Delhi District Court
Hari Niwas Gupta vs Om Propmart Pvt Ltd. & Ors on 10 April, 2015
IN THE COURT OF BHARAT CHUGH,
METROPOLITAN MAGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.275, TIS HAZARI COURT COMPLEX, DELHI
Hari Niwas Gupta
VERSUS
Om Propmart Pvt Ltd. & Ors
JUDGMENT
Part A - The lis at a glance A. Serial No. of the Case CC No. 3048/10 B. Date of Alleged Commission of 11.03.2009 the offence C. Name of the Complainant Hari Niwas Gupta s/o Late Lala Ram Gupta, r/o 16/4, New Rohtak Road, Guru Gobind Singh Marg, Karol Bagh, New Delhi - 110005 D. Name of Accused persons & their 1. M/s Om Propmart (P) Ltd.
parentage & residence Registered office B-2/426, Yamuna Vihar, Delhi - 110053
2. Shri Satish Kumar s/o Shri Atal Upadhyaya Singh r/o B-2/426, Yamuna Vihar, New Delhi -
110053 (Director of Accused No.1 company)
3. Sh.Pankaj Tyagi s/o Shri Sauraj Singh, r/o 163, Village Kaland, Tehsil Sardhan, Distt. Meerut, Meerut (U.P), 250242 (Director of Accused No.1 company)
4. Sh. Pawan Tyagi s/o Sh. Basant Singh r/o Village Panchi-II, Tehsil Sardhana, Distt. Meerut, Meerut (U.P) 245206 (Director of Accused No.1 company) E. Offence complained of Dishonor of cheque - culpable u/s 138 of the Negotiable Instruments Act.
F. Plea of the accused and his Pleaded not Guilty. Took the defence examination (if any) that the cheques in question were Hari Niwas Gupta v. Om Propmart & Others Page 1 of 43 given as conditional security and not in discharge of a legally enforceable debt or liability. They further contended that the contingency on the happening of which the cheques were encashable, having not taken place, the contract is not enforceable. This is the defence on the substantive issue of liability, apart from other issues of technical nature (limitation/defective notice) relating to maintainability of the present complaint G. Final Order Acquittal H. Judgment reserved on 21.03.2015.
I. Judgment pronounced on 10.04.2015.
Part B - A brief statement of reasons for the decision (As mandated u/s 355(i) of the Code of Criminal Procedure, 1973.) Complainant's case
1. Pithily put, It is the complainant's case that the accused persons 2 to 4, represented themselves to be reputed Estate Agents and directors of Accused No.1 company M/s Om Propmart Pvt Ltd, to the complainant, who is a businessman, and was desirous of setting up an industrial unit in Tronica City, Loni, Ghaziabad. The accused persons represented that they could help the complainant acquire Industrial Plots in Tronica City, Loni, Ghaziabad, and on the basis of their assurances, and to enable the accused persons to clinch a property deal for him, the complainant advanced a total sum of Rs. 50,00,000/- to the accused persons. A sum of Rs. 15,00,000/- was advanced to the accused persons first by way of cheque No. 717624, dated : 02.04.2008. On the inability of the accused to secure a deal with this amount at their disposal. The complainant advanced another sum of Rs. 35,00,000/- to the accused by way of Cheque No. 717641, dated 28.05.2008. These cheques are stated to have been encashed by the accused on 04.04.2008 and 31.05.2008 respectively. These payments are stated to have been made to Hari Niwas Gupta v. Om Propmart & Others Page 2 of 43 enable the accused to make spot payments and clinch a suitable deal for the complainant. It is the complainant's case that the accused persons, after having made the complainant part with this huge amount of money, failed to keep their word and their promise of acquiring a good Industrial Plot for him and finally on their sheer inability to do so & after great insistence of the complainant agreed to return the amount advanced by the complainant (i.e Rs.50,00,000/-) by way of the following five cheques, details of which are as follows :-
S.No. Chq No. Dated Amount
1 507609 12.07.2008 Rs.2,50,000/-
2 507610 12.08.2008 Rs.2,50,000/-
3 507611 12.09.2008 Rs.2,50,000/-
4 507612 12.10.2008 Rs.2,50,000/-
5 507613 01.11.2008 Rs.40,00,000/-
• Table 1.1 - The cheques in question
all drawn on the HDFC Bank Ltd., C-1/14A, Yamuna Vihar, New Delhi - 110053, issued by accused no.2 to 4 in their capacity as Directors of accused no.1 company and also Incharge of its day to day affairs.
2. Much to the dismay of the complainant, none of the cheques got honored on presentation. The first cheque (as per table 1.1 - Cheque No. 507609) was presented by the complainant for honour on 12.07.2008, wherein it was returned dishonored on account of 'funds in the account of the accused being insufficient'. The said cheque was again presented, at the assurance of the accused that this time it would be positively cleared, however the same again returned dishonored, this time on account of having become 'stale'.
3. The rest of the cheques were also presented by the complainant subsequently, and much to his chagrin, returned dishonored on account of 'funds in the account of the accused being insufficient'. The cheque at serial no.2 i.e Cheque No. 507610, returned dishonored to the complainant on 09.02.2009.
Hari Niwas Gupta v. Om Propmart & Others Page 3 of 43The cheques at serial no. 3 to serial no. 5 have been returned dishonored vide return memo dated 18.02.2009.
4. This constrained the complainant to serve a Legal Notice on the accused on 09.03.2009, which was met not with payment but a reply by the accused (dated 21.03.2009) disclaiming their liability. The complainant being aggrieved by the non payment within 15 days of service of legal notice, set the criminal law into motion by filing the present complaint on 24.04.2009. The complainant entered the witness box himself in support of his case as CW1.
5. Vide order dated 24.09.2009, the accused persons were summoned to face trial for an offence u/s 138 of the N.I.Act, but only with respect to the cheques at serial nos 2 to 5 in table 1.1 above. With respect to cheque at serial no.1 i.e Cheque No. 507609, no cognizance was taken since that cheque had returned dishonored for the first time on 12.01.2009 and the legal notice was sent on 09.03.2009 i.e beyond the period of 30 days from the date of dishonor or knowledge thereof. The complaint, therefore qua Cheque at serial No.1 was dismissed and matter proceeded with respect to the rest of the cheques and accused persons summoned with respect to cheques at serial number 2 to 5 in table 1.1.
The Defence
6. The accused persons entered appearance and pleaded not guilty. Accused No. 2 to 4 admitted having issued the cheques in question drawn on an account in the name of Accused No.1 company M/s Om Propmart Pvt. Ltd. Accused No. 2 & 4 admitted having signed the cheques in their capacity as the directors of Om PropMart Pvt. Ltd. They also admitted having filled in the particulars on the cheque. Accused No. 3, denied having signed the cheques in question.
On the substantive aspects of liability, The common defence of the accused persons (culled out from their plea of defence & application u/s 145 (2) of Hari Niwas Gupta v. Om Propmart & Others Page 4 of 43 the NI Act) is that the cheques in question were given as conditional security and not in discharge of any legally enforceable liability. Though the accused admitted the receipt of Rs.50,00,000/- from the complainant by way of two cheques as mentioned above, however it was contended by the accused that the complainant and the accused have entered into several business transactions since 2005-2006. It is claimed that, prior to the deal with respect to the plot in question, to which we shall shortly turn, the complainant being a financier and regular investor in property, has purchased as many as 6-7 industrial plots but has not set up any industrial plot till date. The accused claim to have assisted the complainant in sale/transfer/other legal formalities of the some of these plots, details of which are elaborated in their applications u/s 145(2) of the N.I.Act.
7. In that factual background, the accused persons contend that the complainant has not to come to the court with clean hands, insofar as he has concealed that he did not part with Rs.50,00,000/- in the abstract for the purchase of some property by the accused for him, but it is with respect to the specific transaction pertaining to Industrial Plot bearing no. G-186, Sector D-I/P-3 situated at Tronica City, Loni, Ghaziabad, UP on 02.04.2008, that the present controversy pertains. [For the ease of reference this property shall be hereinafter referred to as 'the plot in question'].
