Delhi District Court
Suman Gulati vs Raghuvender Raghav on 30 May, 2024
IN THE COURT OF MR. SHIVAM GUPTA,
MM, NI ACT, DIGITAL COURT-02, NEW DELHI DISTRICT, PATIALA
HOUSE COURT
NEW DELHI
SUMAN GULATI VS RAGHUVENDER RAGHAV
CC No. 3191/2022
U/S 138 Negotiable Instruments Act, 1881
1. CNR number : DLND02-006425-2022
2. Name of the complainant : Suman Gulati
Address: 7/169, First Floor, Ramesh
Nagar, New Delhi- 110015
3. Name of the accused, parentage : Raghuvender Raghav
and residential address Address: Flat number 903, Tower-3,
Panchsheel Primrose, Gobindpuram,
Ghaziabad UP- 201002
4. Offence complained of or proved : U/S 138 of Negotiable Instruments
Act, 1881
5. Plea of the accused : Pleaded not guilty and claimed trial
6. Final Judgment/order : Conviction
7. Date of judgment/order : 30.05.2024
Date of Institution : 24.03.2022
Date of Reserving Judgment/Order : 14.05.2024
Date of Pronouncement of Judgment/Order : 30.05.2024
Digitally signed
SHIVAM by SHIVAM
GUPTA
GUPTA Date: 2024.05.30
19:21:01 +0530
CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 1 of 21
JUDGMENT
1. Vide this Judgment, this court shall dispose of the present complaint filed by Ms. Suman Gulati (hereinafter referred to as 'the complainant') against Sh. Raghuvender Raghav (hereinafter referred to as 'the accused') U/S 138 of Negotiable Instruments Act, 1881 r/w Section 142 Negotiable Instruments Act, 1881 (hereinafter referred to as 'NI Act').
Brief facts:
2. It is the case of the complainant, that the accused approached the complainant and stated that he owned the property - Flat no. 301 admeasuring 1520 sq. feet located at Third Floor at SK-116, Shastri Nagar, Ghaziabad, Uttar Pradesh (hereinafter referred to as the case/said property) . The complainant and accused entered into an agreement to sell dated 17 th August, 2018 for a consideration of Rs. 30,00,000 (Rupees Thirty Lakh). Pursuant to that, the complainant had made a payment of Rs. 20,00,000 (Rupees twenty lakh) to the Accused. The parties agreed that Sale deed shall be executed on or before 31 st December, 2018, but the accused failed to execute the sale in time and complainant sent a legal notice to the accused dated 9 th May, 2019 to comply with the agreement to sell. When no action was forthcoming from the accused, the complainant made multiple complaints to the Police dated - 24 th October, 2019, 30th December, 2019 and finally on 2nd March, 2021. Accused gave certain assurances to the complainant as to executing the sale deed but meanwhile complainant came to know that the said property has come in the SHIVAM Digitally signed by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:21:07 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 2 of 21 possession of one Mr. Amit Diwan. This threatened the rights of the complainant over the property and therefore he finally confronted the accused on 29th June, 2021 whereby a settlement deed was entered into between the parties that said that the agreement to sell shall stand cancelled and the accused shall pay an amount of Rs 33,25,000 to the complainant for failing to execute the sale deed. The breakdown of the amount is stated in the settlement deed only.
In lieu of the same, the accused gave a post dated cheque in question bearing No. 000152 dated 10th January, 2022 drawn on Karur Vysya Bank, Ghaziabad Branch to the complainant for the said liability amount. However, when the complainant presented the above mentioned cheque for encashment at his bank i.e. ICICI bank Ltd., 19, Arunachal Building, Barakhamba Road, New Delhi, the said cheque was returned back to the complainant as dishonoured by its banker vide return memo dated 11th January, 2022 for cheque no. 000152 with the remarks "Funds Insufficient". The complainant after receipt of said dishonoured cheque, sent a legal notice in writing to the accused through his counsel on 31 st January, 2022 through Speed post. The accused had failed to pay the cheque amount to the complainant within stipulated time of 15 days, hence this complaint U/S 138/142 NI Act.
Proceedings before the Court:
3. The complaint was received by assignment in this Court. After perusing the complaint and hearing the arguments of the complainant on the point of summoning of the accused, prima facie it appeared that the offence U/S 138 NI Digitally signed SHIVAM by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:21:12 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 3 of 21 Act, has been committed. Hence, cognizance of the offence U/S 138 NI Act was taken against the accused on 09.05.2022 and summons were issued to the accused.
