Delhi District Court
Mohit Walia vs . Raj Kumar Puria Page No.1 Of 24 on 23 February, 2022
IN THE COURT OF SHRI HARSHAL NEGI, MM05 (NI
ACT), SOUTHWEST DISTRICT, DWARKA COURTS, NEW
DELHI
CC No.5002030/2016
CNR No.DLSW020069332016
Mohit Walia
S/o Sh. Sunil Kumar Walia
R/o B46, Upper Ground Floor,
Sainik Nagar, Near Nawada Metro Station,
Uttam Nagar, New Delhi110059
...Complainant
Versus
Raj Kumar Puri
S/o late Sh. Kesar Das Puri
R/o B131, Mana Ram Park
Behind Charu Departmental Store,
Uttam Nagar, New Delhi 110059
...Accused
Offence complained of : U/s 138, NI Act, 1881
Date on which the complaint was instituted : 27.06.2016
Plea of the Accused : Pleaded not guilty
Date of Pronouncement of judgment : 23.02.2022
Ct. Case 5002030/2016
Mohit Walia Vs. Raj Kumar Puria Page No.1 of 24
JUDGMENT
The complainant alleges that accused was running a chit fund committee/scheme and complainant was also member of the said committee. The complainant participated in the Committee/Chit fund Scheme in the year 2014 for 20 months period. It is the case of the complainant that after the expiry of 20 months period the accused issued a cheque bearing no 000030 of Rs. 1, 95,000 dated 31.03.2016, drawn on HDFC Bank, Connaught Circus, New Delhi to the complainant with an assurance of its encashment. The complainant presented the cheques in his account maintained at HDFC Bank, K1 Rajapuri, New Delhi which was returned with the remarks "Insufficient Funds" vide bank return memo dated 13.04.2016. Thereafter, complainant served a legal notice dated 10.05.2016 upon the accused through his counsel demanding the said amount. Despite service of aforesaid notice, neither any reply was sent nor was the money repaid by the accused. Thereafter, complainant has filed the present complaint case Material on Record The accused entered appearance on 08.08.2016. Notice under Section 251 Crpc dated 20.01.2017 was framed accordingly to which the accused pleaded not guilty and claimed trial. In his Notice under Section 251 CRPC the accused admitted that he had issued Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.2 of 24 the cheque in question. He further admitted that the cheque in question bears his signature. He further stated that he had applied for a loan from the complainant's bank and the complainant told him that Rs 5000/ has to be paid in cash and a cheque of Rs 1, 95,000/ has to be given as security as the loan was to be taken in the name of the complainant.
The Complainant relied on the following documents:
a. Copy of Election card of complainant Ex CW 1/1 (OSR) b. Original Cheque in question Ex CW 1/2 c. Original returning memo Ex CW 1/3 d. Copy of Legal Notice Ex CW 1/4 e. Original postal receipts Ex CW 1/5 (Colly) The Complainant was called for cross examination under Section 145(2) NI Act on 08.08.2017. The complainant in his cross examination stated that he knew the accused for last 9 to 10 yrs and he used to visit the shop of the accused frequently and accused used to visit his house. The complainant stated himself to be a banker and was working with HDFC as a Deputy Manager for the last 2.5 years. The complainant affirmed that accused opened an electronic shop around 2016. He denied the suggestion that the shop was shut down in December 2015. He further denied the suggestion that in order to promote the electronic business the accused had approached him for the personal loan. He denied the suggestion that he assured the Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.3 of 24 accused that he will help him getting a personal loan of Rs 2, 00,000/ from his bank. He further denied the suggestion that accused has paid Rs 5000/ in cash and that he had given him passport size photographs and ID and that he also got a form filled by the accused. He further denied the suggestion that when the accused was unable to get personal loan, the complainant told him that he will get loan in his own name and asked the accused to give a blank signed cheque as security.
