Delhi District Court
No.33603/16 Also Titled As Klj ... vs . M/S Aura on 7 August, 2018
IN THE COURT OF SHRI SUMEET ANAND, METROPOLITAN
MAGISTRATE(N.I. Act), PATIALA HOUSE COURTS, NEW
DELHI DISTRICT, NEW DELHI
M/s KLJ Resources Limited
Head Office at KLJ House, 63
Rama Marg, Najafgarh Road,
New Delhi-110015.
Through its Authorised Representative
Sh. Mukul Aggarwal ....................... Complainant
Versus
1. M/s Aura Institutions Pvt. Ltd.
2. Sh. Harshvardhan Sarangapani Reddy
Chairman / Director of
M/s Aura institutions Pvt. Ltd.
3. Smt. Nithya Reddy Muthu
Director of M/s Aura institutions Pvt. Ltd.
All at
KLJ Complex-, Private No. B-39
Plot No. 70, Moti Nagar,
Najafgarh Road,
New Delhi-110015 ........................... Accused
Old Case Number. : 365/09
New Case Number. : 33936/2016
Date of Institution of Case. : 21.11.2009
Offence Complained Of. : U/s 138 NI Act
Plea of the Accused. : Pleaded not guilty
Arguments Heard On. : 25.07.2018
Final Order. : Acquittal
Date of Judgment. : 07.08.2018
CC no.33936/16 Page no.1 of 36
:: JUDGMENT ::
1. This judgment shall decide and dispose off criminal complaint case NO.33936/16 (Old CC No.365/09) instituted under section 138 of the Negotiable Instruments Act, 1881 (For short the NI Act) for the dishonour of ten (10) cheques, detailed hereinafter, totalling to a sum of Rs.77,97,828/- (Seventy seven lakh ninety seven thousand eight hundred & twenty eight only).
2. Complainant claims to be a company incorporated and registered under the provisions of Companies Act, 1956;
having its registered office at KLJ House, 63, Rama Marg, Najafgarh Road, New Delhi, 110015. The complaint was instituted by the Authorised Representative (hereinafter AR) of the complainant, Mukul Aggarwal on the strength of Board Resolution dated 22.08.2209, passed in his favour by the complainant company.
3. The complainant claims to be the absolute owner of property situated at KLJ Complex-I, Private No. B-39, Plot NO. 70, Shivaji Marg, Najafgarh Road, New Delhi-110015.
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4. Accused No. 1 M/s Aura Institutions Pvt. Ltd. (hereinafter A-1) is alleged to be a Company with Accused No. 2 Harshvardhan Sarngapani Reddy (hereinafter A-2) as its chairman and one of the directors; and accused No. 3 Nithya Reddy (hereinafter A-
3) to be its other director. It is alleged by the complainant, that both A-2 and A-3 are responsible for the conduct of business of A-1 and they look after and manage its day to day affairs.
5. It is the case of the complainant that A-2 alongwith A-3 approached him and requested to let out a portion of the above mentioned property ad-measuring '20391' Sq. Ft. Super area ('15905' Sq. Ft. covered area) in the basement and '6572' Sq. Ft. super area ('5126' Sq. Ft. Covered area) in the ground floor to run their business activity under the name & style "Aura Institutions Pvt Ltd."
6. It is further the case of the complainant that after due negotiations between the parties, the complainant agreed to let out the above mentioned area in the abovementioned property to the accused; and in this regards 'Lease Deed' dated 25.08.2008 was signed and executed between the CC no.33936/16 Page no.3 of 36 parties and pursuant thereto the accused took peaceful possession of the leased portion.
7. It is the case of the complainant that, in terms of the lease deed, the accused in discharge of their legally enforceable debts and other liabilities towards the complainant issued the following mentioned cheques against the part rent and interest thereon; with an assurance that the cheques will be honoured.
Sl. Cheque Date Amount Drawer Bank
No. No.
1. 486731 01.09.2009 Rs. 8,22,981/- Citi Bank, N.A.Delhi
2. 486732 01.09.2009 Rs 8,13,431/- -DO-
3. 486733 01.09.2009 Rs 8,03,563/- -DO-
4. 486734 01.09.2009 Rs 7,94,694/- -DO-
5. 486735 01.09.2009 Rs 7,84,781/- -DO-
6. 486736 01.09.2009 Rs 7,75,230/- -DO-
7. 486737 01.09.2009 Rs7,65,326/- -DO-
8. 486738 01.09.2009 Rs 7,55,812/- -DO-
9. 486739 01.09.2009 Rs 7,45,944/- -DO 10 486740 01.09.2009 Rs 7,36,075/- -DO-
Total Rs.
77,97,828/-
8. It is the grievance of the complainant that all the abovenoted cheques, upon their presentation, were dishonoured and were CC no.33936/16 Page no.4 of 36 returned back unpaid, vide returning memo dated 12.09.2009, with the remarks, "Payment Stopped by the Drawer".
9. As the payment of the dishonoured cheques in question was not forthcoming, therefore the complainant set the legal course into motion and issued the statutory legal demand notice dated 08.10.2009 to A-1 to A-3 at their corresponding addresses calling upon them to make the payment of the dishonoured cheques with the prescribed period.
10. It is the grievance of the complainant that despite compliance of all statutory requirements of law, the accused have failed to make the payment of the dishonoured cheques in question. Hence, this complaint.
11. The AR of the complainant, on the strength of the board resolution, issued in is favor by the complainant company lead the pre-summoning evidence by way of affidavit. His evidence affidavit is EX CW 1/1. Based on it cognizance of offence was taken and A-1 to A-3 were summoned.
