Delhi District Court
M/S. Bptp Limited vs State on 3 April, 2014
IN THE COURT OF SH. R.K. GAUBA: DISTRICT & SESSIONS
JUDGE (SOUTH DISTRICT) SAKET: NEW DELHI
Criminal Revision No. 257/13
ID No.: 02406R0245322013
M/s. BPTP Limited,
Through its Authorised Representative,
Registered office at M11, Middle Circle,
Connaught Circus, New Delhi110001. .... Revisionist
Versus
State
Govt. of NCT of Delhi. .... Respondent
Instituted on: 09.09.2013
Judgment reserved on: 26.03.2014
Judgment pronounced on: 03.04.2014
J U D G M E N T
1. This criminal revision petition has assailed the order dated 25.07.2013 passed by Shri Vikrant Vaid, Metropolitan Magistrate, Negotiable Instrument Act02 (South) on the file of complaint case No. 327/13 whereby the complaint of the petitioner under section 138 Negotiable Instruments Act was dismissed at the threshold. Since the persons sought to be prosecuted had not yet been summoned, they are not Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 1 of 16 necessary party in these proceedings. Instead, State has been impleaded as proforma respondent for assistance.
2. I have heard Shri Vijay Kaundal, Advocate for the petitioner and Shri Mohd. Zafar Khan, Additional Public Prosecutor for respondent/State. I have gone through the record.
3. The complaint had been presented by the petitioner on 07.05.2013 seeking prosecution of three persons shown in the array of accused including M/s. Topline Build Tech Private Limited (accused no. 1) and Mr. Vikram Bhardwaj and Mr. Vikas Uppal, both directors in the said company (as accused no. 2 and 3 respectively). The complaint alleged offences under section 138 Negotiable Instruments Act having been committed by the said persons with regard to six cheques of the total value of Rs.1,00,00,000/ which, on presentation, were returned by the banker of the prospective accused for the reason "payment stopped" by the drawee. The complaint alleged that in spite of legal demand notice, the prospective accused did not pay the amount of the said cheques and, thus, giving rise to the offence. The complaint was, however, dismissed by the Ld. Metropolitan Magistrate declining issuance of process under section 204 Cr.P.C. Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 2 of 16
4. The background facts leading to the impugned order being passed may be noted at this stage.
5. As per the allegations set out in the complaint, the petitioner is a company registered under the provisions of Companies Act, it being one of the leading real estate developers. It has been alleged that prospective accused no. 1 (company accused) had approached the complainant company with the intent to procure construction related works in its upcoming project named "Park 81" in Sector81, Faridabad and pursuant to the representations and assurances held out, the complainant company, vide letter of intent dated 24.12.2009, followed by Work Order dated 08.01.2010, had awarded the work of construction of 456 flats / 152 plots of size of 275 square yards, 234 flats / 78 plots of size of 300 square yards and 45 flats / 15 plots of size of 500 square yards of "Park 81"
including civil, internal electrical and internal plumbing work in sector 81, Parklands, Faridabad, to the respondent valuing at Rs. 68,55,17,860/ (Rupees Sixty Eight Crores Fifty Five Lacs Seventeen Thousand Eight Hundred Sixty only). The total cost of the works awarded to the respondent was then calculated at the rate of Rs. 685 per square feet for a total area Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 3 of 16 approximating 10,00756 square feet.
6. The complaint further alleged that in terms of the work order dated 08.01.2010, the complainant company had paid to the accused company an amount of Rs.3,42,76,892/(Rupees Three Crores Forty Two Lacs Seventy Six Thousand Eight Hundred Ninety Two only), it representing five per cent of the total contract value towards mobilisation advance.
7. It has been claimed in the revision that the said payment was made pursuant to clause G (a) of the work order which reads as under: "Advances:
a) Mobilization Advance:
The interest free mobilization advance limited to 5 % of the contract value will be released in 2 equal installments against the submission of undated PDC cheque of Rs. 100 Crore & corporate quarantee of an balance amount (i.e. total amount of mobilization advance - PDC cheque).
