Delhi District Court
Sri P Harihar Kumar vs . on 3 April, 2019
IN THE COURT OF MS NIHARIKA KUMAR SHARMA : METROPOLITAN
MAGISTRATE - 04 : SOUTH : SAKET COURT : NEW DELHI
CT Cases 462011/2016
SRI P HARIHAR KUMAR
Vs.
MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS
NIHARIKA
U/s 138 Negotiable Instruments Act KUMAR
SHARMA
JUDGMENT Digitally signed by
NIHARIKA
KUMAR SHARMA
(1) Serial number of the case : 462011/2016 Date: 2019.04.03
16:50:13 +0530
(2) Name of the complainant : Sri P Harihar Kumar
S/o Late Sh. P. Parasuram.
R/o 228, DDA Flats, Gulmohar
Enclave, New Delhi-110049.
(3) Name of the accused :-
Accused no. 1 : M/s Sri Ventures Land
Developers India Ltd.
Office at:- 1221, 1st Floor, 80
Feet Road, 1st Phase, 1st Stage,
Chandra Layout, Banglore-
560040.
Accused no. 2 : Sri K.N Venkatesh
S/o Sh. KN Narayana Iyenger.
Managing Director and
Authorized Signatory of
accused no. 1 company.
Accused no. 3 : Smt. Amrutha Venkatesh
W/o Sh. KN Venkatesh.
Director and Authorized
Signatory of accused no. 1
company.
CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS
Page 1 of 18
(4) Offence complained of or proved: 138 Negotiable Instruments
Act, 1881
(5) Plea of the accused : Pleaded not guilty
(6) Final Order : ACQUITTED
(7) Date of Institution : 09/06/2016
(8) Date on which reserved for
judgment : 21/12/2018
(9) Date of Judgment : 03/04/2019
BRIEF STATEMENT OF THE REASONS FOR THE DECISION
1.That in the month of August/September 2012, the accused nos. 2 & 3 representing accused no. 1 company visited the complainant and his wife at Hari Niwas, BM Kawal, Bangalore (hereinafter referred as 'case property') wherein accused persons had expressed interest for purchase of said property. That the accused nos. 2 and 3 are principal officers / authorized signatories on behalf of accused no. 1 company and in such official capacity jointly and severally liable for running day to day affairs of the company. That after negotiations, it was decided that accused persons will pay initially Rs. 4.50 crores and balance Rs. 2.15 crores through collaterals in the form of land and flats since accused persons flats were coming up in Mysore Eshwari Project in Hebbal Industrial Estate and similarly CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 2 of 18 accused persons were developing a plotted development in Belur. That to facilitate above transaction and to offset balance due in respect of purchase of above property in Bangalore, accused persons had agreed and executed the documents mentioned in paragraph 4 (I to VI) of the complaint.
That to offset the four plots of Belu sold vide sale agreement dated 20/12/2012 and one plot sold in lieu of the Linea (T-Jet) Car, part liability and expiry of time stipulated in agreement with complainant accused jointly and severally issued cheque no. 30400 dated 03/04/2016, for Rs. 36,00,000/-, drawn on Ratnakar Bank, Gandhinagar Branch, Bangalore (hereinafter, "the cheque in question") in favour of the complainant. That on presentation the cheque in question was dishonoured and returned unpaid vide cheque returning memo dated 04/04/2016 with remarks "Account Closed". That a legal demand notice dated 30/04/2016 was sent by the complainant through his counsel to the accused through speed post and registered AD, despite receipt of which, payment of the cheques in question was not made by the accused within the stipulated time of 15 days. Hence, the complainant filed the instant complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter "the Act").
2. The pre-summoning evidence, by way of affidavit (Ex. CW-1/A) was filed by the complainant. In his affidavit of evidence Ex. CW-1/A, he reiterated all the averments made in his complaint and relied on documents, which are cheque in question Ex. CW1/1, its return memo Ex. CW-1/3, office CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 3 of 18 copy of legal notice Ex. CW-1/4, postal receipts Ex. CW-1/5 (colly), the tracking reports Ex. CW-1/7(colly), AD cards Ex. CW-1/6 (colly), and copy of statement of account of the complainant Ex. CW-1/2(colly).
