Delhi District Court
M/S. Ram Kumar Gupta (Huf) vs . on 9 June, 2022
IN THE COURT OF SH. MAYANK GOEL:MM(NI ACT)-02, THC COURTS :
DELHI
_______________________________________________________________________
CIS No. 4603/2016
PS Rajouri Garden
U/s. 138 Negotiable Instrument Act
M/s. Ram Kumar Gupta (HUF)
Office at A-33,
Rajouri Garden,
New Delhi through its Karta
Sh. Ram Kumar Gupta. ........................ COMPLAINANT
Vs.
1. M/s. T.G. Leisure & Resorts Pvt. Ltd.
Through its Directors,
Khasra No. 646 to 653,
Village Chattarpur,
Tehsil Mehrauli,
Chattarpur Mandir Road No. 30
Main Chattarpur Road,
Delhi-110030
___________________________________________________________________________________________________
CIS No. 4603/2016
Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 1 of 33
U/s. 138 Negotiable Instrument Act
2. Rohit Gupta S/o Sh. Raja Ram Gupta
Director of M/s. T.G. Leisure & Resorts Pvt. Ltd.
R/o C-26, Defence Colony, New Delhi
Also At: M/s. T.G. Leisure & Resorts Pvt. Ltd.
Khasra No. 646 to 653, Village Chattarpur,
Tehsil Mehrauli, Chattarpur Mandir Road No. 30,
Main Chattarpur Road, Delhi-110030.
3. Puneet Gupta S/o Sh. Raja Ram Gupta
Director of M/s. T.G. Leisure & Resorts Pvt. Ltd.
R/o C-26, Defence Colony, New Delhi
Also at: M/s. T.G. Leisure & Resorts Pvt. Ltd.
Khasra No. 646 to 653, Village Chattarpur,
Tehsil Mehrauli, Chattarpur Mandir Road No. 30,
Main Chattarpur Road, Delhi-110030
4. Tivoli Westwood
M/s. T.G. Leisure & Resorts Pvt. Ltd.
Khasra No. 646 to 653, Village Chattarpur,
Tehsil Mehrauli, Chattarpur Mandir Road No. 30,
Main Chattarpur Road, Delhi-110030
through Sh. Rohit Gupta/Puneet Gupta ........................ ACCUSED
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CIS No. 4603/2016
Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 2 of 33
U/s. 138 Negotiable Instrument Act
JUDGMENT
1) Offence complained of : Section 138 Negotiable Instrument Act 2) Plea of accused : Pleaded not guilty 3) Date of institution of the case : 05.03.2013 4) Final order : Acquitted 5) Date of reserving of order for judgment : 03.06.2022 6) Date of final order : 09.06.2022
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PS Rajouri Garden Page No. 3 of 33U/s. 138 Negotiable Instrument Act Brief reasons for decision:
1) The necessary facts for disposal of present case as reflected in the complaint is that the complainant M/s Ram Kumar Gupta (HUF) is the owner of the building titled as "The Pharaohs" situated at Plot Khasra No. 40/12 min(2-4), 40/13 min(0-15), 40/18 min(2-1), 40/19 min(4-15), 40/22 min(4-16), 40/23/1 min(2-1), 40/28 (0-1), total area 16 bighas and 13 bighas at Village Tikri Kalan, New Delhi-110041, ad-measuring approx. 16788 sq. yards. That in June 2011, accused no. 1 through accused no. 2 (whole-time Director of accused no. 1) approached the complainant for leasing out the above-said premises on rent to run its motel business. That the complainant entered into a lease agreement dated 09.06.2011 with accused no. 1. That the rent for each month was fixed at Rs. 21,00,000/-. That the cheque issued by the accused bearing no. 705919 which is Ex. CW 1/4 dated 07.01.2013 of Rs. 18,90,000/-
is on account of accrued rent for the month of January, 2013 and cheque bearing no. 696867 which is Ex. CW 1/5 dated 10.01.2013 of Rs. 2,16,300/- is on account of service tax for the same period. On presentation of the following cheques, both were dishonoured with remarks "Stop Payment" as reflected vide returning memos dated 08.01.2013 and 11.01.2013, which are Ex. CW 1/6 and Ex. CW 1/7 respectively. Thereafter, legal demand notice Ex. CW1/8 dated 30.01.2013 was served upon the accused persons calling them to pay the cheque amount but despite the service of the legal notice, the accused persons had not paid the cheque amount within the stipulated period of 15 days as per NI Act. Thereafter, complainant has filed the present written complaint case u/s 138 r/w Section 142 of the Negotiable Instruments Act, 1881. ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 4 of 33U/s. 138 Negotiable Instrument Act
2) Cognizance of offence under section 138 NI Act was taken against the accused persons and summon were issued. Notice of accusation u/s 251 Cr.P.C. was served upon the accused persons on 08.01.2016 and plea of defence of the accused persons were also recorded on the same day in which they had not pleaded guilty and claimed trial. The plea of accused persons had also been recorded on the same day. It is stated by accused persons that the cheques-in- question have been issued to the complainant as advance for the payment of rent of the premises finding mention in the lease agreement placed on record as and when it accrues. It is further stated by the accused persons that the property were in their possession for around 1.5 years. However, the property were unusable on account of various defects in respect of which they communicated the complainant orally as well as in writing. In pursuance of the lease agreement, they also deposited the security amount of Rs. 1,26,00,000/- which had not been returned by the complainant even after the property was vacated by the accused on 30.03.2013 and the same was also mentioned in the course of proceedings in CS bearing no. 512/2013 which was pending at the Delhi High Court. They had received the legal demand notice from the complainant and replied to the same. The cheques-in-question were filled up by the accused when they were given to the complainant. It is further stated by the accused that the present complaint is also not maintainable on various other legal and technical grounds.
