Delhi District Court
Vs. Kamp Developers Pvt. Ltd. & Anr vs . Kamp Developers Pvt. Ltd. & Anr. on 20 March, 2023
IN THE COURT OF METROPOLITAN MAGISTRATE (NI ACT) DIGITAL
COURT-06
(SOUTH-WEST), DWARKA COURTS, NEW DELHI
PRESIDED BY : SH. MANUJ KAUSHAL
CNR No. DLSW02-006000-2021
CC NI ACT 3266/2021
URMIL NAG
VS. KAMP DEVELOPERS PRIVATE LIMITED AND ANR
Under Section: 138 NI Act
Date of reserving : 01.03.2023
Date of pronouncement : 20.03.2023
JUDGMENT
a) Date of Institution of Complaint 23.01.2021
b) Name, parentage and address of the 1.KAMP DEVELOPERS PRIVATE
accused LIMITED
2. Sh. PRADEEP SEHRAWAT S/o Sh.
MOOL CHAND SEHRAWAT
R/o Village Pochanpur, Dwarka,
Sector-23, New Delhi-110075
c) Offence complained of U/s 138 NI Act.
d) Plea of the accused Pleaded not guilty
e) Final order Convicted
f) Date of final order 20.03.2023
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MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
16:21:01 +05'30'
BRIEF REASONS FOR THE JUDGMENT
Complainant' s Case
1 Briefly stated, it is the complainant's case that the accused no.1 through
accused no.2 had approached the complainant and represented that a project named "Eden Heights" was coming up in L-zone. It is the complainants case that on representations and persuasions by the accused no.1 and 2 she had agreed to book two flats/units in the aforesaid project for a total consideration of Rs 34,65,000/- which was paid by several instalments in the year of 2014 and 2015. That pursuant to part payment by the complainant two memorandum of Understanding dated 26.03.2015 and 29.03.2015 was entered into between complainant and accused no.1 through accused no.2. It is further stated that upon seeing that no progress has taken place even after five years from the date of entering the abovesaid MOUs, the complainant and her son demanded the repayment of consideration from the accused persons as per the MOUs. It is the complainant's case that in order to repay the aforesaid consideration the accused persons had issued two Cheques bearing No. 002909 dated 10.10.2020 for an amount of Rs 17,32,500/- and Cheque bearing No. 002910 dated 10.11.2020 for an amount of Rs 17,32,500/- both drawn on Kotak Mahindra Bank, Sector-5, Dwarka, Delhi.
2 Upon presentation both the cheques were dishonoured for the reasons "funds insufficient" vide return memo dated 07.11.2020 and 12.11.2020 respectively.
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MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
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3 In light of the above, the complainant was constrained to issued a legal demand
notice dated 03.12.2022 which was sent to the accused persons. Since the accused failed to make the payment even after receiving the demand notice therefore, the present complaint has been filed.
Accused's Defence 4 On finding a prima facie case, the accused persons were summoned to face the trial. The accused entered appearance and a notice u/s 251 of Criminal Procedure Code, 1973 (hereinafter Cr.P.C) was served upon the accused persons. The accused persons pleaded not guilty and claimed trial. The plea of the defence of the accused persons was also recorded.
5 In the defence recorded U/s 251 Cr.P.C, the accused persons has admitted to having entered into a memorandum of understanding however, the accused persons have stated that since the complainant failed to honour the MOU therefore, they are not liable to pay the amount of dishonoured cheques. It has been further stated that the cheques in question has been misused by the complainant. The accused no.2 had admitted his signatures on the cheques in question. The accused persons have stated that they have not received the legal demand notice however, the accused persons have admitted that the address mentioned on the legal demand notice was the earlier address of the company.
6 The accused persons were examined under Section 313 Cr.P.C r/wSection 281 Cr.P.C by putting all the incriminating evidence and circumstances to them. The CC NI ACT 3266/2021 URMIL NAG Page no.3of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
16:21:46 +05'30'
statement of the accused persons were recorded. The accused persons had stated that the complainant had approached the accused persons for purchasing the flats. The accused persons had again admitted to having entered into a memorandum of understanding dated 26.03.2015 and 29.03.2015 with the complainant. The accused persons however, has denied knowledge of any refund clause and has further stated that MOUs were only regarding the Land Pooling Policy. The accused persons have further stated that the cheques in question were only given as a security cheques to the complainant and since the complainant failed to honour MOUs therefore, the accused persons have no liability towards the complainant. The accused persons have further stated that the legal demand notice might have been received by the company. The accused persons have further stated the complainant had made the investment in respect of land pooling policy. It has been further stated that there was a delay from the concerned departments due to which the accused persons could not provide flat to the complainant on time. It has been further stated that the accused persons have offered the complainant to buy flats in similar localities however, the complainant has refused. It has been further stated that the accused persons have no liability towards the complainant.
