Delhi District Court
Complainant vs Shri Alok Chandra Rastogi on 1 September, 2010
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IN THE COURT OF Ms. GEETANJLI GOEL, MM, NEW DELHI
CC No.1238/3
DATE OF INSTITUTION : 23.04.2009
DATE RESERVED FOR
JUDGMENT :26.08.2010 DATE OF JUDGMENT : 01.09.2010 IN THE MATTER OF:
SHRI RAJ KUMAR MAGGON S/O LATE SHRI SUNDER LAL MAGGON R/O D-82, NEW MULTAN NAGAR DELHI - 110056 COMPLAINANT VERSUS SHRI ALOK CHANDRA RASTOGI S/O LATE SHRI VIPIN CHANDRA RASTOGI R/O 61C, SAINIK FARMS M.G. ROAD, NEW DELHI ALSO AT RCKC FANTASY (RAM CHANDRA KRISHAN CHAND) F-121, RAJOURI GARDEN NEW DELHI - 110027 AND ALSO AT RCKC SAREE STORE ARYA SAMAJ ROAD KAROL BAGH NEW DELHI ACCUSED JUDGMENT
1. The present is a complaint under Section 138 of the Negotiable Instruments Act (hereinafter referred to as the Act) on the averments that the accused was having friendly relations with the complainant for the previous many years. In the month of May, 2008 as the accused was in dire need of Rs.14,00,000/- for business purpose he approached the complainant for friendly loan of Rs.14,00,000/-2
for 6-7 months and the complainant keeping the urgent requirement and need of the accused paid the accused Rs.14,00,000/- after arranging the same from family and friends on different occasions and the accused in discharge of his legal liability issued a cheque bearing No.028617 dated 19.2.2009 for Rs.14,00,000/- drawn on Vijaya Bank, Karol Bagh, New Delhi - 110005 in favour of the complainant and assured the complainant that the said cheque would be honoured on its presentation.
2. It is averred that the complainant presented the cheque to his banker i.e. Standard Chartered Bank, Connaught Place Branch, New Delhi for encashment, however the same was returned unpaid by the banker of the accused with the remarks 'Insufficient Funds' vide return memo dated 25.2.2009. It is averred that the complainant had informed the accused about the dishonour of the cheque issued by the accused but the accused did not bother about the same and avoided to meet the complainant. It is averred that the complainant issued a statutory notice dated 19.3.2009 through registered AD/ courier/ UPC calling upon the accused to pay the amount of the cheque within the period stipulated in the notice. It is averred that the said notice was sent at the last known addresses as furnished by the accused to the complainant and the UPC had been received by the accused and even courier and registered AD had been served upon the accused. It is averred that despite the notice the accused had failed to make the payment of the cheque amount to the complainant. It is averred that the complaint has been filed within the period of limitation.
3. The accused was summoned vide order dated 13.05.2009 and thereafter the accused appeared before the court and was admitted to bail. Vide order dated 19.02.2010 notice under Section 251 Cr.P.C. for the offence under Section 138 NI Act was served upon the accused to which the accused pleaded not guilty and claimed trial.
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4. The complainant in support of his case led his evidence by way of affidavit which is Ex.CW1/1 reiterating the averments made in the complaint. The cheque is Ex.CW1/A; return memo is Ex.CW1/B; copy of the notice is Ex.CW1/C; registered/ courier postal receipts are Ex.CW1/D1 to D6; UPC is Ex.CW1/E1 to E2; AD card is Ex.CW1/F; proof of delivery is Ex.CW1/G1 to G3 and the complaint is Ex.CW1/H.
5. After complainant evidence was led statement of the accused was recorded under Section 313 Cr.P.C. wherein all the incriminating material existing on record including exhibited documents were put to the accused to which the stand of the accused was of general denial. The accused denied that he had issued the cheque. He denied that he had received the legal notice. He stated that no legal notice was ever received by him regarding demanding payment of cheque amount within the prescribed period. He came to know for the first time that the blank cheque signed by him which was given to the complainant to further arrange a loan had been presented for encashment and a case had been filed under Section 138 NI Act in the court only once the police came to his house with warrants. He immediately contacted his lawyer and engaged him to defend/ contest the said false case filed against him by the complainant. He stated that it was a false case by the complainant in order to illegally extract money from him.
