATION NO.230 OF 2012 i.e., CASE NO.611/SS/2004 (KURLA))1. Case No.611/SS/2004 (KURLA)No. Date Amount Cheq.No. Date Signed By MemoNoticeComplaint102 11/03/03 125321 737361 15/01/04 Santosh Borker 13/07/04 11/08/04 28/09/0487 12/07/03 250641 737376 12/01/04 Santosh Borker 12/07/04 Sent on 11.8.200495 29/07/03 125321 737377 14/01/04 Santosh Borker 12/07/04Cheq.No. Date Signed By Memo16/07/04 16/08/04 28/09/042. Case No.612/SS/2004 (KURLA)No. Date Amount81 10/07/03 125321 737380 20/01/04 Santosh Borker103 02/08/03 125321 754801 22/01/04 Santosh BorkerNoticeComplaintSent on 16.8.20043. Case No.613/SS/2004 (KURLA)Date Amount Cheq.No. Date Signed By Memo503 11/03/03 125321 737362 19/01/04 Santosh Borker 16/07/04 16/08/04 28/09/04

73 03/07/03 250641 737379 19/01/04 Santosh Borker 72 03/07/03 250641 737378 16/01/04 Santosh Borker 2817/05/03 250641 737370 03/03/04 Santosh Borker41 30/05/03 125321 737371 08/03/04 Santosh Borker5. Case No.770/SS/2004 (KURLA)DateAmount256 17/01/04 250641Cheq.No. Date Signed By731411 20 10/05/04 12532101/09/04 Sent onMemoNoticeComplaint26/08/04 25/09/04 06/11/04Sent on25.9.2004Cheq.No. Date Signed By Memo737369 Santosh Borkar 26/08/04 25/09/04 6.11.2004 Sent on 25.9.2004Cheq.No. Date Signed By Memo737372 12/03/04 Santosh Borkar 09/09/04 07/10/04 24.11.200416/03/04 Santosh Borkar Amount28/02/04Date02/09/04 29/09/04 06/11/04Sunder Mollya &S.D. Barve28/02/046. Case No.771/SS/2004 (KURLA)No. Sent on 16.8.2004No. Complaint4. Case No.769/SS/2004 (KURLA)NoticeNo. NoticeComplaint7. Case No.784/SS/2004 (KURLA)DateAmount43 30/05/04 25064155 14/06/03 250641No. 737373NoticeComplaintSent on9.10.20048. Case No.785/SS/2004 (KURLA)Date

64 26/06/03 250641No. AmountCheq.No. Date Signed By Memo737374 Santosh Borkar 22/09/04 19/10/04 24.11.2004 Sent on 20.10.2004Cheq.No. Date Signed By Memo710123 Sunder Mollya & 1153814 29/09/04 27/10/04 S.D. Barve /-26/03/04NoticeComplaint9. Case No.783/SS/2004 (KURLA)Date521 No. Amount08/03/01 359815517 22/03/03 187981115 25/08/03 125321125 01/09/03 112789159 27/09/03 125321178 29/10/03 125321181 01/11/0308/04/04NoticeComplaintSent on27.10.2004Revalidated by Nihal Garware125321Less Received 8028/-116186921/02/01 297755 526 27/03/03 250641 S.D. Barve94 29/07/03 250641 Revalidated by Nihal Garware112 11/08/03 138 08/09/03 250641 158 21/09/03 250641 Total71012401/04/04Sunder Mollya &539651354284Less Received1139901 28/09/04507 Total214383/-Out of these cases, for the purpose of arguing these appeals, thelearned Counsel for the Complainant and the respondents have relied onthe evidence of the complainant in 2 to 3 cases as the evidence in all thecases is more or less on the same lines. The learned Counsel for therespondent has also pointed out the admissions elicited in the cross-examination of the complainant to buttress his submissions on the points

