Delhi District Court
Bharat Dutta vs . R.L. Varma & Sons (Huf) & Anr. Page 1 Of 19 on 23 February, 2022
IN THE COURT OF MS. ANAM RAIS KHAN, MM
(NI ACT)01, PATIALA HOUSE COURT: NEW DELHI
CC No. : 25845/16
CNR No. : DLND020013822011
Bharat Dutta
S/o Late Sh. K.C. Dutta,
Proprietor of Columns & Structures,
having its office at J35, Ground Floor,
Jor Bagh Lane, Jor Bagh, New Delhi.
...... Complainant
versus
1. R.L. Varma & Sons (HUF)
(Ratan Lal Varma &Sons HUF)
Through its Karta/ authorised signatory
Mr. Dhruv Varma
A123, New Friends Colony, New Delhi110065.
2. Mr. Dhruv Varma
Karta/ authorised signatory of
Ratan Lal Varma & Sons HUF
S/o Sh. Ratan Lal Varma,
R/o A123, New Friends Colony,
New Delhi110065. ...... Accused
JUDGMENT
Date of institution of complaint : 20.07.2011 Offence complained of : U/s 138 of NI Act Plea of accused : Not guilty Date on which reserved for : 05.02.2022 judgment Final Order Qua Accused No.1 : Conviction Final Order Qua Accused No.2 : Conviction Date of Decision : 23.02.2022 CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 1 of 19 BRIEF STATEMENT OF FACTS AND REASONS FOR THE DECISION
1. Vide this judgement, I shall dispose of the aforementioned complaint case filed by the complainant, Bharat Dutta against Accused No. 1 R.L. Varma & Sons (HUF) and Accused No. 2 Dhruv Varma in respect of the dishonour of the cheque bearing no. 212591 dated 25.11.2010 drawn on Axis Bank Ltd., Branch Statesman House, 148, Barakhamba Road, New Delhi for an amount of Rs. 3,00,000/.
2. Factual Matrix: Briefly stated, it is the case of the complainant that he is engaged in property dealing business and is the proprietor of the firm "Columns & Structures". Complainant through his brother Mr. Rajen Dutt, (proprietor of firm "Rose Garden Estates") finalised a Lease Deed dated 19.11.2010 between Accused No.1 through its authorised signatory Mr. Dhruv Varma i.e. Accused No.2 and IL&FS Waste Management and Urban Services Limited (Lessee) wherein the accused persons let out their property on 4th floor of Dr. Gopal Dass Bhawan, 28, Barakhamba Road, New Delhi110001 (hereinafter referred as "said property") to the IL&FS Waste Management and Urban Services Ltd. for a fixed period of five years commencing from 05.01.2011 on a monthly rent of Rs. 9,22,080/ with CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 2 of 19 increase of rent every year. Further, it is the case of the complainant that on account of the said lease deed, the accused persons were liable to pay brokerage equal Rs. 18,75,000/ inclusive of Rs.18,44,160/ equal to the two months' rent @ Rs. 9,22,080/ per month and Rs.30,840/ towards miscellaneous expenses incurred to finalise the deal. It is further alleged that following three cheques were issued by the accused persons against the brokerage fee:
a) Cheque bearing no. 200326 dated 05.11.2010 in favour of the Complainant's brother Mr. Rajen Dutt.
b) Cheque bearing no. 212590 dated 25.11.2010 in favour of the firm of Mr. Rajen Dutt i.e. "Rose Garden Estates".
c) Cheque bearing no. 212591 dated 25.11.2010 in favour of the firm of the complainant i.e. "Columns & Structures" which is the cheque in question.
3. It is further the case of the complainant that the cheque in question was dishonoured for the reason "Funds Insufficient" and was returned vide cheque return memo dated 03.05.2011. Upon this, on 04.06.2011, the complainant sent a legal demand notice dated 30.05.2011 to the accused persons through speed post and registered post AD which was duly served upon the accused persons on 06.06.2011. Since the accused persons did not pay the amount of the dishonoured cheque within the mandatory period of 15 days from the receipt of legal demand notice, hence, the complainant has moved this court with the CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 3 of 19 present complaint under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "NI Act").