12. After appearance of accused, notice of accusation under section 251 Cr.P.C was served upon them on 05.07.2011 to which they pleaded not guilty and claimed trial.
CC no.33936/16 Page no.5 of 36
13. At the stage of post-summoning evidence, the AR of complainant adopted his evidence affidavit and was subjected to cross-examination as CW-1. Other than CW-1 no other witness was examined by the complainant in support of his case.
14. After the complainants evidence at the post-summoning evidence stage, the statement of accused persons under section 313 Cr.P.C was recorded, wherein all the incriminating facts lead in evidence against them were put to them affording an opportunity to give their explanation.
15. Subsequently, the matter was posted for defence evidence. A-
2 appeared as a defence witness and was examined and cross-examined as DW-1. Except for DW-1 no other witness was examined by the accused persons in support of their defence.
16. At the stage of final arguments, learned counsels for both the parties addressed their submissions in support of their respective cases. The accused also filed his arguments/ submission in writing. The same are on record.
CC no.33936/16 Page no.6 of 36
17. This court has perused the entire record and has carefully considered the evidences lead by the contesting parties and the arguments made in support of their respective case.
18. It is undisputed that the parties signed and executed lease deed dated 25.08.2008 and in pursuance thereof the accused took possession of the leased premises; i.e. the area noted hereinabove. There is no dispute whatsoever with respect to the contents of the lease deed by either of the parties.
19. As the lease deed is the foundation of transaction between parties and as per the complainant's own case, all the dishonored cheques in question were issued by the accused in the terms of lease deed towards the part rent and interest thereon, it shall be beneficial to enumerate herein certain relevant clauses and excerpts from the lease deed dated 25.08.2008.
" This lease deed is made on this 25th day of August 2008 between M/s KLJ Resources Ltd. and M/s Aura Institutions Pvt Ltd."
"Whereas the lessor is the owner of substantial portion of the property KLJ complex-I put. no.B-39 Plot no.70 Najafgarh Road, New Delhi-110015".
Clause 1: That in consideration of the rent hereinafter specified and of the covenents and conditions hereinafter CC no.33936/16 Page no.7 of 36 contained and on the part of the lessee to be paid, observed and performed, the lessor hereby demises into the lessee, free from all encumbrances to hold & use for his business activities for a period mentioned herein below the premises having an extent of 20391 Sq. Ft. (Super Area) approx 15905 Sq. Ft. (covered area) on basement and 6572 Sq. Ft. (Super Area) approx 5126 Sq. Ft. (covered area) on the ground floor of KLJ Complex-I, Private no.B-39 Plot no.70, Najafgarh Road, New Delhi-110015 totally to 26963 Sq. Ft. (Super Area) approx. 21031 Sq. Ft. (covered area) approx. being the demised premises.
Clause 2: "The lessee hereby agrees to pay to the lessor towards the lease of the demised premises a monthly rent of Rs.13,41,400/- (thirteen lakh forty one thousand four hundred only) calculated @ Rs. 40 per Sq. Ft. of the super area for for basement and @ Rs.80 per Sq. Ft. of the super area for the ground floor of the demised plus applicable service tax and other taxes/cess as are or may be made applicable in respect of the lease, subject to deduction of tax at source at applicable rates. Clause 3:- That the parties agree that the period of lease shall be initially for 3 (three) years commencing from 01.09.2008 till 31.08.2011. Further the lease may will be renewed for further 2 (two) terms of 3 (three) years each by the parties to the lease deed in writting. The monthly rent shall be enhanced at the commencement of each renewed term by 30% on the last payable sent and all other terms will remain same. Clause 4:- That the parties agree that the lessee shall not apy any rrental to the lessor for intial period of 2 (two) months of the lease during which period the lessee shall be permitted to enter the demises premises to install fitments therein.That the lessee agrees to pay the rent in respect of the demises premises in advance by 10th day of each English calander month".
CC no.33936/16 Page no.8 of 36
Clause 5:- "That the parties agree that for the first
year of lease from 01.09.2008 to 31.08.2009 (excluding fit out period of two months) the rent would commence from 01.11.2008. The said rent would be paid as per ANNEXURE-A attached herewith.
Clause 6:- That the lessee will give interest free security deposit equivalent to 3 months rent which is Rs.40,24,200/- (Forty lakh twenty four thousand two hundred only) by way of cheque bearing no.486751 dated 10.01.2009 drawn on City Bank, N. A. Delhi as per ANNEXURE-B attached herewith.
Clause 7:- That the service tax and any other taxes on the lease in respect of the one months rent paid in advance by the lessee shall also be remitted as and when it becomes applicable and demanded by the lessor. Clause 8:- That the maintainance charges for the demised premises will be paid by the lessee @ Rs.3.30/- (Rs. three and three paisa) per Sq. Ft. on the super area togather with applicable service tax on a monthly basis maintainance services will be restricted to using of lifts, stair cases, drive way (parking) watchman, water supply and lobby. The said maintainance charges will be increased by 10% after the end of every year of the lease on the last payable amount.
Clause 9:- That the lessee will pay an interest @ 16% per annum on post dated cheques issued by him till their realisation, ini case the lessee makes the payment before the due date he shall be liable to pay the interest upto the date of payment and the lessor shall return post dated cheeques and @ 24% on the arrears due on account of delayed payment of rent, security or amount due on account of maintainance charges or any other amount due from lessee.