of rebuttal of presumption. Therefore, the evidence in a few cases isreferred herewith to get a clear idea.11.In case No.611/SS/2004 (Application No.230 of 2012), threecheques dated 1.1.2004, 12.1.2004 and 14.1.2004 were bounced. Thethree cheques were given against three invoices dated 11.3.2003,12.7.2003 and 29.7.2003 respectively for amounts of Rs.1,25,321,Rs.2,50,641 and Rs.1,25,321/-.It is mentioned that for one tonne ofplastic granules, the rate was Rs.1,25,321/- and for two tonnes, the ratewas Rs.2,50,641/-. The complainant has filed affidavit in reply wherein hehas stated specifically that the cheques were given against the threeinvoices as the goods were delivered against the three challans. The caseof the complainant was that the cheques were given against specificinvoices. The notice of demand was sent, however, all the accused failedto make the payment within 15 days of the receipt of the notice. Then inthe cross-examination, he deposed that the accused used to place orderorally and then, the goods were delivered by the complainant companyand thereafter the accused was supposed to make payment of the price ofthe goods within 30 days. He has denied that the cheques were given ascollateral security against the transaction. He said that as soon as thegoods were delivered the accused used to issue cheques to thecomplainants firm and on the back of the cheque, the complainant-He gavecompany used to write details of that particular invoice.admission in the cross-examination that his firm was maintaining books ofaccounts and he can produce the ledgers maintained by the firm regardingthe transaction in question.12.He deposed that the accused company was going through afinancial crisis and therefore, the accused company used to replace theearlier cheques by giving the fresh cheques to the complainant firm. Thenthe complainant company used to demand fresh cheques from theaccused before the expiry period of cheques. Thus, he agreed that therewas a practice of giving the cheques by way of adjustment andsubsequently the cheques were replaced by issuing fresh cheques. Aletter dated 17.3.2004, corroborating this practice, was taken on record,marked exhibit D1. He has also stated that the accused used to issuecheques in exchange for less or more amount than the amount of earliercheques. He has stated that he would have to verify to ascertain howmany cheques were replaced.In the cross-examination, questions were put to the complainant in13.respect of payments made by the accused from time to time. He agreedthat his company received the payment in piecemeal as there wascontinuous supply of goods or material to the accused and there wascontinued repayment of bill amount on the part of the accused inOn this mode of repayment, the learned Counsel for thepiecemeal.accused could seek very important admissions which are to bereproduced as follows:I am not in a position to explain against which date Ihave received the payments from the accused.

Before presenting all the subject cheques, I have notsettled accounts with the accused. I and accused didnot confirm the balance by the end of March of everyyear. I have not made correspondence with theaccused in order to apprise the accused that suchand such a bill is pending and accused is liable topay the amount of said unpaid .... It is true that theaccused also used to make the payment ofoutstanding amount by depositing the cheque as wellas some time by depositing cash in account of thecomplainant firm.14.In the present case, the issuance of cheques by the respondent-company is not disputed. Indeed, the fact of issuance of the cheques bythe respondent-company is admitted. All the cheques were issued. It isalso admitted that they were issued against the due payment. Mr.Borkarhas given admission that the respondent-company has accepted thefinancial liability. The only point is whether the cheques were issued forand presentation or only as accommodation cheques or not. In otherwords, the cheques were never intended to be presented to the bankbecause the company was undergoing financial crisis and there were nofunds. The complainant had knowledge of this financial position of therespondent company and, therefore, replacement of the cheques afterexpiry date was accepted as a part of the business by the company. Thisis the defence. In short, whether this defence is probable and whether it isto be accepted or not is a short question before the Court.15.In all these matters, which were tried by the Metropolitan Magistrate,Kurla, the examination in Chief and cross-examination of all the witnessesis more or less same. There is variation of facts depending on the numberof invoices and so also the date of the notice and reply. For example, inCriminal Appeal No.234 of 2012, which is filed against the C.C.No.770/SS/2004, invoice No.BO256 dated 17.1.2004 and against whichcheque bearing No.731411 dated 28.2.2004 was issued for Rs.2,50,641/-drawn on Sangli Urban Cooperative Bank, Fort, Mumbai. It wasdishonoured for the reason payments stopped by the drawer. While inappeal No.230 of 2012, which was for funds insufficient. The followingchart will give an exact idea of the transactions between the complainantand the accused in all the nine cases which are decided by learnedMetropolitan Magistrates Court at Kurla, and the 4 cases which weredecided by the learned Metropolitan Magistrate, Ballard Pier:In the cross-examination in this appeal of PW1 i.e., the complainant16.Kirti Mansukhlal Turakhia, was asked about ledger before the Court andhe said that he could produce the ledger before the Court. He gaveadmission that there was running business transaction between thecomplainant and the accused. He also has admitted that whenever theaccused used to make payment in cash or by cheque, then the saidpayment was adjusted against the old dues. He further admitted that therewas no correspondence with the accused that such and such bill waspending. He was asked whether he had received payment of Rs.94,000/-from the accused on 17.1.2004, he refused that it was a payment againstthe bill No.BO256 dated 17.1.2004, i.e., exhibit P3. However, he could not