After perusal of the complaint and affidavit of evidence, since sufficient material was found against the accused persons, summoning order u/s 204 CrPC was passed against the accused no. 1, 2 & 3 vide order dated 09/06/2016 by my Ld. Predecessor Judge.
3. Accused no. 2 & 3 appeared pursuant to issuance of summons. Thereafter, notice U/s 251 CrPC was served upon the accused no. 1 (through accused no. 2), accused no. 2 and accused no. 3 vide order dated 28/01/2017, to which the accused persons pleaded not guilty and claimed trial.
In his defence, accused no. 2 stated that the said cheque in question was given as security in the year 2012 and in the year 2015 and the account was closed and the said cheque in question was blank cheque signed by him when given by him to the complainant. Further, accused no. 2 stated that he had received the legal notice and replied to the same and he has no legal liability to pay the cheques amount to the complainant.
In her defence, accused no. 3 stated that the cheque in question were given as blank signed cheque for security. Further, accused no. 3 admits the receipt of legal notice of demand and stated that she also replied the same and she has no legal liability towards the complainant. CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 4 of 18
4. In post summoning complainant evidence, complainant CW-1 was duly cross examined on behalf of accused persons pursuant to allowing of application u/s 145(2) NI Act. No other witness on behalf of the complainant has been produced. Thereafter, complainant evidence was closed vide order dated 25/06/2018.
5. Thereafter, statements of the accused no. 2 & 3 u/s 313 r/w 281 CrPC were recorded vide order dated 23/07/2018. All material existing on record including the exhibited documents were put to accused persons. Both the accused persons disclosed their defence and expressed their desire to lead DE. Accused no. 3 examined himself as DW-1 and he is duly cross- examined on behalf of complainant. Thereafter, DE was closed vide order dated 23/10/2018.
6. I have heard the arguments of both the parties and perused the record of the case meticulously.
7. In order to prove an offence under Section 138 NI Act, following ingredients are required to be fulfilled :
i) That there is legally enforceable debt or liability;
ii) The drawer of the cheque issued the cheque to discharge in part or whole the said legally enforceable debt or liability;
iii) The cheque so issued was returned unpaid by the banker of the CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 5 of 18 drawer;
iv) Legal demand notice was served upon the accused and the accused failed to make the payment within15 days of the receipt of the said notice.
8. It is a well-settled position of law that when a negotiable instrument is drawn, two statutory presumptions arise in favour of the complainant, one under Section 139 and other under Section 118(a) of the NI Act. The court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon. (Reliance placed on M.S. Narayana Menon v. State of Kerala, (2006) 6 SCC 39).
9. Section 138 Negotiable Instruments Act is attracted in cases where any cheque drawn by a person on an account maintained by him to the banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability standing to the credit of that account is insufficient to honour the CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 6 of 18 cheque or that it exceeds the amount arranged to be paid from the account by an agreement made with that bank, such person shall be deemed to have committed an offence.
10. Defence taken by the accused at difference stages:-
1. Cheque in question were given in the year 2012 and in 2015.
2. Cheques were issued as security for the transaction of the case property.
3. Accused persons have no liability to pay the cheque amount in question.
11. Undisputed factual matrix:-
On sifting of evidence on record and appreciation of arguments, the following facts have gone either unchallenged or are admitted:-
1. Parties are known to each other.
2. Accused persons purchased the case property of the complainant.
3. Cheques in question are issued by the accused to the complainant.
4. Complaint is filed with the jurisdiction.
5. Complaint is filed with the period of limitation.
6. Legal notice of demand is received by the accused and replied.
CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 7 of 18
7. Registered sale deed of the case property Ex. CW-1/10, page 21-
30.