4. Presummoning evidence: In his presummoning evidence, the complainant examined himself as CW1 on affidavit being Ex. CW1/A and placed on record certain documents i.e. the cheque in question being Ex. CW1/1, cheque return memo dated 12.05.2011 being Ex. CW1/2, office copy of legal demand notice being Ex. CW1/3, postal receipts being Ex. CW1/4 (Colly) and Ex. CW1/5 (Colly), letters to the postal department being Ex. CW1/6 and Ex. CW1/7 and replies to the said letters from the postal department being Ex. CW1/8, Ex. CW1/9, Ex. CW1/10 and Ex. CW1/11. A copy of lease deed dated 19.11.2010, the brokerage fees of which is the bone of contention between the parties also forms a part of the complaint as its first Annexure. The same is not marked/exhibited but is an admitted document and hence, nonmarking/exhibiting being a technical procedure, is of no consequence when the same has been relied on at the time of evidence by both the parties. The same is referred to in this judgment as 'the lease deed'.
5. Summoning of the accused: Upon prima facie consideration of presummoning evidence, Accused No. 1 and 2 were summoned. Thereafter accused persons entered CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 4 of 19 appearance and Accused no. 1 was represented by accused no. 2 Dhruv Varma throughout the trial.
6. Notice: Upon the appearance of accused persons, notice under section 251 Cr.P.C. was served upon them to which they pleaded not guilty. They further disclosed their defence stating that some of the cheques were security cheques and the other cheques were issued against a brokerage fee for a property that had been leased through the complainant/his brother and his firm. Further, the accused could not recollect if any legal demand notice was received by them.
7. Evidence on behalf of the complainant: The complainant adopted his presummoning evidence as postsummoning evidence also. After the application under section 145(2) of the NI Act was allowed, the complainant was recalled for cross examination. No other evidence was led by the complainant and complainant evidence was closed.
8. Examination of the accused under section 313 Cr.P.C.:
Statement of the accused persons was recorded under Section 313 read with Section 281 of the Cr.P.C., whereby, entire incriminating evidence was put to them. In response to which the facts of execution of the lease deed, dishonour of the cheque in question, and signatures of accused no. 2 on the same being the authorised signatory of Accused No. 1 were admitted. However, broadly, two defence pleas were CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 5 of 19 taken at this stage. Firstly, that the cheque in question was issued in the name of "Columns & Structures" for an unrelated cash transaction at the instance of the complainant's brother i.e. Mr. Rajen Dutt. Secondly, it was stated that accused persons do not owe any liability towards the complainant as no services were provided to them by the complainant. It was further stated that the accused persons had come into contact with the brother of the complainant and not the complainant regarding leasing out the said property and they denied meeting the complainant prior to the institution of the present complaint.
9. Defence Evidence: In his defence, accused Dhruv Varma examined himself as DW1 under section 315 Cr.P.C. No other evidence was led by the accused persons and the same was closed.
10. Final Arguments were heard on behalf of both the parties.
Rival submissions have been considered and the record of the case along with the case laws relied upon by them have been carefully perused.
11. Defence of the Accused: When notice under section 251 Cr.P.C. was framed against the accused persons, they took the defence that some of the cheques given to the complainant and his brother were towards brokerage charges and others were security cheques. They later CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 6 of 19 recanted from this stand during their statement under Section 313 Cr.P.C. and their defence evidence. Their current defence is the nonexistence of any legally enforceable debt or liability to the complainant on the ground that the cheque in question is a security cheque, and the same was given for an unrelated cash transaction with Rajen Dutt, the brother of the complainant and has already been repaid.
12. In order to prove their defence, accused Dhruv Varma, cross examined the complainant and himself deposed as defence witness, DW1.
13. Appreciation of evidence: Before delving into the facts of the present case, it is relevant to discuss the law applicable to the present proceedings. To bring home a liability under section 138 of the NI Act, following elements must spring out from the averments in the complaint and the evidence adduced by the complainant, which are:
(a) The accused issued a cheque on an account maintained by him with a bank.
(b) The said cheque has been issued in discharge, in whole or in part, of any legal debt or other liability, which is legally enforceable.
