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[Cites 21, Cited by 0]

Delhi District Court

R.L. Varma & Sons (Huf) vs Rajen Dutt on 14 March, 2023

         IN THE COURT OF MR. DHARMESH SHARMA
 PRINCIPAL DISTRICT & SESSIONS JUDGE : NEW DELHI DISTRICT
            PATIALA HOUSE COURTS : NEW DELHI

Criminal Appeal­64/2022
CNR No. DLND01­002383­2022


1. R.L. Varma & Sons (HUF)
   (Ratan Lal Varma & Sons­HUF)
   Through its Karta/Authorized Signatory
   Dhruv Varma
   E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)

2. Dhruv Varma
   Karta/Authorized Signatory of
   (Ratan Lal Varma & Sons­HUF)
   S/o Late Sh. Ratan Lal Varma
   R/o E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)                                     ...... Appellants
    Versus
1. Rajen Dutt
   S/o Late Sh. K.C. Dutta,
   Proprietor of Rose Garden Estate,
   Having its office at J­35, Ground Floor,
   Jor Bagh Lane, Jor Bagh, New Delhi

2. State
   (Govt of NCT of Delhi)                               ....... Respondents

                                                  AND

Criminal Appeal­65/2022
CNR No. DLND01­002385­2022

Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022               Page 1 of 28
 1. R.L. Varma & Sons (HUF)
   (Ratan Lal Varma & Sons­HUF)
   Through its Karta/Authorized Signatory
   Dhruv Varma
   E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)

2. Dhruv Varma
   Karta/Authorized Signatory of
   (Ratan Lal Varma & Sons­HUF)
   S/o Late Sh. Ratan Lal Varma
   R/o E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)                                     ...... Appellants
          Versus
1. Bharat Dutta
   S/o Late Sh. K.C. Dutta,
   Proprietor of Columns & Structures
   Having its office at J­35, Ground Floor,
   Jor Bagh Lane, Jor Bagh, New Delhi

2. State
   (Govt of NCT of Delhi)                               ....... Respondents

                                                  AND
Criminal Appeal­66/2022
CNR No. DLND01­002386­2022

1. R.L. Varma & Sons (HUF)
   (Ratan Lal Varma & Sons­HUF)
   Through its Karta/Authorized Signatory
   Dhruv Varma
   E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)

Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022               Page 2 of 28
 2. Dhruv Varma
   Karta/Authorized Signatory of
   (Ratan Lal Varma & Sons­HUF)
   S/o Late Sh. Ratan Lal Varma
   R/o E­14, 1st Floor, Kalindi Colony,
   (Previously at A­123, New Friends Colony,
   New Delhi­110025)                                           ...... Appellants
          Versus
1. Rajen Dutt
   S/o Late Sh. K.C. Dutta,
   Proprietor of Rose Garden Estate,
   Having its office at J­35, Ground Floor,
   Jor Bagh Lane, Jor Bagh, New Delhi

2. State
   (Govt of NCT of Delhi)                                    ....... Respondents

          Date of impugned Judgment/Order         :   23.02.2022 & 25.02.2022
          Date of institution of Appeals          :   23.03.2022
          Date of Judgment                        :   14.03.2023

Appearances:
Appellant/convict Sh. Dhruv Varma, Karta/Authorized Signatory in person.
Sh. Arun Sharma, Advocate for the respondent No.2/complainant.

JUDGMENT:

1. This common Judgment shall decide the above­noted three Criminal Appeals preferred in terms of Section 374(3) of the Code of Criminal Procedure, 1973 by the appellants/convicts assailing impugned Judgment dated 23.02.2022 whereby the appellants/convicts have been convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (in short 'NI Act') followed by order on sentence dated 25.02.2022 passed by the Court of Ms. Anam Rais Khan, Ld. MM (NI Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 3 of 28 Act)­01, New Delhi District, Patiala House Courts, New Delhi (in short the 'Ld. MM') in complaint cases bearing CC Nos. 23443/16; 25845/16 and 23317/16 respectively.

2. The aforesaid complaints raise common question of law and facts and can be conveniently disposed of together. However, it may be noted that Criminal Appeal­66/2022 is based on same factual matrix leading to filing of the complaint under Section 138 of the NI Act, but a different legal issue is raised, which would also be addressed in this Judgment separately.

FACTUAL BACKGROUND:

3. It is the case of the complainant/respondent No.1 that he is engaged in the business of Real Estate and Proprietor of the firm M/s. Rose Garden Estate. It was stated that the complainant/respondent No.1 finalized a Lease Agreement, which was executed on 19.11.2010 appellant No.1 HUF through its authorized signatory/appellant No.2 Sh Dhruv Varma (Lessor) and IL&FS Waste Management and Urban Services Limited (Lessee), whereby the appellants let out their property at 4 th Floor, Dr. Gopal Dass Bahwan, 28, Barakhamba Road, New Delhi­110001 (hereinafter referred as the 'subject premises') to M/s. IL&FS Waste Management and Urban Services Limited for a period of five years commencing from 05.01.2011 on a monthly rent of Rs. 9,22,080/­ with the stipulation of increase of rent every year. It was the case of the complainant/respondent No.1 that on execution of the Lease Deed, the accused were liable to pay brokerage amounting to Rs. 18,75,000/­ inclusive of Rs. 18,44,160/­ towards monthly rent for two months plus Rs.30,840/­ towards miscellaneous expenses that were incurred to Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 4 of 28 finalize the deal. It was further the case of the complainant/respondent No.1 that in order to honour its liability to pay the brokerage charges, the accused company issued three cheques viz. cheque bearing No. 200326 dated 05.11.2010 for Rs. 10,75,000/­ in favour of Rajen Dutt (CC No. 23443/16); cheque bearing No. 212090 dated 25.11.2010 for Rs. 5,00,000/­ in favour of Rose Garden (CC No. 23317/16); and cheque bearing No. 212591 dated 25.11.2010 for Rs. 3,00,000/­ in favour of the Columns & Structures (CC No. 25845/16) which is firm of the complainant's/respondent No.1 brother Mr. Bharat Dutta.

4. Suffice to state that the aforesaid cheques on presentation were dishonoured by the banker of the complainant/respondent No.1 for the reasons 'funds insufficient' in the account of the drawer/appellants and the complainant /respondent No.1 served the appellants with legal demand notice dated 30.05.2011 in each of the three cases and it was his case that the demand notice was duly served upon the appellants on 03.06.2011. Three separate complaints in respect of each of the cheques were filed and upon leading pre­summoning evidence, Ld. MM took cognizance of the offence vide order dated 26.07.2011 in complaint cases 23443/16 and 23317/16 and vide order dated 20.07.2011 in CC No. 25845/16 and summoned the appellants to face trial. On the appellants putting appearance in the matter, notice of accusation in terms of Section 251 Cr.P.C. was administered, to which the appellant No.2 as karta of appellant No.1 and authorized signatory pleaded not guilty and claimed trial and in their defence it was stated that "some of the cheques were security cheques and other cheques were issued against brokerage fees for a property that has been leased out through the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 5 of 28 complainant/his brother and his firm". The appellant No.2, however, could not recollect if any legal demand notice was served upon them.

5. So far as CC No.23443/16 (Criminal Appeal Nos. 64/2022) and CC No.23317/16 (66/2022) are concerned, complainant Rajen Dutt came in the witness box and he was examined as CW­1 and on allowing application under Section 145(2) of the NI Act of the appellants, he was duly cross­ examined. No other witness was examined by the complainant. The matter then proceeded for recording statement of the appellant No.2 under Section 313 Cr.P.C. and suffice to state that although signatures of appellant No.2/accused No.2 Dhruv Varma were admitted on impugned cheques, defence was taken to the effect that the cheques in question were not issued towards brokerage fees but in a related transaction between the parties, as security cheques which have been misused by the complainant; and that as per standard market tradition/policy brokerage/ commission was equivalent to one months rent only and it was highly improbable that the appellants would agree to make payment of brokerage equivalent to two months rent. Further, it was the defence of the appellants/accused persons that they had never met Proprietor of M/s. Rose Garden Estate, namely Rajen Dutt prior to institution of the present complaint. In both the the complaints giving rise to the Criminal Appeal Nos. 64/2022 and 65/2022, the respondent Dhruv Varma examined himself as DW­1. In so far as complaint case bearing CC No. 25845/16 is concerned giving rise to Criminal Appeal­66/2022, likewise the complainant Bharat Dutta came in the witness box and was examined as CW­1 and he was allowed to be cross­examined on an application under Section 145(2) of the NI Act being moved on behalf of the appellants. In the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 6 of 28 said third case also, it was likewise admitted that the cheque was bearing signatures of AR/appellant No.2 but the same defence was taken that brokerage fees amounting to a period of two months rent was never agreed upon and the cheque in question was issued for unrelated transaction between the parties.

IMPUGNED JUDGMENT:

6. Ld. MM vide the impugned Judgment dated 23.02.2022 in complaint case No. 23443/16 (giving rise to CA No. 64/2022) found that the accused had not been able to prove that cheque in question was given for security purposes and there was no evidence that they ever demanded the cheques back from the complainant after making payment of brokerage charges, for which reliance was placed on decision in the case of V.S. Yadav v. Reena, (2010) 172 DLT 561. Ld. MM further found that DW­1 Dhruv Varma testified that he had given instructions to the bank to stop payment against the impugned cheques but no such evidence had been led and rather cheque had been dishonoured for their being "insufficient" funds in the account of the appellant No.1. Further, the learned MM found that merely because there was a plea that the cheques had been given as "security cheques", it did not result in holding that there was no legally enforceable debt or liability in favour of the complainant, for which reliance was placed on decisions in the case of M.S. Narayana Menon @ Mani v. State of Kerala & Anr., 2006 SCC Online SC 660; M/s. Indus Airways Pvt. Ltd. & Ors. v. M/s. Magnum Aviation Pvt. Ltd. & Anr., (2014) 12 SCC 539;

Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458; and Sripati Singh v. State of Jharkhand Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 7 of 28 & Anr., 2021 SCC Online SC 1002. Further, the learned MM found that DW­1 Dhruv Varma had not denied that brokerage was payable by them and he was unable to lead any evidence that brokerage was on the higher side, or that as per market tradition or policy it was limited only to one months rent. Hence, holding that the appellants have not been able to rebut the presumption under Section 118 read with Section 138 of the NI Act that the cheques had not been issued in discharge of legally recoverable debt or liability, the appellant No.1 R.L. Varma & Sons (HUF) as well as appellant No.2 Dhruv Varma were held guilty for committing offence punishable under Section 138 of the NI Act. This was followed by the impugned order on sentence dated 25.02.2022, whereby the appellants have been sentenced to pay fine of Rs. 21,50,000/­, which amount was directed to paid to the complainant as compensation within 30 days of the pronouncement of the Judgment/order on sentence, failing which the appellant No.2 Dhruv Varma has been sentenced to undergo Simple Imprisonment for a period of two months, while no substantive sentence has been awarded to the appellant No.1 HUF. The liability of the appellants had been held to be joint and several. However, since it was admitted that Rs. 50,000/­ has been paid by the appellants on reaching a settlement in the civil proceedings between the parties, the same was allowed to be adjusted and net fine was fixed at Rs. 21,00,000/­.

7. In so far as complaint case No. 23317/16 (giving rise to CA No. 66/2022) is concerned, both the appellants have been directed to pay fine of Rs. 10,00,000/­, which is to be paid as compensation to the complainant within 30 days of the pronouncement of the order, failing which the appellant Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 8 of 28 No.2 has been directed to undergo Simple Imprisonment for a period of one month in addition to substantive sentence of Simple Imprisonment of one month awarded to appellant No.2 which was ordered to be run concurrently with the sentence awarded in CC No. 23443/16 under Section 138 of the NI Act.

8. Likewise, in so far as CC No. 25845/16 is concerned, the appellants have been directed to pay a fine of Rs. 6,00,000/­, which is to be paid to the complainant and to be paid within 30 days of the date of pronouncement of the order. The appellant No.2 has been spared with any substantive imprisonment but at the same it has been directed that in case the amount is not paid, the appellant No.2 shall undergo simple imprisonment for a period of one month.

GROUNDS OF CHALLENGE:

9. The appellants have assailed the impugned Judgment on conviction followed by order on sentence in each of the instant three criminal complaints before us on identical grounds inter alia on the grounds that the Ld. Trial Court has committed a grave error by wrongly holding that appellants have not denied the existence of any liability to pay brokerage contrary to the statement under Section 313 Cr.P.C. as well as evidence recorded under Section 315 Cr.P.C.; and that the Ld. Trial Court failed to appreciate that no evidence had been brought by the complainant to show that there was any agreement to pay him brokerage fees equivalent to two months rent plus miscellaneous charges; and that the Ld. Trial Court failed to appreciate that complainant in his cross­examination on 07.02.2017 acknowledged that there was no written agreement executed between him Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 9 of 28 and the appellant with regard to brokerage fees; and that the Ld. Trial Court failed to appreciate that CW­1 in his cross­examination on being asked about percentage of brokerage charges in respect of the adjoining areas leased out to him through different companies, acknowledged that brokerage fees was starting from one month rent depending upon the space; and that it was also conceded that brokerage was received by him qua some other lease(s) equivalent to one months rental charges; and that the Ld. Trial Court failed to appreciate that documents downloaded from the Websites of various real estate companies viz. '99 acres' and 'Magic Brick' etc. clearly brought out that brokerage fee in relation to leasing out of commercial premises was not exceeding more than one months rental charges; and that Ld. Trial Court failed to recognize the basic principles that "when the quantity / area etc. increased for any commodity, the prices get reduced"; and that the Ld. Trial Court failed to appreciate the responses given by the appellant No.2 in his statement under Section 313 Cr.P.C. wherein he categorically denied that there was any agreement for payment of brokerage fees equivalent to two months rent; and that the Ld. Trial Court failed to recognize that there was no basis or evidence provided for claiming of Rs. 30,840/­ towards miscellaneous charges; and that the impugned Judgment passed by the Ld. Trial Court is contrary to the ratio decidendi in catena of cases by the Hon'ble Supreme Court. Suffice to state that in this regard the appellants have referred to decisions in Rangappa v. Sri Mohan, (2010) 11 SCC 441; M/s. Kumar Exports v. M/s. Sharma Carpets, (2009) 2 SCC 513; MS Narayana Menon @ Mani v. State of Kerala & Anr., 2006 SCC Online SC 661; Basalingappa v. Mudibasappa, (2019) 5 SCC Online 418; M/s.

Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 10 of 28

Indus Airways Pvt. Ltd. & Ors. v. M/s. Magnum Aviation Pvt. Ltd. & Anr., (2014) 12 SCC 539; Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458. PROCEEDINGS DURING THE HEARING OF THE APPEALS:

10. On filing of the present appeals, the appellants were directed to deposit 20% of the amount of the compensation in each of the three appeals the Court by way of FDRs for a period of two years in the name of the Court (ex officio), which orders have been complied with in each of the three complaint cases. It is also pertinent to mention that an application under Section 148 of the NI Act was moved on behalf of the respondent/ complainant whereby it was prayed that FDR towards the 20% of the amount of compensation placed on the record by the appellants be released in favour of the respondent/complainant. On the appellant No.2 placing his "no objection" if the said FDRs are released in favour of the respondent No.1/complainant, the application under Section 148 of the NI Act was allowed subject to the respondent No.1/complainant furnishing an indemnity bond with respect to amount in the Fixed Deposit Receipts and an undertaking that same would be repaid with interest in case the judgments go against him, which twin conditions have been complied with. DECISION:

11. I have given my anxious thoughts to the submissions made by the appellant No.2 in person, who is a Chartered Accountant by profession as also by learned Counsel for the respondent/complainant at the Bar. I have also gone through the voluminous oral and documentary evidence led by the parties during the course of trial as also the record of the instant Criminal Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 11 of 28 Appeal files. I have gone through the overwhelming case law cited at the Bar as also the written submissions filed by the parties.

12. In order to decide the present Criminal Appeals, it would be expedient to refer to the provisions of Section 138 of the NI Act that provides as under:­ "138 Dishonour of cheque for insufficiency, etc., of funds in the account. --Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless--

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation­ For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.]"

13. A bare perusal of Section 138 of the NI Act would show that three fundamental requirements for applicability of such Section are: (1) that Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 12 of 28 there should be legally recoverable enforceable debt and (2) that the drawer issued cheque to satisfy part or whole of the debt and (3) that thirdly that the cheque issued had been returned due to insufficiency of funds in the account of drawer. It would also be expedient to refer to the provisions of Section 118
(a) of the NI Act and Section 139 of the Act that provide as under:­ "Section 118(a) in The Negotiable Instruments Act, 1881
(a) of consideration --that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

Section 139 in The Negotiable Instruments Act, 1881

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."

CRIMINAL APPEALS NO: 64/2020 & 66/2022:

14. In view of the aforesaid proposition of law, reverting to the instant appeals, so far as Criminal Appeal­64/2022 and 66/2022 are concerned, the pleadings in the complaints as also the testimony of CW­1 Rajen Dutt examined in the two Criminal Complaint Cases viz. CC No. 23443/16 and 23317/16 bring out that through the aegis respondent/ complainant a deal was struck with regard to lease of the subject premises as between the appellants and IL&FS Waste Management and Urban Services Limited; and although much has been urged that there was no written agreement executed between the appellants and the respondent/complainant, the parties had indeed verbally agreed to payment of brokerage fees. It has been consistent version of CW­1 in his pleadings as also in the testimony when cross­examined on 07.02.2017 and 17.04.2017 that although no written Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 13 of 28 agreement was executed, the brokerage was verbally agreed about two months rental plus miscellaneous charges. As a matter of fact, appellant No.2 at the time of putting notice of accusation under Section 251 Cr.P.C. as also in his statement under Section 313 Cr.P.C. acknowledged that brokerage was payable and the impugned cheques were given towards brokerage and also for same other related transactions.
15. In the face of categorical testimony of CW­1 in the affidavit Ex.CW­1/A deposed in the post­summoning evidence, the plea by the appellants that brokerage was never stipulated to be equivalent to two months rental remains unsubstantiated. The appellants have been blowing hot and cold in the same breath with regard to issue of brokerage and the impugned cheques. First thing first, it is not possible to decipher any business practice, usage or custom that rate of brokerage should be mentioned in any testamentary disposition in the nature of lease or sale transaction etc. and there may or may not be any written agreement between the Real Estate Agent and the parties who are supposed to pay brokerage charges. CW­1 Rajen Dutt was put to a very rigorous cross­examination and it comes out that he conceded that agreement/lease deed with regard to to adjoining areas had also been executed through him and it had been mutually agreed with regard to other parties that brokerage would be starting from one month rent depending upon the space. He categorically testified without any challenge that the brokerage in the instant deal was fixed with regard to leased out area, which was about 8160 Sq. Feet envisaging two months rental totalling Rs.

18,44,000/­. On a specific question as to how brokerage is fixed, whether it was on the basis of square feet area or square meter area, CW­1 testified that Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 14 of 28 brokerage was based on monthly rent and depending upon as to how much space was being leased out by the owner of the leased premises and on being asked, in the same breath CW­1 testified that around Rs.30,000/­ was agreed to be as additional charges for meetings, documentation, visiting to the sites etc. between him and the appellants and at no point of time there was any cash transaction between him and the appellants or for that matter with his brother Bharat Bhusan Dutt.

16. As a matter of fact, there is no denial from the side of the appellants to the fact that the impugned two cheques for Rs. 10,75,000/­ and Rs. 5 Lacs which are subject matter of two complaint cases viz. CC No. 23443/16 and 23317/16 were signed as also other particulars were filled by the appellant No.2. The said fact was conceded not only in the statement under Section 251 & 313 Cr.P.C. by the appellant No.2 but also in his deposition as DW­1. It clearly stares on the face of the record that the appellants miserably failed to demonstrate and prove that cheques were "security cheques" and not cheques towards brokerage equivalent to two months rental agreed upon in terms of lease deed executed on 19.11.2020 between the appellants (Lessor) and IL&FS Waste Management and Urban Services Limited (Lessee). In other words, there is no evidence led by the appellants as to which cheque was issued for which purpose assuming it was not meant for brokerage, and the whole testimony of CW­1 would show that there was no iota of suggestion to him that brokerage equivalent to two months rental of the subject premises was never agreed upon and in fact it was for the first time in the statement under Section 313 Cr.P.C. of the appellant No.2 that a plea was taken that brokerage was never agreed upon Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 15 of 28 equivalent to two months rental of the subject premises, which was contrary to defence plea at the time of responding to notice U/s.251 Cr.P.C.