CC no.33936/16 Page no.9 of 36
ANNEXURE-A Lease rent described in clause 2
hereinabove would be paid as under:
"30% of the rent as described in clause 2 hereinabove will be paid by 10th day of each English Calander Month".
"70% of the rent due as described in Clause 2 hereinabove will be paid after 10 months from the due date of rent by way of post dated cheques, to be handed over at the time of signing of this lease deed, alongwith the reqular rent due from the second year i.e. from 01.09.2009 by 10th day of each English calander month. In other words from 31.08.2009 routine regular monthly rent in full will be paid alongwith the arrears of rent falling due of first year".
"In case of demolition by Municipal Corporation of Delhi or under any order of a Court during the period 1st November 2008 to August 2009, the lessor will return all post dated cheques given by the lessee which have not become ensashable till then, on possession of the demised premises being handed over to the lessor.
20. A joint reading of Clause 2 of the lease deed with Annexure 'A"
reflects, that, viz.
20.1 For the first year of the lease, the lessee had to pay rent only for 10 months (The rent for first two months was waived off) 20.2 Rent was payable in parts; 30% of rent was payable from 01.11.2009 on every 10th day of English calendar and the remaining 70% rent was deferred and was payable, as per Annexure A, i.e. after 10 months from the due date of rent by CC no.33936/16 Page no.10 of 36 way of post-dated, to be to be handed over at time of signing of lease deed.
20.3 Regular rent due payable from second year i.e. from 01.09.2009 shall be paid by 10th day of each English calendar month. In other words from 31.08.2009 routine regular monthly rent in full will be paid alongwith the arrears of rent falling due of first year.
21. Herein, it is pertinent to note that all the 10 (ten) dishonored cheques in question, totalling to a sum of Rs.77,97,828/- are dated 01.09.2009 and all of them have been dishonored & returned back unpaid vide returning memo dated 12.09.2009.
22. The complainant in para 6 of the complaint has very categorically stated that the dishonored cheques in question were issued by the accused to complainant in terms of lease deed in discharge of their legally enforeable debts & libilities against the part rent and interest thereon.
23. Clause-9 of the lease deed stipulates about payment of interest @ 16% per annum on post-dated cheques issued by accused to the complainant till their realisation. However, unlike for the payment of rent, for which there is specific procedure / manner provided in the lease deed, there is no CC no.33936/16 Page no.11 of 36 stipulation whatsoever provided in the lease deed for the payment of the interest on the deferred rent; i.e. whether it is payable either in cash; or through post-dated cheques; or otherwise.
24. Annexure A also only talks about payment of balance rent of 70% by way of post-dated cheques, but it does not stipulates for inclusion and payment of interest thereon.
25. A post-dated cheque literally means a cheque issued in present for discharge of a pre-ascertained liability likely to be accruing ona future date whether fixed or not, upon happening or not happening of an event.
26. However, a combined reading of Clause 9 of the lease deed and Annexure A, particularly in the light of clause of the lease deed to the effect that, if the lessee makes the payment of balance / deferred rent before the due date then, he shall be liable to pay interest only upto the date of payment and the lessor shall return the post-dated cheques, manifestly suggest that the amount, if any mentioned in the post-dated cheques issued by accused to the complainant at the time of signing of lease deed were subject to flexibility / change on account of payment being made before time. Hence, the amount, if any, CC no.33936/16 Page no.12 of 36 mentioned at the post-dated cheques cannot be taken to be a pre-ascertained liquidated amount.
27. It is not in dispute that the all the dishonored cheques were issued at the time of signing of the lease deed for payment of 70% of the balance / deferred rent towards the payment of 10 months of the rent accruing in the first year of the lease, which as per Annexure-A was deferred and payable after 10 months from the due date of rent.
28. It is pertinent to note that, the lease for the first year commencedfrom 01.09.2008 and lasted till 31.08.2009. No rent was payable for first two months; and rent, as per Annexure A was payable from 01.11.2008 in the following manner.
On 30% Rent i.e. 30% of 70% Rent i.e. 70% of 01.11.2008 13,41,400/- a Sum of Rs. 13,41,400/- a sum of 4,02,420/- was due and Rs.9,38,980/- was due payable on 10.11.2008 and payable on (Tenth Day of English 10.09.2009 i.e. after Calendar) 10 (ten) months from due date of rent.
Similarly, the rent for the next month was due and payable on; 01.12.2008 30% Rent i.e. 30% 7of 70% Rent i.e. 70% of 13,41,400/- a sum of Rs.13,41,400/- a sum of 4,02.420/- was due andRs. 9,38,980/- was CC no.33936/16 Page no.13 of 36 payable on 10.12.2008due and payable on (Tenth Day of English10.10.2009 i.e. after Calendar) 10 (ten) months from due date of rent So on and So forth, the rent for the last month of the first year of lease was due and payable on;
01.08.2009 30% Rent i.e. 30% of 70% Rent i.e. 70% of 13,41,400/- a sum of Rs. 13,41,400/- a sum of 4,02,420/- was due and Rs. 9,38,980/- was payable on 10.08.2009 due and payable on (Tenth Day of English 10.06.2010 i.e. after Calendar) 10 (ten) month from due date of rent.
29. As such, based on abovementioned analogy, inferred from combined reading of Clause 2, 4 and 5 with Annexure A of the lease deed, this Court is of the opinion that as on 12.09.2009, when all the cheques in question had been dishonoured, the liability qua payment of 70% of the deferred rent for the month of 01.11.2008 had only been accrued and liability qua subsequent months had not been accrued.