He further stated that it is not mentioned in the complaint as to when the committee has commenced and for what amount. He further affirmed that he had not mentioned in the complaint about the monthly installments of the committee. He stated that the accused was running the registered chit fund/committee and he had also shown registration document to him. He further stated that he did not remember the name of the chit fund. He further stated that he did not read about the place where the chit fund was registered. He further affirmed that the registration of the chit fund is not mentioned in the complaint. He denied the suggestion that the cheque in question was taken as a security and is misused by him. He further stated that he do not know whether the legal demand notice sent to the accused was served upon him or his family members.
Thereafter, CW 2 i.e. Deputy Manager, HDFC Bank, Branch at K G Marg, Connaught Place, New Delhi was examined on Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.4 of 24 09.02.2018 and he brought the summoned record i.e. Ex CW 2/1 (Colly) (Running into 16 pages) i.e. the account statement of the accused and Ex CW 2/2 (Colly) (Running into 12 pages) to prove the transaction qua the cheque in question Ex CW ½. He was cross examined on 09.02.2018 and was discharged.
CW 3 i.e. Public relation Inspector, Post office, Naraina, New Delhi was examined on 09.02.2018 and brought the record regarding the booking of registered post which was Ex CW 3/1 (Colly) (Running into 2 pages). He was cross examined and stated that he had only produced the record regarding the booking of registered post and not the delivery report qua the said article.
CW 4 i.e. Personal Banker, HDFC Bank, Rajapuri Branch, New Delhi was examined on 18.07.2018 and he brought the account statement of the complainant from 01.01.2016 to 31.12.2016 along with copy of the cheque in question and the record was marked as Ex CW 4/A (Running into 10 pages). After giving opportunity to cross examine CW 4, he was discharged.
CW 5 i.e. Public relation Inspector, Post Office, Malkaganj was examined on 30.11.2018 and had brought the report of Sub post Master, Malkaganj Ex CW 5/A. He stated that as per the report the Post office Malkaganj cannot provide details of the post booked on 09.06.2016 as the records has been weeded out by the post office in the year 2016.
The complainant closed his evidence on 30.11.2018.
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.5 of 24Thereafter, the statement of the accused under Section 313 Crpc was recorded on 04.09.2019 and all the incriminating evidences were put to him. In his statement the accused stated that he had given the cheque for taking business loan as the complainant is a banker. He stated that the complainant took his cheque and did not give him any money. He admitted his signature on the cheque.
The accused opted to lead his defence evidence. However, on 27.10.2021, the accused submitted that he does not want to lead his defence evidence and vide separate statement the accused closed is defence evidence.
Arguments adduced by Ld Counsels of both the parties have been heard. Evidences and documents on record perused carefully.
It was argued by the Ld. counsel for the complainant that this is a fit case for conviction of the accused as all the essential ingredients of Section 138 of the Act read with Section 139 of the Act have been fulfilled and that the same has been aptly demonstrated by the complainant before the court. The accused has admitted his signatures on the cheque in question in answer to notice under section 251 Cr.P.C and in his statement U/s 313 Cr.P.C. He argued that accused never gave reply to the legal demand notice. It is averred that accused failed to raise the probable defence to disprove the case of complainant and to rebut the presumption under Section 139 of the Act. Therefore, accused be convicted for the offence under Section 138 of the Act.
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.6 of 24Per contra the counsel for the accused it was argued that complainant did not produce any written record of the committees. It was argued that evidence of complainant suffered from material lapses and was not sufficient to establish the case against accused. He submitted that complainant has failed to prove his case beyond reasonable doubt and accused is entitled to be acquitted of offence u/s 138 of the Act.
Law Point Before analyzing the material on record, it is imperative to set forth the legal benchmark which governs the adjudication of cases under Section 138 NI Act. A bare reading of Section 138 NI Act reveals that in addition to the cheque being issued for the discharge, in whole or in part, of any debt or other liability; following are the ingredients which constitute an offence:
1. that a person drew a cheque on an account maintained by him with the banker;
2. that such a cheque when presented to the bank is returned by the bank unpaid;
3. that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier;
4. that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.7 of 24
5. such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid.