ARGUMENTS 7 It has been argued by the ld. counsel for the complainant that all the ingredients of the offence are fulfilled in the present case and the complainant has duly proved his case. Ld. Counsel further submits that a reading MOUs dated 26.03.2015 and CC NI ACT 3266/2021 URMIL NAG Page no.4of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:22:00 +05'30' 29.03.2015 show that the accused persons have an existing liability towards the complainant. Ld. Counsel further argues that the accused no.2 has admitted his signatures on the cheques in question therefore, the presumption enshrined U/s 118(a) and 139 arise against the accused which the accused persons have miserably failed to rebut. Ld. Counsel further submits that the accused has raised a false defence of security cheque As such, it is prayed that the accused be punished for the said offence.
8 Per contra, Ld. counsel for the accused has argued that the complainant has failed to establish his case beyond reasonable doubt. He submits that there is no legally enforceable debt or liability existing in favour of the complainant. Ld. Counsel submits that cheques in question were given as security cheques to the complainant in 2015 when MOUs were entered into between the parties therefore, the debt had become time barred on the date of filing of the present complaint. In support of his contention, Ld. Counsel for the accused has placed reliance upon a. Jage Ram Karan Singh & Anr. Vs. State and Anr. 2019 SCC Online Del 9486.
b. Ghanshyam Dass Vs. Madhav Chandra Das & Anr. (2018) 3 Guwahati Law Reporters 664 c. Amrit Sandhu Costar Vs. State 2022 SCC Online Del 2990 d. Jasween Sandhu Vs. State & Anr. (2022 SCC Online Del 2987 CC NI ACT 3266/2021 URMIL NAG Page no.5of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:22:11 +05'30' e. Smt. Ashwani Satish Bhatt Vs. Sh. Jeevan Divakar Lolienkar & Anr. (1999) SCC Online Bom 69 f. M/s Vijay Polymers Pvt. Ltd. & Anr. Vs. M/s Vinnay Aggarwal (2009 (110) DRJ 592 Ld. Counsel for the accused has further submitted that the complainant was aware of the Land pooling policy and delay in handing over the possession of the Dwelling Unit/flat was caused due to delay by the concerned authorities. Ld. Counsel further submits that there was no existing debt or liability of the accused towards complainant on the date when the cheque was presented. Therefore, it is prayed that the accused be acquitted of the offence U/s 138 NI Act. 10 Before, proceeding to examine the present matter on merits this Court deems it fit to decide the objections of the Ld. Counsel for the accused regarding the non- signing of the complaint which was raised by the Ld. Counsel during the cross- examination of the complainant. In support of the said objection, Ld. Counsel for the accused side has placed reliance upon Sheela Enterprises v. Manoj and Co., 2018 SCC OnLine Mad 7857.
11. It is not disputed that the present complaint has not been signed by either the complainant or her counsel. Therefore, this Court has to examine the effect of the non-signing of the complaint by the complainant. Similar question cropped up before the Hon'ble Punjab & Haryana High Court in M.S. Shoes East Ltd. v. Modella Knitwear Ltd., 1998 SCC OnLine P&H 346 wherein Honbl'e Court after a conjoint CC NI ACT 3266/2021 URMIL NAG Page no.6of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:22:22 +05'30' reader of Code of Criminal Procedure, 1973 (hereinafter Cr.P.C) and Negotiable Instruments Act, 1881 observed as under:
11. A reading of the above section would show that no court would take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, by the holder of the cheque in due course. This section starts with a specific provision that the provisions of the Negotiable Instruments Act shall apply notwithstanding anything contained in the Code of Criminal Procedure with regard to those provisions given in sub-sections (a), (b) and (c) of this section, i.e., section 142. Thus, in order to constitute a valid complaint for the purpose of section 138 of the Act, there should be a complaint and that complaint must be in writing". A close scrutiny of the provisions of section 142 of the Act is not obligatory on the part of the complainant to establish that his complaint was signed by him or it. The word "complaint" has not been defined under the Act, but luckily it has been defined under the Code of Criminal Procedure and according to section 2(d) of the Code "complaint" means any allegation made orally or in writing to a magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report. The complaint under section 138 of the Act is supposed to be tried as a warrant case instituted otherwise than on a police report. The scheme of the Code shows that wherever the Legislature wanted that any action on the part of a litigant should be signed, it has so stated in the relevant provisions. However, where the Code wants that a written complaint would be enough for the purpose of taking cognizance, or for the purpose of summoning the accused, the thing's can go in that fashion without any difficulty. I would like to make a mention of section 190 of the Code of Criminal Procedure. As per this section the magistrate of the first class or second class can take cognizance of any offence upon receiving a complaint of facts which constitute such offence. It does not talk that the complaint should be signed by the complainant. I have already incorporated the definition of "complaint" as defined under the Code. As per section 200 of the Code once a complaint is instituted before a magistrate, he is supposed to examine upon oath the complainant and the witnesses. Their statements are supposed to be reduced into writing and those statements are further supposed to