30. The averment made by the complainant in his complaint, that the dishonoured cheques were issued in discharge of part rent, itself suggest that as on the date of presentation of the cheques the entire liability of the accused, in terms of the lease deed had not accrued.
CC no.33936/16 Page no.14 of 36
31. Moreover, according to the lease deed, the complainant was charging 16% yearly interest on the deferred / balance rent of 70% to be paid after 10 months when the rent became due. If, the entire rent had to fall due on 10.09.2009 itself i.e. only after 10 months from the payment of the first rent, then there was no occasion to put a stipulation for charging 16% annual interest on the deferred payment. For instance, as the last rent for the first year of lease fell due an payable on 10.08.2009 the deferred payment of 70% for this month had to be paid on 10.06.2010 i.e. after 10 months when it fell due. Therefore, on a Post-dated cheque issued by accused to the complainant for 10.06.2010 complainant would have charged 16% interest from the issuance of the post-dated cheque, i.e. at the time of execution of the lease deed. Hence, a covenant for yearly rent was incorporated in the lease deed.
32. Based on the abovedone discussion, this court is of the firm opinion that as on 12.09.2009 when all the dishonoured cheques in question were presented, the accused had no liability accrued towards the complainant towards rent, except for the balance/deferred rent for the month 01.11.2008.
CC no.33936/16 Page no.15 of 36
33. Assuming that the deferred / balance rent of 70% of the rent for the entire first year of lease was payable as on 01.09.2009 i.e. the date mentioned on all the dishonoured cheques in question, then the first question that appeals the mind is, why the accused had to issue 10 different cheques of even date with different amounts, when he could have conveniently issued one post-dated cheque for the entire amount due, which would suffice the requirement/condition of lease deed?
34. The question posed hereinabove deserves the mention that there is another case between the parties bearing CC no.33603/16 also titled as KLJ Resources Ltd Vs. M/s Aura Institution Pvt Ltd which also contains 10 (ten) dishonored cheques totalling to a sum of Rs.12,44,358/- and all are dated 01.09.2009 and all of them have been dishonored on 12.09.2009 and the complaint alleges that all the dishonoured cheques were issued by the accused towards the discharge of part liability towards part rent and maintenance charges for the same portion of leased premises, as in this case, and in terms of the same lease deed dated 25.08.2008.
35. It is also pertinent to note that the total amount of all the 10 (ten) dishonored cheques in question, in this case is Rs.
CC no.33936/16 Page no.16 of 36 77,97,828/- and the total amount of all the 10 (ten) dishonored cheques in question in case CC no.33603/16 is Rs. 12,44,358/-. Both the cases combined allege a total liability of Rs. 90,42,186 due from accused towards the complainant. According to the allegations made in the two complaints, the total amount alleged to be due is towards part rent plus (+) interest thereon plus (+) maintenance charges.
36. The Monthly rent is Rs. 13,41,400/-. The dishonoured cheques, as per the Annexure A of the lease deed, had been issued towards the 70 % of the balance / deferred rent. Now, 70 % of 13,41,400 is Rs. 9,38,980/-. For the first year rent had to be paid only for 10 months. Hence, the Post-dated chques issued to the complainant had to be to the tune of Rs. 9,38,980/- multiplied by 10 i.e. Rs. 93,89,800/-.
37. However, interestingly, the amount mentioned in all the 20 (twenty) dishonoured cheques, in both the above referred cases, including the interest on the post-dated cheques and the maintenance is far less than only the deferred balance payment of Rent, payable as per the lease deed.
38. The complainant has very conveniently, alleged in the complaint that the cheques in question were issued in part CC no.33936/16 Page no.17 of 36 discharge of rent including the interest thereon and the maintenance, when the lease deed categorically records that Post-dated cheques shall be given for deferred / balance rent. It is not the case of the complainant that post-dated cheques, as contemplated in the lease deed were not issued by the accused; or some more / other cheques were also issued, which do not form part of lease deed.
39. It is also pertinent to note that the lease deed, except for the issuance of Post-dated cheques towards the deferred rent does not contemplate for issuance of any other cheques, particularly not for payment of the yearly interest on the post-dated cheques, or towards the payment of maintenance charges. As such, in accordance with the terms of the lease deed, the complainant ought to have been holding only 10 (ten) cheques of the accused, however, in this case and in case CC No. 33603/16 combined the complainant is in all holding 20 (twenty) cheques of the accused. The onus was squarely upon the complainant to aver and prove the circumstances under which he came into possession of more cheques of the accused, than what is contemplated in the lease deed.
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40. Furthermore, in the opinion of this court, it was incumbent upon the complainant to categorically aver and prove that at the time of presentation of cheques what amount of rent was due, what was the calculation of the interest accrued on the balance deferred rent, which had become due on the date of presentation of the cheques. However, the complainant has not made any such essential averment in his complaint.
41. Based on the above done discussion, this court is of the considered opinion that the complainant was in possession of more cheques than contemplated to have been issued under the lease deed and the complainant. And, all the cheques were presented at once without the actual liability of the accused towards the complainant having been accrued in terms of lease deed, and also without having given any breakup of calculation towards the interest calculated.
42. The complainant has vehemently argued that the accused has retained possession of the leased premises for complete 3 years, rather beyond that and he handed over the possession of the leased property only after a Criminal Contempt Petition was filed in the Hon'ble Delhi High Court. In the most humble opinion of this court, till when and under what CC no.33936/16 Page no.19 of 36 circumstances accused remained in possession of leased premises & under what circumstances he vacated it is not a subject matter of this court. The only issue to be decided by this court is that whether the accused has committed an offence under section 138 of N I Act, or not.