4. Notice U/S 251 Cr.P.C. was framed against the accused on 19.01.2023, to which the accused pleaded not guilty and claimed trial. The statement U/S 294 of CrPC of the accused was recorded in which he admitted that the cheque belongs to him and has been dishonoured. Therefore, the bank witness at number 2 in the complainant's list was dropped. Thereafter, considering the defence stated at the time of framing of notice by the accused, this court decided to allow cross examination of the complainant as per 145(2) NI Act, and the case was tried as a summons case. During complainant evidence, complainant has examined himself as sole witness as CW-1. After due cross examination of CW-1 by the Ld. Counsel for the accused, CE was closed in the present case on 25.09.2023. Statement of the accused U/S 313 CrPC was recorded on 25.09.2023 wherein the accused has opted to lead defence evidence, as such, the case was fixed for defence evidence. Thereafter the accused examined Sh. Sonu Ujjwal S/O Sh. Rajender Singh R/O SJ-118, Shastri nagar, Ghaziabad as DW-1. Thereafter the DE was closed on 30.11.2023 and the case was listed for final arguments. On 14.05.2024, final arguments were heard on behalf of the complainant and accused and the case was reserved for judgment. Ld. Counsel for the accused has filed written arguments on which he has based his defense, along with the judgments relied upon.
Digitally signed by SHIVAM SHIVAM GUPTA
GUPTA Date:
2024.05.30
19:21:17 +0530
CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 4 of 21
Evidence:
5. To prove his case, complainant has examined himself as CW1 and has led his evidence by way of evidence affidavit Ex. CW1/A and has relied upon the following documents:-
(a) The present complaint is Ex. CW-1/1.
(b) The true copy of Aadhar of the complainant is Ex. CW-1/2.
(c) The true copy of Agreement to sell dated 17.08.2019 is EX.CW1/3.
(d) The true copy of legal notice dated 09.05.2019 is EX.CW1/4.
(e) The true copy of complaint to police dated 24.10.2019 is
Ex.CW1/5.
(f) The true copy of complaint to police dated 30.12.2019 is Ex.
CW1/6.
(g) The true copy of complaint to police dated 02.03.2021 is Ex.
CW1/7.
(h) The original Settlement deed dated 29.06.2021 is Ex. CW1/8.
(i) The original cheque no. 000152 alongwith original return memo is
Ex. CW1/9 (colly)
(j) The true copy of statutory legal notice dated 31.01.2022 is Ex.
CW1/10
(k) The tracking report of legal notice is Ex. CW1/11 (colly)
(l) The original acknowledgement signed by accused evidencing the
delivery of legal notice is Ex. CW1/12
(m) The original statement of account of the complainant is Ex.
CW1/13.
Digitally signed
by SHIVAM
SHIVAM GUPTA
GUPTA Date:
2024.05.30
19:21:23 +0530
CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 5 of 21
Complainant has not examined any other witness in this case.
6. The accused has examined Sh. Sonu Ujjwal, S/O Sh. Rajender Singh R/O SJ-118, Shastri nagar, Ghaziabad, as DW-1, who is a witness to the settlement deed dated 29.06.2021.
7. The Accused in this case has not disputed the Agreement to sell, existence of some legal liability, signature on cheque, settlement deed (though under duress), dishonour of cheque and receipt of legal demand notice.
Arguments of both parties:
8. Ld. counsel for the complainant while reiterating the contents of the complaint has argued that all the requirements of Section 138, NI Act have been fulfilled by the complainant in the present case. He argued that the cheque in question Ex.CW1/9 was issued by the accused towards the payment of the amount as per the settlement deed Ex. CW1/8 cancelling the agreement to sell Ex. CW1/3, hence towards the legally enforceable liability of the accused. He further argued that when the cheque was presented before the bank for encashment, the same was dishonored on presentation vide return memo Ex.CW1/9 dated 11.01.2022 for reasons 'Funds Insufficient'. Thereafter the legal notice Ex. CW1/10 dated 31.01.2022 was sent to the accused to make the payment within the 15 days stipulated period, but no payment was made by the accused. Thus, all the ingredients of section 138 NI Act, have been duly satisfied and thus presumption U/S 139 NI Act, has been validly raised against SHIVAM Digitally signed by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:21:30 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 6 of 21 the accused. Ld. Counsel submits that the accused has failed to raise any probable defence to disprove the case of complainant and to rebut the presumption U/S 139 NI Act. He further argued that there is material contradiction in the defence of the accused for example witness DW1 stated that the cheque was issued as a security but the same is nowhere mentioned by the accused in his statement under Sec 313 of CrPC. Therefore, accused be convicted for the offence U/S 138 NI Act.