tell against which bill he had received the said payment of Rs.94,000/-from the accused. He admitted that before presentation of the subjectcheque, he did not settle the accounts with the accused and he did not getconfirmation of the accounts from the accused at the end of every year.He also gave admission that when the subject cheque was deposited forclearance, at that time, he was not aware of the actual outstanding duesagainst the accused.17.PW1 stated on oath that the goods were delivered to the accusedunder invoice Nos.BO503 dated 11.3.2003, BO072 dated 3.7.2003 andBO73 dated 3.7.2003, collectively marked as exhibit P2, against which 3cheques were issued viz., 737362 dated 19.1.2004 for Rs.125,321/-,cheque No.737378 dated 16.1.2004 for RS.250,641/- and chequeNo.73779 dated 19.1.2004 for Rs.250,641/-, which were all drawn onSangli Urban Cooperative Bank, Fort, Mumbai, which are marked asexhibits P3, P4 and P5 respectively and the cheques were dishonoured forthe reason funds insufficient, as per the exhibit P6 memo. In the cross-examination, he admitted that it was a general practice adopted betweenthe parties to exchange the earlier cheques after expiry of the validityperiod of earlier cheques and the accused used to give new cheques tothe complainant. He admitted that on 10.7.2003, he had receivedRs.1,75,000/- but refused that it was given against the said transaction,but he said that he had not settled the account with the accused at the endof every year and he also admitted that he could not state against whichbill the complainant had received Rs.1,75,000/- from the accused onHe admitted that the accused used to randomly depositcheque or cash in the bank account of the complainant-firm.10.7.2003.18.It is to be noted that four appeals bearing Nos.129 of 2014 to 132 of2014 were decided subsequent to the judgments in the nine cases whichwere dismissed on merit by the learned Metropolitan Magistrate, Kurla.The judgments in the cases by the learned Metropolitan Magistrate,Ballard Pier were passed on 9.1.2014. Thus, the parties were aware ofthe view taken by the learned Metropolitan Magistrate, Kurla fromNovember, 2011. The evidence in the matters pending before theMetropolitan Magistrate, Ballard Pier was recorded in 2009 i.e., prior to thejudgment in the cases by the Metropolitan Magistrate, Kurla. At the timeof recording of evidence before the learned Metropolitan Magistrate, Kurla,8 invoices for the supply of products were from 10.2.2001 till 31.1.2004.They are marked collectively P2 in the said case. As per the case, indischarge of the said liability, he issued two cheques bearing Nos.754802dated 6.2.2004 for Rs.13,34,259/- and another bearing No.754803 dated9.2.204 for Rs.4,76,408/-drawn on Sangli Bank. They were markedcollectively P3 and P4. They were bounced for reasons funds insufficient.He admitted that the transactions between the two parties was going onsince 1992 till the date of the evidence i.e., 2009. The orders were placedorally and the post dated cheques were given. The cross-examination ofthe complainant in the cases decided by the learned MetropolitanMagistrate, Ballard Pier, is more specific than the cross examination onthe cases before the learned Metropolitan Magistrate, Kurla. No suchledger was produced before the Metropolitan Magistrate, Kurla. However,

in the cases before the Metropolitan Magistrate, Ballard Pier, statement ofaccount which is marked exhibit 31, in Application No.130 of 2014, wasIt was pointed out that on 16.10.2003, invoice No.65288 wasproduced.raised. On 16.10.2003, amount of Rs.33,750/- was received by theaccused through HDFC bank. Then, the admissions in respect of receiptof the amounts and the dates are as follows:Amount (Rs.)16/10/2003 16,25017/10/2003 50,00028/10/2003 3,75,00029/10/2003 1,20,00003/11/2003 1,68,75006/11/203 96201/12/2003 48,00003/12/2003 65,000 60,00005/12/2003 40,00015/12/203 45,000 4,183 2,12816/12/2003 16,000 17,540Date of the cheque 22/12/2003 1,50,642 32103/02/2004 50,000 75,32109/02/20041,25,32112/02/20041,25,32114/02/20041,00,00021/02/200450,00017/11/200395,00055,00045,000ig17/11/2003Mr.Laddha has argued that the questions asked in the cross-19.1,25,00018/12/2003 examination in respect of the payment made by the accused in the BallardPier cases were all randomly asked; however, the cheques were issuedagainst specific invoices and, accordingly on the back of each chequedetails were written. These submissions cannot be appreciated especiallyon the background of the admissions given by PW1 Mr.Turakhia in thecross-examination. Though he admitted the payment, he could not specifyagainst which invoice the payments were made. In defence, under section

