Delhi High Court
Ranbir Singh vs Sajanti Ram on 12 September, 2018
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 12th September, 2018.
+ RSA 175/2017 & CM No.24021/2017 (for stay)
RANBIR SINGH ..... Appellant
Through: Mr. S.K. Jain, Adv.
Versus
SAJANTI RAM ..... Respondent
Through: Mr. C.M. Sharma, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. This Second Appeal under Section 100 of the Code of Civil
Procedure, 1908 (CPC) impugns the judgment [dated 18 th February, 2017 in
RCA No.196/2016 (Unique ID No.02402C0034422016) of the Court of
Additional District Judge, Shahdara] allowing the First Appeal filed by the
respondent / plaintiff against the judgment and decree [dated 25 th April, 2016
in Civil Suit No.275/2010 (Unique ID No.02403C0221442010) of the Court
of Additional Civil Judge, Shahdara] of dismissal of suit filed by the
respondent / plaintiff against the appellant / defendant for recovery of
Rs.1,25,000/- along with interest and costs. Resultantly, vide the impugned
judgment, a decree has been passed in favour of the respondent / plaintiff
and against the appellant / defendant for recovery of Rs.1,25,000/- with
interest.
2. The appeal came up first before this Court on 12 th July, 2017, when,
without expressing satisfaction that the appeal entails a substantial question
of law and without framing a substantial question of law, notice of the appeal
RSA 175/2017 Page 1 of 14
was issued and subject to the appellant depositing 50% of the decretal
amount in this Court, execution stayed. Vide subsequent order dated 3 rd
November, 2017, the trial court record was requisitioned.
3. The counsel for the appellant / defendant and the counsel for the
respondent / plaintiff have been heard and the Suit Court record requisitioned
perused.
4. On enquiry from the counsel for the appellant / defendant as to what is
the substantial question of law that arises in this appeal, the counsel for the
appellant / defendant states that the First Appellate Court has allowed the
appeal of the respondent / plaintiff and passed a decree in favour of the
respondent / plaintiff and against the appellant / defendant referring to, in
para 13 of the impugned judgment, Section 139 of the Negotiable
Instruments Act, 1881 (NI Act) and which is but a presumption of the
cheque having been given in discharge of antecedent liability. It is argued
that on the basis of the said presumption alone, the suit of the respondent /
plaintiff against the appellant / defendant for recovery of money on the basis
of a cheque for the suit amount, could not have been decreed.
5. I have enquired from the counsel for the appellant / defendant, what
evidence did the appellant / defendant lead to rebut the presumption.
6. The counsel for the appellant / defendant states (i) that the respondent
/ plaintiff instituted the suit pleading having advanced a loan of
Rs.1,25,000/- for a period of six months to the appellant / defendant and
further pleading that the appellant / defendant in repayment of the loan had
issued a post dated cheque for Rs.1,25,000/- and which cheque was
RSA 175/2017 Page 2 of 14
dishonoured; (ii) that the appellant / defendant contested the suit by filing a
written statement denying any financial transaction with the respondent /
plaintiff and pleading that one Chhote Lal, who is a relative of the
respondent / plaintiff, had taken the said blank cheque from the appellant /
defendant as a security and the said Chhote Lal had subsequently informed
the appellant / defendant that he had lost the said cheque; (iii) that the
appellant / defendant was not aware as to how the said cheque fell into the
hands of respondent / plaintiff; (iv) that in the course of the evidence, it was
admitted by the respondent / plaintiff that Chhote Lal is the brother of the
brother of the wife of the respondent / plaintiff; (v) that the respondent /
plaintiff claimed that he was possessed of the sum of Rs.1,25,000/- loaned to
the appellant / defendant, owing to having collected a "Committee" operated
by one Om Prakash; (vi) that the respondent / plaintiff further admitted that
he had not reflected the said money in his income tax returns; (vii) that the
respondent / plaintiff, appellant / defendant and Chhote Lal aforesaid are all
"beldars" i.e. masons and in fact the appellant / defendant had given the
aforesaid blank signed cheque to Chhote Lal as security for a loan of
Rs.8,000/- taken by the appellant / defendant from the said Chhote Lal and
which loan has been repaid; (viii) that the appellant / defendant examined
Om Prakash from whom the respondent / plaintiff claimed to have picked up
the 'Committee' but the said Om Prakash appearing as DW3 deposed as
under:
"DW3 Statement of Sh. Om Prakash, S/o Sh. Ratan Lal, R/o B-4/380,
Nand Nagri, Delhi.