9. Per contra, learned counsel for the accused while opposing the present case has argued that:
Argument (a):The accused's liability is less than what is stated in the legal demand notice. As the legally enforceable debt is lower than the cheque amount, the complaint is liable to be dismissed. For this, he has relied on the judgment of the Hon'ble Supreme Court in the case of Dashrathbhai Trikambhai Patel vs Hitesh Mahendrabhai Patel and Anr. CA no. 1497/2022.
Argument (b) Genuineness of the settlement deed: Further through cross examination of CW1 and by evidence of DW1, the accused has taken a defence that the signatures on the settlement deed and cheque were taken under duress. At the same time, he raises the doubts over the settlement deed as it is not properly notarized as per the rules, reliance is placed on Prataprai Trumbaklal Mehta vs Jayant Nemchand Shah And Another (AIR1992BOM149). He further argues that the witness to the settlement deed is an advocate who is a kin of the counsel for the complainant, hence there are serious doubts on the credibility of the settlement deed.
SHIVAM Digitally signed by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:21:37 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 7 of 21 Argument (c): He further argues that the claim made by the complainant cannot be said to be a debt unless awarded by any competent court, reliance is placed on Greenhills Exports (Private) Limited vs Coffee Board, Bangalore (2001) 106 COMCAS 391.
Therefore, the present complaint is liable to be dismissed and accused be acquitted of the offence under section 138 of Negotiable Instrument Act. Legal Provision
10. Before deciding the present complaint case, let the legal provisions be considered. For fastening liability U/S 138 Negotiable Instruments Act, following are the requirements :-
(a) Drawing of the cheque by the person on the account maintained by him.
(b) Drawer of the cheque issued the cheque to discharge in whole or in part, any legal enforceable debt or other liability.
(c) The cheque issued has been returned unpaid due to insufficiency of funds or exceeds the arranged amount.
(d) The drawer fails to make payment within stipulated time after the receipt of demand notice.
(e) A complaint is then filed within the stipulated time period.
11. Further Section 118 Clause (a) of Negotiable Instruments Act provides for presumptions regarding the consideration for the Negotiable Instruments. It reads as under: -
Digitally signed by SHIVAMSHIVAM GUPTA GUPTA Date:
2024.05.30 19:21:43 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 8 of 21 "That every negotiable instrument was made or drawn for consideration and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration".
Section 146 of Negotiable Instruments Act reads as under :- "The court shall, in respect of every proceedings under this chapter on production of bank's slip or memo having thereon official mark the denoting that the cheque has dishonored, presume the fact of dishonor of such cheque, unless and until such fact is disproved."
Section 139 of the Negotiable Instruments Act provides for presumption in favour of a holder. It reads as under :-
"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, or any debt or other liability." The combined reading of above said sections, raises a presumption in favour of the holder of the cheque that he has received the same for discharge in whole or in part of any debt or other liability. However, it is a settled principle of law that the presumption U/S 139 Negotiable Instruments Act, can be rebutted by the accused by raising a probable defence but the burden of proof is on the accused.
12. Coming to the present case, the complainant has relied upon an agreement to sell dated 17.08.2019 Ex. CW1/3, followed by Settlement Deed dated 29.06.2021 Ex CW1/8 which shows the existence of a legally recoverable debt i.e. the liability. Qua the said liability, a post dated cheque was issued by the Digitally signed by SHIVAM SHIVAM GUPTA GUPTA Date:
2024.05.30 19:21:49 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 9 of 21 accused which was dishonoured on presentation. Cheque and return memo is Ex. CW-1/9 (colly) and legal demand notice is Ex.CW1/10. The accused has admitted his signatures and the fact that the cheque in question was given by him to the complainant, thus, the presumption U/S 139 and U/S 118 (a) has been raised against the accused.