(Para 26, N. Harihara Krishnan vs J. Thomas, (2018) 13 SCC 663, referred to in Himanshu vs B. Shivamurthy (2019) 3 SCC
797) Section 138 is to be read with the presumption, being a rebuttable presumption, as contained in Section 139. Section 139 provides that:
"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."
Thus, in cheque bouncing cases, the judicial scrutiny revolves around the satisfaction of ingredients enumerated under Section 138 NI Act and if so, whether the accused was able to rebut the statutory presumption contemplated by Section 139 NI Act. Section 139 is an example of reverse onus clause which usually imposes an evidentiary burden and not a persuasive burden. In other words, Evidence of a character, not to prove a fact affirmatively, but to lead evidence to show nonexistence of a liability. Further the law is well settled that when an accused has to rebut the presumption Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.8 of 24 under Section 139, the standard of proof of doing so is that of "preponderance of probability" (Rangappa vs Sri Mohan (2010) 11 SCC 441). Once execution of cheque is admitted, it is a legal presumption under Section 139 of Negotiable Instrument Act, the cheque was issued for discharging legally enforceable debt.
Attention is also invited to Section 118(a) wherein a presumption of the cheque having been issued in discharge of a legally sustainable liability and drawn for good consideration, arises. Section 118 of the N.I Act provides: "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, indorsed, negotiated or transferred was accepted, indorsed, negotiated or transferred for consideration;"
Hence, it can be seen that from its very inception a presumption that the cheque was issued in discharge of a debt or other liability subsists in favour of the Complainant and onus rests upon the accused to rebut the existing presumption on the touchstone of preponderance of probability.
Further, the accused in a trial under Section 138 has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the non Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.9 of 24 existence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed(Para 20, Kumar Exports vs Sharma Carpets (2009) 2 SCC 513). Analysis & Conclusion The judicial analysis at this stage is centered on whether the complainant has been able to make out the ingredients of Section 138 NI Act. For convenience, before satisfying as to whether the complainant has been able to establish that "the cheque being issued for the discharge, in whole or in part, of any debt or other liability", let us first examine whether the other ingredients of Section 138 NI Act stands fulfilled.
First: that a person drew a cheque on an account maintained by him with the banker; and that such a cheque when presented to the bank is returned by the bank unpaid;
On the close scrutiny and appraisal of the original cheque bearing no 000030 of Rs 1, 95,000 dated 31.03.2016 marked as Ex CW1/2 drawn on HDFC, Connaught Cricus, New Delhi, the testimonies of CW 2 i.e. Deputy Manager HDFC Bank, Branch K G Marg Connaught Place New Delhi (Bank of the accused), and CW 4 i.e. Personal Banker, HDFC Bank, Rajapuri Branch, New Delhi (Bank of the Complainant) it clearly transpires that the same had been issued as per the above details. Further, the cheque in question again got dishonored vide returning memo dated 13.04.2016 with Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.10 of 24 remarks "insufficient funds" marked as Ex CW 1/3. Thus, the ingredient i.e. that a person drew a cheque on an account maintained by him with the banker; and that such a cheque when presented to the bank is returned by the bank unpaid, stands fulfilled.
Second: that such a cheque was presented to the bank within a period of six months from the date it was drawn or within the period of its validity whichever is earlier;
On a cojoint reading of the cheque Ex CW ½ being drawn on 31.03.2016, return memo Ex CW 1/3 and the testimony of CW 4, it stands proved that "cheque was presented to the bank within a period of six months from the date it was drawn".
Third: that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid.
The Legal notice dated 10.05.2016 Ex.CW1/4 further proves that the same was issued on 10.05.2016 and dispatched vide postal receipt Ex.CW1/5. Now, the accused in his notice under Section 251 CRPC and statement under Section 313 CRPC has denied that he has received any legal notice. However, the address mentioned Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.11 of 24 by the accused in his bail bonds and surety bonds as well as the address of the accused mentioned in the vakaltnama of his counsel bear the same address which finds mention in the legal notice. Even otherwise, the Hon'ble Supreme Court in K Bhaskaran vs Sankaran Vaidhyan Balan (1999) 7 SCC 510 in Para 18 observed thus:
"......'Giving Notice' in the context is not the same as 'receipt of notice'. Giving is a process of which receipt is the accomplishment. It is for the payee to perform the former process i.e. Giving, by sending the notice to the drawer at the correct address....."