RSA 175/2017 Page 3 of 14
ON SA
I am summon witness in the present case. I do not run committee. I am
working in MCD as Beldar. I do not know anything about present case. It is
correct that I have been summoned in the present case.
XXXXX by Sh. C.M. Sharma, counsel for the plaintiff.
I do not know Ranvir Singh (defendant). I never meet with Ranvir
Singh even I cannot identify Ranvir Singh on today. It is wrong to suggest that
I am having friendly relation with Ranbir Singh due to which I am appearing
as witness on today.
RO&AC
Sd/-
(Bhawani Sharma)
ACJ/CCJ/ARC (Shahdara), KKD, Delhi
22.11.2014"
and, (ix) that the respondent / plaintiff, in cross-examination of the said Om
Prakash, did not even suggest that the amount of which loan was claimed to
have been given by the respondent / plaintiff, was received by the respondent
/ plaintiff in a 'committee' operated by Chhote Lal.
7. I have enquired from the counsel for the appellant / defendant, what is
the evidence of loan of Rs.8,000/- claimed to have been taken by
appellant/defendant from Chhote Lal and whether the appellant / defendant
examined Chhote Lal as his witness.
RSA 175/2017 Page 4 of 14
8. The counsel for the appellant / defendant states that though Chhote Lal
was not examined and there is no document with respect to the said loan but
the appellant / defendant in his evidence has deposed so.
9. I have further enquired from the counsel for the appellant / defendant,
whether the appellant / defendant proved the date on which he claims he was
informed by Chhote Lal of loss of cheque and whether the appellant /
defendant examined any witness from his bank for proving having stopped
payment of the said cheque and whether the appellant / defendant lodged any
other complaint with any other authority of loss of the cheque.
10. The answer to all the questions is in the negative.
11. The counsel for the appellant / defendant however contends that it was
for the respondent / plaintiff to establish before the Court the antecedent debt
in discharge whereof the cheque on which the suit was filed was issued and
the respondent / plaintiff has utterly failed to, by evidence, establish the
antecedent debt. It is further argued that it emerges that the transaction which
the respondent / plaintiff claims, was not disclosed to income tax authorities.
Reliance is placed on the dicta of a Single Judge of the Bombay High Court
in Sanjay Mishra Vs. Kanishka Kapoor @ Nikki 2009 SCC OnLine Bom
290 where it was held that liability to repay unaccounted cash is not a legally
enforceable liability within the meaning of explanation to Section 138 of the
NI Act and reliance therein was placed on Dalmia Cement (Bharat) Ltd. Vs.
Galaxy Traders & Agencies Ltd. (2001) 6 SCC 463.
RSA 175/2017 Page 5 of 14
12. I have enquired from the counsel for the appellant / defendant,
whether the appellant / defendant is an income tax assessee and had shown
the transaction claimed with Chhote Lal in his income tax return.
13. The counsel for the appellant / defendant states that appellant /
defendant is not an income tax assessee and thus the question of appellant /
defendant showing the transaction with Chhote Lal in the income tax returns
did not arise. It is however stated that the respondent / plaintiff admitted
being an income tax assessee.
14. I have further enquired from the counsel for the appellant / defendant,
under which provision of the income tax laws, such loan transactions are
required to be reflected in the income tax returns.
15. The counsel for the appellant / defendant draws attention to the
judgment aforesaid of the Bombay High Court where reference is made to
Section 271D of the Income Tax Act, 1961.
16. The Bombay High Court in the judgment aforesaid in a Revision
Petition against dismissal of a complaint under Section 138 of the NI Act
was concerned with a loan of Rs.15 lacs. In fact, the counsel for the
appellant / defendant is not aware whether any further challenge was made to
the judgment aforesaid of the Bombay High Court or whether the same has
been relied upon in any other judgments.