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PS Rajouri Garden Page No. 5 of 33U/s. 138 Negotiable Instrument Act
3) In post-summoning evidence, complainant has been examined as CW-1 for proving his version of the case and the witness is duly cross-examined by Ld. Counsel for the accused persons.
4) Thereafter, memorandum of statement of accused persons u/s 313 Cr.P.C. r/w Sec 281 Cr.P.C. were also recorded in the case wherein accused persons stated that the company of the accused and the complainant entered into a lease agreement for a monthly rent of Rs. 21,00,000/-. The company of the accused persons issued five security cheques for service tax and 5 security cheques for the rent. It is stated by the accused persons that the accused took two portions on lease from the complainant. The ground floor was put to use immediately after leasing the same but the same was in a very dilapidated condition to the extent that all the toilets were leaking badly. It is further stated by the accused persons that the lower ground floor could not be used even for a single day because of heavy leakage and the same was immediately informed to the complainant but no action was taken by them. It is further stated by the accused persons that the notice of the dilapidated condition of the building was served to the complainant and a notice for not presenting the cheques with the bank was also sent to the complainant. The boundary wall of the premises fell down posing risk to the rest of the property. It is further stated by the accused that the premises were never got repaired by the complainant. The initial security of Rs. 1,26,00,000/-, which was misused by the complainant. The accused persons do not owe any liability towards the cheques-in-question.
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PS Rajouri Garden Page No. 6 of 33U/s. 138 Negotiable Instrument Act
5) In their defence evidence, the accused persons examined three witnesses.
Accused Rohit Gupta S/o Late Sh. Rajaram Gupta R/o 18, Chinar Drive, DLF Chattarpur Farms as DW-1, Sh. Baldev Negi S/o Sh. S.S. Negi, R/o A 11-12, Keshopur Industrial Area, Vikaspuri, New Delhi as DW-2 and Sh. Ashu Paul S/o Late Sh. Sudesh Paul as DW 3.
6) Thereafter, Learned Counsels for both the parties made detailed final oral submissions on behalf of respective parties. It is pertinent to mention that there are 5 connected matters pending trial between the parties with almost same facts and detailed final submissions have been heard in all matters together.
7) Ld. Counsel for the complainant stated that the dishonored cheque in question bears his signature and legal presumption of consideration u/s 139 of NI Act would act against the accused. It is further stated by Ld. Counsel for complainant that the genesis of the present case is that the complainant has leased out the property owned by him to the accused person by registered Lease Agreement, which is Ex. CW 1/3 for the rent of Rs. 21,00,000/- p.m. and service tax. It is further stated by Ld. Counsel for complainant that the accused failed to pay the rent and service tax for the month of May, 2012, December, 2012, January, 2013, February, 2013 and March, 2013. It is further stated by Ld. Counsel for complainant that the accused no. 1 Company vide letter dated 25.07.2011, which is Ex. DW 1/C2 and 17.12.2011, which is Ex. ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 7 of 33U/s. 138 Negotiable Instrument Act DW 1/C3 forwarded the cheques-in-question to the complainant towards the payment of monthly rent/lease of the respective months and the service tax due and payable on the monthly rent/lease. It is further stated by Ld. Counsel for complainant that the monthly rent/lease cheque each of Rs. 18,90,000/- were after deduction of TDS @ 10% from the monthly lease amount of Rs.21,00,000/-. It is further stated by Ld. Counsel for complainant that the accused are blowing hot and cold in the same breath and taking sham defence that the subject cheques were for the purpose of security which is contrary to the terms and conditions of the lease agreement as in the Lease Agreement dated 09.06.2011, which is Ex. CW 1/3, there is specific mention of the security deposit in Para. No. 3 of the Lease Agreement. It is further stated by Ld. Counsel for complainant that the dishonored cheques are proved beyond any doubt as well as no dispute has been raised by the accused persons regarding the signature or the issuance of cheques-in-question. It is further stated by Ld. Counsel for complainant that it is also admitted by the accused persons that they have surrendered the possession of the property on 30.03.2013, therefore, they are liable to pay the rent as well as service tax till 30.03.2013.