be signed by the complainant and the witnesses, meaning thereby that the complaint can be instituted in writing. It need not be signed by the complainant but the statement which shall be made by the complainant or on his or its behalf shall be reduced into writing and such statement is supposed to be signed by the complainant. Besides that, the statements of the witnesses examined by the complainant are also supposed to be signed, meaning thereby wherever the Code wanted that a particular CC NI ACT 3266/2021 URMIL NAG Page no.7of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:22:35 +05'30' act should be signed, it has to be signed. If the Code wants a written document and if a complaint is filed in writing before a Magistrate, who has taken cognizance over the matter, such a complaint is not bad in the eyes of law. To proceed further, I would also like to refer to the provisions of section 154 of the Code of Criminal Procedure, which again states that every information relating to the commission of a cognizable offence, if given orally to the officer in charge of a police station, shall be reduced into writing. It shall be read over to the informant and it shall also be signed by the person, who gives the information. Similarly, a reading of section 164 of the Code indicates that if the magistrate is to record a confession, as per sub- section (4) of this section it is supposed to be signed by the person making the confession.
12. Things do not rest here. Even the scheme of the Negotiable Instruments Act would show that the Legislature had not laid down a stress that the complaint under section 138 of the Act should be signed by the complainant. A reading of the provisions of section 138 shows that before a complaint is filed in a court of law, the holder of the cheque is supposed to give a notice to the drawer as per the provisions of sub-section (b) of section 138 of the Act. Supposing a notice is given by the holder of a cheque and that notice is not signed, whether in such eventuality it can be said that the notice was bad and, therefore, the complainant had no cause of action to file a complaint under section 138 of the Act. The answer to this court would be in the negative. In this regard I would like to take assistance from Satyanarayana Goivda v. Rangappa (B.), [1997] 88 Comp Cas 433 (Kar), where it was held by the Karnataka High Court that when a notice under section 138(b) of the Act is not signed by the advocate of the party, such notice is not bad because the provisions do not contemplate that notice under section 138(b) should be signed by the party. In the present case when the complaint was filed on behalf of Modella Knitwear Ltd., Shri Ashok Goel appeared on behalf of the company in pursuance of the resolution and it was his statement which was recorded by way of preliminary evidence. After recording the preliminary evidence, cognizance of the offence was taken and the summons was issued to the respondent (now petitioners) to face the charge under section 138 of the Act. As per section 142 of the Act, no court shall take cognizance of an offence punishable under section 138 except upon a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. Thus, it can be safely said that before taking cognizance, the magistrate had a complaint in writing before him. He had the statement of Shri Ashok Goel, which statement was reduced into writing and it was signed by him. In these circumstances, I do not see any infirmity in the impugned order when the learned magistrate allowed the application of the complainant to formally sign the complaint and other documents by CC NI ACT 3266/2021 URMIL NAG Page no.8of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:22:45 +05'30' rejecting the application of the present petitioners that the complaint should be dismissed as it was no complaint in the eyes of law. .................................
.................................
14.In the present case, I have already held above that the requirements of section 142 of the Negotiable Instruments Act have been duly complied with when there was a written complaint before the magistrate and when on the basis of that complaint a statement has been recorded and the magistrate took the cognizance on the basis of that written complaint corroborated by the statement of the authorised person.
11 Similar observations were made by the Hon'ble Supreme Court in Indra Kumar Patodia v. Reliance Industries Ltd., (2012) 13 SCC 1 wherein it was observed as under:
21.In the case on hand, the complaint was presented in person on 3-6-
1998 and on the direction by the Magistrate, the complaint was verified on 30-7-1998 and duly signed by the authorised officer of the Company, the complainant. As rightly pointed out by the Division Bench, no prejudice has been caused to the accused for non-signing the complaint. The statement made on oath and signed by the complainant safeguards the interest of the accused. In view of the same, we hold that the requirements of Section 142(a) of the Act are that the complaint must necessarily be in writing and the complaint can be presented by the payee or holder in due course of the cheque and it need not be signed by the complainant. In other words, if the legislature intended that the complaint under the Act, apart from being in writing, is also required to be signed by the complainant, the legislature would have used different language and inserted the same at the appropriate place. In our opinion, the correct interpretation would be that the complaint under Section 142(a) of the Act requires to be in writing as at the time of taking cognizance, the Magistrate will examine the complainant on oath and the verification statement will be signed by the complainant.