(c) The said cheque has been presented to the bank within a period of three months from the date of cheque or within the period of its Validity.CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 7 of 19
(d) The aforesaid cheque, when presented for encashment, was returned unpaid/dishonoured.
(e) The payee of the cheque issued a legal notice of demand to the drawer within 30 days from the receipt of information by him from the bank regarding the return of the cheque.
(f) The drawer of the cheque failed to make the payment within 15 days of the receipt of aforesaid legal notice of demand.
14. Once the abovementioned ingredients are established by the complainant, then as soon as the execution of cheque is admitted by the accused, a factual base is established to invoke the presumption of cheque having been issued in discharge, in whole or in part, of any debt or other liability by virtue of Section 118(a) r/w Section 139 of NI Act. This is a reverse onus clause, which means that unless the contrary is proved, it shall be presumed that the cheque in question was drawn by the accused for a consideration and that the complainant had received the cheque in question in discharge of a debt/ liability from the accused. In the case titled Bir Singh vs. Mukesh Kumar, (2019) 4 SCC 197, it was held by Hon'ble Supreme Court of India that once the accused has admitted the signatures on the cheque in question, then the court is bound to raise presumption under section 139 NI Act.
CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 8 of 1915. It has been held by Hon'ble Supreme Court in India in the judgment titled Rangappa vs. Sri Mohan, (2010) 11 SCC 441 as follows:
"28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of "preponderance of probabilities".
Therefore, if the accused is able to raise a probable defence which creates doubts about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not need to adduce evidence of his/her own."
(Emphasis Supplied)
16. The accused has additionally relied on the judgments of the Hon'ble Supreme Court of India in M/s. Kumar Exports vs. M/s. Sharma Carpets, (2009) 2 SCC 513 and Basalingappa vs. Mudibasappa, (2019) 5 SCC 418 to show that the standard of proof required on behalf of the accused to rebut the presumption raised u/s. 139 NI Act is that of preponderance of probabilities.
17. In the present case, in order to discharge his initial burden, Complainant has relied upon the cheque in question being Ex. CW1/A and placed on record certain documents i.e. the cheque in question being Ex. CW1/1, cheque return memo CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 9 of 19 dated 12.05.2011 being Ex. CW1/2, office copy of legal demand notice being Ex. CW1/3, postal receipts being Ex. CW1/4 (Colly) and Ex. CW1/5 (Colly), letters to the postal department being Ex. CW1/6 and Ex. CW1/7 and replies to the said letters from the postal department being Ex. CW1/8, Ex. CW1/9, Ex. CW1/10 and Ex. CW1/11. In the considered opinion of this court, on the basis of the above stated documents, the complainant has discharged his initial burden and has successfully established the above ingredients of offence under Section 138 of the NI Act. Further, since the accused Dhruv Varma has admitted his signatures on the cheque in question and the fact of issuance of the cheque from the account maintained in the name of HUF that he represents, thus, the presumptions under sections 118(a) and 139 of the NI Act arise against the accused persons. The onus is now upon the accused persons to rebut the mandatory presumptions under the NI Act by raising a probable defence to show that the cheque in question was not issued in discharge of a debt/ liability.
18. Before delving upon the defences of the accused, it is pertinent to note that the accused has taken inconsistent pleas in the present matter at various stages. Upon consideration of record of the case in entirety, the defence of accused persons appears to be cryptic and grossly inconsistent. Initially in response to the notice under Section 251, Cr.P.C. the accused persons had admitted that out of CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 10 of 19 three cheques issued in the transaction, some cheques were for brokerage and some were for security, without specifying the exact details as to which cheque was for which purpose. Later on, their stance omitted the mention of brokerage and was limited only to the point that the cheque in question was issued in the name of "Columns & Structures", i.e., the firm of the complainant for an unrelated cash transaction at the instance of the complainant's brother, Mr. Rajen Dutt. Although the facts stated by the accused under Section 251 Cr.P.C. are not substantive piece of evidence, yet, the inherent contradiction in the two versions of the accused, in the considered view of this court, diminishes the veracity of facts stated by accused Dhruv Varma in his deposition as DW1 and causes dubiety to lurk around the story of the accused persons.