The principles pertaining to the presumptions and the onus of proof as recently summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and 139, we now summarize the principles enumerated by this Court in the following manner: 25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence. Inference of preponderance of probabilities can be drawn not only from the materials brought on record by the parties but also by reference to Digitally signed by SHIVAM SHIVAM GUPTA GUPTA Date:
2024.05.30 19:21:54 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 10 of 21 the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence. Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
13. Now, it is upon the accused to displace this presumption on a scale of preponderance of probabilities and the lack of consideration or a legally enforceable debt, but it 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. Thus, the accused can do either by leading his own evidence in defence or even by punching holes in the case of the complainant in cross-examination.
14. The accused has to come forth with a convincing defence that appeals to common sense and basic rationality. Only in a case where the accused comes up with a convincing defence to counter liability, that the presumption can be stated to have been rebutted.
Appreciation of evidence:
Digitally signed by SHIVAM SHIVAM GUPTA
GUPTA Date:
2024.05.30
19:22:01 +0530
CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 11 of 21
15. Coming to the present case, the accused has admitted to drawing the cheque, handing the cheque and receipt of the legal demand notice. The two questions that need to be decided are that -
Firstly, whether the signatures on settlement deed and cheque were taken under duress, thereby making both the documents invalid? Secondly, whether there existed a legally enforceable debt or liability to the extent mentioned in the cheque, against the accused? Every other aspect for determining the liability is already admitted in the case. Both the issues shall be dealt with by this court one after the other.
16. The first issue was raised by the accused through the testimony of the DW1 in which he has stated that the signature of DW1 and Accused were taken after threatening them with police action and that they never saw the content of settlement deed. When the said witness was being cross examined as to how they were threatened and put in duress, the answer to the question was that 6-7 people came to the accused's house demanding signatures on the settlement deed and threatened to send them to Tihar Jail. Any prudent person in the similar circumstances would have reported the incident to Police, however, when asked whether they filed any complaint or took any other action against the complainant or people who came to the accused's home and took signatures, the answer was in the negative. On the other hand, the complainant has adduced evidence showcasing that she has approached the accused and the police multiple times to get her grievance addressed but to no avail. There is no dispute as to the validity of the agreement to sell Ex. CW1/3 from where the Digitally signed by SHIVAM SHIVAM GUPTA Date: GUPTA 2024.05.30 19:22:08 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 12 of 21 existence of the settlement deed Ex. CW1/8 ensues. Also, it is not the defence of the accused that he did not sign the settlement deed or that he did not incur any liability. At best, his defence is that his liability is not to the extent of the cheque amount. Thus, it is on the preponderance of probabilities that this court finds the version of accused that the signatures were taken forcefully and under duress, is not believable. Even if the story of the accused is taken as it is, it will still not amount to exercise of duress invalidating the signatures as the threat merely pertained to a legal action. The argument that the witness to the settlement deed is also an advocate, who is the kin of the complainant, holds no ground. There is no bar on advocates or kin of the parties being witnesses to any settlement deed. Therefore, this court believes in the validity of the settlement deed.
17. With regard to the second question, all the arguments raised by the accused shall be hereby addressed.
For argument (a) of the accused:
The defence of the accused is that the complainant has admitted the debt to be an amount of Rs. 20,00,000 (Rupees Twenty Lakh) and not the amount as stated in the cheque or the legal demand notice. He relies on the judgment of Hon'ble Supreme Court in the case of Dashrathbhai Trikambhai Patel vs Hitesh Mahendrabhai Patel and Anr. CA no. 1497/2022, wherein the court has made certain observations with respect to security cheques. The relevant paragraph for our consideration is as follows :-Digitally signed
SHIVAM by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:22:13 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 13 of 21 "30. In view of the discussion above, we summarise our findings below:
(i) For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation;
(ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque;
(iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted;
(iv) The first respondent has made part-payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the 'legally enforceable debt' on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds; and
(v) The notice demanding the payment of the 'said amount of money' has been interpreted by judgments of this Court to mean the cheque amount. The conditions Digitally signed SHIVAM by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:22:18 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 14 of 21 stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided."