12. Points of determination:-
1. Whether there exists a legally recoverable debt?
It is the case of the complainant that the accused persons approached him and his wife for the purchase of the case property and after deliberations it was decided that the accused will pay initially 4.5 Crore and balance 2.15 Crore. For the payment of the balance amount it was decided between the parties that same shall be paid by way of collaterals in the form of land and flats. Several sale agreements and mortgage agreements were executed in this regard. Therefore, this case relates to the payment of balance amount of Rs. 2.15 crore. The payments were made for initial months however later the accused persons stopped making the payments. Hence, for the payment of this amount a legally recoverable debt exists in the favour of the complainant.
Per contra, defence is raised on behalf of the accused in application u/s 145(2) NI Act, that sale deed with respect to the case property was executed on 12.02.2013 and accused has paid entire sale consideration of Rs. 4.50 Crores and only after that payment the sale deed was registered and accused never agreed to pay any additional amount and therefore there is no question of offsetting any balance amount.
As per section 118 Presumptions as to negotiable instruments. CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 8 of 18
--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, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
There is a statutory presumption in favour of the complainant with respect to existence of the debt and therefore, burden of proof lies in upon the accused. The burden of proof to show that a legally recoverable debt did not exist in favour of the complainant lies upon the accused. This burden of proof is rebuttable in nature and accused is required to raise a probable defence to show that a legally recoverable debt did not exist. And for rebutting the same the accused is not required to prove the fact beyond reasonable doubt but to raise a probable defence to create a doubt in the story of the complainant.
During final argument, Ld. Counsel for the accused has raised an objection on the legality of the debt. It is brought out in the cross examination of the complainant dated 25.10.2017, that the total consideration of the sale deed was Rs. 4.50 crore which was entered with the accused. It is also stated to be correct that there was no settlement/Recital/terms in the sale deed regarding setting off the amount of Rs. 2.15 Crore.
Therefore, at the stage of cross examination it is brought out that sale deed with respect to the case property was already executed. The CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 9 of 18 entire case is for the payment of the balance amount of Rs. 2.15 crore. The fact that sale deed executed is an important fact and it is concealed in the complaint. Since the sale deed was already executed for the lesser amount than the agreed amount, we have to look into the legality of the debt of balance amount of Rs. 2.15 crore. Therefore, the presumption of legality of the debt is rebutted by the accused and burden is on the complainant to show whether the debt was legal or not?
Complainant stated during his cross examination that he knows the accused as he visited the case property and expressed his desire to buy the same. Perusal of cross examination dated 25.10.2017 of CW-1, complainant shows that in the voluntary statement complainant stated that "the said terms were not mentioned in the sale deed because otherwise the registration and execution of the sale deed would not have gone through. The same was done with the knowledge and understanding of the accused". It was further stated that entire sale consideration of the case property is not received. It was further answered that no steps were taken to cancel the sale deed as life of the collaterals was 18 months from the date of agreement and after that period, he persuaded the accused through e-mail to make the payments. In cross examination dated 25.10.2017, complainant was questioned if there was any separate agreement to pay initially Rs. 4.50 crore and balance Rs.2.15.crore through collateral in the form of land and flats in writing. It was agreed by the complainant that an agreement was executed in this regard. The submissions made in the cross examination are CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 10 of 18 considered. The fact of execution of the agreement was concealed in the complaint. Therefore, now it becomes important to see the legality of the said agreement as the debt amount is arising from this agreement Ex. CW- 1/12 (pages 2-12) filed in post summoning evidence.
In cross examination dated 25.10.2017, complainant agreed that a sale deed was executed with the accused persons with respect to the case property after receiving the sum of Rs. 4.50 Crore. Complainant was specifically questioned if there is any averment in the sale deed saying that Rs. 6.65 crore was agreed to be paid as consideration. Complainant replied that it was not done. In voluntary statement complainant stated that if it was written that balance was due, the registration would not ave gone through. It is further stated in the cross examination that if the balance due of Rs. 2.15 crore was mentioned in the agreement, the registration would not have gone through hence other agreements were made to set off the balance amount of Rs. 2.15 Crore. It is further stated that no one agreement was stated for the amount of Rs. 2.15 crore, separate collaterals were executed totaling for this amount.