Further, in Para 24 of the above said judgment the Hon'ble Supreme Court held that where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of General Clauses Act could profitably be imported in such a case. It was further held that in this situation service of notice is deemed to have been effected on the sendee.
Law with respect to the delivery of legal notice by post and the presumption with respect to the same has been succinctly put forth by the Hon'ble Supreme Court in C C Alavi Haji vs Palapetty Muhammed (2007) 6 SCC 555. Para 13 & 14 of the judgment is worth mentioning as under:
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.12 of 24"13. According to Section 114 of the Act, read with Illustration (f) thereunder, when it appears to the Court that the common course of business renders it probable that a thing would happen, the Court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed. Thus, Section 114 enables the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Consequently, the court can presume that the common course of business has been followed in particular cases. When applied to communications sent by post, Section 114 enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. But the presumption that is raised under Section 27 of the G.C. Act is a far stronger presumption. Further, while Section 114 of Evidence Act refers to a general presumption, Section 27 refers to a specific presumption
14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.13 of 24 when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business Thus, in view of the law as above said and the fact that the address mentioned by the accused in his bail bonds and surety bonds as well as the address of the accused mentioned in the vakaltnama of his counsel bear the same address which finds mention in the legal notice, the mandatory statutory legal notice marked as Ex CW 1/4 is deemed to have been served on the accused in the present case. Thus, the factum of issuance and receipt of mandatory statutory legal notice also stands proved based on the documentary evidence of legal notice, postal receipts. It has been also proved that despite issuance of legal notice, the accused had failed to make the payment of the cheque amount.
After analyzing the other ingredients of Section 138 NI Act, judicial scrutiny now centers on as whether the complainant has to been able to satisfy that:Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.14 of 24
"the cheque being issued for the discharge, in whole or in part, of any debt or other liability".
The foundation of the case of the complainant is that he had opted for a committee in the year 2014 for 20 months and was contributing well in time against the said committee/Chit funds scheme. Thus it is clear that the actual transaction between the parties was akin to a chit fund. The complainant in his cross examination had categorically stated that he had not mentioned in his complaint as to when the committee has commenced and for what amount. He further stated that he had not mentioned about the monthly installments of the committee. The Complainant in his cross examination further categorically stated that the accused was running a registered chit fund/committee and had shown registered documents to the complainant. The complainant further stated that he do not remember the name of the chit fun nor did he read about the place where the chit fund was registered. It is thus, important to address the issue as to whether the cheque in question which is said to have been issued towards payment due on such a chit fund/committee can be said to have been issued in discharge of a legal debt or liability.
At the outset, it is profitable to discuss the law governing funds/committees in India. A PanIndia legislation in the form of Chit Funds Act, 1982 (hereinafter referred to as the 'Chit Funds Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.15 of 24 Act') was enacted with a view to institutionalize the system of chit funds and have a regulatory mechanism in place, to ensure investor protection and smooth conduct of chit funds. This legislation (supplemented by Delhi Chit Fund Rules 2007), interalia, provides for mandatory registration of chit fund companies, in addition to sanction with respect to each chit scheme individually. It also mandated a provision for minimum capital requirements for a company intending to organize a chit fund, written chit agreements between the foreman and the subscribers detailing their respective contractual obligations, and other similar regulations to protect investor's interest.
As per the rules a Chit Fund Company, in order to run business it is required to first obtain a certificate of incorporation from the Registrar of Companies. Then the same needs to be registered with the Chit fund department of the government after compliance with the elaborate formalities including drawing up of bye laws and spot inspection by the registrar. As per the Scheme of things, therefore, in order to start and run a chit in Delhi, a prior registration is mandatory. In addition to the above, every new chit group organized needs to be approved from the Registrar. Moreover as per provisions laid down in Sections 4 and 5 of the Chit Funds Act, no person shall commence or conduct any chit or publish any notice, circular, prospectus, proposal or other document inviting the Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.16 of 24 public to subscribe for tickets in any chit unless previous sanction of the State Government is obtained and unless the chit is registered in that State and thereafter a certificate of commencement under section 9(2) of the Chit Funds Act is issued in Form VII of Delhi Chit Funds Rules, 2007.