This court finds that the said judgment is not relevant in the current case as factual matrices in the two cases are quite different. The case being relied upon envisages a scenario where the accused has made part payment after issuing the security cheques, and therefore does not have legally enforceable debt on the date of encashment/presentation of cheque. But in the case at hand, no such payment is made. The accused has disputed the quantum of liability itself for which he has relied on the cross examination of CW1, wherein she has stated that she paid Rs. 20,00,000 (rupees twenty lakh) as earnest money on 17.08.2018. But, in the defence evidence, the accused has completely ignored the amount settled as per the settlement deed which is dated 29.06.2021. The settlement deed Ex CW1/8 clearly mentions that the amount of Rs. 33,25,000/- is towards settling the amount of Rs. 20,00,000/- which has already been paid as earnest money along with Rs. 13,25,000/- (13,00,000/- as time value for money and 25,000/- as cancellation of deeds). When an agreement to sell is amicably cancelled, the defaulting party does incur some liability beyond the paid amount. As per the settlement deed, that amount i.e. Rs 33,25,000 (Rupees Thirty Three Lakh Twenty Five Thousand) was the same as mentioned in the cheque and the legal demand notice.
For Argument (b) Genuineness of the settlement deed:
The accused has failed to show that the settlement was entered into under duress, as Digitally signed by SHIVAM SHIVAM GUPTA GUPTA Date:
2024.05.30 19:22:38 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 15 of 21 discussed above. The Ld. Counsel has argued that no marking has been done by the notary on the settlement deed as per Rule 11 of the Notaries Rules, 1956. For a better understanding, the referred rule is reproduced below.
Rule 11. Transaction of business by a notary:
(1) A notary in transacting the business under the Act shall use the Forms set forth in the Appendix to these rules.
(2) Besides recording declaration of payment for honour a notary shall also register notings and protests made. Every notary shall maintain a notarial register in the prescribed Form XV.
The relevant excerpts from Prataprai Trumbaklal Mehta vs Jayant Nemchand Shah And Another (AIR1992BOM149) are:
"...Rule 11(2) of the said Rules in terms provides that every notary shall maintain notarial register in prescribed Form No. 15. The prescribed form of the register provides for entry of every notarial act in the notarial register and taking of signature of the person concerned in the register and entry in respect of fees charged...." (Para 11) It is pertinent to note that there are a substantial number of case laws to show that procedure is a device of justice and is not to be used to thwart the same purpose. Various decisions of the Hon'ble Supreme Court speak of how minor procedural defects which are curable, should not be allowed to defeat substantive rights or to cause injustice. The settlement deed bears the stamp of notary along with details and signature of the witnesses, just a notary number is missing, which in the opinion Digitally signed by SHIVAM SHIVAM GUPTA GUPTA Date: 2024.05.30 19:22:43 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 16 of 21 of this court, is a minor procedural defect. Moreover, this does not rebut the existence of a legal liability, which is in fact admitted by the accused, the main defence is regarding the amount of legal liability, as discussed above. In order to rebut the presumption under Section 139 of N.I. Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. The Judgment of Hon'ble Delhi High Court has held the same in V.S.Yadav Vs. Reena, 172 (2010) DLT 561. Mere argument is not sufficient, the accused has failed to call any witness (the notary who got the settlement deed executed) or bring any document (notary's register) to disprove the settlement deed. The accused has only examined Sh. Sonu Ujjwal S/O Sh. Rajender Singh as DW1, who has also failed to show that the settlement deed was entered under duress.
For Argument (c):
For the argument that the claim made by the complainant cannot be said to be a debt, reliance has been placed by the Ld. Counsel for the accused on Greenhills Exports (Private) Limited vs Coffee Board, Bangalore (2001) 106 COMCAS 39 . In the case cited, the Hon'ble Karnataka High Court has distinguished between 'debt' and 'damages'.
"14. We will now cull out the principles for ready reference:
(i) A 'debt' is a sum of money which is now payable or will become payable in future by reason of a present obligation. The existing obligation to pay a sum of money is the sine qua non of a debt.
"Damages" is money claimed by, or ordered to be paid to, a person as Digitally signed SHIVAM by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:22:49 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 17 of 21 compensation for loss or injury. It merely remains as a claim till adjudication by a Court and becomes a 'debt' when a Court awards it.
(ii) In regard to a claim for damages (whether liquidated or unliquidated), there is no 'existing obligation' to pay any amount. No pecuniary liability in regard to a claim for damages, arises till a Court adjudicates upon the claim for damages and holds that the defendant has committed breach and has incurred a liability to compensate the plaintiff for the loss and then assesses the quantum of such liability. An alleged default or breach gives rise only to a right to sue for damages and not to claim any 'debt'. A claim for damages becomes a 'debt due', not when the loss is quantified by the party complaining of breach, but when a competent Court holds on enquiry, that the person against whom the claim for damages is made, has committed breach and incurred a pecuniary liability towards the party complaining of breach and assesses the quantum of loss and awards damages. Damages are payable on account of a fiat of the Court and not on account of quantification by the person alleging breach.