8. The accused persons contended that the complainant agreed to purchase the plot in question through the accused, for which the total consideration was stipulated to be Rs. 60,00,000/-, out of which, the complainant had paid an earnest amount of Rs.15,00,000/- initially. This was evidenced in the agreement to sell between the parties entered into on the same date i.e 02.04.2008 duly witnessed by DW2 & DW3. [Led in evidence as Mark 'G']
9. The accused persons contend that after the execution of the said agreement, the complainant became disinclined to purchase the property on account of a recession and resultant slump in the property prices and tried to wriggle out Hari Niwas Gupta v. Om Propmart & Others Page 5 of 43 of his commitment and started demanding return of the earnest money of Rs. 15 lacs paid by him initially.
10. The accused persons claim, that it was prevailed upon the complainant that under the Agreement to sell dated 02.04.2008 [Mark G] entered into between the accused and the complainant, the said amount was liable to be forfeited in case the deal was not carried all the way through by the complainant.
11. To resolve this deadlock, and with the intervention of market persons, A Memorandum of Understanding was entered into between the accused and the complainant on 24.05.2008 [Mark H - witnessed by DW2 & 3] in which it was stipulated that the complainant now wanted to sell the plot in question through the accused and it was agreed between the parties that the complainant would make the balance payment of Rs.35 lacs subject to the accused company issuing cheques of a cumulative amount of Rs.50 lacs as security of the payment made to the accused company by the complainant. The MoU envisaged the sale of the property by the accused in the market if they find a suitable buyer. It was also stipulated that since the total consideration was Rs.60 lacs, the complainant would pay the balance consideration of Rs.10 lacs before 12.06.2008 i.e. the date of completion of sale as per original agreement to sell dated 02.04.2008. It was agreed that the said cheques will be presented for payment only if the sale of the plot takes place through the accused and if the said plot was not sold within a year, the complainant would return the cheques and the possession of the plot would be handed over to him.
12. The accused persons submit that these material facts have been concealed by the complainant to suppress the real genesis of the case. The complainant is trying to wriggle out of the transaction which he feels is not profitable now, due to the slump in property rates. The accused contends that the cheques in question were delivered to the complainant as post dated security cheques, the presentation of which was contingent on further sale of the property by Hari Niwas Gupta v. Om Propmart & Others Page 6 of 43 the accused persons.
13. The accused claimed that the plot in question has not been sold till date and therefore the liability under the security cheques never arose. Furthermore, the accused persons submit that are ready and willing to materialize the said transaction, by executing sale documents in favour of the complainant even now provided the complainant making the balance payment of Rs.10 lacs and any other loss occasioned. The accused therefore, claim that the cheques in question were not issued in discharge of a legal liability, but as conditional security, the condition having not been met, the liability on cheques cannot be said to be legally enforceable. They plead an exoneration on this count. Apart from other technical grounds, such as, the bar of limitation and legal notice being defective, which shall be dealt with later in the judgment.
Hence the factual matrix, in a nutshell is the complainant alleges that a huge amount of money was taken from him by the accused under the guise of buying a suitable plot for him, which the accused never did, on account of which they came under a liability to return the amount of Rs. 50,00,000/- to the complainant, towards payment of which the present cheques are said to have been issued.
As against this, accused claims that this is a classic case of a property deal gone foul due to slump in property prices. The accused persons claim that the amount was not advanced in the abstract to buy some property, but for the specific plot in question, and it is the complainant who backtracked from the deal in view of slump in property prices, and later anxious to protect his earnest money, entered into an MoU with the accused and received the cheques in question as security cheques. The condition i.e sale of property by the accused further, not having been fulfilled, the liability is not enforceable.
Hari Niwas Gupta v. Om Propmart & Others Page 7 of 43In support of their case, accused no.4 has entered the witness box himself as DW1, and also led the evidence of DW2 Dev Kumar, DW3 Pawan Kr Tyagi and DW4 Lalit Gogia. These witnesses have entered the witness box to depose and prove the execution of agreement to sell dated 02.04.2008 (Mark G) and MoU dated 24.05.2008 (Mark H) and to prove the defence of the accused to the effect that the cheques in question were given as conditional security and not in repayment of amount taken from the complainant or in discharge of any debt or liability.
This, in sum and substance, is the factual exposé.
14. The factual position being thus, Now let us quickly run through the legal benchmark which is to be satisfied in order to constitute an offence under S. 138 N.I. Act :-
(i) Person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii)That cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv)That cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) The payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as Hari Niwas Gupta v. Om Propmart & Others Page 8 of 43 unpaid;
(vi) The drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
Being cumulative, it goes without saying that it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act.
This is the legal benchmark to be satisfied in order for a prosecution u/s 138 of the N.I.Act to succeed.
15. The service of the legal notice has been admitted by the accused and their reply to the same has been led in evidence as Ex. CW1/13, therefore, the aspect of service of legal notice need not be delved into.
16. Apart from denying liability on substantial grounds, the accused has raised a number of objections with respect to the maintainability of the proceedings, which deserve to be discussed at the very outset :-
a) Ld.Counsel for the accused has argued with great vehemence that the present complaint is barred by limitation, having been filed beyond the prescribed period of limitation. It has also been argued that the legal notice was not sent within 30 days of dishonor with respect to cheque no. 2 in table 1.1 and the complainant for that reason is not maintainable.
b) It has also been argued that the proceedings in the present case suffer from an inherent infirmity as the legal demand notice stands vitiated being faulty. The accused has contended that in the legal demand notice, payment of all the cheques detailed in table 1.1 has been demanded, out of which cheque No.1 is shown to have become outdated/stale. He submits that the payment on that cheque could not have been demanded.
Hari Niwas Gupta v. Om Propmart & Others Page 9 of 43He submits that since the legal notice makes a consolidated demand of Rs. 50,00,000/- (which includes the amount on the stale cheque), the demand was illegal. This according to the accused, renders the entire complaint still born and vitiates the notice. To buttress this submission Ld.Counsel for the Accused relies on the judgment in D.S.Nanda & Other v. Height Export Pvt. Ltd. - 2008 SCC OnlineDel 398.
Period of Limitation
17. The attack on the question of limitation is two pronged. Let us first deal with the objection as to the legal notice having been sent beyond 30 days from dishonor of the cheque at Serial No.2 in table 1.1 To see whether the case can be said to be within period of limitation. Let us briefly recapitulate that the complaint remains with respect to Cheques at Serial Numbers 2 to 5 in table 1.1, as cognizance with respect to cheque No.1 therein has been declined on account of it having become stale.
Ld.Counsel for the Accused has argued that Cheque No.2 in table 1.1 (No. 507610 dated 12.08.2009) was returned unpaid by the bankers of the complainant on 05.02.2009, and the consolidated legal notice concerning all the cheques having been sent on 09.03.2009, was beyond the period of limitation of 30 days as prescribed vis-à-vis this particular cheque. The other cheques (At serial nos 3 to 5 of table 1.1) were returned dishonored on 18.02.2009, therefore the legal notice concerning them has been sent within 30 days.
The argument of the accused that the legal notice w.r.t cheque No. 507610 was not sent within 30 days of dishonor fails to cut any ice since the Hari Niwas Gupta v. Om Propmart & Others Page 10 of 43 complainant has specifically deposed as having received the information of dishonor of this cheque from his bankers on 09.02.2009. Nothing could be culled out from the complainant during his cross examination that would falsify this claim. So construed, the legal notice sent on 09.03.2009 is within 30 days from the receipt of information of dishonor of the cheque. If the accused disputed that claim, he ought to have summoned the bankers of the complainant with the register concerning the handing over of the dishonored cheque or the information thereof to the complainant. No evidence has been forthcoming on this count. In these circumstances, there is no reason to assume that the complainant received the information of dishonor of the cheque on the date of dishonor memo i.e 05.02.2009 and not on 09.02.2009. The legal notice having been sent on 09.03.2009 cannot be said to be outside the period prescribed of 30 days.
In the second attack on limitation, Ld.Counsel for the Accused has also argued that since the accused had replied to the complainant's legal notice vide their reply dated 21.03.2009, the communication of which was complete against the complainant on the moment it was put into transmission, the cause of action for filing of the present complaint, therefore had arose on 21.03.2009 itself, and the complainant could have filed the case within one month thereof i.e by 21.03.2009. Seen in this light, it is contended that the filing of the case on 24.04.2009 is beyond the period of limitation.
