Delhi District Court
Neeraj Kumar Jha vs . Mr. Surender Mandal Page 1 Of 19 on 6 January, 2022
IN THE COURT OF SH. ANSHUL SINGHAL, MM-03
(NI ACT), NEW DELHI DISTRICT, PHC, NEW DELHI
In the matter of: - CC No.: 18181/19
CNR NO.: DLND02-020851-2019
Niraj Kumar Jha
S/o Sh. Diwakant Jha,
R/o N-21, B-1, Block N,
Near Raj Modern Public School,
Jaitpur, New Delhi-110044
......Complainant
versus
Mr. Surender Mandal
Prop. M/s Mandal Enterprises
S/o Mr. Laddu Mandal
R/o House No. 16, Gali No.A-6,
Ashok Vihar, Phase III,
Gurgaon(Haryana)-122001
Also At:
Apex Homes Construction India Pvt Ltd.,
S-349, Ansal Corporate Plaza,
Palam Vihar, Gurgaon-122001
........Accused
JUDGMENT
Date of Institution of Complaint : 21.08.2019 Offence Complained of : u/s. 138 of NI Act Plea of Accused : Not Guilty Date of Final Arguments Heard : 20.12.2021 Decision Qua Accused : Acquittal Date of Decision : 06.01.2022 CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 1 of 19 BRIEF FACTS AND REASONS FOR DECISION OF THE CASE
1. By this judgment, I will dispose of the present complaint U/s. 138 of N.I.Act, 1881 filed by the complainant against accused on account of dishonour of cheque bearing no.001115 dated 22.05.2019 for a sum of Rs.7,61,000/-, drawn on HDFC Bank, Palam Vihar, Gurgaon issued by the accused in favour of the complainant (hereinafter referred to as the cheques in question).
2. Brief facts of the case as per the complaint are that complainant wanted to purchase a flat in the area of Ashok Vihar, Gurgaon and the accused offered the complainant to purchase his Flat No. 001, Upper Ground Floor, Ashok Vihar, Phase-III, Tehsil and District Gurgaon Haryana. After negotiation the deal was finalized for a sum of Rs. 52,21,000/- and the complainant made advance payment of Rs. 7,61,000/- to the accused and the balance amount was agreed to be paid at the time of execution of the sale deed and a Sale deed was executed between the accused and the complainant. It is further the case of the complainant that he wanted to get finance from Aditya Birla Finance Noida, however, his application for loan was rejected. He further asked the accused to arrange finance for him and the accused assured him that he would arrange finance for the complainant for the said flat. It is further the case of the CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 2 of 19 complainant that when he was not able to arrange finance, the complainant expressed his unwillingness to purchase the flat in question and requested for refund of the advance payment and for the same the cheque in question has been issued. Upon presentation, the cheque has been dishonoured on 26.06.19 for the reasons "funds insufficient". Thereafter, a legal notice was sent to the accused dated 15.07.19 which has been duly served on the accused. When no payment was made within 15 days of the service of legal notice, then the present case has been filed.
3. A notice explaining the accusation to the accused U/s 138 of N.I. Act was served on 04.12.2019 and his plea was recorded. The accused took a plea that since the complainant has expressed his unwillingness to pay the remaining amount and obtain the possession of the flat in question, accordingly, the said amount of Rs. 7,61,000/- which was paid as earnest money has been forfeited by him as per the agreement between both the parties and he is not liable to pay the said amount to the complainant. Application U/s 145(2) N.I.Act moved on behalf of the accused was allowed vide order dated 18.02.2020. During CE, the complainant relied upon the following documents:-
(i) Sale agreement is Ex-CW1/1.
(ii) Statement of Account is Ex-CW1/2.
(iii) Cheques in question is Ex-CW1/3.
(iv) Return Memo dated 26.06.2019 is Ex-CW1/4.
CC No. 18181/19
Neeraj Kumar Jha vs. Mr. Surender Mandal Page 3 of 19
(v) Legal notice dated 15.0719 is Ex-CW1/5.
(vi) Postal receipts is Ex-CW1/6.
(vii) Tracking reports are Ex-CW1/7 to Ex-CW1/9.