It is stated by Ld. Counsel for the accused persons that the terms of Clause 6 of the Lease Agreement Ex. CW 1/3, the accused company was permitted to use the lease premises between the period from 9 th June, 2011 till 31th August, 2011, which period is termed as Fit-Out Period to find out operational capabilities of equipments, fittings, fixture and structure being ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 8 of 33U/s. 138 Negotiable Instrument Act leased. It is further stated by Ld. Counsel for the accused persons that during Fit-Out Period, the architect of the accused company inspected the land and made some observations in water seepages in the structure and conveyed the same to the company of the accused that whatever finishing being executed at the site will get spoiled. It is further stated by Ld. Counsel for the accused persons that during the Fit-Out Period, the accused company after the surveys performed by his architect and expert employees found certain problems in the building and made a list of works to be completed immediately and that list of work was intimated to the complainant via E-Mail, which is Ex. CW 1/D1. It is further stated by Ld. Counsel for the accused persons that the accused company also sent a letter dated 14.09.2011, which is Mark A to the complainant wherein it is pointed out that the accused no. 2 was concerned to see that lot of work needs to be done to start the operation of the property and the letter also indicated the list of work which was supposed to be rectified in the building by the complainant. It is further stated by Ld. Counsel for the accused persons that it was the implied condition on the complainant that whatever problem was there in the lease premises was supposed to be rectified by the complainant and then only, the accused company can start the operation in the company. It is further stated by Ld. Counsel for the accused persons that the complainant even admitted this fact in his cross-examination dated 19.10.2016 that "Fit-Out Period is meant for the beautification of the property by the person taking the same on rent/lease. No alteration was allowed to be carried out in the property. It is correct that if any structural defects or inherent defects were noticed in the premises leased out by us, ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 9 of 33U/s. 138 Negotiable Instrument Act during the Fit-Out Period, the same were to be rectified by us." It is further stated by Ld. Counsel for the accused persons that on the false assurances of the complainant that all the major defects in the building will be rectified by him, accused company started giving rent to the complainant and also started running their business. It is further stated by Ld. Counsel for the accused persons that the complainant was time-to-time communicated by the accused persons about the serious inherent defects including falling of portion or boundary wall during the rainy season due to lack of proper foundations and defects including massive seepage in the basement were specifically communicated to the complainant. It is further stated by Ld. Counsel for the accused persons that in the Lease Agreement Ex. CW 1/3, it is nowhere mentioned that post-dated cheques were to be issued by the accused persons to the complainant and same has been given for administrative convenience, which is also admitted by the complainant during his cross-examination. It is further stated by Ld. Counsel for the accused persons that due to the structural/inherent defects in the property, the accused company was able to use only fifty per cent of the total area of the property and that too partially. It is further stated by Ld. Counsel for the accused persons that the accused company has paid the rent upto April, 2012 without any default and the rent of May, 2012 was suspended to realize huge losses suffered by the accused company in terms of loss of business by them. It is further stated by Ld. Counsel for the accused persons that in a letter dated 08.06.2012 sent by the accused no. 2 to the complainant, which is Ex. CW 1/12 in CC No. 3630/2016, it is clearly pointed out that the huge losses have been suffered by the accused ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 10 of 33U/s. 138 Negotiable Instrument Act company and the letter also stated that the complainant was already intimated to not present the Cheque No. 705911 dated 07.05.2012 for Rs. 18,90,000/- and Cheque No. 696859 dated 10.05.2012 for Rs. 2,16,300/- which are Ex. CW 1/4 and Ex. CW 1/5 respectively in CC No. 3630/2016. It is further stated by Ld. Counsel for the accused persons that the accused company had made payment of rent as well as service tax afterwards from June, 2012 to November, 2012 on the promises of the complainant that they will rectify the problems. It is further stated by Ld. Counsel for the accused persons that the accused persons also intimated the complainant about the un-usability of the basement which was shown to the accused company as 3-4 banquet halls, which has also been admitted by the complainant during his cross-examination dated 19.10.2016. It is further stated by Ld. Counsel for the accused persons that the accused company further issued a letter dated 18.12.2012, which is Ex. CW 1/11 in CC No. 11829/2016 indicating the neglect on the part of the complainant to remove the structural defects pending since August, 2011 which has rendered more than 50 per cent of the lease premises un-useable since beginning and after the Fit-Out Period i.e. 01.09.2011. It is further stated by Ld. Counsel for the accused persons that the licenses applied by the accused company in the Health Department, Narela Zone, MCD Delhi, for the functioning of Motel/Banquets were rejected due to various defects in the lease property by the MCD Health Department on 31.12.2012 vide Ex. DW 1/B. It is further stated by Ld. Counsel for the accused persons that closure notice has been issued by the MCD Health Department, Narela Zone, Delhi, which is Ex. DW 1/A. It is further stated by Ld. Counsel for the accused persons that due to ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 11 of 33U/s. 138 Negotiable Instrument Act notices of MCD and rejection of license, the accused company was unable to perform the business and if the accused company would have performed any work in the premises, it would have been treated illegal and accused could have been charged heavily by MCD. It is further stated by Ld. Counsel for the accused persons that