19. Defence of "Security Cheque": It is the defence of the accused persons that the cheque in question was given as a security for an unrelated cash transaction between the accused persons and Mr. Rajen Dutt, which was not returned after repayment of the amount and was misused by the complainant to file the present complaint. Qua this defence of the accused, this court finds that:
a) No proof that the cheque in question is security cheque: On the basis of the material available on record, the accused persons have not been able to CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 11 of 19 prove that the cheque in question was given for security purposes.
b) No proof of repayment/steps taken for the return of cheque in question: Accused persons have not brought on record any evidence showing the repayment, if any, of the cash loan or any steps taken by them to get back the cheque from the complainant or his brother, or any complaint made on their behalf to the bank or public authorities regarding the alleged misuse of their cheque. Reliance in this regard is placed upon the judgment of Hon'ble High Court of Delhi in V.S. Yadav vs. Reena, (2010) 172 DLT 561 wherein it was held as follows:
"Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption under Section 139, N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."
c) Nonissuance of stop payment instruction to the bank: Though accused Dhruv Varma has stated during his examination that he had issued stop payment instructions to the bank, however, bare perusal of the bank return memo shows that the cheque has not been dishonoured for this reason and CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 12 of 19 the reason for dishonour is "funds insufficient". Even otherwise, he has not brought anything on record to show that he had issued stop payment instructions to the bank qua the cheque in question except his oral testimony which stands rebutted by documentary evidence in the form of bank return memo which is ExCW1/2. Accused persons have thus failed to adduce any credible evidence to show that they indeed did everything within their power and control, as a reasonable and prudent person would, to ensure that the cheque tendered by them was not misused.
d) Arguendo: Even if the defence that the cheque in question was issued as a 'security cheque' is accepted, it does not come to the rescue of the accused persons. In order to prove this defence, accused persons have placed reliance on the judgment of Hon'ble Supreme Court of India in M.S. Narayana Menon @ Mani vs. State of Kerala & Anr. 2006 SCC Online SC 660, wherein it has been held that if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. Accused persons have additionally relied upon the judgment of M/s. Indus Airways Pvt. Ltd. & Ors. vs. M/s. Magnum Aviation Pvt. Ltd. & Anr., (2014) 12 SCC 539. I have gone through the judgments furnished by the accused persons in support of their defence. This CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 13 of 19 court is of the considered view that the law laid down in M.S. Narayan Menon's case (Supra) and M/s. Indus Airways' case (Supra) is particular to the facts of these cases and cannot be construed as an axiomatic statement or general proposition of law to be mechanically applied, in all circumstances. Reliance in this regard is placed by this court on the judgments of Hon'ble Supreme Court of India in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458 and Sripati Singh vs. State of Jharkhand & Anr., 2021 SCC OnLine SC 1002 wherein the Hon'ble Apex Court has held that merely because a cheque has been given for security purposes does not mean that there is no legally enforceable debt or liability in favour of the complainant, however, it does mean that the court has to see whether there exists legally enforceable debt or liability as on the date mentioned on the cheque and whether security cheque is a cheque pertaining to advance payment to be made by the accused. The court added that merely labelling the cheque as a security would not obviate its character as an instrument designed to meet a legally enforceable debt or liability. Hence, the defence of the accused regarding issuance of cheque in question as a security cheque falls flat.
CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 14 of 1920. Existence of brokerage fee not denied: It is pertinent to note that accused persons have nowhere denied that a brokerage fee was due under the lease deed but the bone of contention appears to be the quantum of the said fee. In his deposition as DW1, accused Dhruv Varma stated that brokerage was not paid by him because brokerage equal to two months' rent was not agreed upon and also because the tenant did not comply with the terms of the lease deed. This stand taken by him casts a shadow upon his defence, as on one hand, he is trying to prove that brokerage fee of one month rent is prevalent in the area and on the other hand he states that he did not pay the brokerage because the tenant did not fulfil the obligations under the contract. In the absence of any parallel proof of payment of one month's rent as brokerage, the liability to pay brokerage fee to the tune of at least one month rent is admitted by the accused persons.