(iii) When the contract does not stipulate the quantum of damages, the Court will assess and award compensation in accordance with the principles laid down in Section 73. Where the contract stipulates the quantum of damages or amounts to be recovered as damages, then the party complaining of breach can recover reasonable compensation, the stipulated amount being merely the outside limit.
(iv) When a contract provides that on default by a buyer to pay for and take delivery of goods, the seller is entitled to recover the loss incurred on resale, interest on delayed recovery of the price, godown charges, insurance charges Digitally signed SHIVAM by SHIVAM GUPTA GUPTA 19:22:55 Date: 2024.05.30 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 18 of 21 and other expenses incurred by the seller till resale, it cannot be said the buyer incurs the liability to pay those amounts automatically, when he fails to take delivery. Failure to take delivery may be due to several valid or lawful reasons which may show that the failure to take delivery is not a 'default' or 'breach' in which event, no pecuniary liability may fasten on him.
(v) Even if the loss is ascertainable and the amount claimed as damages has been calculated and ascertained in the manner stipulated in the contract, by the party claiming damages, that will not convert a claim for damages into a claim for an ascertained sum due. Liability to pay damages arises only when a party is found to have committed breach. Ascertainment of the amount awardable as damages is only consequential."
The scope of legally enforceable debt U/S 138 of NI Act, is different from damages to be claimed on breach of a contract in civil law. The term "legally enforceable debt" is defined in the Explanation to Section 138 of the Indian Negotiable Instruments Act. It refers to a debt or other liability that can be lawfully recovered through the due process of law. In order for Section 138 to apply, the debt or liability must be legally enforceable. In the present circumstances, a sum of Rs. 20,00,000/- was paid as earnest money, however the agreement to sell was not executed. Here, the settlement deed was made by the parties for paying back the earnest money along with Rs.13,25,000/- as time value for money and Rs. 25,000/- as cancellation of deeds. The above amount can be recovered by the complainant through due process of law. Moreover, the receiving of the earnest money has never been denied by the accused. Thus, this Digitally signed SHIVAM by SHIVAM GUPTA GUPTA Date: 2024.05.30 19:23:01 +0530 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 19 of 21 squarely falls under "legally enforceable debt or liability", as given U/S 138 of NI Act. Thus, this argument of the accused is also not tenable.
18. The version of the complainant has remained consistent throughout and she has never stated that she paid an excess amount than that stated by the accused.
The burden was on the accused to come forth with a convincing defence that appeals to common sense and basic rationality, and show that the said settlement deed is invalid and the quantum of liability incurred is not as mentioned in the legal demand notice. Only in a case where the accused comes up with a convincing defence to counter liability, that the presumption can be stated to have been rebutted. In this case, the Accused has completely failed to rebut the presumption which arises from issuance of cheque (which is an admitted fact) but further gets fortified by the existence of settlement deed on record, the validity of which has not been satisfactorily brought in doubt. Moreover, this court cannot go into the question of deciding whether the amount settled as per the settlement deed is excessive or not. The court has to keep its ambit of inquiry to the existence of a legally recoverable debt which is evident from the settlement deed. In light of the above observations, this court finds that a legally recoverable debt existed in favour of the complainant.
Conclusion:
19. Thus, in the opinion of this court, the accused has failed in cross examining the complainant in a way so as to shake the complainant's case and highlight infirmities in the complainant case. Further, evidence brought on record by the accused also did not shake the veracity of the complainant's testimony. Thus, the presumptions in SHIVAM Digitally signed by SHIVAM GUPTA GUPTA 19:23:06 +0530 Date: 2024.05.30 CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 20 of 21 favour of the complainant have not been rebutted by the accused. In light of this, accused Raghuvender Raghav is Convicted for the offence U/S 138, N.I. Act.
Copy of the judgment be given to the accused free of cost.
Judgment pronounced in the open court on 30.05.2024.
Digitally signed by SHIVAM SHIVAM GUPTA
GUPTA Date:
2024.05.30
19:23:10 +0530
(Shivam Gupta)
M.M (N.I.Act), Digital Court-02
PHC/New Delhi 30.05.2024
CC No. 3191 of 2022 SUMAN GULATI VS RAGHUVENDER RAGHAV Page 21 of 21