17. The High Court of Bombay in Sanjay Mishra supra relied on Krishna
Janardhan Bhat Vs. Dattatraya G. Hegde (2008) 4 SCC 54 laying down
that "Existence of legally recoverable debt is not a matter of presumption
RSA 175/2017 Page 6 of 14
under Section 139 of the Act. It merely raises a presumption in favour of a
holder of the cheque that the same has been issued for discharge of any debt
or other liability". The High Court of Bombay, in view of the said judgment
of the Supreme Court, reasoned that even if presumption is not rebutted, in
order to attract Section 138 of the Negotiable Instruments Act, the debt has
to be a "legally enforceable debt," as is clear from the explanation to Section
138 which provides that for the purposes of the said Section, the debt or
other liability means a legally enforceable debt or other liability.
18. Krishna Janardhan Bhat supra, relying whereon the High Court of
Bombay in Sanjay Mishra reasoned as aforesaid, was a judgment of two
Hon'ble Judges of the Supreme Court. Subsequent judgment of three
Hon'ble Judges of the Supreme Court, in Rangappa Vs. Sri Mohan (2010)
11 SCC 441 held that the observations in Krishna Janardhan Bhat to the
effect that the "existence of legally recoverable debt is not a matter of
presumption under Section 139 of the Act" and that "it merely raises a
presumption in favour of a holder of the cheque that the same has been
issued for discharge of any debt or other liability" are in conflict with the
statutory provisions as well as an established line of precedents of the
Supreme Court. Referring to a plethora of past judgments, it was held that
the presumption mandated by Section 139 does indeed include the existence
of a legally enforceable debt or liability and to that extent the observations to
the contrary in Krishna Janardhan Bhat were not correct. It was reiterated
that "there is an initial presumption which favours the complainant" and it
was reasoned that (i) Section 139 is an example of a reverse onus clause
that had been included in furtherance of the legislative objective of
RSA 175/2017 Page 7 of 14
improving the credibility of negotiable instruments; (ii) while Section 138 of
the Act specifies a strong criminal remedy in relation to the dishonour of
cheques, the rebuttable presumption under Section 139 is a device to prevent
undue delay in the course of litigation; (iii) that the test of proportionality
should guide the construction and interpretation of reverse onus clauses; (iv)
when an accused has to rebut the presumption under Section 139, the
standard of proof for doing so is that of preponderance of probabilities; and,
(v) therefore, if the accused is able to raise a probable defence which creates
doubts about the existence of a legally enforceable debt or liability, the
prosecution can fail.
19. Thus, the edifice of Krishna Janardhan Bhat, on which Sanjay
Mishra was premised, is no longer good law and for this reason alone
Sanjay Mishra supra cannot today be relied on as good law.
20. Not only so, a subsequent dicta of the Bombay High Court in Krishna
P. Morajkar Vs. Joe Ferrao 2013 SCC OnLine Bom 862 disagreed with
Sanjay Mishra supra to the extent laying down that liability to repay an
unaccounted cash amount admittedly not disclosed in the Income Tax Return
cannot be a legally recoverable liability, reasoning (i) that there is no
prohibition in the Income Tax Act or in any other law on recovery of
amounts not disclosed in Income Tax Returns; (ii) the entire scheme of the
Income Tax Act is for ensuring that all amounts are accounted for; (iii) if
some amounts are not accounted for, the person would be visited with the
penalty or at times even prosecution under the Income Tax Act, but it does
not mean that the borrower can refuse to pay the amount which he has
borrowed, simply because there is some infraction of the provisions of the
RSA 175/2017 Page 8 of 14
Income Tax Act; (iv) infraction of provisions of Income Tax Act would be a
matter between the Revenue and the defaulter and advantage thereof cannot
be taken by the borrower; (v) to say, that an amount not disclosed in the
Income Tax Returns becomes irrecoverable, would itself defeat the
provisions of Section 138 of the Negotiable Instruments Act; (vi) moreover,
the moment a person seeks to recover through a cheque an amount advanced
in cash, it gets accounted for in the system and the Revenue Authorities can
keep a track of that and if necessary tax the person; and, (vii) to brand an
amount which is not shown in Income Tax Act as unaccounted money would
be too farfetched and amounts to reading an additional requirement in
Section 138 of the Negotiable Instruments Act, and legislating that such
amounts becomes irrecoverable.