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MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
16:22:56 +05'30'
12. In view of the aforesaid observations, it is clear that non-signing of the complaint is not a statutory requirement and is not a material irregularity. Further, no prejudice has been caused to the accused persons in their defence due to non-signing of the complaint. Moreover, the present complaint has been accompanied by an affidavit wherein the complainant has affirmed that she has carefully gone through the contents of the complaint and the same prepared by her counsel under her instructions. Further, the evidence by way of affidavit accompanying the affidavit has been duly signed and verified by the complainant. In the given circumstances, this Court is of the opinion that non-signing of the complaint is not a material irregularity and does not vitiate the present complaint proceedings.
13. Before parting with the discussion on the above-mentioned issued this Court deems it fit to specify that the judgment of Sheela Enterprises v. Manoj and Co., 2018 SCC OnLine Mad 7857, cited by the Ld. Counsel for the accused was passed in different set of facts and is not applicable in the present case as in that case the complaint was not only not signed by the complainant but the payee was also not examined as a witness which is not the case here.
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MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
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Applicable Legal Provisions:
14 Having dealt with the objections of the accused side, let us now proceed to
examine the present case on merits. The ingredients which are required to be satisfied for bringing home the culpability under Sec. 138 of Negotiable Instrument Act has been expounded by the Hon'ble Apex court in the case of Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. And Others (2000) 2 SCC 745; the same is reproduced below:
"(i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability;
(ii) that cheque has been presented to the bank within a period of six months from the date on which it is drawn of within the period of its validity whichever is earlier;
(iii) 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;
(iv) 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 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
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MANUJ Digitally signed by
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KAUSHAL Date: 2023.03.20
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(v) 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 cheque within 15 days of the receipt of the said notice;"
The accused can only be held guilty of the offence under Section 138 NI Act if the above-mentioned ingredients are proved by the complainant co-extensively. This being the legal position, let us proceed to examine the factual matrix on the aforesaid legal touchstone.
Appreciation of Evidence and Marshalling of the Facts:
15. Issuance of Cheque 15.1 The burden of proving the issuance of the cheque in the favour of the complainant from an account maintained by the accused rests upon the complainant.
In order to prove this, the complainant as CW-1 has stated in her affidavit (which is re-exhibited as CW-1/1) that the accused in discharge of his liability had issued two Cheques bearing No. 002909 dated 10.10.2020 for an amount of Rs 17,32,500/- and Cheque bearing No. 002910 dated 10.11.2020 for an amount of Rs 17,32,500/- both drawn on Kotak Mahindra Bank, Sector-5, Dwarka, Delhi Ex. CW-1/A (Colly.). The accused persons in the notice put to them U/s 251 Cr.P.C as well as in the statement of the accused U/s 313 R/w 281 Cr.P.C has admitted the signatures on the cheques in question. Further, the accused persons in their admission and denial U/s 294 Cr.P.C has not disputed the genuineness and correctness of the cheque in question. It has no where been disputed by the accused that the cheque in question CC NI ACT 3266/2021 URMIL NAG Page no.12of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:23:29 +05'30' has not been issued from an account maintained by him. Further, the accused persons in their statement U/s 313 R/w 281 Cr.P.C has stated that the cheques in question were given as security cheques to the complainant. Thus, the complainant has been able to discharge the initial burden of proving that the cheque in question has been issued on an account maintained by the accused.
16 Presentment and dishonour of the cheque 16.1 In order to prove the offence U/s 138 of Negotiable Instruments Act, 1881 the complainant is further required to prove that the cheque was presented within the statutory period and was returned unpaid by the banker. To this effect, Complainant as CW-1 through his affidavit (Ex. CW-1/1) has deposed that cheques in dispute were presented for encashment but the same was dishonoured due to reasons "insufficient funds" vide memos dated 13.10.2020 and 12.11.2020. In order to evince the veracity of his deposition CW-1 has brought on record Original cheques (Ex. CW-1/A(colly) and return memo dated 13.10.2020(Ex.CW-1/B) and 12.11.2020(Ex.CW-1/D) showing the dishonour of cheque due to funds insufficient. The complainant has further brought on record the statement of account dated 18.11.2020 (Ex CW-1/C) which shows that the cheque bearing number 002909 was again dishonoured on 07.11.2020 with remarks 'funds insufficient". The accused has admitted the genuineness and correctness of the dishonour memos and statement of the account in the statement recorded U/s 294 Cr.P.C. Thus, the presentment and the subsequent dishonour of cheque stands established.