6. The accused further stated that he is the Director of M/s Ram Chander Krishan Chander Sarees since 1993 having shop at Kamla Nagar. In the year 2000 the complainant had approached him at his house and requested him for a loan of Rs.4 lakhs. He expressed his inability to advance such loan. The complainant then requested him to provide him a blank signed cheque so that he could arrange a loan 4 from the market as he knew that he and his company enjoyed good repute and popularity in the market. He was assured by the complainant that the blank signed cheque issued by him would not be misused ever. Having trust and on his repeated assurances the cheque would not be misused he issued a blank signed cheque. He stated that after a few months when he enquired about the cheque and asked him to return the cheque back to him he informed him that he was able to raise a loan and had torn the blank signed cheque and asked him to trust him. He stated that as he was known to him and a good friend he trusted him and accepted that the blank cheque signed by him had been torn. He stated that he checked for 2-3 years if the blank cheque signed by him which was given to the complainant was ever presented for encashment. Since the cheque had never been presented he assumed that the cheque had been torn as was represented by the complainant. He stated that there was no legal liability upon him to issue the cheque in question to the complainant as alleged by him in his complaint for discharge of liability. However the accused has not led evidence in his defence.
7. I have heard the learned counsel for the complainant and accused and perused the record. The learned counsel for the complainant has argued that the AD card, UPC and courier were there to show that notice was served on the accused. It was not necessary that the accused himself should receive the notice. It is argued that accused stated that he issued the cheque to the complainant so that the complainant could obtain a loan but no steps had been taken by the accused to get the payment of the cheque stopped. The cheque was dishonoured on the ground of 'Insufficient Funds'. It is argued that the complainant had stated in the complaint that loan was given in May 2008 whereas in cross-examination he had stated that the loan was given in January 2008 which was a human error as complainant was surrounded by 5 4-5 counsels. It is argued that nobody gives cheque for loan. The accused had not disputed the address in his statement under Section 313 Cr.P.C. and had not disputed his signatures on the cheque and he did not say that the cheque was not signed by him. It is argued that limit of Rs.25,000/- under Income Tax Act was there but it happened and they helped each other. It is argued that according to the accused the cheque was of 1990s but the accused himself had stated that the complainant had approached him in 2000 so even as per the accused the cheque was of 2000. No complaint was made by the accused when he got to know that the cheque was misused or when the complainant allegedly represented to him that the cheque had been torn by him. The income of the complainant was Rs.50,000/- and the income of his wife was Rs.25,000/- so he had sufficient sources of income.
8. The learned counsel for the accused has argued that as per the case of the complainant the accused asked for loan and the complainant gave Rs.14 lakhs to the accused which he raised from family and friends. It is argued that the present was a false and fabricated case. In the complaint it was stated that the accused needed money in May 2008 but in cross it was stated that the loan was given in January 2008. No name of friend and relative was there or what amount was taken from whom and no relative was produced in the witness box. No bank statement was produced nor any receipt and there was nothing to show that money was withdrawn from somewhere. It is argued that the notice was not served on the accused and the AD bore the name of Ashok and Ram Prakash and not of the accused. His mother had no source of income and it was not stated how she had arranged the money. No security was taken. It is argued that the complainant had taken Rs.5-10,0000- loan for everyday expenses so he could not have advanced loan of Rs.14 lakhs without any security. It is argued that as per Section 265 of the Income Tax Act amount of above 6 Rs.25,000/- could not be given in cash and if there was something illegal law would not come to rescue. Even the loan was not shown in the returns.
9. The learned counsel has further argued that the alleged liability is not substantiated by any document. In 2000 the complainant came to the accused and said that he needed to raise money and the accused told him to take blank cheque and on basis of it he could raise loan. In 2000 blank cheque was issued by the accused to the complainant and it was not returned back when asked. There was nothing for 7-8 years. The complainant stated that the cheque was filled by some 3rd person but no third person was produced in the witness box. It is argued that there was no misuse of cheque for 7-8 years so he presumed that he had destroyed the cheque. It is argued that there was no proof of any amount.