4. CW1 was duly cross-examined by counsel for accused. CE was closed on 25.02.2020. Accused was thereafter examined U/s 281 r/w Sec 313 Cr.P.C on 21.10.21, putting entire incriminating evidence against him. During examination of the accused U/s 281 r/w Sec 313 Cr.P.C, the accused has stated that the sale agreement that has been placed on file is forged and fabricated and he has not signed the document. He has further submitted that one different agreement in respect of the same property has been executed between the parties and the cheque in question has been given only for security purposes. Since the accused did not choose to lead evidence in his defence, matter was adjourned for final arguments. Final arguments were heard by this court on 20.12.21.
5. I have heard counsel for the parties, perused the record and have gone through the relevant provisions of the law.
6. Before moving forward towards the merits of the case at hand, it is pertinent to reproduce the penal provision of section 138 NI Act:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.-CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 4 of 19
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, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless--
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation.--For the purposes of this section, 'debt or other liability' means a legally enforceable debt or other liability."
(Emphasis Supplied) CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 5 of 19
7. At the very outset, it is pertinent to lay down the ingredients of the offence under section 138 of NI Act. In Jugesh Sehgal v. Shamsher Singh Gogi, (2009) 14 SCC 683, the Hon'ble Supreme Court of India culled out the following ingredients in order to constitute an offence u/s. 138 of NI Act.
"13. It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:
(i) a person must have drawn a cheque on anaccount maintained by him in a bank for payment of a certain amount of money to another person from out of that account;
(ii) the cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;
(iii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity whichever is earlier;
(iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
(v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
(vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 6 of 19 cheque within 15 days of the receipt of the said notice.
Being cumulative, it is only when all the aforementioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act."
8. Ld. Counsel for the complainant has submitted that there exists legally enforceable liability in favour of the complainant on behalf of the accused on the basis of the presumption under section 139 NI Act and also on the basis of sale agreement which is Ex-CW1/1 and on the basis of accounts statement which is Ex-CW1/2. He has further submitted that the cheque in question was issued to the complainant which is Ex-CW1/3. He has further submitted that the dishonour of the cheque is proved by the cheque return memo which is Ex-CW1/4. Further, copy of the legal notice is Ex. CW1/5 and postal receipt is Ex-CW1/6. He has further submitted that the complainant received no payment within 15 days of the service the legal notice. Ld. Counsel for complainant has thus submitted that all the ingredients laid down u/s. 138 NI Act are fulfilled and the accused persons should be convicted.
Defence of the accused
9. The primary defence that the accused has taken is that there is no legally enforceable liability in favour of the CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 7 of 19 complainant and against the accused as on the date of the cheque in question or on the date of its presentation.
10. Before moving forward with the contentions of the accused persons, it is pertinent to discuss the relevant provisions of law which deal with legally enforceable debt or liability under the NI Act which are section 118(a) and 139 of the NI Act. Section 118(a) of the NI Act deals with the presumption of consideration and section 139 of NI Act deals with presumption of legally enforceable debt or liability and reads as follows:
"118. Presumptions as to negotiable instruments- Until the contrary is proved, the following presumptions shall be made:
(a) of consideration: that every negotiable instrument was made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, endorsed, negotiated or transferred for consideration;
***
139. Presumption in favour of holder-
It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
11. It is further pertinent to mention the relevant judgments on the point of presumption of legally enforceable debt or liability. Reliance is placed upon the following observations CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 8 of 19 of Hon'ble Supreme Court in India in the judgment of Rangappa v. Sri Mohan, (2010) 11 SCC 441:
"28. In the absence of compelling justifications, re- verse 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 "pre- ponderance of probabilities". Therefore, if the ac- cused is able to raise a probable defence which cre- ates doubts about the existence of a legally enforce- able 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 evi- dence of his/her own."
(Emphasis Supplied)
12. Further reliance is placed upon the following observations of the Hon'ble Supreme Court of India in Bharat Barrel & Drum Mfg. Co. vs. Amin Chand Payrelal, (1999) 3 SCC 35:
"12. Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by a consider- ation. Such a presumption is rebuttable. The defen- dant can prove the non-existence of a consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was im- probable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 9 of 19 the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by ref- erence to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defen- dant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the de- fendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare de- nial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
13. Further reliance is placed upon the following observations of the Hon'ble Supreme Court of India in Kumar Exports vs. Sharma Carpets, (2009) 2 SCC 513:
"20. The accused in a trial under Section 138 of the Act has two options. He can either show that consid- eration and debt did not exist or that under the par- ticular circumstances of the case the non-existence of consideration and debt is so probable that a pru- dent man ought to suppose that no consideration and CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 10 of 19 debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the court need not insist in every case that the ac- cused should disprove the non-existence of consid- eration and debt by leading direct evidence because the existence of negative evidence is neither possi- ble nor contemplated. At the same time, it is clear that bare denial of the passing of the consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To dis- prove the presumptions, the accused should bring on record such facts and circumstances, upon consider- ation of which, the court may either believe that the consideration and debt did not exist or their non-ex- istence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing di- rect evidence to prove that the note in question was not supported by consideration or that he had not in- curred any debt or liability, the accused may also rely upon circumstantial evidence and if the circum- stances so relied upon are compelling, the burden may likewise shift again on to the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising un- der Sections 118 and 139 of the Act."