2.5 % with in 10 days of issue of work order & balance as mutually agreed upon during the execution of the work. The mobilization advance shall be recovered from 1st RA bill onward in such a manner that total advance is recovered before 90 % of work is completed."Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 4 of 16
8. It is the case of the petitioner that the six cheques bearing Nos. 679282 for Rs. 20,00,000/, 679283 for Rs. 20,00,000/, 679284 for Rs. 20,00,000/, 679285 for Rs. 10,00,000/, 679311 for Rs. 20,00,000/ and 679312 for Rs. 10,00,000/ drawn on the account of the accused company with Punjab and Sind Bank, Green Park Extension, New Delhi16 had been handed over as undated cheques in consideration of the mobilisation advance paid by the complainant company to the accused company. The work order indicates the said cheques which were handed over, though described as PDC (post dated cheques), were actually "undated" which is also the expression used in their context in the work order.
9. The petitioner also seeks to point out that as per clause 'J' of the work order, time was stipulated to be "of essence" to the contract, the work awarded wherein was to be completed and handed over by the accused company within 24 months from the date of issue of letter of intent dated 24.12.2009. It is also pointed out by the counsel for the petitioner that under clause 'S' of the work order, the complainant company had reserved the right, in the event of the accused company failing to execute the work as per the schedule, to withdraw a part / Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 5 of 16 whole of the work from the scope of the work awarded by giving notice in writing and getting the same executed through some other agency at the risk and cost of the accused company.
10.The Metropolitan Magistrate took cognizance on the complaint and held the preliminary inquiry wherein the petitioner company tendered the affidavit Ex. CW 1/A of its authorised representative Mr. Yashpal Antil (CW1) in the course of which he also tendered the documents in support, which included the board resolution (Ex. CW 1/1), the six cheques (collectively shown as Ex. CW 1/2), the respective return memos (collectively shown as Ex. CW 1/3), the legal notice dated 26.03.2013 (Ex. CW 1/4) and proofs of delivery (collectively shown as Ex. CW 1/5).
11.After the evidence led through the authorised representative (CW1) had been recorded, the Magistrate proceeded to examine CW1 further. This has been shown in the record of the magisterial court as "Enquiry Proceedings". The same reads as under: "Statement of AR of the complainant, Sh. Yashpal Antil S/o Sh. Tejpal Antil, office address M11, Middle Circle, Cannaught Place, New Delhi. Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 6 of 16 On SA As per Clause G (a) of the work orer executed between the complainant and accused, the complainant gave a mobilization advance of 5 % of the contract value to the accused against submission of undated PDC cheques of Rs. 1,00,00,000/ and corporate guarantee of balance amount. The same undated PDC cheques form subject matter of the present case.
Q. What do you mean by undated PDC cheque?
Ans. It must be a typographical/clerical error. The cheques in question were issued undated.
In case the accused had performed his part of the promise, the mobilization advance of 5% of contained value would have been adjusted against the payment to be made to the accused. In other words, this advance would have become part of the final payment and only 95 % of the contract value remained to be paid.
In case the accused had performed his part of promise, the cheque in question would not have been encashable. The cheques in question were to be presented for payment only upon the contingency of failure of accused to perform their part of promise. Q. Was the liability of the accused of the cheque amount subsisting on the date when the cheques in question were issued?
Ans. The liability of the accused was not subsisting on the date of issuance of cheque. The liability was to arise only in the event of failure of accused to perform the contract.