21. Improbability of the complainant's case: The accused has tried to show the improbability of the complainant's case on the basis of the following defences:
a) Prevalence of one month brokerage in the area: The accused persons have relied upon certain computer generated printouts supported by Certificate under Section 65B of the Indian Evidence Act, showing brokerage fee in and around the said property randomly taken from the websites of 99acres.com and CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 15 of 19 magicbricks.com being Ex. DW1/A. Accused persons have tried to show that complainant's case is improbable in view of the fact that the cheque in question was given as part of the brokerage fee equivalent to two month's rent and some miscellaneous expenses, however, the actual brokerage fee in and around the said property is equivalent to only one month's rent. In the considered opinion of this court, each contract is unique in its own form and even if the prevalent brokerage in the area was one month rent, the same is no bar for parties to decide on a higher brokerage as in the present case. This is further buttressed by the complainant's uncontroverted testimony that the largest area on the fourth floor of the building belonged to the accused and hence the higher brokerage. Further, the present transaction pertains to the year 2010, and the computergenerated printouts furnished by the accused pertain to the year 2021, hence, they do not prove that the prevalent brokerage fee at the time of execution of lease deed was one month's rent.
b) Meeting with complainant denied: it is also the contention of accused Dhruv Varma, that he never met the complainant prior to the present complaint proceedings. Per contra, the complainant argued that he had in fact signed as a witness on the lease deed which is admitted by the accused. In his cross examination CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 16 of 19 accused Dhruv Varma admitted the lease deed being signed by four persons namely himself, authorised signatory of the tenant and Rajen Dutt but omitted mentioning the name of the fourth person, i.e., complainant Bharat Dutta. In the factual matrix of the case, the omission seems to be intentional on his part and creates a shadow of doubt over his testimony.
22. The entire defence of the accused persons boils down to the point where they do not deny the existence of their liability as on the date of the issuance of cheque in question, but state that the liability was towards Rajen Dutt and not the complainant, in the form of a cash loan which has extinguished in view of the repayment. At the cost of repetition, it is stated that the accused persons have failed to adduce evidence of the unrelated cash transaction and of the repayment thereof and that they indeed did everything within their power and control, as a prudent person would, to ensure that the cheque tendered by them was not misused. The conduct of the accused persons is such which is not expected of any reasonable and prudent person.
23. Since in the instant case, the accused persons have failed to lead any convincing evidence to rebut the reverse onus casted upon them, the presumption of law operates in favour of existence of debt or liability. It was the sole burden of the accused persons to prove absence of liability by raising a CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 17 of 19 "probable defence". However, they have failed to discharge their onus. The facts stated by accused Dhruv Varma during his deposition as DW1 are merely bald assertions unsubstantiated by any cogent evidence which could be termed as a probable defence. It is pertinent to note that though the accused persons have taken the defence that the cheque in question was given as security and they had already returned the cheque amount, but as discussed above, they have failed to prove the defence in their favour. It is a settled law that the presumption under section 139 of the NI Act cannot be rebutted upon a mere denial. The same can be rebutted by the accused only by leading cogent evidence. Support is drawn from the decision of Hon'ble Supreme Court of India cited as K.N. Beena v. Muniyappan and Another; (2001) 8 SCC 458. Thus, in absence of any cogent evidence to prove the same, there is nothing on record to doubt the existence of liability in favour of the complainant.
Findings of the Court
24. In view of the above observations and analysis, it is concluded that the accused has miserably failed to rebut the mandatory presumptions under section 118(a) and 139 of the NI Act even on a scale of preponderance of probabilities, while the complainant has succeeded in proving his case beyond reasonable doubt.
CC No. 25845/16 Bharat Dutta vs. R.L. Varma & Sons (HUF) & Anr. Page 18 of 1925. Accordingly, Accused No. 1 R.L. Varma & Sons (HUF) and Accused No. 2 Dhruv Varma are held guilty and are convicted of the offence under section 138 of the Negotiable Instruments Act, 1881.
26. Copy of this judgment be given to the convict free of cost as per rules.
Announced in open Court (Anam Rais Khan) On 23.02.2022 MM(NI Act)01/NDD/PHC/ND
This judgment contains 19 signed pages and each page has been signed by the undersigned.
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