138, the accused has to make out a probable circumstance. The degreeof probability of the existence of the facts or the circumstances which isrequired to be shown by the accused cannot be equated with the degreeof the proof of the facts and circumstances which is required to beestablished by the prosecution or the complainant.At this stage, I would like to advert to the submissions of Mr.Laddhain respect of non-exhibition of one important document.Mr.Laddha20.submitted that a letter dated 8.3.2004 was sent by Garware SyntheticsLimited i.e., accused to the company of the complainant with K.M.Enterprises. He relied on two other documents i.e., exhibit D1, in caseNo.611/S/2004 dated 17.3.2004, a letter sent by the complainant companyto the respondent company and also another letter sent by the company ofthe complainant to the respondent company dated 7.4.2004 markedexhibit D2 in C.C. No.611/S/2004. The learned Counsel submitted that theletter dated 8.3.2004 also ought to have been exhibited by the learnedMetropolitan Magistrate, as this letter was brought in the cross-examination and this letter disclosed the cheque numbers, their dates, theamount so also on which bank the cheques were drawn and against whichbill number, the cheques were paid.In order to substantiate hissubmissions that the subject cheques were paid against a particular bill orinvoice, he said this document is very significant. The document fortifiesthe case of the complainant i.e., payment was against a particular invoiceand it was not in the running account. He submitted that the learnedMagistrate has committed an error in not accepting the said document inthe evidence. He pointed out that though the document was not signed byanybody, it was on the letterhead of the Garware Synthetics Limited and itwas relied on by the advocate for the accused at the time of the trial. Thelearned Counsel for the respondents opposed these submissions andargued that once the document is not exhibited in the criminal trial, it21.cannot be exhibited or cannot be looked into at the appellate stage.The purpose of exhibiting a document is to make the parties awarethat this particular document is proved and the Court is going to read thecontents in the document in evidence. A party can rely on the contents ofthe documents if the contents are favourable to a party and otherwise mayexplain and answer the contents if they are against the party. Sometimes,mere exhibition of document may not amount to proof of the contents inthe document. The document may be exhibited subject to proof of thecontents, if the authorship of the contents is attributed to some otherperson. The document is to be proved by following the procedure laiddown in the Evidence Act. The Evidence Act is not merely a procedurallaw but also a substantive law. If the document is not proved or exhibitedby the trial Court, then, normally, it cannot be read in the evidence at theappellate stage.On the background of this position of law, thesubmissions made by the learned Counsel in respect of reading thedocument, i.e., a letter dated 8.3.2004 are to be tested.22.The witness was questioned in detail about in all 14 chequesreceived from the respondents against particular invoices and he

admitted. Thus, there were questions in respect of the contents of the saiddocument i.e., letter dated 8.3.2004. The learned Magistrate ought to haveexhibited the said document. In respect of the reading this document andexhibition of this document in evidence, at the appellate stage, the learnedCounsel for the respondents has argued that this document was notexhibited because it was not signed by anybody. However, it is a fact thatthe said document was brought by the witness, the employee of thecomplainant but was called by the complainant. Therefore, in fact, he wasThis particular letter was brought at the instance of theprosecution.a witness of the accused though he was giving evidence for theaccused and, therefore, the respondent ought not to have objected to theexhibition of the said document. The learned Counsel for the appellanthas also submitted that at the relevant time, the document was objectedas it was not signed. However, after going through the evidence of thewitnesses and the questions put to the witness in the cross-examination,this document ought to have been exhibited and read in the evidence.The learned Counsel obviously wanted this document to be exhibitedbecause the document discloses a chart divided under the five heads infive columns i.e., cheque numbers stating the numbers of all 14 cheques,dates of issuance of cheques, amount of the documents, name of thebank on which the cheque is drawn, the bill numbers i.e., against whichthe particular cheque was drawn. Thus, obviously, the learned Counselfor the appellant now wants to rely on this document to show that theissuance of the cheque by the respondents was against bill to bill and itI am of the view that the learned Magistrate has committed an error23.was not as a part of running account.in not accepting these documents when the document was relied andbrought on record as the document was brought by the accused in thecross-examination, the document was written on the letterhead ofGarware Synthetics and it was received by the other party. After all,exhibition of document is a ministerial act of the Court. The stamp on thedocument was shown and accepted and the witness was fully aware ofthe contents of the document and the transaction and, therefore, whenquestions were allowed on the contents of the document and no objectionwas raised at the relevant time in respect of bringing the contents of thedocument on record, the learned Magistrate ought to have admitted thesaid document in the evidence and should have taken it on record byexhibiting it. Thus, when the contents in the document are brought onrecord then the document is required to be exhibited and read as a wholeto find out facts and ultimately to reach to the truth. Therefore, I am of theview that this particular document can be read as a whole, as submittedby Mr.Laddha, leaned Counsel for the applicant. Hence, the document isto be read in the evidence but it cannot be read partially, it is to be read asa whole, in appeal. The said document discloses that all those chequeswere accommodation cheques.24.The basic question why the cheques were issued if at all they werenot intended to be paid is answered by the respondents. The chequesexaminationhasalso