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MANUJ Digitally signed by
MANUJ KAUSHAL
KAUSHAL Date: 2023.03.20
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16.2 Further, the cheque (Ex. CW-1/A (colly.) are dated 10.10.2020 and 10.11.2020 respectively and are lastly returned unpaid on 07.11.2020 and 12.11.2020 respectively, which is well within the statutorily period prescribed U/s 138 NI Act. Hence, the presentment and dishonour of the cheque stands proved. 17 Legal Demand Notice 17.1 The next ingredient which the complainant is required to prove in order to bring home the offence U/s 138 N I Act is that a legal demand notice, in writing, was served upon the accused within 30 days from the date on which the complainant received the information that the cheque was returned unpaid by the banker of the complainant. In this regard, CW-1 deposing through his affidavit (Ex-CW1/1) has brought on record the demand notice dated 02.12.2020 (Ex-CW 1/E) and postal tracking reports which have been marked as Mark B. The said postal tracking reports although marked are accompanied with a certificated U/s 65B of Indian Evidence Act, 1872 and are therefore, read in evidence. A perusal of the postal tracking reports shows that the legal demand notice has been delivered. A perusal of the remarks appearing on the postal tracking report further clarifies that notice has been delivered to [Kamp (addressee)].
17.2 Accused persons had initially denied the receipt of legal notice in the Notice put to them U/s 251 Cr.P.C but had admitted that the address mentioned on the legal demand notice was the earlier address of the accused no.1 company. However, in the CC NI ACT 3266/2021 URMIL NAG Page no.14of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:24:04 +05'30' statement recorded U/s 313 R/w 281 Cr.P.C the accused persons have stated that the accused company might have received the legal demand notice. Further, no questions have been put by the accused side in the cross-examination of the complainant to suggest that the legal demand notice was not sent or delivered to the accused persons. 17.3 At this stage, this Court deems it to refer to the Judgment of Hon'ble Supreme Court in C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555
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, 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. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. (Vide Jagdish Singh v.Natthu Singh [(1992) 1 SCC 647 : AIR 1992 SC 1604] ; State of M.P.\v.Hiralal[(1996) 7 SCC 523] andV. Raja Kumariv. P. Subbarama Naidu [(2004) 8 SCC 774 : 2005 SCC (Cri) 393] .) It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved.
17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of CC NI ACT 3266/2021 URMIL NAG Page no.15of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:24:16 +05'30' summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed inBhaskaran case[(1999) 7 SCC 510 : 1999 SCC (Cri) 1284] if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.
In the present case, the accused persons in the notice has admitted that the address mentioned on the legal demand notice was the correct address of the accused no.1. Further, the complainant has placed on record the postal tracking reports showing that legal demand notice has been sent to the accused persons. In the given circumstances, the presumptions under section 114 of Indian Evidence Act and Section 27 of the General Clauses Act would arise and a rebuttable presumption of service would arise against the accused. Nothing has been brought on record by the accused to rebut the presumption. Therefore, in the light of C.C. Alavi Haji judgment (Supra) the accused cannot contend that he has not received the notice. 17.4 In the given circumstances, this Court is of the opinion that the complainant has been able to prove that a legal demand notice in writing was sent to the accused CC NI ACT 3266/2021 URMIL NAG Page no.16of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:24:31 +05'30' within 30 days from the date of receipt of information regarding the dishonour of the cheque in question and the accused has received the same. 18 Existence of any debt or other liability 18.1 Since the accused persons have admitted the signatures of authorized signatory on the impugned cheques in their plea of defence, the only question which is required to be decided is whether the impugned cheque was given in discharge of a legally enforceable debt or liability.
18.2 To examine this, let us again recapitulate that the accused persons have admitted that the cheque is drawn upon a bank account maintained by the company. The accused persons have also admitted signatures on the cheque. Under the NI Act, once the accused admits drawing of the cheque, certain presumptions are drawn against him which results in shifting the onus on the accused. Section 118(a) of the NI Act lays down the presumption that every negotiable instrument was made or drawn for consideration. Further, Section 139 of NI Act lays down the presumption that the holder of the cheque received it for the discharge, in whole or part, of any debt or other liability. The combined effect of these two provisions is a presumption that the cheque was drawn for consideration and given by the accused for the discharge of debt or other liability. Both the sections use the expression "shall", which makes it imperative for the court to raise the presumptions, once the foundational facts required for the same are proved {Refer Hiten P. Dalal vs. Bratindranath Banerjee (2001) 6 SCC 16}.