21. Krishna P. Morajkar supra was also followed by the High Court of
Madras in A. Arun Kumar Vs. R. Moorthy 2017 SCC OnLine Mad 1353.
22. Reliance by the counsel for the appellant on Sanjay Mishra supra,
without checking the aforesaid developments in law, is thus faulty and the
counsels, before citing a judgment in the Court, ought to take care.
23. I respectfully concur with the dicta of the Bombay High Court in
Krishna P. Morajkar supra followed in A. Arun Kumar supra and I am
unable to agree with Sanjay Mishra supra.
24. It cannot also be lost sight of, that this Court is exercising jurisdiction
under Section 100 of the CPC and which jurisdiction was considerably
curtailed vide the amendment of the CPC with effect from 1976. As recently
held by the Supreme Court in Surat Singh Vs. Siri Bhagwan (2018) 4 SCC
RSA 175/2017 Page 9 of 14
562 and Vijay Arjun Bhagat Vs. Nana Laxman Tapkire 2018 SCC OnLine
SC 518 even a notice of Second Appeal under Section 100 CPC cannot be
issued without framing a substantial question of law.
25. "Substantial question of law" is not a word/phrase of art and has been
interpreted in various dicta of the Supreme Court. It has been held in
Veerayee Ammal Vs. Seeni Ammal (2002) 1 SCC 134 that merely because
on appreciation of evidence another view is also possible, would not clothe
the High Court to assume jurisdiction on issue of fact framed by the Trial
Court by terming the question as a substantial question of law. As far back as
in Sir Chunilal V. Mehta Vs. Century Spinning and Manufacturing Co.
Ltd. AIR 1962 SC 1314 reiterated in Kashmir Singh Vs. Harnam Singh
(2008) 12 SCC 796, it was held that the proper test for determining whether
a question of law raised in a case is substantial, is whether it is of general
public importance or whether it directly and substantially affects the rights of
the parties and if so whether it is an open question in the sense it is not
finally settled or is not far from difficulty or calls for discussion of
alternative views; if the question is settled by the highest Court or the general
principles to be applied in determining the question are well settled and there
is a mere question of applying those principles, it would not be a substantial
question of law. It was further held that it is not within the domain of the
High Court to investigate the grounds on which the findings were arrived at
by the last Court of fact being the first Appellate Court. Mere appreciation of
facts, documentary evidence was held to be not raising a question of law.
Even in Santosh Hazari Vs. Purushottam Tiwari (2001) 3 SCC 179 it was
held:
RSA 175/2017 Page 10 of 14
"To be "substantial" a question of law must be debatable, not previously
settled by law of the land or a binding precedent, and must have a material
bearing on the decision of the case, if answered either way, insofar as the
rights of the parties before it are concerned."
26. Mention may also be made of Hero Vinoth Vs. Sheshammal (2006) 5
SCC 545 holding as under:
"24. The principles relating to Section 100 CPC, relevant for this case,
may be summarised thus:-
(i) An inference of fact from the recitals or contents of a document is a
question of fact. But the legal effect of the terms of a document is a
question of law. Construction of a document involving the application of
any principle of law, is also a question of law. Therefore, when there is
misconstruction of a document or wrong application of a principle of law
in construing a document, it gives rise to a question of law.
(ii) The High Court should be satisfied that the case involves a substantial
question of law, and not a mere question of law. A question of law having a
material bearing on the decision of the case (that is, a question, answer to
which affects the rights of parties to the suit) will be a substantial question
of law, if it is not covered by any specific provisions of law or settled legal
principle emerging from binding precedents, and, involves a debatable
legal issue. A substantial question of law will also arise in a contrary
situation, where the legal position is clear, either on account of express
provisions of law or binding precedents, but the court below has decided
the matter, either ignoring or acting contrary to such legal principle. In the
second type of cases, the substantial question of law arises not because the
law is still debatable, but because the decision rendered on a material
question, violates the settled position of law.
(iii) The general rule is that High Court will not interfere with the
concurrent findings of the courts below. But it is not an absolute rule. Some
RSA 175/2017 Page 11 of 14
of the well-recognized exceptions are where (i) the courts below have
ignored material evidence or acted on no evidence;(ii) the courts have
drawn wrong inferences from proved facts by applying the law
erroneously; or (iii) the courts have wrongly cast the burden of proof.