17. Further, it was also not shown, demonstrated or proved by the appellants if there was indeed any established uniform business practice, usage or custom that in case of leasing out commercial premises, brokerage was never more than one month rental. At the cost of repetition, the three impugned cheques in the three complaint cases have been signed by the appellant No.2; and it is also acknowledged by DW­1 viz. appellant No.2 that he filled up all the relevant details and no evidence whatsoever has been led in terms of plea taken in the defence under Section 251 Cr.P.C. as to which of cheques were meant as security cheques and / or which of the cheques were meant towards brokerage; and therefore, the plea in the defence racked up by the appellants is inconsistent, self contradictory and a feeble attempt to improve its defence at every stage of the matter.

18. There is another interesting twist to the story that although appellant No.2 at the time of raising his defence on putting notice under Section 251 Cr.P.C. showed his ignorance if the legal demand notice was ever served upon him, however, no suggestion was put to CW­1 that legal demand notice(s) were never sent and/or served upon him and infact the appellant No.2 in his statement under Section 313 Cr.P.C. gave evasive denial, not recollecting if any legal demand notice was served upon him while on the other hand the complainant has been able to prove that legal demand notice(s) dated 30.05.2011 were served by virtue of proof of its delivery in the nature of postal receipts, speed post receipts as also track reports. On being putting the service reports in regard to legal demand Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 16 of 28 notice(s), in his examination under Section 313 Cr.P.C., the appellants chose to merely respond that "these were matter of record and he wanted to offer no comments thereupon".

19. That is not the end of the story and infact DW­1 in his cross­ examination recorded on 17.03.2021 gave another twist to the tale by testifying that he had paid brokerage charges/fees to the respondent/complainant on 27/28 November 2010 but he did not return the cheques to him and further took a new defence that he had instructed his banker to stop the payment but it was not done by the bank and then cheques were presented without his knowledge. It is patently manifest that there has been a calculated attempt to improve upon the defence at every stage and course of trial and there was brought no proof that any instructions were given to the bank to stop payment or for that matter any complaint to the police for the complainant refusing to handover the cheques despite making payments.

20. Much mileage was sought to be drawn by the appellant No.2 by canvassing the plea that out of the three cheques, one cheque bearing N0. 200326 dated 05.11.2010 for Rs. 10,75,000/­ in favour of the Rajen Dutt (subject matter of CC No. 23443/16) was given prior to the execution of the lease deed dated 19.11.2020 and as such there was "no existing debt or liability" when the cheque was drawn on 05.11.2010 and in this regard heavy reliance was placed on decision in the case of M/s. Indus Airways Pvt. Ltd. & Ors. v. M/s. Magnum Aviation Pvt. Ltd. & Anr. (supra), in which case it was held that "there must be existing legally enforceable debt or liability subsisting on the date of the drawing of the cheque". I am afraid the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 17 of 28 aforementioned ratio is not applicable in the present matter as this Court will explain hereinafter.

21. In a recent decided case titled Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel, (2023) 1 SCC 578, the ingredients of applicability of Section 138 of the Act were reiterated after analysis of catena of decided cases providing that a drawer of a cheque is deemed to have committed the offence if the following ingredients are fulfilled:

"(i) A cheque drawn for the payment of any amount of money to another person;
(ii) The cheque is drawn for the discharge of the "whole or part" of any debt or other liability. "Debt or other liability" means legally enforceable debt or other liability; and
(iii) The cheque is returned by the bank unpaid because of insufficient funds.

However, unless the stipulations in the proviso are fulfilled the offence is not deemed to be committed. The conditions in the proviso are as follows:

(i) The cheque must be presented in the bank within six months from the date on which it was drawn or within the period of its validity;
(ii) The holder of the cheque must make a demand for the payment of the "said amount of money" by giving a notice in writing to the drawer of the cheque within thirty days from the receipt of the notice from the bank that the cheque was returned dishonoured; and
(iii) The holder of the cheque fails to make the payment of the "said amount of money" within fifteen days from the receipt of the notice."

22. In the cited case Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (supra), the Hon'ble Supreme Court dealt with a primary contention of the first respondent that the offence under Section 138 was not committed since the amount that was payable to the appellant, as on the date the cheque was presented for encashment, was less than the amount that was represented in the cheque. A question was framed: whether Section Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 18 of 28 138 of the Act would still be attracted when the drawer of the cheque makes a part­payment towards the debt or liability after the cheque is drawn but before the cheque is encashed, for the dishonour of the cheque which represents the full sum. It was held as under:

"13. It must be noted that when a part­payment is made after the issuance of a post­dated cheque, the legally enforceable debt at the time of encashment is less than the sum represented in the cheque. A part­payment or a full payment may have been made between the date when the debt has accrued to the date when the cheque is sought to be encashed. Thus, it is crucial that we refer to the law laid down by this Court on the issuance of post­dated cheques and cheques issued for the purpose of security.
23. Well, in the cited case Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (supra), their lordships referred to the earlier cases, in particular the ratio in the case of Indus Airways(P) Ltd (Supra) which was not approved and it was held as under:
"14. In Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd. [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] , the issue before a two­Judge Bench of this Court was whether dishonour of post­dated cheques which were issued by the purchasers towards "advance payment" would be covered by Section 138 of the Act if the purchase order was cancelled subsequently. It was held that Section 138 would only be applicable where there is a legally enforceable debt subsisting on the date when the cheque is drawn. In Sampelly Satyanarayana Rao v. Indian Renewable Energy DevelopmentAgency Ltd. [Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458 : (2017) 1 SCC (Civ) 126 : (2017) 1 SCC (Cri) 149] , the respondent advanced a loan for setting up a power project and post­dated cheques were given for security. The cheques were dishonoured and a complaint was instituted under Section 138. Distinguishing Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] , it was held that the test for the application of Section 138 is whether there was a legally enforceable debt on the date mentioned in the cheque. It was held that if the answer is in the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 19 of 28 affirmative, then the provisions of Section 138 would be attracted.

24. Their Lordships referred to the decision in Sripati Singh v. State of Jharkhand, (2022) 18 SCC 614 : 2021 SCC OnLine SC 1002], wherein observed that if a cheque is issued as security and if the debt is not repaid in any other form before the due date or if there is no understanding or agreement between the parties to defer the repayment, the cheque would mature for presentation: (SCC paras 21­22) "21. A cheque issued as security pursuant to a financial transaction cannot be considered as a worthless piece of paper under every circumstance. "Security" in its true sense is the state of being safe and the security given for a loan is something given as a pledge of payment. It is given, deposited or pledged to make certain the fulfilment of an obligation to which the parties to the transaction are bound. If in a transaction, a loan is advanced and the borrower agrees to repay the amount in a specified time­frame and issues a cheque as security to secure such repayment; if the loan amount is not repaid in any other form before the due date or if there is no other understanding or agreement between the parties to defer the payment of amount, the cheque which is issued as security would mature for presentation and the drawee of the cheque would be entitled to present the same. On such presentation, if the same is dishonoured, the consequences contemplated under Section 138 and the other provisions of NI Act would flow.

22. When a cheque is issued and is treated as "security" towards repayment of an amount with a time period being stipulated for repayment, all that it ensures is that such cheque which is issued as "security" cannot be presented prior to the loan or the instalment maturing for repayment towards which such cheque is issued as security. Further, the borrower would have the option of repaying the loan amount or such financial liability in any other form and in that manner if the amount of loan due and payable has been discharged within the agreed period, the cheque issued as security cannot thereafter be presented. Therefore, the prior discharge of the loan or there being an altered situation due to which there would be understanding between the parties is a sine qua non to not present the cheque which was issued as security. These are only the defences that would be available to the drawer of the cheque in a proceedings initiated under Section 138 of the NI Act.

Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 20 of 28

Therefore, there cannot be a hard and fast rule that a cheque which is issued as security can never be presented by the drawee of the cheque. If such is the understanding a cheque would also be reduced to an "on demand promissory note" and in all circumstances, it would only be a civil litigation to recover the amount, which is not the intention of the statute. When a cheque is issued even though as "security" the consequence flowing therefrom is also known to the drawer of the cheque and in the circumstance stated above if the cheque is presented and dishonoured, the holder of the cheque/drawee would have the option of initiating the civil proceedings for recovery or the criminal proceedings for punishment in the fact situation, but in any event, it is not for the drawer of the cheque to dictate terms with regard to the nature of litigation."(emphasis supplied)

25. Further, reference was made to decision in Sunil Todi v. State of Gujarat, (2022) 16 SCC 762 : 2021 SCC OnLine SC 1174], wherein a two­Judge Bench of Hon'ble Supreme Court expounded the meaning of the phrase "debt or other liability". It was observed that the phrase takes within its meaning a "sum of money promised to be paid on a future day by reason of a present obligation". The Court observed that a post­dated cheque issued after the debt was incurred would be covered within the meaning of "debt". The Court held that "Section 138 would also include cases where the debt is incurred after the cheque is drawn but before it is presented for encashment". In this context, it was observed: (SCC para 30) "30. The object of the NI Act is to enhance the acceptability of cheques and inculcate faith in the efficiency of negotiable instruments for transaction of business. The purpose of the provision would become otiose if the provision is interpreted to exclude cases where debt is incurred after the drawing of the cheque but before its encashment. In Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] , advance payments were made but since the purchase agreement was cancelled, there was no occasion of incurring any debt. The true purpose of Section 138 would not be fulfilled, if "debt or other liability" is interpreted Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 21 of 28 to include only a debt that exists as on the date of drawing of the cheque. Moreover, Parliament has used the expression "debt or other liability". The expression "or other liability" must have a meaning of its own, the legislature having used two distinct phrases. The expression "or other liability" has a content which is broader than "a debt" and cannot be equated with the latter. In the present case, the cheque was issued in close proximity with the commencement of power supply. The issuance of the cheque in the context of a commercial transaction must be understood in the context of the business dealings. The issuance of the cheque was followed close on its heels by the supply of power. To hold that the cheque was not issued in the context of a liability which was being assumed by the company to pay for the dues towards power supplied would be to produce an outcome at odds with the business dealings. If the company were to fail to provide a satisfactory LC and yet consume power, the cheques were capable of being presented for the purpose of meeting the outstanding dues."