This contention, I am afraid, is completely devoid of merit. The computation of period of one month for filing of the case has to be computed from the date when 15 days from the service of legal notice expire. The legal notice of the complaint having been dispatched on 09.03.2009, can in the ordinary course of business be said to have reached the accused in 2 days. (As per the citizen charter of the postal department relied upon by the accused) which is by 11.03.2009, now after due service, the accused had a period of 15 days in Hari Niwas Gupta v. Om Propmart & Others Page 11 of 43 which they could have made payment, i.e by 26.03.2009. Payment having not been made, the complainant could have filed the case within one month thereafter i.e by 26.04.2009. The complaint in the present case has been filed on 24.04.2009, therefore within the period of limitation. The period of one month of filing of the complaint cannot be reckoned from the date of reply of the accused to the legal notice. The statute lays down a period of 15 days for the accused to make the payment. The cause of action for filing of the complaint arises on the 16th day. The fact that the accused denies payment, to illustrate, on the 5th day of such dishonor, that would not give rise to cause of action on the same day. To substantiate this, a bare reference to the basic language of the statute shall suffice. Section 138 of the N.I.Act reads :-
"138 Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to an- other person from out of that account for the dis- charge, in whole or in part, of any debt or other lia- bility, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that ac- count by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of infor-Hari Niwas Gupta v. Om Propmart & Others Page 12 of 43
mation by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Hence from a reading of proviso (c) of the section, it is clear that the drawer of the cheque has 15 days from the receipt of legal notice, to make the payment and avoid prosecution. This statutory period for filing of complaint thereafter is provided in Section 142 of the N.I.Act, which reads as follows :-
142 Cognizance of offences. --Notwithstanding anything contained in the Code of Criminal Proce-
dure, 1973 (2 of 1974)--
(a) no court shall take cognizance of any offence punishable under section 138 except upon a com-
plaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:
It is clear from a bare reading that the date of reckoning or the date on which the cause of action is said to have arose, is the date on which fifteen days from the service of legal notice elapse. (i.e as per clause c of proviso to Section 138 of the NI Act). The fact that the accused sent a reply disclaiming liability before that period would not give rise to cause of action as the statute makes no departure in that case. The period of limitation is to be reckoned from the expiry of fifteen days of service of legal notice, which in the present case is 26.03.2009, the complainant having been filed within one month thereof i.e on 24.04.2009 is within limitation.
This argument having been overcome. The accused has alternatively argued Hari Niwas Gupta v. Om Propmart & Others Page 13 of 43 that the complaint was filed on 1.05.2009 and not 24.04.2009 as claimed by the complainant. It has also been argued on behalf of the accused that the complainant in his examination has admitted that the complaint has been filed on 1st of May, 2009, which he submits is the actual date of filing. As regards the endorsement of filing on the face of the complaint, the accused argues that the same has been forged or fabricated by the complainant with a view to render his complaint within the period of limitation.
This objection to my mind is thoroughly misconceived as the complaint on its first page clearly bears the endorsement of filing of 24.04.2009 and the same also bears signatures of the then Ld.CMM(Central). The stamp clearly states that the case having been filed on 24.04.2009, was marked to Sh.Ashu Garg, Ld.MM and for it to be taken up for consideration on 07.05.2009, which happened to be a holiday and the matter was finally taken up on 08.05.2009. The official endorsement commands presumption of it being correct and genuine. The argument of fabrication of that stamp is too far fetched, especially because this argument was never taken up even once during the entire life of this litigation having been filed in 2009. It seems quite improbable that the complainant would indulge in such far fetched and elaborate forgery and go to an extent so as to fabricate the stamp, and also the signatures of the Ld.CMM concerned, in order to save limitation.
Especially when the lapse of limitation is not a cul-de-sac (dead end) for him, or any complainant for that matter, as delay could always have been condoned, and which usually is, if sufficient cause is shown, which term is to be interpreted liberally as per settled guidelines.
The submission that the complainant has admitted in his examination that the date of filing is the 1st of May, 2009, to my mind is inconsequential, and appears to be an inadvertent factual error. A complainant, who usually acts through counsel, especially in ministerial tasks such as filing, cannot be Hari Niwas Gupta v. Om Propmart & Others Page 14 of 43 expected to remember the date of filing of the case with certitude, especially when he comes to depose after a substantial period of time. The matter having been filed on 24.04.2009 and then listed on 8th of May, 2009 for the first time, it stands to reason that the complainant may have labored under a belief that May, 2009 to be the date of filing. When the official endorsements, which have never been challenged till date, bear the date of filing as 24.04.2009 that is conclusive of the matter, unless of course, the accused proves otherwise by concrete evidence, which he has failed to. The accused having raised this extremely tenuous argument ought to have led evidence to prove that the complaint case was not filed on 24.04.2009 but on 1.05.2009, by summoning the necessary records, which he has failed to do. He who asserts ought to bear the onus of proving the same, is the guiding principle in matters of evidence.
The arguments relating to limitation having been overcome, let us turn to the other technical objection taken by the accused.
Defective Notice
18. The second objection of the accused concerns the validity of the legal demand notice Ex.CW1/11. Ld. Counsel for the Accused has argued that, by complainant's own admission, Cheque at S.No.1 was stale at the time of giving of legal notice. He argues, that it is also not in dispute that the complainant had demanded payment of all the cheques in the consolidated legal notice dated 09.03.2009 (Ex. CW1/11). He submits that payment of the cheque No. 507609, having been stale, could not have been stacked together with other cheques in the legal demand notice. He submits that the complainant ought to have confined his demand only to the other cheques, the payment of which could have been lawfully demanded. He submits that for this reason, the legal demand notice issued by the complainant as a Hari Niwas Gupta v. Om Propmart & Others Page 15 of 43 precursor to this prosecution is not within the terms of Section 138, proviso
(c) of the N.I.Act and therefore stands vitiated. To buttress his submissions he relies on D.S.Nanda & Other v. Height Export Pvt. Ltd. - 2008 SCC OnlineDel 398, wherein the court was faced with a situation where the accused had issued four cheques to the complainant, out of which only three cheques came to be presented, however in the legal demand notice - payment with respect to all the cheques was sought, including payment on the cheque that never came to be presented. In these circumstances the Hon'ble High Court of Delhi held the notice to be defective and proceedings were quashed on this ground alone. It is argued that this decision was delivered after due consideration of previous decisions of the Hon'ble Supreme Court on the point, and therefore carries great precedential weight. The relevant extract from the decision is reproduced as under :-
"
2. The aforementioned complaint was filed by the Company Height Exports Pvt. Ltd. in respect of the dishonour of three cheques issued in its favour by Paragon, a partnership of which Petitioner No. 1 Shri D.S. Nanda is a partner. Petitioner No. 2 is the wife of Petitioner No. 2 and described in the com- plaint as the authorised signatory of Petitioner No. 3. The de- tails of the three cheques which were dishonoured were:
Cheque No. Date Amount (Rs.)
102318 10.01.2006 5 Lacs
102319 17.01.2006 5 Lacs
102320 22.01.2006 7 Lacs
3. The complaint states that Petitioner No. 3 Paragon had is- sued 4 cheques in all but that the fourth cheque was not pre- sented for payment. Learned counsel for the Petitioner sub- mits that although the petitioners seek the quashing of the complaint on several grounds, he would rest his case for the present on one ground.
He submits that the notice issued by the complainant to the drawer (Paragon) demanding payment soon after the dishonor of the cheques, did not comply with the requirements of the law as contained in Clause (c) of the proviso to Section 138 Negotiable Instruments Act, 1881 ('NI Act'). He points out that the complainant's demand notice dated Nil May 2006 sets out the details in respect of three dishonoured cheques in the Hari Niwas Gupta v. Om Propmart & Others Page 16 of 43 sum of Rs. 5 lakhs, Rs. 5 lakhs and Rs. 7 lakhs aggregating Rs. 17 lakhs but calls upon the accused to make the entire payment of Rs. 25 lakhs (Rs. Twenty Five lakhs only along with interest) and Rs. 11 lakhs (Rs. Eleven Lakhs only) to- wards the expenses of the legal notice.? Relying on the judg- ment of the Supreme Court in K.R. Indira v. Dr. G. Adi- narayana, 2003 (3) JCC (NI) 273 : [2004 (1) All India Crimi- nal LR (S.C.). 133] which has been reiterated in Rahul Builders v. Arihant Fertilizers and Chemical, [2007] 80 SCL 277 (SC) it is contended that where the notice demanding payment is itself defective, no complaint could have been filed much less could the offence under Section 138 NI Act be taken cognizance of by the learned MM.