Another important aspect under the scheme of the Act is that a written chit agreement is mandated as per Section 6 of the Chit Funds Act which must include the details regarding the subscribers, the amount of subscription and various other particulars. Moreover, the said chit fund agreement is required to be filed with the Registrar, as per provisions of Section 7. It is also mandated, that the foreman has to provide copy of the chit fund agreement to all the subscribers, as per provisions of Section 10 of Chit Funds Act. Most importantly, the subscribers to the chit fund are entitled to receive a receipt for the payment made by them in lieu of installments, as per provisions of Section 27 of the Chit Funds Act. The act also requires the foreman to give security of an amount equal to the chit amount, before applying for sanction. This has been done with the salutary object of protecting the interest of the investor. Also as per Section 13 of the Chit Funds Act, no foreman, other than a firm or other association of individuals or a company or cooperative society, shall commence or conduct chits, the aggregate chit amount of which at any time exceeds twentyfive thousand rupees. However in Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.17 of 24 present case the amount of each chit fund committee is Rs. 1,95,000/ which is in gross violation of the Act.
Thus, exhaustive provisions have been laid out in the Chit Funds Act, laying out mandatory requirements regarding registration and documentation at each and every stage, as also the volume of business, to ensure protection of investors and so that same does not become an avenue for illegal and unaccounted transactions.
However, in the facts of the present case it is clear that the committee of accused was being run, without any registration or sanction and in violation of the maximum prescribed chit amount, in clear contravention to the provisions of the Chit Funds Act. The complainant nowhere in his complaint, affidavit or documents filed, has been able to show that whether the chit fund was registered. In fact, no details whatsoever regarding the chit fund has been mentioned by the complainant in his complaint or evidence. Additionally, in his cross examination of the complainant himself admitted that he has not filed any detail. The complainant even did not remember the name of the chit fund. Although in his cross examination he stated that the accused was running the registered chit fund/committee and the registered documents were also shown to him, however, the complainant in the same cross admitted that registration of chit fund is nowhere mentioned in his complaint.
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.18 of 24Now, the law is well settled that "once the cheque relates to the account of the accused and he accepts and admits the signatures on the said cheque, then initial presumption as contemplated under Section 139 of the Negotiable Instruments Act has to be raised by the Court in favour of the complainant." (Rangappa v. Mohan, AIR 2010 SC 1898). Reference can also be made to K. Bhaskaran Vs. Sankaran Vaidhyan Balan 1999 (4) RCR (Criminal) 309, wherein it has been held by the Hon'ble Supreme Court as under:
"As the signature in the cheque is admitted to be that of the accused, the presumption envisaged in Section 118 of the Act can legally be inferred that the cheque was made or drawn for consideration on the date which the cheque bears. Section 139 of the Act enjoins on the court to presume that the holder of the cheque received it for the discharge of any debt or liability."
It is not in dispute that the cheque in question was signed by the accused himself as the reading of Notice under Section 251 Crpc and Section 313 CRPC statement establishes that the accused issued the cheque in question and signed the same. However, the presumption under Section 139 NI Act being a rebuttable presumption and that too on the touchstone of preponderance of probabilities, the accused through the cross examination of the complainant has been able to create a doubt against such Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.19 of 24 presumption. It was on the complainant, after the rebuttal of the presumption under Section 139, to prove that the cheque was issued for legally enforceable debt. The complainant has brought nothing on record to show that the chit fund/committee which was being run by the accused is a registered chit fund. Neither the complainant brought on record any receipt for the payment made by him in lieu of installments in terms of Section 27 of the Chit Funds Act. Nor he has been able to bring on record any certificate of incorporation of the registered Chit fund from the Registrar of Companies as it is the case of the complainant in his cross that the said chit fund was registered.