43. Furthermore, the dishonored cheques in question have not been dishonoured for the reason funds insufficient; or Exceeds Arrangements, but they have been dishonored for the reason "Payment Stopped by Drawer"
44. It is settled proposition of law that even the dishonor of cheque for the reason Payment Stopped by Drawer attracts the rigor of section 13 NI Act. However, the Hon'ble Apex Court in the Judgment of M/S Laxmi Dyechem vs State Of Gujarat & Ors (2012) 13 SCC 375; in a concurring Judgment delivered by HMJ Gyan Sudha Mishra J., held;
"1. I endorse and substantially agree with the views expressed in the judgment and order of learned Brother Justice Thakur. However, I propose to highlight a specific aspect relating to dishonour of cheques which constitute an offence under Section 138 as introduced by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 by adding that in so far as the category of 'stop payment of cheques' is concerned as to whether they constitute an offence within the meaning of Section 138 of the 'NI Act', due to the return of a cheque by the bank to the CC no.33936/16 Page no.20 of 36 drawee/holder of the cheque on the ground of 'stop payment' although has been held to constitute an offence within the meaning of Sections 118 and 138 of the NI Act, and the same is now no longer res integra, the said presumption is a 'rebuttable presumption' under Section 139 of the NI Act itself since the accused issuing the cheque is at liberty to prove to the contrary. This is already reflected under Section 139 of the NI Act when it lays down as follows:-
"139. Presumption in favour of holder.-- It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability."
2. We have to bear in mind that the Legislature while incorporating the provisions of Chapter XVII, Sections 138 to 142 inserted in the NI Act (Amendment Act 1988) intends to punish only those who know fully well that they have no amount in the bank and yet issue a cheque in discharge of debt or liability already borrowed/incurred
-which amounts to cheating, and not to punish those who refused to discharge the debt for bona fide and sustainable reason. It is in this context that this Hon'ble Court in the matter of M.M.T.C. Ltd. And Anr vs. Medchl Chemical and Pharma (P) Ltd. And Anr.[1] was pleased to hold that cheque dishonour on account of drawer's stop payment instruction constitutes an offence under Section 138 of the NI Act but it is subject to the rebuttable presumption under Section 139 of the NI Act as the same can be rebutted by the drawer even at the first instance. It was held therein that in order to escape liability under Section 139, the accused has to show that dishonour was not due to insufficiency of funds but there was valid cause, including absence of any debt or liability for the stop payment instruction to the bank. The specific observations of the Court in this regard may be quoted for ready reference which are as follows:
"The authority shows that even when the cheque is dishonoured by reason of stop-payment instructions by virtue of Section 139 the court has to presume that the cheque was received by the holder for the discharge, in CC no.33936/16 Page no.21 of 36 whole or in part, of any debt or liability. Of course this is a rebuttable presumption. The accused can thus show that the "stop-payment" instructions were not issued because of insufficiency or paucity of funds. If the accused shows that in his account there were sufficient funds to clear the amount of the cheque at the time of presentation of the cheque for encashment at the drawer bank and that the stop-payment notice had been issued because of other valid causes including that there was no existing debt or liability at the time of presentation of cheque for encashment, then offence under Section 138 would not be made out. The important thing is that the burden of so proving would be on the accused. Thus a court cannot quash a complaint on this ground."
Therefore, complaint filed in such a case although might not be quashed at the threshold before trial, heavy onus lies on the court issuing summons in such cases as the trial is summary in nature.
3. In the matter of Goaplast (P) Ltd. vs. Chico Ursula D'Souza And Anr.[2] also this Court had held that ordinarily the stop payment instruction is issued to the bank by the account holder when there is no sufficient amount in the account. But, it was also observed therein that the reasons for stopping the payment can be manifold which cannot be overlooked. Hence, in view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability. But the presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. However, this presumption coupled with the object of Chapter XVII of the Act leads to the conclusion that by countermanding payment of post- dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of the Act. Therefore, in order to hold that the stop payment instruction to the bank would not constitute an offence, it is essential that there must have been sufficient funds in the accounts in the first place on the date of signing of the cheque, the date of presentation of the cheque, the date on which stop payment instructions were issued to the bank. Hence, in Goaplast matter (supra), when the magistrate had disallowed the application in a case of 'stop payment' to the bank without hearing the matter CC no.33936/16 Page no.22 of 36 merely on the ground that there was no dispute about the dishonour of the cheque issued by the accused, since the signature was admitted and therefore held that no purpose would be served in examining the bank manager since the dishonour was not in issue, this Court held that examination of the bank manager would have enabled the Court to know on what date stop payment order was sent by the drawer to the bank clearly leading to the obvious inference that stop payment although by itself would be an offence, the same is subject to rebuttal provided there was sufficient funds in the account of the drawer of the cheque.
4. Further, a three judge Bench of this Court in the matter of Rangappa vs. Sri Mohan [3] held that Section 139 is an example of a reverse onus clause that has been included in furtherance of the legislative objective of improving the credibility of negotiable instruments. While Section 138 of the Act specifies the strong criminal remedy in relation to the dishonour of the cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. The Court however, further observed that it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing of a cheque is largely in the nature of a civil wrong whose money is usually confined to the private parties involved in commercial transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the defendant accused cannot be expected to discharge an unduly high standard of proof". The Court further observed that 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 all preponderance of probabilities.