4. Learned counsel for the Respondent does not dispute the fact that the notice issued by the complainant to the accused had called upon the accused to make the payment of the entire sum of Rs. 25 lakhs and was not confined to the amount cov- ered by the three dishonoured cheques.
5. The law in regard to the requirement of making a demand for payment of a sum that exactly corresponds to the amount covered by the dishonoured cheques was first explained by the Supreme Court in K.R. Indira. The relevant paragraph of the said judgment reads as under:
"...However, according to the respondent, the notice in question is not separable in that way and that there was no specific demand made for payment of the amount covered by the cheque. We have perused the contents of the notice. Sig- nificantly, not only the cheque amounts were different from the alleged loan amounts but the demand was made not of the cheque amounts but only the loan amount as though it is a de- mand for the loan amount and not the demand for payment of the cheque amount, nor could it be said that it was a demand for payment of the cheque amount and in addition thereto made further demands as well. What is necessary is making of a demand for the amount covered by the bounced cheque which is conspicuously absent in the notice issued in this case. The notice in question is imperfect in this case not be- cause it had any further or additional claims as well but it did not specifically contain any demand for the payment of the cheque amount, the non-compliance with such a demand only being the incriminating circumstance which exposes the drawer for being proceeded against under Section 138 of the Act....?
(Emphasis supplied)
6. More recently in Rahul Builders, the Supreme Court was considering a case where the total outstanding bill amount was Rs. 8,72,409 and in part discharge thereof a cheque for the sum of Rs. 1 lakh was issued to the complainant. This cheque when presented for payment was dishonoured. The notice issued by the complainant to the accused soon there-
Hari Niwas Gupta v. Om Propmart & Others Page 17 of 43after did not confine the demand to the cheque amount of Rs. 1 lakh but required the drawer of the cheque to settle the en- tire pending bills. The Supreme Court quashed the criminal proceedings, inter alia, on the ground that the notice demand- ing payment was for a sum over and above the sum indicated in the dishonoured cheque. The Supreme Court explained the rationale for insisting on a strict compliance with Clause (c) of the proviso to Section 138 NI Act in the following manner:
The statute envisages application of the penal provi- sions. A penal provision should be construed strictly; the condition precedent wherefore is service of no- tice. It is one thing to say that the demand may not only represent the unpaid amount under cheque but also other incidental expenses like costs and inter- ests, but the same would not mean that the notice would be vague and capable of two interpretations. An omnibus notice without specifying as to what was the amount due under the dishonoured cheque would not sub-serve the requirement of law. Respondent No. 1 was not called upon to pay the amount which was payable under the cheque issued by it. The amount which it was called upon to pay was the out- standing amounts of bills, i.e., Rs. 8,72,409/-. The notice was to respond to the said demand. Pursuant thereto, it was to offer the entire sum of Rs. 8,72,409/-. No demand was made upon it to pay the said sum of Rs. 1,00,000/- which was tendered to the complainant by cheque dated 30.04.2000. What was, therefore, demanded was the entire sum and not a part of it.
7. Thereafter, while reiterating the dictum in K.R. Indira, the Supreme Court affirmed the decision of the High Court quashing the complaint.
8. This Court in Pramod Vijay Khullar v. State, 2005 [1] JCC [NI] 97 followed the decision in K.R. Indira and in similar circumstances quashed the criminal complaint.
9. As far as the present case is concerned it is obvious that only three cheques were presented for payment which were dishonoured and the amount covered by these cheques was Rs. 17 lakhs. The notice demanding payment required the Petitioner/accused to make the entire pay-
ment of Rs. 25 lakhs which was over and above the amount covered by the dishonoured cheques. Accordingly, following the judgments of the Supreme Court in K.R. In- dira and Rahul Builders, Complaint Case No. 49198 of 2006 titled Paragon v. Height Exports Pvt. Ltd. pending in the court of the learned Additional Chief Metropolitan Magistrate ('ACMM'), New Delhi and all proceedings consequent thereto hereby stand quashed."
Hari Niwas Gupta v. Om Propmart & Others Page 18 of 43A bare reading of the judgment reveals that in the case under discussion (D.S.Nanda - supra) though the amount under the three dishonored cheques was set out adequately and separately, however in view of the fact that the fourth cheque was never presented at all, but payment having been sought thereon, the legal demand notice was held to be vitiated. Learned Counsel for the Accused has argued that for the purpose of demand u/s 138 of the N.I.Act, an outdated/stale cheque cannot be distinguished from a cheque which was not presented at all as mentioned in aforesaid judgment. Hence merely by presenting the stale cheque to the bank, the notice dated 09.03.2010 cannot be saved from what he calls a 'fatal infirmity'. He has also argued that the legal notice being a consolidated one has to be vitiated in totality and the present prosecution crumbles on that account.
I am in agreement with the argument of the Ld.Counsel for the Accused. There is no rational or reasonable differentia between the case of a cheque having not been presented at all or a cheque having become outdated/stale, for the purposes of demand. In either case demand cannot be made legally as the cause of action on the cheque extinguishes at-least for the purposes of an offence u/s 138 of the NI Act. When a legal notice can be vitiated on account of demand of an unpresented cheque, it does not stand to reason why a different approach should be adopted in case of a stale cheque. The underlying idea on as to why a demand ought to extend to live cheques is that legal demand notice affords an opportunity to the accused/drawer to avoid prosecution by making payment thereon. It is manifestation of the salutary principle of natural justice - audi alteram partem. In view of this, the legal demand notice is required to set out with precision the demand on the cheque and only that demand the payment of which could have been legally sought. This is to afford an opportunity to the accused to know with certainty the demand against him and pay the amount to avoid prosecution. Whenever the legal demand notice does not state the demand with precision Hari Niwas Gupta v. Om Propmart & Others Page 19 of 43 or makes a demand that could not have been made, the same leads to uncertainty in the mind of the drawer as to whether he is required to make the entire payment and even on stale cheque or a cheque that was never presented at all. This dilemma strips the notice of its legality. In D.S.Nanda (supra) the basic idea to hold the notice vitiated seems to be that the accused/drawer in such a case would be prejudiced if no clear demand is made to him. He would not be in a position to know whether he would avoid prosecution by making the payment on the other three cheques or not, or does he have to comply with the entire demand. The same logic holds true in the present case too. The accused could not have known whether to comply with the entire demand or the ones other than on the stale cheque. This renders the legal notice vitiated to my understanding. Furthermore the legal notice having made a consolidated demand is not severable and cannot survive even with respect to the other cheques. A consolidated demand of Rs. 50,00,000/- (including demand on stale cheque) having been made must have created that doubt and confusion in the mind of the drawer as to whether he would avoid prosecution by making the entire payment or the payment on other cheques except the stale one. This vitiates the legal demand notice and renders it in violation of Section 138, proviso (c). Once the legal notice is vitiated the entire proceedings fall to the ground. There is no reason to take a different view from the one taken by the Hon'ble Delhi High Court in D.S.Nanda (Supra). What further fortifies this conclusion is the basic canon of interpretation of penal laws i.e strict construction. When a statute imposes criminal liability, the same ought to be constructed strictly and compliance of a mandatory condition ought to be scrupulously ensured before the criminal law can take its course. In this case the condition precedent of a prosecution u/s 138 of the NI Act, i.e valid legal demand notice being not fulfilled, the proceedings fall to the ground and the prosecution cannot sustain.
Having said that, since arguments have been heard at length on the core issue Hari Niwas Gupta v. Om Propmart & Others Page 20 of 43 of 'whether cheques in question can be said to have been issued in discharge of a legally enforceable debt or liability or not?' The same is being also discussed as follows, since every judgment is an endeavor to utmost objectivity.
Question of Liability
19. Before approaching that issue, let us again briefly recapitulate that the accused persons have admitted having drawn the cheque on a bank account maintained in the name of accused no.1 company, and having signed the same. Now once these foundational facts are admitted and a factual basis is established, by virtue of Section 118(a) and Section 139 of the NI Act a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration, arises.