10. In the instant case the accused has denied the issuance of the cheque to the complainant and it is his case that the cheque was given to the complainant to enable him to secure a loan in 2000 and had been misused by the complainant. On the other hand it is the case of the complainant that the cheque was issued by the accused towards the loan taken from the complainant. The complainant was cross- examined regarding his source of income and during cross-examination CW1 stated that he is having a shop of electronics goods at A-22, Palika Bazar, New Delhi. It was a sole proprietorship by the name of Sur Sagar Electronics. His average earning from the said shop was Rs.50,000/- per month out of which only Rs.10,000/- was spent on household expenses and Rs.40,000/- became his savings. He had no other source of income except the shop. He stated that there was no fixed amount of savings per month as expenses and income varied per month. He was running the said shop for the previous 20 years. Thus CW1 stated about having average earning 7 of Rs.50,000/- per month out of which only Rs.10,000/- were spent on household expenses.
11. The complainant was then cross-examined on knowing the accused and during cross-examination CW1 stated that he knew the accused through a common friend Mr. Sanjay Mehta who was also a CA of the accused. He knew the accused for the previous 7-8 years. He stated that he knew Mr. Sanjay Mehra since his college days. He also filed his returns being his CA. He admitted that he had not mentioned the said fact in his complaint or affidavit filed before the court. Thus CW1 stated about knowing the accused through a common friend and even the accused had stated about knowing the complainant. It may be mentioned that the accused had in his statement under Section 313 Cr.P.C. stated that the complainant was known to him and he had trust in him and he had stated about the complainant approaching him in 2000 whereas the complainant stated about knowing the accused for the previous 7-8 years.
12. The complainant was then cross-examined on giving loan to the accused and during cross-examination CW1 stated that the accused had approached him as he was requiring some funds. He gave the accused Rs.14 lakhs in 5-6 installments at different times. In January 2008 he gave Rs.2 lakhs in cash in currency notes. The same was given from his savings. Later he paid further Rs.3.5 lakhs to the accused. He did not remember the date when the next payment was made. Again said the payment was made in the month of April. The said payment of Rs.3.5 lakhs was also in cash in currency notes. CW1 stated that the money was collected from his relations. He admitted that no name or details of any relatives or family or friends 8 from whom the said money was arranged had been given by him in the complaint before the court or the evidence filed by way of affidavit before the court. He also admitted that no specific amount was also mentioned as to whether what amount was arranged from what relatives.
CW1 stated that he further paid another sum of Rs.3.5 lakhs in the first week of May, 2008. The said payment of Rs.3.5 lakhs was made in cash in currency notes. The said amount was given from the savings of wife and his mother. He could not say what amount was given by his mother and what amount was given by his wife vol the amount was given jointly by his wife and mother. He stated that the said money was handed over by him to the accused. The notes were maximum of Rs.500/- denomination and rest were of Rs.100/-. He then paid in the last week of May 2008 in two parts, Rs.2.5 lakhs each totaling Rs.5 lakhs. The said amount was paid in cash in currency notes. The said amount of Rs.5 lakhs was arranged from family. He admitted that no name or details of any relatives or family or friends from whom the said money was arranged had been given by him in the complaint before the court or the evidence filed by way of affidavit before the court. He also admitted that no specific amount was also mentioned as to whether what amount was arranged from what family members. After that he did not pay any further amount to the accused. He stated that he is an Income Tax Assessee and he filed returns for every year. He admitted that all the documents had been filed by him to prove his case and the same were a part of court file. He admitted that there was no document on record to show that he had advanced a loan as alleged of Rs.14 lakhs to the accused in the manner as alleged or else. He also admitted that there was no document to prove that he had borrowed/ arranged any amount from any relatives or family members. He could not say whether he had declared the amount of Rs.2 lakhs in his income tax returns for 9 the relevant year of 2008. He stated that his wife was a housewife. She sold suits from their house D-82, New Multan Nagar, Delhi - 110056. She earned Rs.25,000/- per month and she was also an income tax payee. He stated that his house was located in a residential area and it did not have any mixed land use. He did not know whether it was an offence to carry out any commercial activity in a residential colony. He could not say if the amount of Rs.3.5 lakhs which was arranged by his wife and his mother were declared in the Income Tax Returns filed by his wife for the relevant year 2008. He stated that his mother is aged 73-74 years of age. His mother is a housewife. He stated that there was no source of income of his mother.