admittedthatthewere issued by way of an accommodation. The complainant in his cross-chequesissuedwereaccommodation cheques. Some points need to be noted that thecomplainant did not send a letter of intimation to the accused beforepresentation of these accommodation cheques.Secondly, there wascontinuous business transactions going on even after the filing of thesecases till the evidence of the complainant was recorded and no civil suitfor money recovery is filed by the complainant. Therefore, even thoughthe respondents did not enter the box to give evidence, admissions givenby the complainant in respect of payments are sufficient to discharge theburden of rebuttal.25.Learned Counsel for the appellant, the original complainant, on thepoint of issuance of postdated cheques means accommodation cheques,relied on Kamal Trading Company vs. State4, where the leaned SingleJudge of this Court at Aurangabad Bench, has held that difference in inkand signature on the cheque is not legal when the defendant accused didnot dispute commercial transactions and issued postdated cheques to thecomplainant. The learned Sessions Judge has unwarrantedly observedthat the ledger entries were not proved by the petitioner. Further it is not4 2013 ALL MR (Cri) 2789disputed by the accused that the postdated cheques were given to thecomplainant for the goods purchased on credit of 30 days. In the case ofVinod Tanna vs. Zaheer Siddiqui 5, the learned Judge of this Court hasheld that if the issuance of the cheques in favour of the respondents is notdisputed. Then, the presumption under section 118 is to be invoked andunless it is not rebutted, it will not be open for the petitioner to show thatsection 138 is not attracted because the cheque was not issued fordischarge as a whole or in part, of any debt or other liability. In the case ofC.Keshava Murthy vs. H.K. Abdul Zabbar 6, the Honble Supreme Courtvs. Shree Mohan8.discussed the law laid down in K.J. Bhat vs. D.Hegde7 and RangappaIt observed that the proposition in K.J. Bhat vs.D.Hegde (supra) that the burden is always on the complainant toestablish not only issuing of cheque but existence of debt or legal liability,is not correct, as held in para 26 of the judgment rendered by the 3 JudgeBench in Rangappa vs. Shree Mohan (supra), wherein the Court heldthat presumption under section 139 of the Negotiable Instruments Actincludes a presumption of existence at the legally enforceable debt orliability.In C. Keshavamurthy (supra), the Supreme Court hadconfirmed that the presumption is required to be honoured if it is not sodone, the entire basis this enactment will be lost.5678