26. Their lordships in the case of Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel (supra) then observed as under :­ "the judgments from Indus Airways [Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845] to Sunil Todi [Sunil Todi v. State of Gujarat, (2022) 16 SCC 762 : 2021 SCC OnLine SC 1174] indicate that much of the analysis on whether post­dated cheques issued as security would fall within the purview of Section 138 of the Act hinges on the relevance of time. In Indus Airways (P) Ltd. v. Magnum Aviation (P) Ltd., (2014) 12 SCC 539 : (2014) 5 SCC (Civ) 138 : (2014) 6 SCC (Cri) 845], it was held that for the commission of the offence under Section 138, there must have been a debt on the date of issuance of the cheque. However, later judgments adopt a more nuanced position while discussing the validity of proceedings under Section 138 on the dishonour of post­ dated cheques. This Court since Sampelly Satyanarayana Rao [Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., (2016) 10 SCC 458 : (2017) 1 SCC (Civ) 126 : (2017) 1 SCC (Cri) 149] has consistently held that there must be a legally enforceable debt on the date mentioned in the cheque, which is the date of maturity.

This Court in NEPC Micon Ltd. v. Magma Leasing Ltd., (1999) 4 SCC 253 : 1999 SCC (Cri) 524: AIR 1999 SC 1952] held that the courts must interpret Section 138 with reference to the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 22 of 28 legislative intent to supress the mischief and advance the remedy. The objective of the Act in general and Section 138 specifically is to enhance the acceptability of cheques and to inculcate faith in the efficacy of negotiable instruments for the transaction of business. [Sunil Todi v. State of Gujarat, (2022) 16 SCC 762 : 2021 SCC OnLine SC 1174] Section 138 criminalises the dishonour of cheques. This is in addition to the civil remedy that is available. Through the criminalisation of the dishonour of cheques, the legislature intended to prevent dishonesty on the part of the drawer of a negotiable instrument. [Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists & Engineers (Electronics) (P) Ltd., (1996) 2 SCC 739 : 1996 SCC (Cri) 454] The interpretation of Section 138 must not permit dishonesty of the drawee of the cheque as well. A cheque is issued as security to provide the drawee of the cheque with a leverage of using the cheque in case the drawer fails to pay the debt in the future. Therefore, cheques are issued and received as security with the contemplation that a part or the full sum that is addressed in the cheque may be paid before the cheque is encashed.

The judgments of this Court on post­dated cheques when read with the purpose of Section 138 indicate that an offence under the provision arises if the cheque represents a legally enforceable debt on the date of maturity. The offence under Section 138 is tipped by the dishonour of the cheque when it is sought to be encashed. Though a post­dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment. If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence under Section 138 is not made out."

27. The proposition of law was summarized as under:

"34.1. For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation.
34.2. If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque. 34.3. When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any. If the Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 23 of 28 cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted.
34.4. The first respondent has made part­payments after the debt was incurred and before the cheque was encashed upon maturity. The sum of rupees twenty lakhs represented on the cheque was not the "legally enforceable debt" on the date of maturity. Thus, the first respondent cannot be deemed to have committed an offence under Section 138 of the Act when the cheque was dishonoured for insufficient funds. 34.5. The notice demanding the payment of the "said amount of money" has been interpreted by judgments of this Court to mean the cheque amount. The conditions stipulated in the provisos to Section 138 need to be fulfilled in addition to the ingredients in the substantive part of Section 138. Since in this case, the first respondent has not committed an offence under Section 138, the validity of the form of the notice need not be decided."

28. In view of the aforesaid proposition of law, reverting to the instant matters, the plea by the appellants that the aforesaid cheque for Rs. 10,75,000/­ was not in respect of an existing legally recoverable debt or liability, does not cut much ice in view of decisions in the case of Dashrathbai Trikambhai Patel v. Hitesh Mahendrabhai Patel & Anr. (supra) and Sunil Todi & Ors. v. State of Gujarat (supra),wherein it was observed that Section 138 of the NI Act is attracted in case where debt is incurred after drawing of cheque but before its encashment. All said and done, the execution of lease deed between the appellant and IL&FS Waste Management and Urban Services Limited was a separate contract, of­course facilitated by the complainant, but at the cost of repetition there is no business practice, usage or custom that the rate of brokerage should have been mentioned in such testamentary disposition and the verbal agreement for brokerage charges/fees was a separate and an independent verbal agreement between the parties to this litigation, and therefore, plethora of case law relied upon by the appellant No.1 has no bearing in the present Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 24 of 28 cases.