CW1 admitted that he had advanced friendly loans in cash to his friends and family on many occasions and also taken from friends on many occasions. He admitted that on many occasions he had taken friendly loan of Rs.5-10,000/- from his friends as he required the same for every day expenses vol it was for the first time that he had advanced friendly loan of Rs.14 lakhs in cash by arranging the same from family and friends. He was not aware of the specific provision in the Income Tax Act which stated that if Rs.25,000/- or more was to be advanced then the said payment had to be made by way of cheque. He stated that it was in the year 2007 that the accused had approached him for friendly loan.
13. Thus CW1 stated that he gave the accused Rs.14 lakhs in 5-6 installments at different times. In January 2008 he gave Rs.2 lakhs in cash which was given from his savings though he has not produced any document showing his savings. He stated that later he paid further Rs.3.5 lakhs to the accused in April in cash in currency notes which was collected from his relations. He admitted that no name or details of any relatives or family or friends from whom the said money was 10 arranged had been given by him in the complaint before the court or the evidence filed by way of affidavit before the court or what amount was arranged from whom and even during cross-examination no such names were stated. He stated that he further paid another sum of Rs.3.5 lakhs in the first week of May, 2008 in cash in currency notes which was given from the savings of wife and his mother though he could not say what amount was given by his mother and what amount was given by his wife and volunteered that the amount was given jointly by his wife and mother. He had stated that his wife sold suits from their house and earned Rs.25,000/- per month and she was also an income tax payee but again nothing has been produced on record. He could not even say if the amount of Rs.3.5 lakhs which was arranged by his wife and his mother were declared in the Income Tax Returns filed by his wife for the relevant year 2008. It is pertinent that he stated that his mother was a housewife and there was no source of income of his mother.
14. CW1 also stated that he then paid in the last week of May 2008 in two parts, Rs.2.5 lakhs each totaling Rs.5 lakhs in cash which was arranged from family. He admitted that no name or details of any relatives or family or friends from whom the said money was arranged had been given by him in the complaint before the court or the evidence filed before the court and no specific amount was also mentioned as to what amount was arranged from what family members. He had admitted that all the documents had been filed by him to prove his case and the same were a part of court file but there was no such document on record nor to show that he had borrowed/ arranged any amount from any relatives or family members and he could not say whether he had declared the amount of Rs.2 lakhs in his income tax returns for the relevant year of 2008. As such the complainant had stated about giving Rs.14,00,000/- in installments to the accused at various points of time and he had 11 also stated about taking the amount from his relatives but name of no relative has been stated except that some amount was taken from his wife and mother as well but again he stated that his mother had no source of income. Even no document has been produced to show that the complainant had savings as mentioned by him or his wife had any such savings. In fact CW1 admitted that he had advanced friendly loans in cash to his friends and family on many occasions and also taken from friends on many occasions and that on many occasions he had taken friendly loan of Rs.5- 10,000/- from his friends as he required the same for every day expenses. He had volunteered that it was for the first time that he had advanced friendly loan of Rs.14 lakhs in cash by arranging the same from family and friends but there is merit in the contention of the learned counsel for the accused that a person who took friendly loans of as little as Rs.5-10,000/- for every day expenses could not extend a loan of Rs.14,00,000/- even by borrowing and it also does not stand to reason that one would borrow money from relatives to give loan to another person.