accused persons further issued letter on 06.02.2013, which is Ex. CW 1/12 in CC No. 7213/2016 indicating the neglect on the part of the complainant to remove the structural defects pending since August, 2011. It is further stated by Ld. Counsel for the accused persons that it was also intimated to the complainant that as per Clause 18 of CW 1/3, it is clear that the obligation of the accused company is to maintain only for the breakage/damage to the building, walls, gates, structure, fittings, fixtures, plants, machineries, 2 DG Sets each 125 KV, etc . It is further stated by Ld. Counsel for the accused persons that it has been admitted by the complainant during his cross-examination dated 20.03.2019 that before handing over of the possession of the property by the accused company to the complainant, an understanding between the complainant and the M/s Chanson Hospitality Pvt. Ltd. regarding giving the premises in question on lease to M/s. Chanson Hospitality Pvt. Ltd. was reached between them. It is further stated by Ld. Counsel for the accused persons that the accused company used to approach the complainant on the daily basis and several meetings were also held at the lease property in question regarding the defects in the property as the complainant has its office on the leased property. It is further stated by Ld. Counsel for the accused persons that vide letter dated 21.08.2011, which is Ex. CW 1/D1, the accused company through its Director, accused no. 2 informed ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 12 of 33U/s. 138 Negotiable Instrument Act the complainant that the post-dated cheques which were secured by the complainant from the accused company were to be treated as security cheques till the time, the work is not complete and the said letter is sent during the Fit- Out Period. It is further stated by Ld. Counsel for the accused persons that the accused in his testimony produced the cancellation letters Mark D (Colly) by the client of the accused company and also the reviews which the clients made regarding the lease property. It is further stated by Ld. Counsel for the accused persons that DW 2, who is the employee of M/s. Chanson Hospitality Pvt. Ltd. deposed that the property was taken on lease by M/s. Chanson Hospitality Pvt. Ltd. from 01.04.2013 and the rent of the property was paid in cash till September, 2013. DW 2 further deposed that the lease property did not have the MCD License to carry out Motel/Banquet business and in the record of MCD, it was mentioned as Sealed property, at the time when the property was taken on lease by M/s Chanson Hospitality Pvt. Ltd. It is further stated by Ld. Counsel for the accused persons that DW 2 also deposed that the basement of the lease property was in shabby condition and there was clogging of water due to seepage all around the basement and the STP (Sewage Treatment Plant) was not functional. It is further stated by Ld. Counsel for the accused persons that DW 2 also deposed that they could not complete the 3 years of lease period due to the reasons that the MCD has started creating problems due to non-compliance of statutory regulations. It is further stated by Ld Counsel for the accused persons that DW2 also deposed that the MCD issued the requisite license to work in the lease property only on 27.01.2014. It is further stated by Ld Counsel for the accused persons that DW3 deposed that during June-July, ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 13 of 33U/s. 138 Negotiable Instrument Act 2011 which was the fit-out period, he had visited the property to do the interiors of the property and he made observations regarding the water seepages in the structure that whatever interior finishing being executed at the lease premises will get spoiled. It is further stated by Ld Counsel for the accused persons that DW3 further deposed that he was again called by the accused company in the year 2012 and after survey/examining the site, he gave written report on 26.10.2012 which is Ex. DW3/1. It is further stated by Ld Counsel for the accused persons that DW3 specifically deposed during his cross-examination that the seepages in the lease property cannot happen because of poor maintenance and seepage happened because of poor construction quality or execution where proper attention is not paid for water proofing during construction.
Ld. Counsel for the accused persons relied upon the judgment of Hon'ble Supreme Court of India in the case of Indus airways Vs. Magnum Aviation, MANU/SC/0288/2014 in which it is held that "The above reasoning of the Delhi High Court is cleared falwed inasmuch as it failed to keep in mind the fine distinction between civil liability and criminal liability under Section 138 of the N.I. Act. If at the time of entering into a contract, it is one of the conditions of the contract that the purchaser has to pay the amount in advance and there is breach of such condition then purchaser may have to make good the loss that might have occasioned to the seller but that does not create a criminal liability under Section 138. For a criminal liability to be made out under Section 138, there should be ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 14 of 33U/s. 138 Negotiable Instrument Act legally enforceable debt or other liability subsisting on the date of drawal of the cheque. We are unable to accept the view of the Delhi High Court that the issuance of cheque towards advance payment at the time of signing such contract has to be considered as subsisting liability and dishonour of such cheque amounts to an offence under Section 138 of the N.I. Act by holding that the purpose of enacting Section 138 of the N.I. Act would stand defeated if after placing orders and giving advance payments, the instructions for stop payments are issued and orders are cancelled. In what we have discussed above, if a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusion either because of its cancellation or otherwise and material or goods for which purchase order was placed is not supplied by the supplier, in our considered view, the cheque cannot be said to have been drawn for an existing debt or liability."
Ld. Counsel for the accused persons also relied upon the judgment of Hon'ble High Court of Delhi in the case of Icon Buildcon Vs. Aggarwal Developers, 2014(143) DRJ 136. It is further stated by Ld. Counsel for the accused persons that the accused persons have successfully with preponderance of probabilities created doubt in the case of the complainant.