RO & AC"
Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 7 of 16
12.Having recorded the presummoning evidence, and further statement of the authorised representative of the petitioner, the Magistrate passed the impugned order holding the complaint to be not maintainable on the ground that the material on record (certain admissions appearing in the course of enquiry proceedings) indicated that there was no liability in existence when the cheques were issued. The reasons leading to this conclusion have been set out primarily in para 5 of the impugned order which reads as under: "In order to attract the provision of section 138 NI Act, the cheque must have been issued in discharge of debt or liability. It is well settled that the liability or debt must be in existence when the cheque is issued. Admittedly, at the time of issuance of cheque in question, there was no existence liability of the respondent towards the complainant. The liability may have arisen in future and that too upon the contingency of the violation of the terms of work order dated 08.01.2010. This fact also finds corroboration from the enquiry proceedings dated 17.07.2013 wherein CW1 deposed that the cheques in question were issued undated. If the liability were determined/ascertained when the cheques were issued, the date would have been mentioned thereon. Issuance of undated cheques reassures that the liability not existing at the time of issuance of Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 8 of 16 cheques in question."
13.The Magistrate referred to Collage Culture and Ors. Vs. Apparel Export Promotion Council 2007 (99) DRJ 251 to observe that a cheque issued under such circumstances as are involved in the case at hand can be kept construed only as a cheque handed over "by way of security". He further observed that a cheque issued for security purposes cannot attract the liability under section 138 Negotiable Instruments Act. He also referred to Exports India and Anr. Vs. State and Anr. 2 (2007) BC 69 to note that in case there was no debt or liability when the cheque was handed over to the payee, the complaint under section 138 Negotiable Instruments Act could not be maintained.
14.The counsel for the petitioner has argued that the very fact that a cheque has been issued in favour of the complainant, a presumption arises under section 139 Negotiable Instruments Act to the effect that it had been issued for discharge of an existing debt or liability (K.N. Beena v. Muniyappan AIR 2001 SCC 2895). He further submitted that there is no requirement that the complainant must specifically allege in the complaint that there was a subsisting liability since the Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 9 of 16 burden of proving facts to the contrary is on the drawer of the cheque at the trial (M/s. M.M.T.C. and another v. M/s. Medchl Chemicals and Pharma (P) Ltd. and another AIR 2002 SC 182, Maruti Udyog Ltd. Vs. Narender and Ors. JT 1998 (9) SC 411).
15.The counsel for the petitioner further argued that it was not proper on the part of the Metropolitan Magistrate to jump to the conclusion on the basis of merely an answer given by the authorised representative (CW1) in the course of enquiry proceedings, after the evidence had been led by the petitioner through affidavit Ex. CW 1/A, to the effect that there was no liability to be discharged through the cheques which had been handed over at the time of award of the work contract. He submitted that the answer given by CW1 in response to the question of the Metropolitan Magistrate during the course of enquiry proceedings was "opinion" of the said person and it could not have been used as an admission against the documentary material that was available and should have been called for. He pointed out that since the petitioner, as complainant, was relying primarily on the cheques, return memos, legal notice of demand etc, in view of the Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 10 of 16 presumption available under section 139 Negotiable Instruments Act, the copy of the work order pursuant to, and at the time of execution of, which the cheques had been handed over was not placed on record. The Metropolitan Magistrate, thus, had gone beyond the documentary material that had been submitted on behalf of the complainant by questioning the witness as to the circumstances in which the cheques had been issued and handed over. The grievance of the counsel is that the Magistrate, instead of going into the corresponding documents, has gone by the oral word of the witness and thereby fallen into error by construing the cheques to have been issued without any subsisting liability.
16.In above context, reliance has been placed on T. Nagappa v. Y.R. Murlidhar (2008) 5 SCC 633; Mojj Engineering Systems Ltd. and Ors. v. A.B. Sugars Ltd. 154 (2008) DLT 579; and Sandeep Khanna and Anr. Vs. State and Ors. in Criminal Miscellaneous Case No. 3308 of 2008 decided on 30.08.2010. In all these three judgments, the effect of Section 20 of Negotiable Instruments Act has been dilated upon. Section 20 Negotiable Instruments Act reads as under: '20. Inchoate stamped instruments.Where one Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 11 of 16 person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments then in force in [India], and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein and not exceeding the amount covered by the stamp. The person so signing shall be liable upon such instrument, in the capacity in which he signed the same, to any holder in due course for such amount; provided that no person other than a holder in due course shall recover from the person delivering the instrument anything in excess of the amount intended by him to be paid thereunder."