5. Therefore, if the accused is able to establish a probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail. The accused can rely on the materials submitted by the complainant in order to raise such a defence and it is inconceivable that in some cases the accused may not need to adduce the evidence of CC no.33936/16 Page no.23 of 36 his/her own. If however, the accused/drawer of a cheque in question neither raises a probable defence nor able to contest existence of a legally enforceable debt or liability, obviously statutory presumption under Section 139 of the NI Act regarding commission of the offence comes into play if the same is not rebutted with regard to the materials submitted by the complainant.
6. It is no doubt true that the dishonour of cheques in order to qualify for prosecution under Section 138 of the NI Act precedes a statutory notice where the drawer is called upon by allowing him to avail the opportunity to arrange the payment of the amount covered by the cheque and it is only when the drawer despite the receipt of such a notice and despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount, that the said default would be considered a dishonour constituting an offence, hence punishable. But even in such cases, the question whether or not there was lawfully recoverable debt or liability for discharge whereof the cheque was issued, would be a matter that the trial court will have to examine having regard to the evidence adduced before it keeping in view the statutory presumption that unless rebutted, the cheque is presumed to have been issued for a valid consideration. In view of this the responsibility of the trial judge while issuing summons to conduct the trial in matters where there has been instruction to stop payment despite sufficiency of funds and whether the same would be a sufficient ground to proceed in the matter, would be extremely heavy.
7. As already noted, the Legislature intends to punish only those who are well aware that they have no amount in the bank and yet issue a cheque in discharge of debt or liability which amounts to cheating and not to punish those who bona fide issues the cheque and in return gets cheated giving rise to disputes emerging from breach of agreement and hence contractual violation. To illustrate this, there may be a situation where the cheque is issued in favour of a supplier who delivers the goods which is found defective by the consignee before the cheque is encashed or a post-dated cheque towards full and final payment to a builder after which the apartment owner CC no.33936/16 Page no.24 of 36 might notice breach of agreement for several reasons. It is not uncommon that in that event the payment might be stopped bona fide by the drawer of the cheque which becomes the contentious issue relating to breach of contract and hence the question whether that would constitute an offence under the NI Act. There may be yet another example where a cheque is issued in favour of a hospital which undertakes to treat the patient by operating the patient or any other method of treatment and the doctor fails to turn up and operate and in the process the patient expires even before the treatment is administered. Thereafter, if the payment is stopped by the drawer of the cheque, the obvious question would arise as to whether that would amount to an offence under Section 138 of the NI Act by stopping the payment ignoring Section 139 which makes it mandatory by incorporating that the offence under Section 138 of the NI Act is rebuttable. Similarly, there may be innumerable situations where the drawer of the cheque for bonafide reasons might issue instruction of 'stop payment' to the bank in spite of sufficiency of funds in his account.
8. What is wished to be emphasized is that matters arising out of 'stop payment' instruction to the bank although would constitute an offence under Section 138 of the NI Act since this is no longer res- integra, the same is an offence subject to the provision of Section 139 of the Act and hence, where the accused fails to discharge his burden of rebuttal by proving that the cheque could be held to be a cheque only for discharge of a lawful debt, the offence would be made out. Therefore, the cases arising out of stop payment situation where the drawer of cheques has sufficient funds in his account and yet stops payment for bona fide reasons, the same cannot be put on par with other variety of cases where the cheque has bounced on account of insufficiency of funds or where it exceeds the amount arranged to be paid from that account, since Section 138 cannot be applied in isolation ignoring Section 139 which envisages a right of rebuttal before an offence could be made out under Section 138 of the Act as the Legislature already incorporates the expression "unless the contrary is proved" which means that the presumption of law shall stand and unless it is rebutted or disproved, the holder of CC no.33936/16 Page no.25 of 36 a cheque shall be presumed to have received the cheque of the nature referred to in Section 138 of the NI Act, for the discharge of a debt or other liability. Hence, unless the contrary is proved, the presumption shall be made that the holder of a negotiable instrument is holder in due course.
9. Thus although a petition under Section 482 of the Cr.P.C. may not be entertained by the High Court for quashing such proceedings, yet the judicious use of discretion by the trial judge whether to proceed in the matter or not would be enormous in view of Section 139 of the NI Act and if the drawer of the cheque discharges the burden even at the stage of enquiry that he had bona fide reasons to stop the payment and not make the said payment even within the statutory time of 15 days provided under the NI Act, the trial court might be justified in refusing to issue summons to the drawer of the cheque by holding that ingredients to constitute offence under Section 138 of the NI Act is missing where the account holder has sufficient funds to discharge the debt. Thus the category of 'stop payment cheques' would be a category which is subject to rebuttal and hence would be an offence only if the drawer of the cheque fails to discharge the burden of rebuttal.
10. Thus, dishonour of cheques simpliciter for the reasons stated in Section 138 of the NI Act although is sufficient for commission of offence since the presumption of law on this point is no longer res integra, the category of 'stop payment' instruction to the bank where the account holder has sufficient funds in his account to discharge the debt for which the cheque was issued, the said category of cases would be subject to rebuttal as this question being rebuttable, the accused can show that the stop payment instructions were not issued because of insufficiency or paucity of funds, but stop payment instruction had been issued to the bank for other valid causes including the reason that there was no existing debt or liability in view of bonafide dispute between the drawer and drawee of the cheque. If that be so, then offence under Section 138 although would be made out, the same will attract Section 139 leaving the burden of proof of rebuttal by the drawer of the cheque.
CC no.33936/16 Page no.26 of 36 Thus, in cases arising out of 'stop payment' situation, Sections 138 and 139 will have to be given a harmonious construction as in that event Section 139 would be rendered nugatory.