It is further stated by Ld. Counsel for complainant in rebuttal that it is specifically mentioned in the clause 2 of lease agreement Ex. CW1/3 that "the ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 15 of 33U/s. 138 Negotiable Instrument Act lessee hereby agrees to pay the lessor on or before every 7 th day of a month without any further grace, starting from 1st September, 2011, a sum of Rs.21,00,000/-(Rs. Twenty One Lakh Only) plus service tax, cess as applicable time to time as monthly rent/least amount for using the leased premises. This rent shall be payable in advance on or before every 7 th day of each English calender month (but due date will be 1 st day of every month in advance) In the rare event of delay in payment of rent by 60 days or more from 1st day of calender month it becomes due, interest @ 24% per annum shall be charged on compounding basis for late payment". It is further stated by Ld. Counsel for complainant that it is specifically mentioned in the clause 10 of lease agreement Ex. CW1/3 that " In case, lease money is not paid for three consecutive months, the Lease shall stand revoked, cancelled, and terminated and shall be deemed as determined and the lessee shall vacate the lease premises immediately and have to clear all dues such as lease rental, license fee, taxes, duties, fee, etc. However, due to any delay in handing over the possession to the lessor for whatsoever reasons, the lessee shall pay the doubt the amount of existing lease rent per month till the date of handing over the physical vacant possession of the premises to the lessor. These terms will apply to both the default period and the subsequent trespass period". It is further stated by Ld. Counsel for complainant that it is specifically mentioned in the clause 12 of lease agreement Ex. CW1/3 that "The lessee shall use the leased premises for Motel purposes only and for no other purpose. The lessee has informed the lessor that they will be using the leased premises as a motel only. The motel will be run as per bye laws, ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 16 of 33U/s. 138 Negotiable Instrument Act guidelines of central/state government and any other local authority. If any of the bylaws, guidelines and directions are violated, the lessee will solely responsible for the same and bear the consequences in regard of above. It is the lessee responsibility to take necessary permissions, NOC and any granting from any department, government, Semi-government, and any local authority at his own cost. Lessee will have to arrange star classification (i.e. 2/3 star) of this motel from the Ministry of Tourism at his own cost and the copy of documents for the above will be handed over to lessor. The lessor will provide copy of available documents with him". It is further stated by Ld. Counsel for complainant that it is specifically mentioned in the clause 18 of lease agreement Ex. CW1/3 that "The day to day repairs and maintenance of the leased premises is to be done by the lessee at their own cost. All maintenance would be done by the authorized/qualified agencies of respective companies/manufacturer or directly from the companies/manufacturing firm of the same product. In case of any breakage/damage to the building, walls, gates , structure, fittings, fixtures, plants, machineries, two DG sets(each 125 kva), lift, furniture, glasses, hardware, pumps, etc,. The expenses/charges towards their repair during the period of occupancy shall be paid/borne by the lessee. If it is required to be changed the same will be changed and the product will be reputed/branded will be use by the lessee at his own cost. All the fittings, fixtures, plants, machineries, A.C. units/A.C. machines, two Diesel Generators (each 125 kva), Lift, furniture, glass, hardware, pumps, motors, STP plant bore wells any equipments, electrical goods, etc, and part thereof will remain the ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 17 of 33U/s. 138 Negotiable Instrument Act property of lessor". It is further stated by Ld. Counsel for complainant that it is specifically mentioned in the clause 6 of lease agreement Ex. CW1/3 that "The lessor agrees to provide a rent-free period upto 31 st August, 2011 to the lessee to use as a fit-out period. The rent shall commence from the 1st of September, 2011". It is further stated by Ld. Counsel for complainant that it is specifically mentioned in the clause 9 of lease agreement Ex. CW1/3 that "There shall be a lock-in period of three years from the 1 st September, 2011. If the lessee vacates the premises before the expiry of the lock-in period and hands over the possession of the leased premises, they shall be liable to pay the lease money for the balance of the lock-in period of three years". It is further stated by Ld. Counsel for complainant that though the premises have been handed over to the M/s Chansons Hospitality Pvt Ltd. on 01/04/2013 but from 01/04/2013 till 30/09/2013 is fit-out period for M/s Chansons Hospitality Pvt. Ltd. and no rent has been received by the complainant in cash from M/s Chansons Hospitality Pvt Ltd and DW2 is deposing falsely and moreover, no proof has been placed on record by the accused persons or DW2 to prove the same. It is further stated by Ld. Counsel for complainant that the complainant is also not claiming the rent for the period after 01.04.2013 from the accused persons. It is further stated by Ld. Counsel for complainant that in the map Ex. CW1/D4, basement is mentioned for the use of parking and services and services includes storage, laundry etc. and not for holding functions. It is further stated by Ld. Counsel for complainant that the complainant failed to understand that when the property is not usable why the accused paid the rent till April,2012 and thereafter for the period of June,2012 to November,2012. It ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 18 of 33U/s. 138 Negotiable Instrument Act is further stated by Ld. Counsel for complainant that in the Mark D (colly), it is specifically mentioned that the accused persons had used the property for the period for which rent is not paid by them. It is further stated by Ld. Counsel for complainant that accused persons had taken contradictory defence regarding the cheques in question i.e. at one point of time it is stated by accused persons that cheques-in-question were gives as advance payment for rent and at other point of time, it is stated by accused persons that cheques in question were given as security. It is further stated by Ld. Counsel for complainant that if the property is not usable during the fit-out period, he can very well terminate the lease. It is further stated by Ld. Counsel for complainant that the lease agreement Ex. CW1/3 was registered two months after its execution and the accused persons had ample opportunities to terminate the lease. It is further stated by Ld. Counsel for complainant that there is completion certificate of MCD which shows building was absolutely in good and proper condition.
Ld. Counsel for the complainant relied upon the judgment of Hon'ble High Court of Delhi in case Sangeeta Batra Vs. VND Foods, SCC Online Del 10100, that the lessee is liable to pay the rent till the possession is handed back to the lessor. Section 108 of the Transfer of Property Act deals with the aspect of rights and liabilities of lessor and lessee. It was held that if the leased premises is rendered substantially and permanently unfit for the purpose for which it was let, the lessee has the option to avoid lease. Unless the lessee so avoids the lease, he cannot avoid his obligation in Clause (1) of Section 108, which states that "the lessee is bound to pay or tender, at the ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 19 of 33U/s. 138 Negotiable Instrument Act proper time and place, the premium or rent to the lessor or his agent in this behalf".