29. In view of the foregoing discussions, I find that the impugned Judgment dated 23.02.2022 passed by the Ld. MM in CC Nos. 23443/16 and CC No. 23317/16 giving rise of Criminal Appeal Nos. 64/2022 and 66/2022 respectively do not suffers from any illegality, infirmity, perversity and / or incorrect approach in law. Further in the same vein, the impugned order on sentence passed in the aforesaid criminal complaints dated 25.02.2022 also cannot be assailed in law and the Ld. MM appears to have exercised her discretion to award sentence in the most fair, impartial and judicious manner. DECISION IN CRIMINAL APPEAL NO. 65/2022:

30. Without further ado, although factual narrative of the present complaint is same as other two criminal complaints that might invite the same decision that the impugned cheque for Rs. 3 Lac was given towards brokerage fees, I am afraid the present Criminal Appeal must be allowed on the ground that these three criminal complaints were being tried separately, in each of which separate evidence was lead and in so far as present CC bearing No. 25845/16 is concerned, where the complainant was Bharat Dutta, an order dated 11.11.2016 was passed, which goes as under:­ "The case is at the stage of CE. Sufficient opportunities have been given to the complainant to subject himself for cross­examination. But he is not appearing before the Court to subject himself to further cross­examination.

Exemption application moved on behalf of the accused on the ground that he has to appear in the court of the Ld. MM Sh. Rajat Goyal in Saket Courts. Heard. Perused.

Sufficient opportunities have already been given to the complainant to appear for his further cross­examination. But he is not appearing. Cost also imposed on him.

Today one receipt of depositing of cost of Rs. 5000/­ placed on record. Be taken on record. Still a cost of Rs. 2500/­ remaining to be paid.

Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 25 of 28

Notice of accusation in this case was framed way back in the month of February, 2013. Thereafter since September, 2014 the case is lingering on at at the state of cross­examination of the complainant. Last cross­examination of the pct was conducted on 05.10.2015. However, thereafter the complainant has recused himself from subjecting himself to cross­examination.

In this view, CE is closed. Put up for recording statement of accused u/s 313 Cr.P.C. on 19.11.2016"

31. The record bears testimony to the fact that no application was moved subsequently by the complainant, allowing him to complete or conclude his testimony and it is manifest that the matter was posted for recording statement of accused under Section 313 Cr.P.C. in a mechanical manner overlooking the fact that since the complainant had failed to conclude his post­summoning evidence, there was no evidence at all so as to prove the ingredients of offence under Section 138 of the NI Act, particularly when the application of the appellants under Section 145(2) of the NI Act was allowed and the whole testimony of CW­1 recorded prior to closure of complainant's evidence could not have been read in evidence. In other words, incomplete evidence of CW­1 could only resulted in closure of the complaint and acquittal of accused and the proceedings emanating thereafter in the nature of recording of statement of accused No.2 under Section 313 Cr.P.C. and recording statement of DW­1 was completely unwarranted in law.
32. Accordingly, Criminal Appeal bearing CA No. 65/2022 is allowed and the impugned Judgment dated 23.02.2022 followed by order on sentence dated 25.02.2022 are hereby set aside and thus, the appellants are acquitted. The bail bond­cum­surety bond of the appellant No.2 stand cancelled. Documents, if any, be released after cancellation of Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 26 of 28 endorsement, if any.
FINAL ORDER:
33. The sum result of the aforesaid discussion is that appellants have been held guilty and convicted under Section 138 of the NI Act and are liable to pay total compensation of Rs. 21,00,000/­ in CC No. 23443/16 (CA No. 64/2022) and Rs. 10,00,000/­ in CC No. 23317/16 (CA No. 66/2022) and the order on sentence dated 25.02.2022 is hereby sustained in law since there are no compelling circumstances to interfere with the substantive sentence of imprisonment awarded to the appellant No.2 in the aforesaid two Criminal Complaints keeping in mind that the appellant No.2 by his defiant attitude and disposition of mind has been able to abuse the process of law for more than 10 years now and has wasted the precious time of this Court by relying on plethora of authorities to no avail, and therefore, the substantive sentence to undergo Simple Imprisonment of three months in CC No. 23443/16 and one month in CC No. 23317/16 shall run concurrently. The appellants are further directed to pay total compensation of Rs.31,00,000/­ to the respondent/ complainant after deducting the amount of FDRs which amount has been released to the complainant during the course of this appeal in terms of Section 148 of the NI Act, which comes to Rs. 7,40,000/­ and thereby the appellants remain liable to pay a sum of Rs. 23,60,000/­ to the respondent/complainant within a period of 30 days. No set off is allowed for the interest amount, if any, accrued on the FDs already released to the respondent/complainant. The appellant No.2 shall appear before the learned trial Court for serving the sentence on 14.04.2023.
34. A signed copy of this Judgment be placed in file bearing Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 27 of 28 Criminal Appeal Nos. 65/2022 and 66/2022. Trial court records in each of the three Criminal Appeals along with copy of this Judgment be sent back forthwith. The files of all the three Criminal Appeals be consigned to the Record Room. Digitally signed by DHARMESH DHARMESH SHARMA SHARMA Date: 2023.03.16 10:34:18 +0530 Announced in the open Court (DHARMESH SHARMA) on 14th March, 2023 Principal District & Sessions Judge (NDD) Patiala House Courts, New Delhi Criminal Appeal Nos. 64/2022; 65/2022 & 66/2022 Page 28 of 28