CW1 stated that he was not aware of the specific provision in the Income Tax Act which stated that if Rs.25,000/- or more was to be advanced then the said payment had to be made by way of cheque. While it may be so that in friendly transactions amounts are given but the law cannot be bypassed. It is further significant that in the complaint it was stated that the accused had approached the complainant in May 2008 whereas in cross he stated that it was in the year 2007 that the accused had approached him for friendly loan. It was argued on behalf of the complainant that there was a human error as the complainant was surrounded by many counsels but it is significant that the complainant has then committed the human error not at one place but also when he stated about paying certain amount in January, 2008, then some amount in April, 2008 and finally in May 2008. The accused could have committed error once but not repeatedly when he has deposed 12 specifically as to when what amounts were given by him to the accused. Moreover if the need of the accused was in 2007 it would not stand to reason that the complainant would pay some amount to him as late as May, 2008.
15. It is then the case of the accused that a blank cheque was given to the complainant by him in 2000 and during cross-examination CW1 stated that the cheque in question was handed over to him in the month of August 2008. The said cheque was filled by the CA of the accused who was also a common friend of his. He admitted that there was the year 19___ depicted on the top right of the cheque in question. He could not say whether the year 19___ depicted that the cheque book was pertaining to the year 19___ and not after year 2000. He was shown a letter from Vijaya Bank duly signed by the Senior Branch Manager showing at Serial No.1 that the cheque book containing the cheque numbers 28601-28625 was issued on 10.5.2000. It was specifically put to him that the cheque book containing cheque numbers 28601 - 28625 was issued on 10.5.2000 to which the complainant could not say anything. He stated that he could identify the signatures of the accused. He stated that the accused had signed the cheque in front of him. He denied the suggestion that in the year 2000 he had approached the accused and requested him to issue him a blank cheque as he required the same to raise funds from the market. He further denied the suggestion that a blank cheque bearing only the signatures of the accused was issued to him by him on the assurance by him that the said cheque would never be misused. He further denied the suggestion that he along with his common friend and CA Mr. Sanjay Mehra had misused the said cheque and represented the same for payment or that there was no legal liability of the accused to issue the said cheque in question or that he had never advanced a friendly loan of Rs.14 lakhs to the accused by getting the same arranged from his family and friends. CW1 admitted that he had 13 not filed any civil case for recovery of the said amount of Rs.14,00,000/- against the accused.
16. Thus CW1 stated that the cheque in question was handed over to him in the month of August 2008. It is significant that the complainant had stated that he had given a total sum of Rs.14,00,000/- lakhs to the accused but there is nothing to show that he had taken any security from the accused and even the cheque was handed over to him allegedly in August 2008 that is 2 months after the entire payment was allegedly made by the complainant to the accused. It is true that both the parties have stated about knowing each other but it does not stand to reason that the complainant would hand over such a huge amount without taking any security or anything else in return. CW1 stated that the said cheque was filled by the CA of the accused who was also a common friend of his. The accused had tried to contend that the cheque was of 1990s and CW1 had admitted that there was the year 19___ depicted on the top right of the cheque in question and he was shown a letter from Vijaya Bank duly signed by the Senior Branch Manager showing at Serial No.1 that the cheque book containing the cheque numbers 28601-28625 was issued on 10.5.2000. Thus the said contention of the accused is fallacious as per the evidence produced by the accused himself in that the letter produced by the accused showed that the cheque book was issued on 10.5.2000 i.e. after 1990s and even the accused had stated in his statement under Section 313 Cr.P.C. that the complainant had approached him in 2000 which is also after 1990s.
CW1 stated that the accused had signed the cheque in front of him but even the accused has not denied his signatures on the cheque. A suggestion was put to the complainant that in the year 2000 he had approached the accused and requested 14 him to issue him a blank cheque as he required the same to raise funds from the market and that a blank cheque bearing only the signatures of the accused was issued to him by him on the assurance by him that the said cheque would never be misused and that he along with his common friend and CA Mr. Sanjay Mehra had misused the said cheque and presented the same for payment and there was no legal liability of the accused to issue the said cheque in question which he denied. The accused has also not produced anything specific in that regard nor the complainant was specifically queried that the complainant had represented to the accused that he had obtained the loan from elsewhere and had destroyed the cheque in question. Further there is merit in the contention of the learned counsel for the complainant that the accused had not lodged any complaint even on coming to know about the alleged misuse of the cheque and if the cheque was not returned by the complainant to him he should have issued stop payment instructions but the cheque was dishonoured not on the ground of 'Stop Payment' but 'Insufficient Funds'. The learned counsel for the complainant has relied on 2008 (3) Bankers' Journal 264 regarding filling up of amount and date in a blank cheque as also on 2006 (DCR) 705; 2006 (2) DCR 421 2006 (2) DCR; 2006 (2) DCR 145. Even the presumption is there in favour of the complainant under Section 139 NI Act that the cheque was issued in discharge of liability.