11. The instant matter however do not relate to a case of 'stop payment' instruction to the bank as the cheque in question had been returned due to mismatching of the signatures but more than that the petitioner having neither raised nor proved to the contrary as envisaged under Section 139 of the NI Act that the cheques were not for the discharge of a lawful debt nor making the payment within fifteen days of the notice assigning any reason as to why the cheques had at all been issued if the amount had not been settled, obviously the plea of rebuttal envisaged under Section 139 does not come to his rescue so as to hold that the same would fall within the realm of rebuttable presumption envisaged under Section 139 of the Act. I, therefore, concur with the judgment and order of learned Brother Justice Thakur subject to my views on the dishonour of cheques arising out of cases of 'stop payment' instruction to the bank in spite of sufficiency of funds on account of bonafide dispute between the drawer and drawee of the cheque. This is in view of the legal position that presumption in favour of the holder of a cheque under Section 139 of the NI Act has been held by the NI Act as also by this Court to be a rebuttable presumption to be discharged by the accused/drawee of the cheque which may be discharged even at the threshold where the magistrate examines a case at the stage of taking cognizance as to whether a prima facie case has been made out or not against the drawer of the cheque.
45. The lease deed executed between the parties, pertaining to the portion of property leased out, categorically records, viz.
"AND WHEREAS the lessor has brought to the knowledge of the lessee and the lessee has clearly understood that Writ Petition No. 1649/07 has been filed before the CC no.33936/16 Page no.27 of 36 Hon'ble Delhi High Court by the lessor challenging the issue of sub-division of the plot as raised by the Municipal Corporation of Delhi (MCD), which has been referred to a larger bench of the said High Court and is still pending and further a case of unauthorised construction has also been booked by the MCD in respect of the said property and litigation on that behalf is also pending"
"That in the eventuality of the building being demolished by Municipal Corporation of Delhi or under an order of the court for any misuse of the said property on account of non-sanction of the building plans, or any other such account the same shall be handled solely by the lessor at its own risk and cost. However, in case due to above said reason the demised premises become inhabitable, the present lease shall stand terminated and the lessor shall refund to the lessee security deposit simultaneously with surrender of the vacant demised premises to the lessor. In any eventuality the liability of lessor is limited only to Three Months rent as relocation charges."
46. DW-1 (i.e. Accused No.2 Harshvardhan Reddy) in his examination in chief has alleged that he received a notice from MCD (Municipal Corporation of Delhi) whereby Regularisation charges were called as the building was not meant for carrying educational activity. It is further alleged that he brought this issue to the knowledge of the complainant through a letter and the complainant also replied him. However, the matter could not be resolved between the parties.
47. CW-1 (i.e. the AR of the complainant) in his cross examination has categorically stated that, CC no.33936/16 Page no.28 of 36 "it is correct that the owners had received a notice from Municipal Corporation of Delhi, office of Deputy Commissioner West Zone in April 2009 tentatively."
"It is correct that a letter was written by Director of accused No. 1 by virtue of which he brought in our knowledge, corporation has objected to run a premises for commercial activity. We sent the reply to the letter and asked the company to vacate the premises, if they desire."
"we did not supply any reply to the notice issued by Municipal Corporation in response to the letter which was received by us in April 2009. I had not seen that letter."
48. In the opinion of this court, the answers given by CW-1 (AR of the complainant) as noted hereinabove and the manner in which the complainant dealt with the issue of Municipal Corporation of Delhi raising objection on the activity for which premises was leased out to the accused is in absolutely contrary to the assurances made by the complainant, as categorically mandated, in the lease deed, and as noted above.
49. It is also pertinent to note that, CW -1 in his cross-
examination has stated accused had been running their educational institution in the said building in the name of "Ikon Academy" since 2005. Hence, vide lease deed dated 25.08.2008 it was not for the first time that the parties were entering into a landlord tenant relationship. As, a fresh lease CC no.33936/16 Page no.29 of 36 was executed between the parties in August, 2008, qua the portion in the same building, hence it can be safely presumed that the earlier relationship between the parties as a landlord and tenant must have been a cordial one.
50. Accordingly, based on the abovedone discussion, this court is of the firm view that after notice from Municipal Corporation of Delhi was served upon the accused, for which the complainant showed no interest in dealing with, there commenced the existence of a valid bonafide dispute between the parties, laying down the foundation of a valid cause for the accused to issue stop payment instructions qua the cheques issued for balance / deferred payment of rent. As Such, in the most humble opinion of this court, one ground of rebutting the mandatory presumption of law, particularly in cases where the cheques are diahonoured for the reason "payment stopped"
stands meted out.
51. As far as the second requirement of showing that there was sufficient balance / liquidity in the account of the accused at the time of presentation of the cheque is concerned, the same has not been meted out in this case. Accused has neither examined bank witness, or produced his passbook, bank CC no.33936/16 Page no.30 of 36 statement to show that on 12.09.2009, when the cheques in question were dishonored and returned unpaid for 'Payment Stop', there was sufficient balance in his account to honour the cheque.
52. As far as, this requirement is concerned, this court has already come to a conclusion that at the time of presentation of the dishonoured cheques in question no liability of accused towards the complainant had accrued at all as alleged by complainant, except for payment of balance/deferred rent for 01.11.2008. The accused, in the most humble opinion of this court, ought to have showed / proved sufficient liquidity in his account to honour the post-dated cheques issued by him provided the cheques had been presented by the complainant after the liability of the accused had accrued. But, in this case all the dishonoured cheques to the tune of Rs. 77,97,828/- had been presented pre-maturely at once, without any liability having been accrued.