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KAUSHAL Date: 2023.03.20
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18.3 Moreover, it has been held by a three-judge bench of the Hon'ble Apex
Court in the case of Rangappa vs. Sri Mohan (2010) 11 SCC 441 that the presumption contemplated under Section 139 of NI Act includes the presumption of existence of a legally enforceable debt. Once the presumption is raised, it is for the accused to rebut the same by establishing a probable defence. The principles pertaining to the presumptions and the onus of proof were summarized by the Hon'ble Apex Court in Basalingappa vs. Mudibasappa (2019) 5 SCC 418 as under:
"25. We having noticed the ratio laid down by this Court in the above cases on Section 118(a) and139, we now summarise the principles enumerated by this Court in the following manner:
25.1. Once the execution of cheque is admitted Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability.
25.2. The presumption under Section 139 is a rebuttable presumption and the onus is on the accused to raise probable defence. The standard of proof for rebutting the presumption is that of preponderance of probabilities.
25.3. To rebut the presumption, it is open for the accused to rely on evidence led by him or the accused can also rely on the materials submitted by the complainant in order to raise a probable defence.
Inference of preponderance of probabilities can be drawn not only from the materials brought on record by CC NI ACT 3266/2021 URMIL NAG Page no.18of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:24:56 +05'30' the parties but also by reference to the circumstances upon which they rely.
25.4. That it is not necessary for the accused to come in the witness box in support of his defence.
Section 139 imposed an evidentiary burden and not a persuasive burden.
25.5. It is not necessary for the accused to come in the witness box to support his defence."
The presumptions raised under Section 118(a) and Section 139 NI Act are rebuttable presumptions. A reverse onus is cast on the accused, who has to establish a probable defence on the standard of preponderance of probabilities to prove that there was no legally enforceable debt or other liability. While adjudging whether in a case the presumption of consideration has been rebutted, it becomes important to underscore that a mere denial of liability or vague defence cannot be taken at the mere ipse dixit of the accused. The accused has to come forth with a convincing defence that appeals to the judicial conscience. Only in a case where the accused comes up with a convincing defence to liability, that the presumption can be stated to have been rebutted, lest the statutory intent as adumbrated above would be the direct casualty.
18.4 In the case at hand, the accused side in their plea of defence U/s 251 Cr.P.C has stated that they had entered into a memorandum of understanding with the complainant however, the complainant did not honour the MOUs due to which they are not liable to pay the cheque amount to the complainant. In the Statement of the CC NI ACT 3266/2021 URMIL NAG Page no.19of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
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accused U/s 313 R/w 281 Cr.P.C the accused has stated that the complainant had approached the accused for purchasing the flats. It was further mentioned that the complainant had showed interest in the land pooling policy. The accused had admitted to entering into MOUs dated 26.03.2015 and 29.03.2015 (MARK A (Colly.)) with the complainant. The accused had stated that the cheques in question were given as a security cheques to the accused and since the complainant failed to honour her part of the agreement therefore, they have no liability towards the complainant.
18.5 In the final arguments, Ld. Counsel for the accused has raised two defences for the accused:-
a) Firstly, that the complainant was aware of the Land Pooling Policy prepared by the Delhi Development Authority( hereinafter DDA) and that the delay in handing over the flat and dwelling unit was because of the failure of on the part of DDA to return the land for development. It is further mentioned that the MOUs entered between the complainant and the accused is not lawful.
b) Secondly, it is alleged that the debt in question has become a time barred debt and therefore, there is no legally enforceable debt or liability in favour of the complainant.
18.6 Let us consider the first defence raised by the accused that the complainant had knowingly made an investment in the Land pooling policy and the delay in handing over the flat/dwelling units was due to the failure of the DDA to return the CC NI ACT 3266/2021 URMIL NAG Page no.20of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:25:27 +05'30' land for development due to which the accused persons have no liability towards the complainant. It has been further mentioned by the accused persons in their plea of defence that the complainant did not honour MOUs due to which the accused has no liability towards the complainant. In order to prove this defence the accused persons have cross-examined the complainant as CW-1 and accused no.2 has himself stepped into the witness box as DW-1. On a perusal of the cross-examination of CW-1 as a whole, it is observed that the accused side has miserably failed to bring forth any circumstances to show that the complainant has failed to honour the MOUs. Further, the accused persons have not placed on record any document on record to show that they had asked the complainant to comply with any condition specified in the MOUs dated 26.03.2015 and 29.03.2015. No suggestion has been put by the accused side to the complainant in this regard. The burden of showing that the complainant had failed to honour the MOUs was upon the accused however, the accused has failed to discharge the said burden.