2001 Cr.L.J.22972013(3) DCR 2013 (SC) (DB)(2008) 4 SCC 54(2010) 11 SCC 441Therefore, it has been held that it is for the accused to explain his26.case and defend it once the fact of cheque bouncing is established by theThe learned Counsel also relied on the judgment inVyomesh Jitendra Trivedi vs. State 9.27.complainant.In Krishna Morajkar vs. Joe Ferrao10, a learned Single Judge ofthis Court placed reliance on the judgment in the case of Rangappa(supra) and has concluded thus:Before I conclude, with all humility at my command, it has to be notedthat even after noticing the object of enacting Section 138 of theNegotiable Instruments Act, namely to enhance the acceptability ofcheques, Courts have been accepting virtually any argument advanced tonullify the liability created, like ignoring or misreading presumption underSection 139 of the Act, misreading provisions of Sections 269SS and271D of the Income Tax Act, unmindful of the consequence thatunscrupulous individuals go on signing cheques irresponsibly. When aperson signs a cheque and delivers it, even if it is a blank cheque or apost dated cheque, presumptions under section 118(b) and 139 of theNegotiable Instruments Act would have to be raised and would have to berebutted by the aced, albeit by raising a probability. Unless the Courtsstart discouraging flimsy defences, acceptability of cheques would notincrease. .....28.On the point of running account, the complainant placed reliance onthe judgment in Ganesh Enterprises vs. D.R. Sarla w/o. Rajendran,Proprietor, Priya Silk Sarees11. In the said case, the goods that is rawsilk and twisted yarn was purchased on credit and three cheques wereissued which were bounced.However, the Court had acquitted the9 2013 (3) DCR 66110 (2013) 2 DCR 60711 2007 (2) DCR 236respondents on a ground that the complainant did not produce a singleinvoice or bill before the Court to show the purchase of silk. There was athroughout business of purchase of raw silk and yarn by the respondentaccused from the appellant on credit basis and it was a running account.In the said case, the respondent accused did not enter the witness box,but her husband had offered as a witness. The appeal was allowed andThe learned Counsel also relied on the judgment in Voltas Ltd. vs.29.the respondents were punished.Vidarbha Vehicles Pvt. Ltd.12, the Andhra Pradesh High Court held thatthe burden lies on the accused to prove that the cheque was not issued byhim and even if issued, it was not in lieu of a legally enforceable debt.30.The respondents in reply has relied on the judgment of the SupremeCourt in C.Anthony vs. K.G. Raghavan Nair13. In the said case, payment

was stopped by the drawer i.e., the accused as a blank cheque was givento another and it was used by the respondents. The trial Court acquittedthe accused but the High Court set aside the acquittal wherein theSupreme Court has held that the Court must express its reasons forholding that the acquittal is not justified and if two conclusions areavailable, then the finding of the trial Court is not to be disturbed. TheHigh Court should not re-appreciate the evidence and reverse the order of12 2007 Cr.L.J. 59613 (2003) 1 SCC 1acquittal in the said case and then the order passed by the High CourtThus the ratio laid down by the Supreme Court and various High31.was set aside.Courts on the point of presumption and the object of the Act is now settledlaw and in view of this settled position of law, it is necessary to consider akey issue in respect of rebuttal of the presumption in the facts of thepresent case as the rebuttal of the presumption is always a matter ofevidence, circumstances and facts of each case. For this reason, the32.evidence in two to three cases is discussed to certain extent.The document marked at exhibit No.D1 in C.C. No.611/SS/2004 (inApplication No.230 of 2012) dated 17.3.2004 shows that 7 cheques whichwere expired, were returned by the complainant to the Garware SyntheticsLimited and a request was made to issue fresh cheques for the sameThe exhibit D2 was from KMimmediately by letter dated 17.3.2014.Enterprises addressed to Garware Synthetics Limited on 7.4.2014 wherein2 cheques were enclosed which would be expired and same request wasmade to issue fresh cheques for the same immediately. This shows thatthe other cheques were replaced by the cheques which were going to beexpired. Thus, this is an accommodation.The submissions of therespondents that the term accommodation may not be available anywherein law or under the Negotiable Instruments Act, however, if it is a mutualarrangement between two parties which is not legally barred then, thatmode of adjustment of money is to be accepted as a valid agreementbetween the two parties, are correct and therefore, a theory of the defencethat the respondent company used to issue accommodation chequesnumber of times against the repayment of the due debt is found probable.The word 'accommodation' is not synonym to the word 'security' but itborrows the same colour of adjustment in the transaction. Therefore, it isexpected that the accommodation cheques were not to be presentedunless the drawer gave green signal for the presentation. The intentionbehind the issuance of these cheques, which were used as a security, isrequired to be proved by the respondents, if such defence is adopted.However, once it is shown that the cheques were issued as an assurancetowardsliabilityandnotintendedtobe