Section 118 of the N.I Act provides "Presumptions as to negotiable instruments:
Until the contrary is proved, the following presumptions shall be made: (a) of consideration - that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Section 139 of the N.I Act further provides as follows:
"Presumption in favour of holder - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability"
Hence it is clear that, as per the scheme of the N.I Act, on proof of foundational facts - a presumption arises as to the cheque having been issued in discharge of a legal liability, and the burden of proof lies upon the accused to rebut the said presumption. This clearly is an instance of the rule of Hari Niwas Gupta v. Om Propmart & Others Page 21 of 43 'reverse onus' in action, where it is incumbent on the accused to lead what can be called 'negative evidence'. Evidence of a character not to prove a fact affirmatively, but to lead evidence to show non existence of liability. Keeping in view, that this is a departure from the cardinal rule of 'presumption of innocence' in favour of the accused, and also keeping in mind that negative evidence is not easy to be led by its very nature. It is now fairly well settled that the accused can displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt need not be proved to the hilt or beyond all reasonable doubts. The accused can either prove that the liability did not exist or make the non existence of liability so probable that a reasonable person ought under the circumstances of the case - act on the supposition that it does not exist. The presumption can be rebutted by the accused by bringing forth a version which is more probable and superior in weight than the version put forth by the complainant. Simply put, the accused has to make out a fairly plausible hypothesis. This the accused can do either by leading own evidence in his defence or even by punching holes within the case of the complainant in the testing ordeal of cross examination.
In that light let us proceed to examine the defence of the accused and answer whether the same is a plausible one. In this we would, at all occasions, juxtapose the conduct of the accused as well as the complainant, with that of the hypothetical reasonable man and see as to whose version inspires more confidence and appears more probable.
20. In my opinion in the present case the accused has succeeded in rebutting the presumption of legal liability, by exposing the inherent improbability of the case of the complainant and also by positively proving its own defence of cheques having given as conditional security by proof of Agreement dated 02.04.2008 & MoU dated 24.05.2008, which reveal that the cheques were Hari Niwas Gupta v. Om Propmart & Others Page 22 of 43 meant to be encashed on the further sale of the property by the accused, which never happened. The second aspect would be discussed later in the judgment.
On the point of intrinsic infirmities in the case of the complainant. Let us briefly recapitulate that the complainant has claimed that a staggering amount of Rs. 15,00,000/- and later Rs.35,00,000/- was handed over the accused in air and without any specific property in mind or deliberation. This does not stand to reason and goes against the grain of ordinary human conduct. The complainant, it is important to note, is not a naïve person but a veteran businessman who has transacted in the past in such property deals. The complainant has maintained that this was the first transaction of property with the accused persons who were introduced to him by one Mr.Lalit Gogia (DW4). It is hard to believe that the complainant transacting with the accused for the first time would advance such a huge amount of money to the accused sans any formality or agreement or without even having a specific property in mind. It is inconceivable that the accused did not show a single plot to the complainant , however still the complainant not only gave Rs. 15,00,00/- on 02.04.2008 but another Rs.35,00,000/-, which are by no means small amounts, even to the complainant. Even believing his story for an instant, having failed to discuss even one plot on the initial payment of Rs. 15,00,000/- it ought to have dawned on the complainant that the accused were just trying to get some money out of him without any sincere intentions to facilitate the buying of a plot for him. Judicial Notice can be taken of the fact that in ordinary property transactions, the property is first chosen and earmarked and then after negotiations, a price is agreed upon and deal is fructified. The court while deciding cannot lose sight of the ground realities and common market practices.
In this regard reliance is placed on John.K.John v. Tom K. Varghese (2007) Hari Niwas Gupta v. Om Propmart & Others Page 23 of 43 12 SCC 714, wherein the improbability of such big money transactions sans any formal instrument has been discussed, the relevant extract is reproduced hereunder :-
"11. Relationship between the parties is not in dispute. ..
The High Court was entitled to take notice of the conduct of the parties. It has been found by the High Court as of fact that the complainant did not approach the Court with clean hands. His conduct was not that of a prudent man. Why no instrument was executed although a huge sum of money was allegedly paid to the respondent was a relevant question which could be posed in the matter. It was open to the High Court to draw its own conclusion therein. Not only had no document been executed, even no interest had been charged. It would be absurd to form an opinion that despite knowing that the respondent was not even in a position to discharge his burden to pay instalments in respect of the prized amount, an advance would be made to him and that too even after institution of three civil suits. The amount advanced even did not carry any interest. If in a situation of this nature, the High Court has arrived at a finding that the respondent has discharged his burden of proof cast on him under Section 139 of the Act, no exception thereto can be taken It is hard to believe that the complainant would part with no less than half a crore of rupees just for the accused to clinch a property deal for him. The complainant it seems has not approached the court with clean hands and come out clean with the details of the property transaction. There is something more to it than meets the eye. With this in mind, let us compare it to the hypothesis advanced by the accused that the deal was with respect to a specific property i.e G-186, Tronica City, Distt. Ghaziabad, Delhi which was finalized for the total consideration of Rs. 60,00,000/-. Out of which Rs. 15,00,000/- were paid by the complainant on 02.04.2008, and later on account of a downward trend in property prices, the complainant wanted to wriggle out of the deal and started demanding his earnest money back. After negotiations, the parties arrived at a solution, wherein the complainant was required to pay a sum of Rs. 35,00,000/- more to the accused, who would in Hari Niwas Gupta v. Om Propmart & Others Page 24 of 43 all earnestness try to sell the property further, and towards security of the amount paid by the complainant already, the cheques in question were given by the accused to the complainant as conditional security to be encashed in case the property is sold by the accused persons. The subsequent understanding was arrived at on 24.05.2008 vide an MoU (Mark H) The earlier agreement to sell has been led in evidence by the accused as Mark G. These documents have been sufficiently proved by the accused by the testimony of DW1 to DW4, which when seen clearly reveal that this is a case of property deal gone foul. These documents manifest that the complainant had advanced the said sum of Rs. 50,00,000/- qua the property in question and later wanted to avoid the deal on account of a market slump. He authorized the accused to make endeavours to sell the property further and give security for the amount paid by him. As conditional security he took the cheques in question, which could be enforced provided the property is sold further, which never happened.
The accused had confronted these two documents to the complainant, while the latter was under cross examination. The complainant whilst deposing as CW1 denied having executed or signed these documents. He claimed that his signatures on the same were forged and fabricated. Having denied these documents, the complainant ought to have led evidence to prove the forgery of these documents, which the complainant has not done. Furthermore the execution of these documents has been sufficiently proved in the testimony of DW1 to DW4 who have all deposed in one voice as to the due execution of these documents. Mark G & H being read clearly reveal the true genesis of the occurrence. However Ld.Counsel for the complainant, has quite empathically objected to the admissibility of these documents, saying that the court cannot embark on a reading of these documents, for reasons, which can be summed up under three heads :-Hari Niwas Gupta v. Om Propmart & Others Page 25 of 43
a) The documents having been Marked (Marked 'G' & 'H') and not exhibited - cannot be read in evidence;
b) The documents (Mark G - H) being photocopies and no application under Section 65 of the Evidence Act having been moved for their reception in evidence, they cannot be read in evidence at all;
c) Finally he has argued that the said documents have not been proved in accordance with law therefore reliance cannot be placed on them.
In my opinion, none of these objections are sustainable for more reasons than one. First of all, no objection was taken by the complainant or his counsel at the time when the documents were first confronted to the complainant during his cross examination. The objection as to leading of xerox copies in evidence and not originals relates to mode of proof of documents. The objection having not been taken at first go is deemed to have been waived. In this regard reliance is placed on RVE Venkatachala Gounder v. Arulmugu Vishwesaraswami (2003) 8 SCC 752, where in it was held :-
" Ordinarily, an objection to the admissibility of evidence should be taken when it is tendered and not subsequently. The objections as to admissibility of documents in evidence may be classified into two classes: (i) an objection that the document which is sought to be proved is itself inadmissible in evidence; and (ii) where the objection does not dispute the admissibility of the document in evidence but is directed towards the mode of proof alleging the same to be irregular or insufficient. In the first case, merely because a document has been marked as "an exhibit", an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken when the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The latter proposition is a rule of fair play. The crucial test is Hari Niwas Gupta v. Om Propmart & Others Page 26 of 43 whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in a superior court.."
That having said, even otherwise such objections are not sustainable for the simple reason that secondary evidence in this case has been validly led after satisfaction of conditions u/s 65 of the Evidence Act and the documents i.e agreement dated 02.04.2008 (Mark G) and MoU dated 24.05.2008 (Mark H) have been proved sufficiently in the testimony of defence witnesses. As aforesaid substantial evidence has been led in proof of this document. Accused No.4 who is one of the executors of this document has entered the witness box and deposed as to the execution of these documents, he has also led in evidence the testimony of two other attesting witnesses (DW2 & DW3) who have deposed as to the execution of the documents by the accused and the complainant and the terms agreed thereunder. Nothing could be elicited from them in their cross examination that would render their testimony unworthy of credence.