18.7 Further, the defence of the accused that the delay in handing over the possession of Flats/ dwelling unit was due to DDA's failure to return the pooled land for development does not render any assistance to the accused in light of the Clause IV of the MOUs dated 26.03.2015 and 29.03.2015. The said clause has been reproduced for the sake of convenience:
"iv. The First party agrees, admits, confirms and acknowledges that-
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a) It shall be the responsibility/ obligation of the first party to acquire land for the said housing project and it will be solely responsible to do the project planning and its implementation in pursuance to "land pooling policy" in accordance with the various sanctions obtained from the Government and other authorities. It shall also be its responsibility to obtain all statutory, legal and all other applicable clearances from all the government, semi-government and other local authorities concerned and have the housing project executed and completed .
b) If as a result of any rules or directions of the Government or any authority or if competent authority delays, withholds, denies the grant of necessary approvals for the project, the first party after provisional and or/final allotment is unable to deliver the unit to second party, the first party shall be liable only to refund the amounts received from the Second Party with interest @ 9% per annum.
Further, the second party has the option to get the entire amount back with an annual interest of 9% after 3 years from the date of signing the MOUs.
On a perusal of the above clause it is clear that it was the responsibility to the accused no.1 to acquire the land and obtain the necessary permissions from the Government authorities for acquiring the land on which the housing project was to constructed. Further part b of the aforementioned clause specifies that in case the accused no.1 fails to give the dwelling unit/ flat to the complainant owing to Government authorities withholding, delaying or denying the necessary approvals then the accused no.1 would only be liable to return the money advanced by the complainant alongwith an interest at the rate of 9% per annum.
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18.8 In the present case, it is not disputed that the accused persons have
received a consideration amount of Rs 34,65,000/- to the accused persons for two residential flats/ dwelling units. Further, it is not in dispute that the accused persons have failed to deliver the possession of the said dwelling units to the complainant. In the given circumstances, as per the above clause of the MOUs entered into parties the accused is liable to refund the consideration amount to the complainant. Further the defence of the accused that there was a delay on the part of DDA to return the land for development of housing project is of no avail because as per the agreement it was the responsibility of the accused persons to acquire the land for the construction of housing project and the accused were liable to refund the amount in case they did not receive the necessary sanctions from the Governement. 18.9 Further, nothing has been brought forth by the accused side to show that the agreement is hit by Section 23 of Indian Contract Act. In view of the above observations, the first defence of the accused is without any merits. 18.10 Coming to the second defence of the accused that the amount in question has become a time barred debt and is therefore, not recoverable as it is not a legally enforceable debt or liability. In support of this contention, Ld. Counsel for the accused has argued that the MOUs were entered into between the complainant and the accused in the year of 2015 and the cheques in question were also given as security cheques to the complainant in the year 2015. Ld. Counsel submits that since the amount was paid in the year 2015 therefore, it could only be recovered within 3 CC NI ACT 3266/2021 URMIL NAG Page no.23of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:26:11 +05'30' years from the date of payment. Ld. Counsel in support of his arguments has placed reliance upon following judgments: Jage Ram Karan Singh & Anr. Vs. State and Anr. 2019 SCC Online Del 9486, Ghanshyam Dass Vs. Madhav Chandra Das & Anr. (2018) 3 Guwahati Law Reporters 664, Amrit Sandhu Costar Vs. State 2022 SCC Online Del 2990, Jasween Sandhu Vs. State & Anr. (2022 SCC Online Del 2987, Smt. Ashwani Satish Bhatt Vs. Sh. Jeevan Divakar Lolienkar & Anr. (1999) SCC Online Bom 69 and M/s Vijay Polymers Pvt. Ltd. & Anr. Vs. M/s Vinnay Aggarwal (2009 (110) DRJ 592.
18.11 Per Contra, Ld. Counsel for the accused submits that the cheques in question were not given as security cheques in 2015 which is apparent from the date appearing on the cheques on the bottom hand corner of the cheques in question. Ld. Counsel further submits that under the MOUs the accused persons were under an obligation to deliver the flats and it was a continuous contract due to which the debt in question has not become time barred. Ld. Counsel further submits that Clause IV of the MOUs clearly specifies that the complainant had the right to get the entire amount back after three years from the date of signing the MOUs. 18.12 On a perusal of MOUs (Mark A) annexed with the complaint this Court is of the opinion that the agreement entered into between the parties by way of MOUs was a continuous agreement which was to fructify by either giving the possession of the flats/dwelling units to the complainant or by termination under the clause 7 of the MOUs dated 26.03.2015 and 29.03.2015. In the present case nothing has been CC NI ACT 3266/2021 URMIL NAG Page no.24of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:26:27 +05'30' brought on record to suggest that the present agreement was terminated. In the given circumstances, this Court is of the opinion that the contract entered into by the parties was a continuous contract. Moreover, even if it is assumed that the said contract was not a continuous contract, still as per clause IV(b) of the MOUs dated 26.03.2015 and 29.03.2015 the complainant was entitled to recover the amount of consideration after the expiry of three years from the accused with an interest of 9% per annum.