actedupon,therespondent/accused thus rebutted the presumption. Thus, the transactionbetween the parties has to be understood accordingly. A draweeaccommodates the borrower by allowing to postpone the payment of thedebt with a view to give some breathing time to the borrower to collectfunds and repay the debt. Therefore, accommodation cheques can begiven in continuation as one, two or three, as the case may be. Issuingpost dated cheques may look like giving accommodation cheques. Everyaccommodation cheque, in fact, is a postdated cheque, but everypostdated cheque not necessarily is an accommodation cheque. An eachpostdated cheque falls due for payment on the date written on the cheque,and to be presented before the bank. Often, post dated cheques aregiven in day to day transactions may be business, personal or forpayment of loan, etc. A shortage of money is the only reason for issuingaccommodation cheques; while post dated cheques are issued not onlybecause the funds are less but for various reasons viz., convenience,accessibility of the parties, etc. This is the basic difference between theasaccommodationcheques.respondentsregular postdated cheques and the postdated cheques issued by theThoughthetermwas used not onlyaccommodation is not a legal term, in the present transaction, the termby the respondent / accused but also by theHence, the replacement ofcomplainant with mutual understanding.further postdated cheques was demanded. As expressed earlier, a natureof the transaction and the undercurrents therein between the partiesagreed and if the same is not illegal, then, has to be taken into account inorder to appreciate the defence raised by the respondents/accused. In allthe cases under section 138 of the Negotiable Instruments Act thelaudable object behind this enactment to enhance the acceptability and toincrease the credibility of the instrument, cannot be forgotten, yet, thepresumption is rebuttable depending on the facts and evidence in eachcase. It appears that the replacement of cheques in the transactionbetween the parties with new cheques before expiry of the previouscheques or immediately after expiry of the previous cheques was anaccommodation or adjustment, whereby allowing some time to therespondents to repay the debt and at the same time, it was anacknowledgement of the liability by the respondents towards thecomplainant. This is done because it was a running account and businessbetween these parties.In M.S. Narayana Menon @ Mani vs. State of Kerala and anr 14,33.the Supreme Court has held that the onus on the accused is not as heavyas that of the prosecution. It may be compared with a defendant in a civilproceeding. If the defence is acceptable as probable, the cheque cannot

be held to have been issued in discharge of the debt. If the cheque isissued for security or for any other purpose, the same would not comewithin the purview of section 138 of the Negotiable Instruments Act.In Jayeshbhai vs. State15, the cheques were issued against the34.goods, but, against the purchase of cloth. However, it was found defectiveand the cheques were subsequently dishonoured. In the said judgment,the learned Single Judge of this Court has placed reliance on the case ofC.Anthony vs. K.G.R. Nair (supra) wherein it was stated that unless thefindings of the trial Court are perverse or contrary to the material onrecord, the High Court cannot in an appeal substitute its findings merely14 JT 2006(6) SC 7215 Cr.Application NO.307 of 2008 decided on 5.5.2008because another contrary opinion was possible on the basis of theThus, the main contention of the complainant that there was always35.material on record.bill to bill payment is doubtful as the respondents succeeded in pointingout higher possibility that the cheques issued were in fact not intended forpresentation. The learned Judges of the Metropolitan Magistrate Courtshave observed that the yearly balance confirmation was not obtained bythe complainant. At the end of every financial year, verification of theoutstanding payment received is necessary to fix the amount of the dues.However, it was not done. Though the complainant has denied that it isnot collateral security, but accepted that the cheques were given topostpone the payment due to financial difficulty of the accused. Thus, it isheld that such replacement of cheques by post dated cheques was notintended for the presentation or repayment but they were handed over togive assurance of acknowledgement of the debt. General liability to paythe debt and liability to pay a legally dischargeable debt under section 138of the Negotiable Instruments Act is not one and the same but there is adifferent between these two liabilities.36.In M.S. Total Finaelf India Ltd. vs. Rashmi Parnami16, a learnedSingle Judge of the Delhi High Court held that when the appellant could16 Criminal Appeal No.1239 of 2001 decided on 3.5.2013not prove the cheques in dispute were issued against any debt or liability,mere liability of the respondents to pay her dues towards purchase ofgoods is not enough to proceed under section 138 of the NegotiableInstruments Act as the appellant has civil remedy to recover outstandingdues and so no interference was called for in the reasoned order passedby the trial Court.Thus, there may be a general liability to pay which can be claimedbut not under section 138 of the Negotiablepursuing civil litigation37.38.Instruments Act, which is a strict and specific liability.Hence, in view of this, I do not find any illegality in the judgmentsand orders passed by the learned Magistrates and hence, no interferenceis called for. All the Appeals are dismissed.(MRS.MRIDULA BHATKAR, J.)

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Whether court can rely on documents which are not exhibited?