In light of the above, the question which again begs consideration is whether such an agreement between the parties, which is clearly forbidden by law can give rise to legally enforceable contractual obligations.
As discussed above, to sustain a prosecution u/s 138 of the Act, the debt or liability should be legally enforceable. In other words, there should be a lawful contract between the parties. A contract, is an agreement that is enforceable by law (Section 2(h) of the Indian Contract Act, 1872). As per Section 10 of the Indian Contract Act, 1872:
"10. What agreements are contracts.All agreements are contracts if they are made by the free consent of parties Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.20 of 24 competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void"
As to what objects are lawful, Section 23 of the Indian Contract Act, reads as: "23. 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 agreement of which the object or consideration is unlawful is void."
In view of the above the question as to whether the agreement to contribute made by a subscriber to an unregistered chit fund being run in violation of the statute, is legally unenforceable and has to be answered in the affirmative. Such an agreement, the object of which is forbidden by law, if given effect to would defeat the provisions of statute i.e. Chit Funds Act. Section 4 & 5 of the Chit Funds Act, 1982, in categorical terms, prohibit running of a chit fund or proposing subscriptions in a chit fund without sanction.
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.21 of 24Also there is clear violation of Section 13 of the Chit Funds Act as discussed above.
It is thus clear that running a chit/committee such as the present one is clearly forbidden by law. In such circumstances, the object of the agreement cannot be said to be lawful, as a result of which the agreement, having an illegal object, is therefore void ab initio. Since the agreement is void ab initio, the benefit of Section 65 of Indian Contract Act, 1872, also does not accrue to the complainant. Section 65 of the Indian Contract Act, 1872, reads as follows :
65. When an agreement is discovered be void or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it."
Thus it is clear that Section 65 above is applicable only when agreement is 'discovered to be void' or contract 'becomes void'. The expressions "agreement" and "contract" have distinct meanings under the Contract Act. An "agreement" becomes a "contract" only if it is enforceable in law. Thus, the phrase "a contract becomes void" appearing in the said Section 65 would not have any application in the case where an agreement is void ab initio. It Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.22 of 24 applies to cases, such as of supervening impossibility due to which a contract becomes void or a case where time is of the essence of the contract and one party fails to keep up to the time obligation and the other party exercises the option to rescind the contract. As regards the agreements which are "discovered to be void". This refers to those agreements which, the contracting parties or one of them did not know, at the time of entering into the agreement, to be not enforceable in law but, it was later "discovered" by them or one of them as being void. However, in facts and circumstances of present case the complainant himself in his cross examination has stated that the chit fund was a registered chit fund though no document has been brought on record by the complainant. Thus, no recourse can be taken to the provisions of the said Section 65.
In light of above facts and circumstances, it is clear that the inherent infirmities in the case of the complainant are sufficient to rebut the presumption of legal liability. As discussed above, the agreement to contribute made by a subscriber to a chit fund being run in complete violation of the Chit Funds Act, is legally unenforceable. The same renders it as an unaccounted transaction and not enforceable in court of law. Thus the complainant has failed to establish one of the fundamental ingredients of Section 138 of the Act, i.e. that the dishonoured cheques were issued in discharge of a legally recoverable debt or liability.
Ct. Case 5002030/2016 Mohit Walia Vs. Raj Kumar Puria Page No.23 of 24In present matter, from the case of the complainant itself, the presumptions under sections 118 and 139 of the Act stand rebutted and the reverse onus cast upon accused has been discharged.
Accordingly, the accused Raj Kumar Puri S/o Sh. Kesar Singh Puri is acquitted of the offence under section 138 of the Act.
This Judgment contains 24 pages. Every Page of this Judgment has been signed by me.
Announced in the open court on this day of 23rd February, 2022.
Digitally signed by HARSHAL HARSHAL NEGI
NEGI Date:
2022.02.23
16:59:28 +0530
(HARSHAL NEGI)
MM(NI Act)05/SouthWest District
Dwarka Courts/New Delhi
Ct. Case 5002030/2016
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