Hari Niwas Gupta v. Om Propmart & Others Page 27 of 43The mere fact that these documents are photocopies and no formal application seeking permission to lead secondary evidence has been filed is of no consequence. No law mandates filing of a formal application u/s 65 of the Indian Evidence Act seeking prior permission to lead secondary evidence or for its reception in evidence. If the conditions of Section 65 of the Indian Evidence Act, 1872 are otherwise satisfied, there is no impediment to the reception of secondary evidence. In this regard reliance is placed on a decision of the Hon'ble High Court of Delhi in Shir Prem Chandra Jain (Deceased) vs Shri Sri Ram (Deceased), 2009 SCC OnLine Del 3183, wherein it was held that :-
"2. A practice appears to have developed in the Trial Courts of moving an application under Section 65 of the Evidence Act seeking permission of the courts to adduce secondary evidence. There does not appear to be any sanction therefor in law. Neither the Evi- dence Act nor the CPC nor any other rules & regula- tions or statute requires the filing of such an applica- tion.
3. Section 61 of the Evidence Act provides for proof of documents either by primary or by secondary evi- dence. Section 64 provides that documents must be proved by primary evidence, except in cases "here- inafter mentioned" i.e. in Section 65 & Section 65 A and Section 65 B. Section 65 permits secondary evi- dence to be led in the contingencies mentioned there- in. Thus a litigant without seeking any permission from the court if satisfies the ingredients of Sec- tion 65 of the Evidence Act i.e. of the existence of the contingency or situation when secondary evi- dence is permitted to be led is entitled to lead such evidence.
Such evidence will have to be two fold. Firstly, as to the existence of the contingency or situation in which secondary evidence is permissible, viz that the original document is in possession or power of the person against whom it is sought to be proved etc. or that the existence, condition or contents of original have been proved to be admitted by person against whom it is sought to be proved or that the original has been lost or destroyed or when original is not Hari Niwas Gupta v. Om Propmart & Others Page 28 of 43 moveable etc. i.e. of the various situations mentioned in Clause (a) to (g) of Section 65.
Secondly, such evidence will have to be in proof of document as also prescribed in Section 65 r/w Sec- tion 63.
4. It is only after such evidence has been led can the court form an opinion whether the circum- stances/situation in which it is permissible to lead secondary evidence exist or not. For instance, whether a document has been lost or destroyed is a question of fact. It is only after the person claim- ing so has been cross examined, can a decision be taken as to the existence and loss or destruction of the original.
5. The court, on an application seeking permission to lead secondary evidence, even if setting out reasons as contained in either of the clauses of Section 65, cannot take a decision on the correctness of the rea- sons. The application thus serves no purpose except delaying the proceedings. It is however often found that the courts allow or disallow the applications, without giving an opportunity to the parties for lay- ing a foundation for reception or rejection of sec- ondary evidence. Such procedure is impermissible in law. Factual controversies cannot be adjudicated on applications. That is however not to be understood as allowing a mini-trial on this aspect. The party seek- ing to prove document by secondary evidence is to lead evidence of the existence of circumstances/situ- ations in which secondary evidence is permissible, during leading its evidence, whether by way of ex- amination of witnesses or cross examination of oppo- nents witnesses, in the suit/other proceeding itself. It will be decided at the stage of disposal of suit only, whether case for leading secondary evidence has been made out or not and if so, whether document stands proved by secondary evidence."
To the same effect is the decision of the Hon'ble Punjab & Haryana High Court in Rajesh Yadav v. Balbir Singh, C.R.No. 2359 of 2008, (Date of Decision 06.05.2014), wherein it was held :-
"13. Perusal of these statutory provisions leaves no manner of doubt that secondary evidence can be giv- en and is receivable by the courts in specified cir- cumstances. It is further clear that there is no express provision in the Act for making an application for Hari Niwas Gupta v. Om Propmart & Others Page 29 of 43 leading secondary evidence. During the process of leading of evidence by a party, if it makes out a case for leading secondary evidence in terms of Sections 63 and 65 of the Act, it may do so and no formal per- mission from the court in this behalf for leading sec- ondary evidence is required. As has already been no- ticed relevance, admissibility and probative value of evidence all are different from each other and require separate and distinct handling. Leading of evidence cannot be shunned merely because its probative val- ue would not be of high order."
It is therefore clear that secondary evidence is admissible per se if the condi- tions of Section 65 of the Indian Evidence Act, 1872 are satisfied, and the satisfac- tion may be borne out of the evidence on record.
With the said legal position guiding us, Let us see whether these conditions are sat- isfied with respect to documents Mark G (Agreement to Sell between the accused and the complainant dated 02.04.2008) and Mark H (MoU between the parties dated 24.05.2008).
Section 65 of the Indian Evidence Act, reads as under :-
65. Cases in which secondary evidence relating to docu-
ments may be given.--
Secondary evidence may be given of the existence, condition, or contents of a document in the following cases:--
(a) When the original is shown or appears to be in the pos-
session or power-- of the person against whom the docu- ment is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice men- tioned in section 66, such person does not produce it;
In cases (a), (c) and (d), any secondary evidence of the con- tents of the document is admissible.
......"
In the present case, DW1, 2, 3 & 4, all the witness who have proved the execution of these documents Mark G & Mark H and have spoken in one voice as to the execu-
Hari Niwas Gupta v. Om Propmart & Others Page 30 of 43tion of these documents and also the fact that complainant having been the purchas- er and having paid a large sum of money, had retained the originals of these agree- ments. Hence the condition of Section 65 (a) is patently satisfied as the primary evi- dence in this case is stated to be in the possession of the opposite party. However before reception of secondary evidence is permitted, the section on a bare reading also discloses that for secondary evidence to be received the party adducing sec- ondary evidence ought to have given a notice u/s 66 of the Evidence Act to the op- posite party seeking production of this document.
As to what is the form of this notice u/s Section 66 and to find out whether the same is an indubitable requirement of law or derogable in nature. Let us turn to Section 66 of the Evidence Act :-
66. Rules as to notice to produce.--Secondary evi-
dence of the contents of the documents referred to in section 65, :- (a)shall not be given unless the party proposing to give such secondary evidence has previ- ously given to the party in whose possession or pow-
er the document is, [or to his attorney or pleader,] such notice to produce it as is prescribed by law; and if no notice is prescribed by law, then such notice as the Court considers reasonable under the circum-
stances of the case:--
Provided that such notice shall not be required in or- der to render secondary evidence admissible in any of the following cases, or in any other case in which the Court thinks fit to dispense with it:--
(1) when the document to be proved is itself a notice; (2) when, from the nature of the case, the adverse party must know that he will be required to pro-
duce it;
....."
It is therefore clear that the notice u/s 66 is not an absolute sine qua non for reception of secondary evidence. Proviso (2) to Section 66 qualifies the generality of the main section and dispenses with the requirement of notice when, from the nature of the case, it is clear that the adverse party must know that he will be required to produce the document before the Hari Niwas Gupta v. Om Propmart & Others Page 31 of 43 court. In the present case, when the main thrust of the case of the accused was on these documents, the complainant ought naturally to know that the production of this document would be required and therefore the requirement of a specific notice can be dispensed with. A fortiori, as the complainant is not taken by surprise at the production of these documents or prejudiced in any manner.
The argument that the documents have been 'Marked' and not 'Exhibited' and therefore cannot be read in evidence, is also misconceived and fails to persuade as Marking or Exhibiting are by itself not formal proofs of any document. A document being marked or exhibited is not tantamount to the document having been proved. Denoting an exhibit number or a mark on a document is a mode of identification for easy reference to the document and nothing more. The proof or probative worth of the document is a totally different enquiry. (In this regard see : Sudir Engineering Company vs Nitco Roadways Ltd, 1995 IIAD Delhi 189,) Mere marking or exhibiting a document does not dispense with the formal proof of the document. Therefore conversely, if a document has been proved by leading adequate evidence on the same, the fact that it has been marked or exhibited is of no consequence. In this regard reliance is placed on Sharma Enterprises v. Hotel Leela Venture Ltd. (2009) 159 DLT 60, wherein it was held that the admission of a document is not on account of endorsement made by the judge but on account of evidence already led in respect of the document.