18.13 In the present case, the MOUs were entered into between the parties on 26.03.2015 and 29.03.2015. As per clause IV(b) of the MOUs the complainant would be entitled to recover the consideration amount after the expiry of three years i.e. 26.03.2018 and 29.03.2018 respectively. Article 27 of the Indian Limitation Act, 1963 provides the period of limitation for filing a suit for compensation for breach of a promise to do anything at a specified time, or upon the happening of a specified contingency is three years from the time when the time specified arrives or the contingency happens. In the present case, the contingency happens at the expiry of three years and the limitation for filing the suits in respect of two MOUs expire on 26.03.2021 and 29.03.2021. The present complaint has been filed before the expiry of the said period therefore the defence of time barred raised by the accused is without any merits.
18.14 Further, the defence of the accused that the cheque in question was given as a security cheque is without any merits. It is highly unlikely that cheques which CC NI ACT 3266/2021 URMIL NAG Page no.25of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:26:42 +05'30' bear a printed date of 08.05.2019 could have been given as a security cheques in 2015. Further even if assuming that the cheques in question were given as security cheques still that does not absolve the accused persons of the liability. The law relating to the security cheques have been clarified by the Supreme Court in Sripati Singh v. State of Jharkhand, 2021 SCC OnLine SC 1002 wherein it has been observed as under:
17. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. 'Security' in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the bor-
rower agrees to repay the amount in a specified time frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as se- curity would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presenta- tion, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of N.I. Act would flow.
18. When a cheque is issued and is treated as 'security' towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued CC NI ACT 3266/2021 URMIL NAG Page no.26of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
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as 'security' cannot be presented prior to the loan or the instal- ment maturing for repayment towards which such cheque is is- sued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the N.I. Act. Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an 'on demand promissory note' and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as 'security' the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishon- oured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal pro- ceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation.
On reading of the aforesaid observations of Hon'ble Supreme Court it is clear that merely because a cheque was given as a security cheque CC NI ACT 3266/2021 URMIL NAG Page no.27of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.
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does not by itself absolve the accused from liability for an offence U/s 138 NI Act. In order to be absolved from the liability, the accused is required to show either of the following two things:
a) That the accused has already discharged the liability for which the cheque was given as a security; or
b) That the amount for which the cheque was given as a security had not become due on the date of presentation;
18.15 In the present case, the payment of the consideration by the complainant is not disputed. Further it is not disputed that the complainant has not received the possession of the dwelling units/ flats till date. Moreover, the accused persons have not been able to prove that they don't have liability towards the complainant or that they have already discharged the liability. Accordingly, the defence of security cheque issued by the accused is also without any merits. 18.16 In view of the foregoing discussion, this Court is of the opinion that the accused persons have not been able to rebut the presumption raised against them.
19. Conclusion 19.1 Hence, in the light of above discussion, it comes out that the complainant has successfully proved his case beyond all the reasonable doubts and accused persons have failed to rebut the presumption. Accordingly, accused no1 and 2 are convicted for the offence under Section 138 of Negotiable Instruments Act.
19.2 Let the accused be heard on quantum of sentence on 31.03.2023
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19.3 Copy of the judgment be supplied to convicted persons or their counsel free of cost.
MANUJ Digitally signed by MANUJ
KAUSHAL
Announced in the open KAUSHAL Date: 2023.03.20 16:27:39
+05'30'
Court on 20.03.2023 (MANUJ KAUSHAL)
MM (NI ACT)/DIGITAL COURT-06,
SOUTH WEST, DWARKA COURT,
NEW DELHI/ 20.03.2023
Certified that this judgment contains 29 pages and each page bears my digital signature.
MANUJ Digitally signed by MANUJ KAUSHAL KAUSHAL Date: 2023.03.20 16:27:56 +05'30' (MANUJ KAUSHAL) MM (NI ACT)/DIGITAL COURT-06, SOUTH WEST, DWARKA COURT, NEW DELHI/ 20.03.2023 CC NI ACT 3266/2021 URMIL NAG Page no.29of29 VS. KAMP DEVELOPERS PVT. LTD. & ANR.