53. Furthermore, DW-1 in his examination-in-chief has stated that, "Also it was brought to our notice that KLJ had a litigation pending in the court which is mentioned as the Writ Petition No. 1649/07. Hence it was agreed that only 30 per cent of he said rent amount would be paid and the balance 70 per cent would be paid only on clear of litigation as marked in Annexure A"
CC no.33936/16 Page no.31 of 36
54. It is expedient to mention herein again that accused was running his business in the said building since 2005. Fresh lease deed dated 25.08.2008 was executed perhaps only because the relations between the parties were cordial. The writ petition number mentioned in the lease deed and hereinabove i.e. 1649/07 clearly suggest that the dispute, pertaining to the land use, unauthorised construction etc. between the complainant and Municipal Corporation of Delhi commenced in 2007. Hence, this was a valid justification to agree to accept part rent i.e. 30% every month and to defer the remaining balance rent. The justification for such an arrangement given by DW-1 in his examination in chief appears to be a reasonable and probable one. It is not the case of the complainant that earlier too the premises were given on lease to the accused by him on the same arrangements. Rather, the complainant has not done any cross-examination of the accused with respect to this particuler averments made in his examination-in-chief, as such it has gone totally uncontroverted and stands proved.
55. The complainant in his arguments has also maintained the stand that the accused despite holding the possession of the CC no.33936/16 Page no.32 of 36 leased premises for three years did not make payment of any rent to the complainant. Specific cross-examination of the accused DW-1 has been done in this regards. However, once again it is reiterated that in this case, this court is involved only in deciding whether the accused has committed any offence under section 138 NI Act or not. Whether, or not the accused has made payment of any rent to the complainant is not the subject matter of this case. This court only has to decide whether the ingredients for commission of offence under section 138 NI Act stand meted out in this case or not.
56. Based on the above done discussion, this court comes to the conclusion, that at the time of presentation of all the dishonoured cheques in question, the liability qua payment of rent of month of 01.11.2008 only had accrued and liability qua payment of deferred / balance rent for subsequent months for the first year of lease had not accrued at all. That, the complainant had not given any reasonable calculation of the deferred / balance rent payable. He has also not given any justification for holding more cheques of the accused than that were agreed to have been issued in terms of lease deed.
CC no.33936/16 Page no.33 of 36 That the complainant has not given any reasonable calculation of the interest accrued on the post-dated cheques and the break-up of the part rent and interest claimed through the dishonoured cheques.
That there was valid, justified and bonafide cause for the accused to issue stop payment instructions to his banker qua the post-dated cheques issued by him in terms of lease deed. That the accused has been able to show the existence of pre- ponderance of probability in the defence raised by him that it was agreed that the accused he had to pay only 30% of the rent monthly and the remaining rent shall be deferred as there was a litigation qua the leased premises going on. But, the municipal corporation issued notice for realization of regularization charges to the accused and despite having agreed in the lease deed to deal with all such scenarios the complainant did not undertake any steps.
57. Accordingly, Accused No. 1 M/s Aura Institutions Pvt.
Ltd; Accused No. 2 Harshvardhan Sarangappani Reddy and Accused No. 3 Nithya Reddy all are hereby acquitted.
CC no.33936/16 Page no.34 of 36
58. Before parting it is essential to put it on record that despite holding that liability qua deferred / balance rent for month 01.11.2008 had accrued, yet for dishonour of one such cheque accused are not being held guilty, although dishonour of each cheque is a distinct cause of action, because the complainant has not made it clear in his complaint that which cheque is the one issued for payment of deferred / balance rent for the period 01.11.2008 as all cheques are of the same date, but for different amounts.
59. Before parting it is also essential to discuss/decide upon the application moved by accused u/s 340 Cr.P.C. against the complainant. It has come on record that accused filed application u/s 340 Cr.P.C. and the same shall be decided at the final stage. Perusal of the record, in this case as well as in other cases between the parties, titled as Kamal Jain Vs. Aura Institutions, it is seen that application u/s 340 Cr.P.C. is only on record in cases tiled as Kamal Jain Vs. Aura Institution. It seems that complainant has filed application u/s 340 Cr.P.C. only against complainant Kamal Jain.
60. This court has perused the application u/s 340 Cr.P.C.
Applicant alleges that complainant is not the owner of lease CC no.33936/16 Page no.35 of 36 premises, yet he executed a lease deed in the capacity of owner. It is contended that complainant has played fraud upon the court.
61. Considering the averments made in the application u/s 340 Cr.P.C. and also considering the fact that lease deed was executed out of free will of the parties and prior to execution of lease deed dated 25.08.2008, the accused was already running his business activity/educational institution in the same premises since 2005, this court is of the opinion that it is not expedient in the interest of justice that inquiry should be made in to any offence referred to in clause (b) of sub section 1 of section 195; as this court is of the opinion, based on averments made in the application u/s 340 Cr.P.C., that no offence has been committed in relation to proceedings going on in the court in respect of the document produced, or given in his evidence druing proceedings.
62. Accordingly, application u/s 340 Cr.P.C. moved by accused against the complainant is hereby dismissed. Digitally signed
SUMEET by SUMEET ANAND ANAND Date: 2018.08.08 16:11:10 +0530 Announced in the Open (SUMEET ANAND) Court on 07.08.2018 MM(N.I Act)/PHC/ND 07.08.2018. CC no.33936/16 Page no.36 of 36