The complainant has disowned these documents. But the same have been validly proved on record by the testimony of attesting witnesses DW2 & 3 and also witness DW4. While DW2 & 3 have signed the documents as witnesses. The presence of DW4 at the time of execution of these Hari Niwas Gupta v. Om Propmart & Others Page 32 of 43 documents has also been sufficiently proved.
Ld.Counsel for the complainant has also argued that these documents are not admissible on account of being unstamped and unregistered.
I am afraid these contentions also leave me cold and cannot sustain as Proviso (d) to Section 35 of the Stamp Act, clearly states that the bar of non reception of unstamped documents does not operate in case of criminal proceedings. Furthermore it is also settled law that the bar operates in case of originals and not Xerox copies. In this case on evidence originals are demonstrated to be in possession of the complainant.
Lastly, objection on this count not having been taken at the first instance, cannot be permitted to be raised at this stage as per the clear mandate of Section 36 of the Stamp Act.
The argument regarding the documents being unregistered is similarly devoid of merit. The bar on admissibility of unregistered document in evidence is borne out of Section 49 of the Indian Registration Act.
Section 49 of the Registration Act reads as under :-
49. Effect of non-registration of documents required to be registered.
No document required by section 17 32[or by any provision of the Transfer of Property Act, 1882] to be registered shall-
(a) affect any immovable property comprised there- in, or
(b) confer any power to adopt, or Hari Niwas Gupta v. Om Propmart & Others Page 33 of 43
(c) be received as evidence of any transaction affect- ing such property or conferring such power, unless it has been registered:
PROVIDED that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specif- ic Relief Act, 1877, or as evidence of part perfor- mance of a contract for the purposes of section 53A of the Transfer of Property Act, 1882, or as evi- dence of any collateral transaction not required to be effected by registered instrument.
In these cases the documents Mark G & H, which are stated to be unregistered, are not being relied upon to press a right/title/interest in the property but for the limited purpose of throwing light on the nature of the transaction, and to prove the antecedent facts and the circumstances in which the cheques in question came to be issued and as a defence in a criminal complaint case. The purpose therefore is collateral and there is no embargo on looking into them to get a better insight into the facts of the case.
Hence, none of the gamut of objections taken by the Ld.Counsel for the complainant regarding the admissibility of Mark G (Agreement to Sell dated 02.04.2008 & MoU dated 24.05.2008) succeed.
21. Ld.Counsel for the complainant, during the course of arguments, has very strenuously argued that the documents (Mark G & H) are forged and fabricated and for that reason there is no reference to these agreements in the reply to the legal notice given by the accused on 21.05.2009. He submits that the non mention of these agreements in as many terms is a manifestation of the fact that the documents were not in existence at that time and have been forged subsequently to erect a false defence.
This argument, though attractive at first blush, fails to convince at closer Hari Niwas Gupta v. Om Propmart & Others Page 34 of 43 scrutiny. In my opinion, the mere non mentioning of factum of these agreements being executed in writing per se is inconsequential and the same cannot be construed to be a material omission in any way. A meaningful reading of the legal notice Ex. CW1/13 reveals that there is a clear reference to the agreement between the complainant and the accused relating to sale of property in question i.e Property bearing G-186, Tronica City. The accused was not obliged to disclose his evidence in the legal notice or give particulars of as to when and how the agreement was entered and what was its form. It cannot be inferred by mere non mentioning of dates that there was no agreement. Accused No.4, whilst under examination as DW1 was questioned on this aspect on 16.08.2013, wherein he deposed as having told his lawyer about the agreements dated 02.04.2008 and MoU Dated 24.05.2008. No better diligence can be expected from a litigant. Having intimated his counsel with the requisite details, the accused cannot be faulted for this not having been discussed in the reply to the legal notice.
22. Ld.Counsel for the Complainant has argued with great vehemence that the property in question was sold by original allottee on 10.05.2008, hence there arises no question of there being any agreement to sell concerning that property between the accused and the complainant on 02.04.2008. To that end the complainant relies upon a receipt dated 10.05.2008 issued by the first allottee. This argument is advanced by the complainant to persuade the court to believe the sheer impossibility of an agreement to sell on 02.04.2008 since the property in question did not belong to the accused on that date, therefore, the question of an agreement to sell as on that date does not arise.
To my mind the argument is devoid of merit since the document dated 10.05.2008 is only a receipt issued by first allottee, which acknowledges the receipt of entire sale consideration. It is not entirely unthinkable that the Hari Niwas Gupta v. Om Propmart & Others Page 35 of 43 same may be preceded by agreement to sells as if often the common market practice. Even assuming that the final sale of the property took place in May, 2008, there was no impediment to the agreement to sell entered into between the accused and the complainant, which the former may have entered in expectation of a sale in their favour. An agreement to sell, it goes without saying, is not an actual transfer of interest in the property in praesenti but an agreement to transfer an interest in future. In the status report filed by the police in response to an application filed by the complainant u/s 156(3) of the Cr.P.C (Ex. DW-1/C2) it has come out that the police had examined one Madhusudan who had allegedly purchased the plot from original allottee, and who gave a statement to the police to the effect that that agreement to sell in respect to property in question was entered into between the original allottee Sanjeev Kumar and Madhusudan and it took place in January, 2008. As per police status report the said Madusudhan sold the said plot to one Mr.Vijay Kaul from whom one Sanjay Tyagi purchased the plot and sold it to the present accused. The accused persons in order to fortify their stand have placed on record a copy of Agreement to Sell dated 01.04.2008 executed in their favour by the said Mr.Sanjay Tyagi. The agreement to sell with the complainant was entered into on 02.04.2008, hence there was no impediment in the entering of that agreement to sell and in light of these facts there is no reason to disbelieve execution of agreements Mark G & H or to doubt the legal competency of the accused to do so.
Ld.Counsel for the Complainant has finally argued with great eloquence, that the agreements dated 02.04.2008 (Mark G) and 25.04.2008 (Mark H) are forged and fabricated.
I am afraid this argument has gone unsubstantiated. This document once having been sufficiently proved by the defence witnesses in their testimony. It was for the complainant to disprove this document. The complainant Hari Niwas Gupta v. Om Propmart & Others Page 36 of 43 having taken the stand that the signatures on these documents are forged and having been lifted by a modern process of tracing, ought to have substantiated this plea. The same cannot be taken at his mere ipse dixit, especially when there is overwhelming oral evidence to the contrary. It is notable that no evidence has been led on that count by the complainant. Though a report of a handwriting expert was filed on record by the complainant, the same was never led in evidence or proved in accordance with law. The complainant did not challenge the decision of the Ld.Predecessor disallowing the reception of the report and the same had attained finality.
It is pertinent to further note that an application u/s 156(3) Cr.P.C was filed by the complainant seeking registration of FIR against the accused for having committed forgery of these documents with a view to cheat him. After a status report was called from the police, and on an enquiry being conducted in that regard by the police, by examining all concerned, it came to light that agreements dated 02.04.2008 and MoU Dated 24.05.2008 had been executed by the parties. The application of the complainant for registration of FIR was dismissed. The order of dismissal attained finality after a revision filed by the complainant was also dismissed. The status report at least ex-facie bears the imprimatur of these courts and is on record as DW-1/C2.
23. Ld.Counsel for the Complainant, as a last ditch effort, has argued that DW2, DW3 attesting witnesses to agreements - Mark G & Mark H are interested witnesses being the relatives of the accused and should not be relied on, their impartiality and credibility being suspect. As against DW4 the complainant has argued that the complainant is embroiled in a litigation with him, therefore that witness naturally bears an animus against him and his evidence to the execution of these documents should be eschewed from consideration.
Hari Niwas Gupta v. Om Propmart & Others Page 37 of 43I am afraid this contention too must fail since the presence of DW2 & DW3 at the time of execution of agreement to sell dated 02.04.2008 (Mark G) has been well accounted for. They cannot be termed as chance witnesses. From the tenor of their deposition and their cross examination at length it is revealed that they were having property dealings with the accused and with the complainant and, therefore, were the most natural witnesses to be present there. DW3 & 4 have been shown to be known to the complainant from earlier. Hence their presence at the time of these agreements cannot be termed unnatural or made up. Furthermore the mere fact that DW2 & 3 are related to the accused does not entail ipso facto rejection of their evidence. It is trite law that all related witnesses are not necessarily interested witnesses. In this case any monetary interest of DW2 or DW3 has not been shown in the transaction. It is not shown as to how the said witnesses would gain by deposing falsely against the complainant. Therefore, even if evidence of DW4 is eschewed from consideration on account of animus between the complainant and DW4. The testimony of DW2 & DW3 inspires confidence. Nothing could be elicited from the cross examination of these witnesses which would throw doubt on their deposition.