It is brought out from the cross examination dated 11.12.2017 that entire amount of Rs. 4.50 crores and 2.15 crores claimed in the complainant is in relation to selling of the case property. It is also stated in this cross examination that the agreement to sale concerning the case property is not filed along with the complaint.
The submissions of the complainant are considered. It is very CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 11 of 18 clear from the cross examination that as per the complainant the total sale consideration of the case property was around Rs. 6.65 crores. This fact is not mentioned in the complaint. Complainant has simply stated that firstly Rs. 4.50 crores will be paid and later balance amount of Rs 2.15 crores will be paid. The fact that accused has already paid the sum of Rs. 4.50 crores and the sale deed is executed for this amount only is an important fact and concealed by the complainant as it had direct bearing on the legality of the debt. Only during cross examination it is brought out that the amount of Rs. 6.65 crore is not mentioned in the sale deed because if the same was mentioned the registration of the case property could have gone through. Meaning thereby complainant intentionally undervalued the case property in the sale deed and paid the stamp duty on Rs. 4.50 crores only. And later made separate agreements for the payment of remaining sum pf Rs. 2.15 crores.
At the stage of final arguments, it was argued by the counsel for the complainant that the amount of Rs. 6.65 crores was the total sale consideration of the case property. It was further submitted that as per agreement to sale dated 17/09/2012 Ex. CW-1/10 (page 2-12) internal page no. 5 specifically states that the consideration amount of the case property Rs. 6.65 crores. Further, at page no. 7 it is also agreed that after registration the accused will make the payment of remaining amount. Thereafter, the sale deed was executed on 12/03/2013 and registered, whereby the sale consideration of the case property is mentioned as Rs. 4.50 crores. It is CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 12 of 18 submitted by the counsel for the complainant that parties had already agreed that the balance amount of Rs. 2.15 crores will be paid after the registration in the agreement to sale, accused is liable to pay the same.
Section 62 of Indian Contract Act 1872- Effect of novation, rescission, and alteration of contract - if the parties to a contract agreed to substitute a new contract to it, or to rescind or alter it, the original contract need not be performed.
Negotiable instruments act: Section138- 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 another person from out of that account for the discharge, in whole or in part, of any debt or other liability.......
Explanation.-- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
Payment of stamp duty: Stamp duty is a tax that is paid for acquiring any document or instrument that facilitates the creation, transfer, limiting, extending, extinguishing or recording any right or liability. After the stamp duty is paid, these documents or instruments become legally valid, and have evidentiary value in a court of law. It is commonly paid by affixing stamp paper on the document effecting the transaction. Stamp Duty is paid at the time of registration. Stamp duty calculation is based on the value of the property. Each Indian state has its own criteria based on which it is calculated. It is generally paid on the basis of the circle rate that is CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 13 of 18 determined by a state government. Stamp duty also varies on the basis of the kind of property i.e. residential or commercial, as well as for urban and rural areas. After having completed the payment of stamp duty, the document goes through a process of registration. The fee for property registration is payable over and above the stamp duty. Registration of documents involves the proof of payment of the Stamp Duty.
Section 35 Indian Stamp Act 1899, Instruments not duly stamped inadmissible in evidence, etc.--No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped.
Section 27 Indian Stamp Act 1899, Facts affecting duty to be set forth in instrument.--The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable, shall be fully and truly set forth therein.
Section 64 Indian Stamp Act 1899, Penalty for omission to comply with provisions of section 27.--Any person who, with intent to defraud the Government,--
(a) executes any instrument in which all the facts and circumstances required by section 27 to be set forth in such instrument are not fully and truly set forth.....
CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 14 of 18 shall be punishable with fine which may extend to five thousand rupees.