14. Further reliance is placed upon the following observations of the Hon'ble Supreme Court of India in Bir Singh vs. Mukesh Kumar, (2019) 4 SCC 197:
CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 11 of 19"20. Section 139 introduces an exception to the gen- eral rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not con- flict with the presumption of innocence, which re- quires the prosecution to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law and presumptions of fact unless the accused adduces evidence showing the reason- able possibility of the non-existence of the presumed fact as held in Hiten P. Dalal [Hiten P. Dalal v. Bratindranath Banerjee, (2001) 6 SCC 16 :
2001 SCC (Cri) 960] .
***
33. A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been is-
sued for payment of a debt or in discharge of a lia- bility. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted."
15. On the basis of the aforesaid discussion, it is clear that one of the most basic ingredient to be seen by this court is whether there exists legally enforceable debt or liability in favour of the complainant and against the accused.
16. The basic contention raised by the accused is that the present cheque in question was a blank signed cheque and CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 12 of 19 was meant only for security purposes. He has further submitted that the document i.e. Sale agreement on which reliance is placed by the complainant to show that there is legally enforceable liability in his favour is forged & fabricated.
17. The counsel for accused has submitted that the sale agreement which is Ex-CW1/1 is a photocopy document and no explanation has been offered by the accused as to how this document is admissible as secondary evidence. Furthermore he has submitted that none of the conditions mentioned in section 65 Indian Evidence Act are made out for allowing the complainant to lead secondary evidence of primary document.
18. Ld. counsel for the complainant has submitted that this is an exhibited document and hence, should be read in evidence.
19. In the considered opinion of this court, merely because a document has been marked as an exhibit does not mean that the same has been proved. A document must be proved in accordance with the rules of evidence laid down under the Indian Evidence Act, 1872 and the authoritative pronouncements of the Hon'ble Superior courts.
20. It is pertinent to note that Ex-CW1/1, which is a photocopy of the sale agreement is a secondary evidence. Perusal of the CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 13 of 19 record further reveals that it is not the case that the original has been seen and returned. The circumstances under which secondary evidence of documents can be allowed to be given are given under section 65 of Indian Evidence Act which reads as follows:
"65. Cases in which secondary evidence relating to documents may be given.-
Secondary evidence may be given of the existence, condition, or contents of a document in the following cases:-
(a) When the original is shown or appears to be in the possession or power of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in section 66, such person does not produce it;
(b) when the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;
(c) when the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;
(d) when the original is of such a nature as not to be easily movable;
(e) when the original is a public document within the meaning of section 74;
(f) when the original is a document of which a certified copy is permitted by this Act, or by any other law in force in India to be given in evidence; India to be given in evidence;
(g) when the originals consists of numerous accounts or other documents which cannot conveniently be CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 14 of 19 examined in Court, and the fact to be proved is the general result of the whole collection.
In cases (a), (c) and (d), any secondary evidence of the contents of the document is admissible. In case (b), the written admission is admissible. In case (e) or (f), a certified copy of the document, but no other kind of secondary evidence, is admissible. In case (g), evidence may be given as to the general result of the documents by any person who has examined them, and who is skilled in the examination of such documents."
21. There is neither any application nor any oral explanation as to how the conditions laid down under section 65 of IEA are made out in this case qua the sale agreement. In my considered opinion none of the circumstances as laid down under section 65 are made out and secondary evidence of the sale agreement cannot be allowed to be led.