In Rangappa v. Sri Mohan (2010) 5 SCALE 340 it was observed:
"... the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability. To that extent, the impugned observations in Krishna Janardhan Bhat (supra) may not be correct. However, this does not in any way cast doubt on the correctness of the decision in that case since it was based on the specific facts and circumstances therein. As noted in the citations, this is of course in the nature of a rebuttable presumption and it is open to the accused to raise a defence 15 wherein the existence of a legally enforceable debt or liability can be contested. However, there can be no doubt that there is an initial presumption which favours the complainant. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. 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. However, it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of preponderability should guide the construction and interpretation of reverse onus clauses and the accused/ defendant cannot be expected to discharge an unduly high standard or proof. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of 'preponderance of probabilities'. 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. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/ her own."
17. While the presumption is there in favour of the complainant it is a rebuttal one. In the instant case the accused though there is nothing to substantiate the defence sought to be put forth by him has been able to raise a probable defence and has shown on the basis of evidence of complainant that the complainant could not have extended loan of Rs.14,00,000/- to the accused as alleged and that there are material contradictions in the case sought to be put forth by the complainant which create doubt about the existence of a legally enforceable debt or liability. As such in the present case the accused has succeeded in rebutting the said presumption on preponderance of probabilities.
18. The accused had during his statement under Section 313 Cr.P.C. denied that he got the legal notice and he stated that no legal notice was ever received by him demanding payment of cheque amount within the prescribed period and he came 16 to know for the first time that the blank cheque signed by him which was given to the complainant to further arrange a loan had been presented for encashment and a case had been filed under Section 138 NI Act in the court only once the police came to his house with warrants. During cross-examination CW1 admitted that the RC, AD cards through which legal notice was sent by his counsel had been placed on record and were part of the court file. He admitted that the said AD cards bear the name of one Ashok and one Ram Prakash. He also admitted that the said AD card was not signed by the accused person. He denied the suggestion that no notice was ever received by the accused. Thus the complainant has placed on record the postal and courier receipts and also proof of delivery and registered AD cards. It is true that the AD cards bear the name of Ashok and Ram Prakash but the accused has not led any evidence to show that the said persons were not known to the accused. Once the complainant has placed on record a signed acknowledgement due card it was for the accused then to prove that there was no person who could have signed the said AD card and as such it did not stand served on him. I am fortified on this by the judgment of the Hon'ble High Court of Delhi in M/s Inter Ocean Shipping v. Lt. Col. Y.R. Puri 45 (1991) DLT 221 where it was held that notice sent by registered AD post at correct address even if it is received by somebody else other than the addressee shall be deemed to be duly served upon him. The learned counsel for the complainant in this regard has relied on 2009 (1) CC Cases (SC) 128; 2006 (6) SCJD 640 (SC); 2008 (3) Bankers' Journal 198. The accused has also not disputed his address on the postal receipts. As such the legal notice stood served on the accused but no payment was made pursuant to the same nor reply sent.
19. From the material on record it stands established that the cheque was issued by the accused, the same was returned dishonoured for the reason 17 'Insufficient Funds', legal notice was received by the accused but neither reply was sent to the same by the accused nor payment was made. However the complainant has failed to show that the cheque was issued for consideration. As such the complainant has failed to prove his case against the accused beyond reasonable doubt. Accordingly the complaint is dismissed and accused is acquitted for the offence under Section 138 Negotiable Instruments Act. Bail bond cancelled. Surety discharged. File be consigned to record room.
Announced in open court
On this 1st day of September 2010 (GEETANJLI GOEL)
MM, NEW DELHI