Ld. Counsel for the complainant relied upon the judgment of Hon'ble Supreme Court of India in case titled as "Goaplast Pvt. Ltd. Vs. Shri Chico Ursula D'Souza and Anr", AIR 2003 SC 2035 that "In the present case,the issue is very different. The issue is regarding payment of a post-dated cheque being countermanded before the date mentioned on the face of the cheque. For purpose of considering the issue, it is relevant to see Section 139 of the Act which creates a presumption in favour of the holder of a cheque. The said Section provides that "it shall be presumed that, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in Section 148 for the discharge, in whole or in part, or any debt or other liability". Thus, it has to be presumed that a cheque is issued in discharge of any debt or other liability. The presumption can be rebutted by adducing evidence and the burden of proof is on the person who wants to rebut the presumption. This presumption coupled with the object of Chapter XVII of the Act which is to promote the efficacy of banking operation and to ensure credibility in business transactions through banks persuades us to take a view 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. A contrary view would render Section 138 a dead letter and will provide a handle to persons trying to avoid payment under legal obligations undertaken by them through their own acts which in other words can be said be taking advantage of one's own wrong. If we hold otherwise, by giving ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 20 of 33U/s. 138 Negotiable Instrument Act instructions to banks to stop payment of a cheque after issuing the same against a debt or liability, a drawer will easily avoid penal consequences under Section 138. Once a cheque is issued by a drawer, a presumption under Section 139 must follow and merely because the drawer issued notice to the drawee or to the bank for stoppage of payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. This was the view taken by this Court in Modi Cements Ltd. Vs. Kuchil Kumar Nandi (1998 (3) SCC 249).
On same facts is the decision of this Court in Ashok Yeshwant Badave Vs. Surendra Madhavrao Nighojakar and another (2001 (3) SCC 726). The decision in Modi's case overruled an earlier decision of this Court in Electronics Trade & Technology Development Corpon. Ltd. Vs. Indian Techologists & Engineers (AIR 1996 SC 2339) which had taken a contrary view. We are in respectful agreement with the view taken in Modi's case. The said view is in consonance with the object of the legislation. On the faith of payment by way of a post-dated cheque, the payee alters his position by accepting the cheque. If stoppage of payment before the due date of the cheque is allowed to take the transaction out of the purview of Section 138 of the Act, it will shake the confidence which a cheque is otherwise intended to inspire regarding payment being available on the due date. The Hon'ble Supreme Court in Electronics Trade & Technology Development Corporation Ltd., Secunderabad V. Indian Technologists & Engineers (Electronics) (P) Ltd. And Another (1996) 2 SCC 739, held as follows:
"6..... The object of bringing Section 138 on statute appears to be to ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.PS Rajouri Garden Page No. 21 of 33
U/s. 138 Negotiable Instrument Act inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non- payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138....". In case titled as "M/s Kishan Rao Versus Shankargouda (2018) 8 SCC 165" the Hon'ble Supreme Court held in Para 18:
"Applying the definition of the word "proved" in Section 3 of the Evidence Act to the provisions of Section 118 and 139 of the Act, it becomes evident that in a trial under Section 138 of the Act a presumption will have to be made that every negotiable instrument was made or drawn for consideration and that it was executed for discharge of debt or liability once the execution of negotiable instrument is either proved or admitted. As soon as the complainant discharges the burden to prove that the instrument, say a note, was executed by the accused, the rules of presumptions under Sections 118 and 139 of the Act help him shift the burden on the accused. The presumptions will live, exist and survive and shall end only when the contrary is proved by the accused, that is, the Cheque was not issued for ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.PS Rajouri Garden Page No. 22 of 33
U/s. 138 Negotiable Instrument Act consideration and in discharge of any debt or liability. A presumption is not in itself evidence, but only makes a prima facie case for a party for whose benefit it exists." The Hon'ble Supreme Court is case titled as "Rangappa Vs. SRI Mohan (2010) 11 SCC 441: It was held in Para 30: The fact that the accused had made regular payments to the complainant in relation to the construction of his house does not preclude the possibility of the complainant having spent his own money for the same purpose. As per the record of the case, there was a slight discrepancy in the complainant's version, in so far as it was not clear whether the accused had asked for a hand loan to meet the construction-related expenses or whether the complainant had incurred the said expenditure over a period of time. Either way, the complainant discloses the prima facie existence of a legally enforceable debt or liability since the complainant has maintained that his money was used for the construction-expenses. Since the accused did admit that the signature on the cheque was his, the statutory presumption comes into play and the same has not been rebutted even with regard to the materials submitted by the complainant.
8) This is the factual matrix of this case. Let us now examine the legal benchmark which is to be satisfied in order to constitute an offence under section 138 NI Act:
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(i) That the persons must have drawn a cheque on an account maintained by him in a bank for payment of certain amount of money to another person from out of that account.
(ii) That the cheque should have been issued for discharge in whole or in party of any debt or other liability.
(iii) That the cheque has been presented to a bank within a period of three months from the date on which it was drawn.
(iv) That cheque is returned by the bank unpaid because of the amount of money standing to the credit of account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account or any other reason.
(v) That the payee or the holder in due course of the cheque makes a demand for the payment of said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of cheque as unpaid.