22. Ld. Counsel for accused has further submitted that there is no legally enforceable liability in favour of the complainant. For this he has submitted that even assuming Ex-CW1/1 to be a genuine document, the amount that was to be paid by the complainant was Rs. 9,11,000/- and not Rs. 7,61,000/-. He has further submitted that during cross examination of complainant the complainant has agreed that in fact he has paid only Rs. 7,61,000/-. Ld. Counsel for the accused has further submitted that the on the bare perusal of the sale agreement and the actual amount transferred by the complainant would show that both do not pertain to the same transaction. The explanation given by the complainant CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 15 of 19 during cross-examination is that earlier PDC of Rs. 5,00,000/- was given by him to the accused, however, later on the same was returned back to him and a payment of Rs. 3,50,000/- was paid to the accused by the complainant.
23. Looking at the evidence and cross-examination, this court cannot positively reach a conclusion if the sale agreement which is CW1/1 pertains to the transaction between the parties in reference to the cheque in question.
24. At this stage, it is to be noted that the accused has not denied the receipt of money of Rs. 7,61,000/- from the complainant neither has he denied the signatures on the cheque in question. The only ground that he has taken is that the earnest money of Rs. 7,61,000/- was paid under a different agreement and since the complainant has refused to pay the remaining amount, hence, the above said amount stands forfeited. He has further submitted that the complainant has never rescinded the sale agreement and has only not paid the remaining amount. Ld. Counsel has further submitted that the accused is ready and willing to hand over the possession of the said flat even today to the complainant on receipt of payment of the remaining amount.
25. Ld. Counsel for the complainant has submitted that since the accused has not procured finance for the complainant, accordingly, the complainant was forced to express his CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 16 of 19 unwillingness to complete the sale and also requested the accused to refund the earnest money of Rs. 7,61,000/-. Ld. Counsel for the complainant has further submitted that it was agreed between the parties that the accused would procure finance for the property in question for the complainant and only then the complainant would be asked to complete the sale. It has further been submitted that since the accused could not procure the finance, the complainant cannot be expected to comply with the sale agreement.
26. Before moving to any other contentions of the parties, it is to be noted that no proof has been advanced by the complainant in support of his statement of rescission of the sale agreement.
27. In my considered opinion, the complainant would have been entitled to the refund/return of the earnest money only on the proof of rescission of the sale agreement and only after the time when the sale agreement could no longer be complied with by both the parties. In the facts of the present case, no proof has been adduced by the complainant in support of the fact of rescission of the sale agreement. Thus, in my considered opinion the sale agreement is still subsisting as on today and the complainant is not entitled to any refund of the earnest money.
CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 17 of 1928. Moreover, even if it were to be considered for the sake of arguments that the sale agreement is not subsisting as on today, then also, the complainant is not entitled to refund / return of the entire earnest money and he shall be entitled to such earnest money only after deduction of certain unliquidated damages by the accused to be determined in accordance with law. The admitted position between the parties is that a total amount of Rs. 7,61,000/- was paid to the accused by the complainant as earnest money.
29. Ld. counsel for the complainant has submitted that as per their agreement it was the responsibility of the accused to procure the finance for the property. Per Contra Ld. Counsel for the accused has submitted that as per the cross- examination of the complainant, it is evident that it is the complainant himself who has approached the bank for arranging the finance. In view of this, I do not find merit in the submissions of Ld. Counsel for the complainant and in my considered opinion, the complainant has failed to prove the fact that it was the responsibility of the accused to procure the finance for the property.
30. In view of the aforesaid discussion, the complainant cannot be said to have proved that there was legally enforceable liability equivalent to the amount of cheque in question which is Rs. 7,61,000/- due to the fact that the accused has been able to raise a probable defence against the case of the CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 18 of 19 complainant and also for the reason that he complainant has not been able to prove the sale agreement which is Ex- CW1/1 and also for the reason that the sale agreement, if any, to sell the property is still subsisting as on today owing to the failure of the complainant to prove its rescission.
Findings of the Court
31. Thus, in my considered opinion, complainant has not been able to prove its case beyond reasonable doubt qua the accused and it cannot be said that there was legally enforceable debt or liability existing in favour of the complainant and against the accused as on the date of issuance or the presentation of the cheque in question equivalent to the amount of cheque in question.
32. In view of the aforesaid discussion, accused Surender Mandal is hereby acquitted of offence under section 138 NI Act.
Digitally signedANSHUL by ANSHUL SINGHAL SINGHAL Date: 2022.01.06 15:17:40 +05'30' Announced in Open Court (Anshul Singhal) on 06.01.2022 MM(N.I. Act)-03/NDD/PHC/ND CC No. 18181/19 Neeraj Kumar Jha vs. Mr. Surender Mandal Page 19 of 19