24. The improbability of the complainant's story of advancement of Rs. 50,00,000/- in the air, is further manifest from the fact that the complainant whilst under cross examination on 21.10.2011 has conceded that he never advanced any money to any dealer in the past for clinching a property deal (and he has brought properties in the past), not even Lalit Gogia (DW4), who allegedly introduced the complainant with the accused persons and on whose assurance the money is stated to have been advanced by the complainant to the accused. It defies logic that when the complainant has never advanced any such money to Lalit Gogia, who was the prime facilitator of the transaction, or to any other dealer for that matter from whom he has Hari Niwas Gupta v. Om Propmart & Others Page 38 of 43 purchased properties earlier, why would he advance the said money to accused, who were total strangers to the complainant. What further shrouds the case of the complainant in doubt is his candid admission that he did not give any specification or estimate or limit to the accused for purchasing of the property. The complainant having tendered a sum of Rs. 50,00,000/- without any idea of the property that he wanted to acquire, renders his case quite unworthy of belief.
25. What further renders the accused hypothesis believable is the fact that the complainant has not given any explanation as to why he did not take any cheques or executed any documents when he advanced the sum of Rs. 15,00,000/- to the accused persons vide cheque dated 02.04.2008 and kept mum for half a month and without the accused persons having shown him any property advanced another staggering sum of Rs. 35,00,000/- to the accused, again, without any documentation.
26. Another intrinsic infirmity in the case of the complainant is that the even though the due dates on the cheques had elapsed, the complaint waited till Feb, 2009 for the presentation of the cheques, whereas the cheques had become presentable much earlier as can be demonstrated from the table :-
S.No. Chq No. Dated Amount
1 507609 12.07.2008 Rs.2,50,000/-
2 507610 12.08.2008 Rs.2,50,000/-
3 507611 12.09.2008 Rs.2,50,000/-
4 507612 12.10.2008 Rs.2,50,000/-
5 507613 01.11.2008 Rs.40,00,000/-
It is manifest that all the cheques had become payable by 01.11.2008. If the Hari Niwas Gupta v. Om Propmart & Others Page 39 of 43 cheques were really meant as repayment for the amount taken and not a conditional security, what stopped the complainant from presenting the same on their due dates. The complainant has sought to justify this by claiming that the same was not done at the assurance of the accused. I do not find this believable, complainant having given Rs. 50,00,000/- in air and having got the refund from the accused after much insistence, ought to have been anxious to present the same and receive his money back. The complainant has not proved on record a single communication with the accused regarding request for not presenting the cheques. The non presentation of the cheques till Feb, 2009, raises an inference of an understanding inter-se between the accused and the complainant for non presentation of chequs until the property is further re-sold. This is in accord with the hypothesis advanced by the accused.
27. As has been demonstrated above, documents Mark G & H have been validly proved in evidence through the testimony of DW1, 2 & 3. The accused persons have succeeded in corroborating their basic story that the cheques in question were given as security in terms of MoU Dated 24.05.2008 (Mark H). So read, the cheques were given not in discharge of a legally enforceable debt or liability, but encashable on the happening of a specific contingency i.e the further sale of the property by the accused. In this regard Section 32 of the Indian Contract Act, may be profitably referred to. Section 32 of the Indian Contract Act reads as under :-
32. Enforcement of contracts contingent on an event happening.--Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened.....
In this case the contingency was the further sale of the property and since the same has not happened, the liability is not triggered. In this regard the Hari Niwas Gupta v. Om Propmart & Others Page 40 of 43 relevant clauses of the MoU dated 24.05.2008 (Mark H) deserve reference :-
"8. That the client agreed to make part of the balance payment of Rs. 35,00,000/- (Rupees thirty five lacs only) to the company subject to the condition that the company will issue cheques of Rs. 50,00,000/- (Rupees fifty lacs only) as a security of the payment made to the company, to the client of some future date. This was agreed between the parties that these cheques will be lodged for payment only on sale of the said plot.
9. That the client also agreed to pay balance consideration of Rs. 10,00,000/- (Rupees ten lac only) before 12.06.2008 i.e the date of completion of sale in agreement dated 02.04.2008.
10. That as per understanding in para No. 8 above, the company issued five cheques, a security, as per following denomination and particulars to the client
-
S. No. Cheque No. Dated
Amount
1. 507609 12.7.2008
2,50,000/-
2. 507610 12.8.2008
2,50,000/-
3. 507611 12.9.2008
2,50,000/-
4. 507612 12.10.2008
2,50,000/-
5. 507613 1.11.2008
40,00,000/-
From a bare reading of the above it becomes apparent that the cheques were not issued for a liability or debt in praesenti but one to arise in future, if the property in question is further sold by the accused persons. Whether in these circumstances the cheques can be said to have been issued for an existing debt or liability or not ? The answer is in the negative. In this regard, reliance is placed on a decision of the Hon'ble High Court of Delhi in M/s Collage Culture & Ors v. Apparel Export Promotion Council &Anr. 2007 SCC, wherein the jurisprudence relating to post dated cheques was demystified, in the following words :-Hari Niwas Gupta v. Om Propmart & Others Page 41 of 43
"20. A post dated cheque may be issued under 2 circumstances. Under circumstance one, it may be issued for a debt in presenti but payable in future. Under second circumstance it may be issued for a debt which may become payable in future upon the occurrence of a contingent event.
21. The difference in the two kinds of post-dated cheques would be that the cheque issued under first circumstance would be for a debt due, only payment being postponed. The latter cheque would be by way of a security.
22. The word 'due' means 'outstanding at the relevant date'. The debt has to be in existence as a crystallized demand akin to a liquidated damages and not a demand which may or may not come into existence; coming into existence being contingent upon the happening of an event."
It is manifest that the present case pertains to the second situation and the debt was not in praesenti but contingent on the further sale of the property. It seems, this arrangement has been entered into by the complainant on account of and in fear a forfeiture clause in the earlier agreement to sell dated 02.04.2008, wherein it was stipulated that in case the complainant fails to make the balance payment and take the sale transaction ahead, the earnest amount of Rs. 15,00,000/- shall stand forfeited. It seems that the complainant being anxious as to the safety of his amount, and at the same time not wanting a property the price of which had gone down in the market, had to choose between the proverbial devil (loss of earnest money) and the deep blue sea (blocking his money in an unprofitable deal), and to avoid this - he entered into this arrangement wherein he authorized the accused to sell the property further and for the large amount of payment already made took the cheques in question as security.
Furthermore, the claim of the complainant that he did not know the accused before the present transaction stands falsified by documents Mark A to F to which he was confronted while under cross examination. The complainant has admitted his signatures on these documents, which pertain to previous Hari Niwas Gupta v. Om Propmart & Others Page 42 of 43 dealings of some plots, the sale or transfer of which was facilitated by the accused persons. This goes against the basic grain of the complainant's story and also the fact that he has never indulged in speculative property transaction ever in the past. His claim to that effect stands belied by these documents, which he has failed to explain.
CONCLUSION To sum up the cogitation above, on account of legal demand notice being defective, the inherent improbability of the complainant's hypothesis on question of liability, his unnatural conduct, the proof of documents Mark G & H by the accused and the defence of security having been substantiated, all cumulatively seen, clearly show that the accused has succeeded in rebutting the presumption of legal liability. That having done, the complainant has not been able to prove the legal liability sufficiently. His complaint also suffers from the infirmity of not being preceded by a valid legal notice. That being the case, the ingredients of Section 138 of the N.I.Act are not fulfilled. As a result thereof, the accused persons are acquitted of offence u/s 138 of the N.I.Act.
A copy of this order be placed on the official website of the District Court.
Judgment contains 43 signed pages.
(BHARAT CHUGH) MM-(NI Act)-Central-01/THC/Delhi 10.04.2015.
Hari Niwas Gupta v. Om Propmart & Others Page 43 of 43