When we refer to "decision based on no evidence", it not only refers to
cases where there is a total dearth of evidence, but also refers to any case,
where the evidence, taken as a whole, is not reasonably capable of
supporting the finding."
27. Supreme Court, in Damodar Lal Vs. Sohan Devi (2016) 3 SCC 78,
referring to Kulwant Kaur Vs. Gurdial Singh Mann (2001) 4 SCC 262,
Gurvachan Kaur Vs. Salikram (2010) 15 SCC 530 and S.R. Tewari Vs.
Union of India (2013) 6 SCC 602 held, (a) that the First Appellate Court
under Section 96 CPC is the last Court of facts; (b) the High Court in Second
Appeal under Section 100 CPC cannot interfere with findings of fact
recorded by the First Appellate Court under Section 96 CPC; (c) the findings
of fact of First Appellate Court can be challenged in Second Appeal on the
ground that the said findings are based on no evidence or are perverse; (d)
even if the finding of fact is wrong, that by itself will not constitute a
question of law; the wrong finding should stem out of a complete misreading
of evidence or it should be based only on conjunctures and surmises; (e) if to
a reasonable man, the conclusion on the facts in evidence made by the Courts
below is possible, there is no perversity; (f) inadequacy of evidence or a
different reading of evidence is not perversity; (g) Code of Civil Procedure
(Amendment) Act, 1976 introduced a definite restriction on the exercise of
jurisdiction in a Second Appeal; (h) where it is found that findings stand
vitiated on wrong test and on the basis of assumptions and conjunctures and
resultantly there is an element of perversity involved therein, will the High
RSA 175/2017 Page 12 of 14
Court be within its jurisdiction to deal with the issue; this is however only in
the event such a fact is brought to light explicitly; (i) the findings of fact
recorded by Court can be held to be perverse if the findings have been
arrived at by ignoring or excluding relevant material or by taking into
consideration irrelevant / inadmissible material or if the findings is against
the weight of evidence or if the finding so outrageously defies logic as to
suffer from vice of irrationality; (j) however if there is some evidence on
record which is acceptable and which could be relied upon, the conclusion
would not be treated as perverse and the findings will not be interfered with.
28. It thus emerges that if there is even little evidence on the basis of
which the last Court of Facts has decided, the Second Appellate Court
cannot, by labelling the judgment of the First Appellate Court as perverse,
seize jurisdiction over matters of fact.
29. As far as the argument of the counsel for the appellant / defendant
with respect to testimony of Om Prakash is concerned, the counsel for the
appellant / defendant also admits that running of such committees, though
rampant in the society, is prohibited by law. Om Prakash, when summoned
as a witness by the appellant / defendant, thus could not be expected to
incriminate himself by admitting operating a 'committee' or by admitting
that the respondent / plaintiff had at the contemporaneous time of loan
received money from the 'committee'. The evidence of Om Prakash thus
does not rebut the presumption, even if the test of proportionality laid down
in Rangappa supra is applied.
30. The First Appellate Court has also rightly reasoned, that (a) the
appellant/defendant, in cross-examination of respondent/plaintiff, did not
RSA 175/2017 Page 13 of 14
elicit the parentage or address of Om Prakash; (b) the appellant/defendant,
after commencing his evidence, sought permission to file additional list of
witnesses naming one Om Prakash and which permission was granted; (c)
that from denial of Om Prakash examined, that he was running/operating
'Committee', it was clear that the 'Om Prakash' examined was not the 'Om
Prakash' deposed of by respondent/plaintiff; (d) that the appellant/defendant,
while seeking permission to file additional list of witnesses had claimed that
on making enquiries he had found 'Om Prakash' "who was running
committee"; and, (e) however 'Om Prakash' who was examined, denied that
he was running 'Committee'. It is thus evident that rejection by First
Appellate court, of testimony of Om Prakash examined by
appellant/defendant, is not without any reason.
31. I am thus of the view that this Second Appeal does not entail any
substantial question of law and has no merit to be heard further.
32. Resultantly, the appeal is dismissed.
RAJIV SAHAI ENDLAW, J.
SEPTEMBER 12, 2018 'gsr'/pp..
RSA 175/2017 Page 14 of 14