(vi) That the drawer of the said cheque fails to make payment of the said amount to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice.
9) It is only when all the aforementioned ingredients are satisfied, that the person who had drawn the cheque can be deemed to have committed an offence u/s 138 of NI Act.
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PS Rajouri Garden Page No. 24 of 33U/s. 138 Negotiable Instrument Act
10) As per section 114, Indian Evidence Act,1872 which is applicable to communication sent by the post, the court are to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. Section 27 of the General Clauses Act envisages that when a registered notice is posted , it is presumed to have been served unless rebuttal is given.
11) Final arguments addressed on behalf of both the parties have been heard and carefully considered along with the entire evidence on record.
12) In Kumar Exports Vs. Sharma Carpets, (2009) 2 SCC 513, the Hon'ble Supreme Court, held as under:
"The accused in a trial under Section 138 of the Act has two options. He can either show that consideration and debt did not exist or that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that a prudent man ought to suppose that no consideration and debt existed. To rebut the statutory presumptions an accused is not expected to prove his defence beyond reasonable doubt as is expected of the complainant in a criminal trial. The accused may adduce direct evidence to prove that the note in question was not supported by consideration and that there was no debt or liability to be discharged by him. However, the Court need not insist in every case that the accused should disprove the nonexistence of consideration and debt by leading direct evidence because the existence of negative evidence is neither possible nor contemplated. At the same time, it is clear that bare denial of the passing of the ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.PS Rajouri Garden Page No. 25 of 33
U/s. 138 Negotiable Instrument Act consideration and existence of debt, apparently would not serve the purpose of the accused. Something which is probable has to be brought on record for getting the burden of proof shifted to the complainant. To disprove the presumptions, the accused should bring on record such facts and circumstances, upon consideration of which, the Court may either believe that the consideration and debt did not exist or their non existence was so probable that a prudent man would under the circumstances of the case, act upon the plea that they did not exist. Apart from adducing direct evidence to prove that the note in question was not supported by consideration or that he had not incurred any debt or liability, the accused may also rely upon circumstantial evidence and if the circumstances so relied upon are compelling, the burden may likewise shift again on the complainant. The accused may also rely upon presumptions of fact, for instance, those mentioned in Section 114 of the Evidence Act to rebut the presumptions arising under Sections 118 and 139 of the Act."
13) In M.S Narayana Menon Vs. State of Kerala, (2006) 6 SCC 39, the Apex Court dealing with the statutory presumption under Sections 118(a) and 139 of the N. I. Act inter alia held as under:
"29. In terms of Section 4 of the Evidence Act whenever it is provided by the Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. The words "proved" and "dis proved" have been defined in Section 3 of the Evidence Act (the interpretation clause)......
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30. Applying the said definitions of "proved" or "disproved" to the principle behind Section 118(a) of the Act, the Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the nonexistence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist. For rebutting such presumption, what is needed is to raise a probable defence. Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.
XXX XXX XXX
32. The standard of proof evidently is preponderance of probabilities. Inference of preponderance of probabilities can be drawn not only from the materials on record but also by reference to the circumstances upon which he relies.
XXX XXX XXX Therefore, the rebuttal does not have to be conclusively established but such evidence must be adduced before the Court in support of the defence that the Court must either believe the defence to exist or consider its existence to be reasonably probable, the s standard of reasonability being that of the 'prudent man'."
14) It is a well settled proposition of law that once execution of Negotiable instrument is admitted, the presumption under Section 118(a) NI Act would arise that it is supported by a consideration. However, such presumption is rebuttable and the accused can prove the non-existence of a consideration by raising a probable defence. The burden upon the accused of proving the non- existence of the consideration can be either direct or by bringing on record the ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 27 of 33U/s. 138 Negotiable Instrument Act preponderance of probabilities by reference to the circumstances upon which he relies. To disprove the presumption, the accused has to bring on record such facts and circumstances upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist.
15) The gist of two above mentioned precedents is that the accused is in trial under Section 138 NI Act is left with two alternatives for his defence. He can either show that consideration and debt did not exist for which direct evidence could be adduced which is seldom available or he can show by relying upon circumstantial evidence that under the particular circumstances of the case the nonexistence of consideration and debt is so probable that prudent man ought to suppose that no consideration and debt existed. It is evident that standard of proof to rebut the statutory presumption is not to prove it beyond the reasonable doubt as required in a criminal complaint. The onus to that effect on the accused is not onerous and what is required is a probable defence which could primarily find its foundation in preponderance of probabilities. In order to raise a probable defence, the accused can also rely on the evidence adduced by the complainant. However, a bare denial of the statutory presumption by the accused will not suffice.