Hence, initially by way of sale agreement parties agreed that the total sale consideration will be Rs. 6.65 crores, however, sale was executed for the sum of Rs. 4.50 cores. Further, it was not mentioned in the sale deed that the total amount of consideration is Rs. 6.65 crores. Therefore, the sale deed extinguished the agreement to sale. Further, in the present case it was mandatory for the parties to mention the actual value i.e Rs 6.65 crores on the sale deed since this fact affected the chargebility of the stamp duty as it was calculated as per the value of the property. The complainant intentionally did not mention the actual amount on the sale deed and paid lesser duty.
Proceeding to the aspect of lawful consideration. The consideration in the present case was the sum of Rs 2.15 crore. For a debt to be legal, it must comply with the definition given in Indian Contract Act. As per section 23 of the act:
What consideration and objects are lawful, and what not.--The consideration or object of an agreement is lawful, unless - The consideration or object of an agreement is lawful, unless--" it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 15 of 18 agreement of which the object or consideration is unlawful is void.
The object of the consideration in this case was to evade payment of stamp duty which violated section 27 of Indian Stamp act. This essentially defeated the provision of this law and therefore the agreement for payment of the balance amount is unlawful hence void.
2. Whether the cheques in question were issued in discharge legally recoverable liability?
Since in the previous question, it is proved that the debt is illegal, therefore the cheques issued are not in discharge of legal liability. It is the case of the complainant that cheques were issued as part of payment of balance amount. Per contra, it is defence raised by the accused that the same were given as security for execution of the sale deed with respect to the case property but same were not returned by the complainant after execution. No adverse action is taken by the accused against the complainant for not returning the cheques.
Accused has admitted the signature on the cheque in question, therefore presumption under section 139 of the act arises in the favour of the complainant that the cheque was received by the complainant for the discharge of the debt. This presumption is rebutabble and the accused is required to raise a probable defence. Burden of proof is hence upon the accused. Accused is not required to prove the defence beyond reasonable doubt but only required to raise a probable defence.
There is dispute between the parties with respect to the date CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 16 of 18 on which the cheque in question is received. As per the complainant they were issued for part payment of the balance amount after the execution of sale deed. It is further stated that mortgage agreements, sale agreement for flats in Mysore and Belure were made in return of balance due after the payment of Rs. 4.50 crores for the case property and as part of the agreement cheques in question were also issued. Per contra accused raised the defence that it was issued prior to execution of the sale deed. Complainant was also questioned on this aspect during cross examination and it was stated by the complainant that he does not remember the date as it was given long time ago. It is also stated by the complainant that it was nowhere mentioned in the agreement that the cheques were given as a security. Copy of E mail conversations are perused. The conversations do reveal that the accused have certain liabilities towards the complainant with respect to the mortgage agreement executed between them, however, it is not clear whether the mortgage agreement were executed for the total sum of Rs. 2.15 crores.
Further, there is a discrepancy of the amount claimed by way of cheques(i.e. Rs. 1,73,40,000/-) and the total due amount(Rs. 2.15 crores)- vide cross examination of complainant dated 11.12.2017, this question was put to the complainant. Perusal of cross examination shows that complainant has given very evasive answers to this question. Complainant has simply stated that despite discrepancy in the amount facts remains that accused owes the amount to the complainant.
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13. Conclusively, in light of the above discussions and reasons, this court finds accused nos. 1, 2 & 3 are not guilty of offence punishable U/s 138 of the Act. Hence, accused no. 1 M/s Sri Ventures Land Developers India Ltd, accused no. 2 K.N Venkatesh and accused no. 3 Amrutha Venkatesh stand acquitted for the said offence. Copy of this judgment be given dasti to the complainant.
Announced in the open court on 03.04.2019 (NIHARIKA KUMAR SHARMA) MM-04/NI Act/South/Saket New Delhi/03.04.2019 Certified that this judgment contains 18 pages and each page bears my signature.
(NIHARIKA KUMAR SHARMA) MM-04/NI Act/South/Saket New Delhi/03.04.2019 CT Cases 462066/2016 SRI P HARIHAR KUMAR Vs. MS SRI VENTURES LAND DEVELOPERS INDIA LIMITED ORS Page 18 of 18