17. It has been a consistent judicial view, authoritatively pronounced, that since an undated cheque cannot be encashed, it can only mean that the drawer has authorised the drawee to enter an appropriate date on it. Taking a similar view in H. Maregowda v. Thippamma, AIR 2000 Kant 169, it was observed that the instrument may be "wholly blank or incomplete in particulars" but the holder has the authority to make or complete the instruments as an encashable one.
18.The counsel for the petitioner has placed on record before this court copy of the work order dated 08.01.2010. It is clear from Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 12 of 16 perusal of the said document that the cheques in question were handed over in consideration of the release of mobilization advance by the complainant company in favour of the prospective accused company to the tune of 5 % of the contract value. Undoubtedly, the work order referes to these cheques both as "undated" and also PDC (post dated cheques). But then, it has been fairly admitted by the petitioner company that the cheques did not bear any date when they were handed over. But, merely because the cheques were undated, it does not lead to the conclusion that the cheques were without consideration. The petitioner's authorised representative (CW1) conceded, in answer to the court question in the inquiry proceedings that liability of the accused was "not subsisting" on the date of issuance of cheque. This answer came in response to the question which seems to have assumed that the cheques in question were "issued" on the date when they were handed over. Having regard to the provisions contained in Section 20 Negotiable Instruments Act, the cheque would be deemed to have been issued on the date (28.02.2013) which was later filled in by the drawee before presenting the same to the bank. Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 13 of 16
19.The Ld. Magistrate seems to have misconstrued the admission of CW1 in the course of inquiry proceedings to the effect that the liability was to arise only in the event of failure of the accused to perform the contract to mean that the liability had not arisen on the date (28.02.2013) which was later filled in by the drawee before presenting the cheques to the bank. The petitioner's counsel submitted that there is abundant material available to show that since the accused did not perform their part of the contract within the specified period, the contract was terminated in terms of the clause 'S' of the work order which rendered the cheques in question encashable as the accused company could not get away with the mobilization advance that had been paid by the complainant company to it as consideration at the time of handing over of these cheques.
20.In the facts and circumstances noted above, I am satisfied that the Ld. Magistrate has jumped to certain conclusions prematurely without giving effective opportunity to the petitioner to explain the position. It was not proper to go by the seemingly illinformed opinion of CW1 with regard to the liability of the accused in the context of the fact that the cheques when handed over were undated. The proper course Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 14 of 16 for the Magistrate would have been to call for the copy of the contract pursuant to which the cheques had been issued or handed over. It is only thereafter that the Magistrate would have been in a position to conclude as to whether the cheques were issued by way of security or for discharge of an existing liability.
21.In above context, the petitioner also relies on Magnum Aviation (Pvt.) Ltd. Vs. State and Ors. 172 (2010) DLT 91 to submit that payment made as advance at the time of entering into a contract is also a liability of the opposite party.
22.In above facts and circumstances, I find the request of the petitioner for further opportunity to lead additional evidence under sections 200/202 Cr.P.C to properly explain the position and the circumstances in which the cheques were handed over to be just and proper.
23.Thus, the impugned order is set aside. The criminal complaint case is restored on the file of the Metropolitan Magistrate for further proceedings in accordance with law. The Ld. Magistrate is directed to give opportunity to the petitioner to produce additional evidence for purposes of presummoning inquiry and, thereafter, pass further necessary order as per Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 15 of 16 law. The petitioner is directed to appear before the trial court on 21.04.2014.
24.Needless to add, the Ld. Magistrate shall approach the matter with an open mind and not feel bound by the view taken in the order passed earlier.
25.The revision petition stands disposed of with these observations/directions.
26.Trial court record along with a copy of this judgment be sent back.
27.File of the criminal revision petition be consigned to Record Room.
Announced in open Court today on this 03rd April, 2014. (R.K. GAUBA) District & Sessions Judge (South) Saket/New Delhi Crl. Rev. No. 257/13 M/s. BPTP Vs. State Page 16 of 16