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16) In present case, accused has admitted his signature and account number with respect to cheque in question. The main defence of the accused persons is that the property is not usable due to certain structural/inherent defects and therefore, they are not liable to pay the rent for the said period and several intimations and request has been made by the accused persons to the complainant from time to time to the complainant pertaining to that. After hearing the arguments of both the parties the main point of contention to be decide is whether the accused persons are liable to pay the lease/rent to the complainant for the leased property when they had not used the property due to several structural/inherent defects in the property but the accused persons are in possession of the property. In my view and on the basis of principles of natural justice, the technical legal term for a tenant's/lessee right to livable rental is "implied warranty of habitability". The terms come from the idea that the landlord/lessor promises tenant/lessee a livable place simply by offering the property for rent and this promise does not have to be written in a lease or otherwise formally agreed upon. The right of a tenant to force a landlord to maintain a livable rental is not waivable. For example, landlords cannot shrug off their habitability responsibilities in a "disclaimer" when the tenancy begins. Similarly, courts won't upload any agreements between landlords and tenants to waive the warranty. A landlord breaches the implied warranty of habitability when because of the landlord's inattention or negligence, a problem arises that would cause a reasonable tenant to be concerned for their health and safety. Minor or cosmetic damage that does not affect health and safety does not constitute a breach of the implied warranty of habitability. A minor repair can ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 29 of 33U/s. 138 Negotiable Instrument Act be annoying, limiting or distasteful but it doesn't seriously endanger the health or safety of a reasonable tenant or make a rental uninhabitable. In the present case, the accused persons had time to time intimated the complainant about the structural/inherent defects in the property by various letters some of which has also been annexed by the complainant in his complaint and by letter dated 18.12.2012 which is Ex. CW1/11 in CC No. 11829/16, the accused persons have specifically communicated to the complainant to suspend the rent from Dec.2012 which is a sort of implied termination of lease agreement. Moreover, the MCD has also sent a closure notice to the accused persons for the lease property which shows that the said lease property cannot be used by the accused persons for the purpose it has been leased, therefore, the lease agreement itself become infructuous and the reason for the rejection of MCD license is STP not installed, basement unhygienic conditions, leakage etc. and same has to rectified by the complainant, which has also been admitted by the complainant during his cross-examination. Moreover, it is also pertinent to mention that the complainant has also forfeited the security of Rs.1,26,00,000/- of the complainant which is a admitted fact. Clause no. 3 of lease agreement Ex. CW1/3 states that "the lessee shall pay a sum of Rs. 1,26,00,000/- (Rs. One Crore Twenty Six Lakh only) as Interest-free security deposit. Security will be paid in two part Rs. 84,00,000/- (Rs. Eighty Four Lakh Only) on 01.06.2011 and PDC of Rs. 42,00,000/- (Rs. Forty Two Lakh Only) of date 01.01.2012 at the time of signing of this agreement. This deposit shall be refunded by the lessor after receiving back vacant physical possession of the leased premises from the lessee in good, equipped and decorative condition ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 30 of 33U/s. 138 Negotiable Instrument Act (provided that the lessee has paid the entire rent alongwith service tax, cess and any other taxes applicable time to time, etc, as also all dues related to the leased premises such as telephone, electricity, water charges or any municipal taxes (except house tax of the building), utility or trade charges and taxes which will pay by lessee and any other type of Central/State Government/Department dues, etc. If any of these conditions are not met with, the lessor retains the right to deduct the amount from the security deposit and further claims from lessee". It is very much clear and admitted that the complainant has forfeited the security amount of Rs. 1,26,00,000/- in default of payment of lease/rent and service tax by the accused persons then the complainant cannot claim the lease/rent and service tax by way of cheques- in-question as a legally enforceable debt. Moreover, this court is not a civil court to get enforce the lease agreement Ex CW1/3 in-toto. Here, the admission of signature and account number has itself creates the presumption u/s 139 of NI Act in favor of the complainant. Section 139 of the Act 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. When an accused has to rebut the presumption under Section 139, the standard of proof for doing so is that of preponderance of probabilities. Therefore, if the accused is able to raise the probable defence which creates doubt about the existence of a legally enforceable debt or liability, the prosecution can fail.
17) In the present complaint case, the accused persons have successfully rebut the presumption raised under section 139 of NI act that such liability do not exist. ___________________________________________________________________________________________________ CIS No. 4603/2016 Ram Kumar Gupta Vs. TG Leisure Resorts Pvt. Ltd.
PS Rajouri Garden Page No. 31 of 33U/s. 138 Negotiable Instrument Act
18) Ld Counsel for the complainant relied on several judgments. The proposition of law which has been clearly explained in Bir Singh V. Mukesh Kumar dated 06.02.2019 and have been subsequently relied upon by the Apex Court and other Hon'ble Courts is as follows:-
a) That the onus to rebut the presumption u/s 139 of the NI Act that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post-dated does not absolve the drawer of the cheque of legal consequences.
b) That the bare reading of the provisions of Section 20, Section 87 and Section 139 of the NI Act makes it amply clear that a person who signed the cheque and makes it over to the Payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for a payment of debt or in discharge of a liability. It has also been held that it is immaterial that the cheque may have been filed by any other person other than the drawer if the cheque has been duly signed by the drawer.
c) Even if the blank cheque leaf voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption u/s 139 of the NI Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of any debt.
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19) In view of above discussions, this court is of considered view that accused persons have created reasonable doubt over the veracity of story of complainant by balance of probabilities. It is noticeable that the complainant has to prove his case beyond reasonable doubt which the complainant has failed to do in the present case.
20) In upshot of aforesaid discussion, I return finding of acquittal of accused persons for offence u/s 138 of NI Act in this case.
Digitally signed MAYANK by MAYANK
GOEL
Announced in open court GOEL Date: 2022.06.09
15:39:16 +0530
On 09.06.2022 (MAYANK GOEL)
MM(NI ACT)-02/West District
THC Courts/Delhi
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