Delhi District Court
C-2) Smt. Indira Rani Taheem vs Sh. Mohan Murti Shandilya on 21 April, 2014
IN THE COURT OF SH. ASHU GARG,
Judge, Small Cause Court - cum- Addl. Senior Civil Judge - cum-
Guardian Judge - cum - Metropolitan Magistrate (New Delhi),
Patiala House Courts, New Delhi
CC No. 476/13
Unique Case ID No. 02403R0020352012
Date of Institution: 14.02.2012
Date of reserving judgement: 29.03.2014
Date of pronouncement: 21.04.2014
In re:
C-1) Sh. Pyara Lal Taheem
S/o. Sh. Late Sh. Baru Ram Taheem
R/o. C-106, Second Floor,
NDSE Part-II, New Delhi-110049
C-2) Smt. Indira Rani Taheem
W/o. Sh. Pyara Lal Taheem
R/o. C-106, Second Floor,
NDSE Part-II, New Delhi-110049 ... Complainants
versus
Sh. Mohan Murti Shandilya
S/o. Sh. Satya Swaroop Shandilya
R/o. C-106, Ground & First Floor,
NDSE Part-II, New Delhi-110049 ... Accused
JUDGMENT:
1.The present is a complaint filed under section 138 of the Negotiable Instruments Act, 1881 (NI Act) by the complainants with respect to CC No. 4853/09 Page 1 of 31 non-payment of money by the accused despite expiry of 15 days from the service of demand notice qua dishonour of his two cheques bearing no. 378023 and 378024, both dated 01.12.2011, for Rs. 9,60,000/- each, drawn on UCO Bank, Patiala House Court Complex, New Delhi, for the reasons "funds insufficient". The complaint has been filed jointly by husband and wife duo, wherein the complainant no. 2 wife has issued Power of Attorney in favour of her husband complainant no. 1. The accused in this case happens to be an advocate, well versed in law.
2.Briefly stated, as per the complaint, the complainants are the owners of the property bearing no. C-106, NDSE Part-II, New Delhi. The ground floor and first floor of the said property were leased out to the accused. Lease deed dated 03.12.2010 was executed between the parties for a period of three years, from 01.12.2010 to 30.11.2013, at a monthly rent of Rs. 1,60,000/- excluding electricity and water charges. The payment schedule of the rent was agreed at the time of execution of the lease deed, for which several post dated cheques were handed over to the complainants, as detailed in the deed itself. The two cheques in question were given towards rent for the period from 01.12.2011 to 30.11.2012. When the said cheques were presented by the complainant on 02.12.2011, they returned dishonoured for want of sufficient funds. The complainants approached the accused and upon his request, the cheques were presented thrice thereafter, but they returned unpaid with the same remarks everytime. Subsequently, legal demand notice dated 08.01.2012 was issued to the accused but CC No. 4853/09 Page 2 of 31 despite service thereof, the amount of the cheques was not paid and hence, the present complainant was filed.
3.Pre-summoning evidence was lead by the complainants and the accused was summoned vide order dated 12.02.2012. The accused appeared and notice under section 251 CrPC was framed against him vide order dated 01.05.2012, to which he pleaded not guilty and claimed trial. In terms of the judgement titled as Rajesh Aggarwal v. State [2010 (VII) AD Delhi 576], the accused disclosed his defence to the effect that the cheques were presented without any authorization from him. He claimed that he did not have any liability to pay the cheque amount as per the terms of the lease agreement. He, however, admitted receipt of the legal demand notice.
4.At the trial, the complainant no. 1 examined himself as CW-1 and tendered his affidavit Ex. CW-1/12 reiterating the contents of his complaint. He proved the necessary documents including the Special Power of Attorney executed by complainant no. 2 in his favour Ex. CW-1/1, the registered lease deed Ex. CW-1/2, the two cheques in question Ex. CW-1/3 and Ex. CW-1/4, the four cheque returning memos Ex. CW-1/5 to Ex. CW-1/8, legal demand notice Ex. CW-1/9 and postal receipts Ex. CW-1/10. He was cross-examined at length by the accused himself.
5.The complainant also examined two bank witness. CW-2 Sh. R. K. Kapoor from UCO Bank produced the bank record and established the CC No. 4853/09 Page 3 of 31 dishonour of the cheques due to insufficiency of funds in the account. CW-2 Sh. Dhananjay Kumar Jha from Vijaya Bank proved the cheque returning memos issued by the bank.
6.Statement of the accused under section 313 CrPC was recorded on 02.01.2013, wherein he denied his liability and pleaded innocence. According to the accused, the cheques were given even before the lease deed was executed and only for the purpose of writing the date of payment of the month to month lease. He stated that the cheques did not belong to him personally but were the business cheques belonging to an independent and separate legal entity called 'Champion Advisors', a proprietorship concern, which was not a party to the lease deed and the cheques were not issued by the said drawer towards discharge of any liability. He took defence that the cheques were presented without his authorization as required. He alleged that the complainant was a dishonest person with a ready evil mind to cheat others of their rightful money. He however, chose not to lead any evidence in defence.
7.It is in these circumstances, Ld. Counsel for the complainants has argued that the complainants have been able to prove their case beyond reasonable doubt as all the witnesses have supported their case and no contradiction can be seen in their testimony. It is submitted that the evidence of the CWs, coupled with the presumptions of the law in favour of the complainant, would be sufficient to establish the guilt of the accused. It is submitted that as the cheques were given CC No. 4853/09 Page 4 of 31 towards payment of rent as per the lease deed, there existed a liability on the part of the accused to be discharged.
8.On the other hand, accused has advanced arguments in person and his defence is manifold. Firstly, it is argued that the cheques in question were never issued by him in personal capacity and rather the same were issued by a proprietorship concern namely 'Champion Advisors' that is a separate and distinct legal entity and had no liability towards the complainant. It is claimed that the said concern was neither sent demand notice nor made accused nor faced trial and thus, the accused cannot be proceeded against in his capacity of a proprietor of the said proprietorship concern. Secondly, it is argued that the impugned cheques were given even prior to the execution of the lease deed and on that day of handing over the cheques, there was no existing debt or liability of the accused or his proprietorship concern towards the complainant. It is submitted that the liability, if any, was contingent to the accused continuing with the tenancy on a future date, as he had the liberty to discontinue the tenancy even prior to the period for which the cheques had been issued. It is thus contended that handing over such post dated cheques for a contingent future debt would not give rise to an offence under section 138 NI Act. Thirdly, it is submitted that the tenancy was a 'month-to-month' tenancy and therefore, the entire payment of one year could not have been made in advance so as to give rise to any legally enforceable debt. Fourthly, it is alleged that the complainant presented the cheques four times consecutively after a gap of only 2-3 days which shows his haste in CC No. 4853/09 Page 5 of 31 harassing the accused. It is submitted that the present case is a false case which is an outcome of the landlord-tenant dispute going on between the two sides. It is claimed that the complainant has concealed true and correct facts from the court that amounts to playing fraud upon the court as well as the opposite side.
9.I have heard the arguments from both the sides and have carefully perused the material available on record, including the testimony of the witnesses, the documents proved on record as well as the written submissions filed by the accused.
10.The law with respect to offences punishable under section 138 of the Act is well laid down by the Hon'ble Supreme Court of India, in the precedent titled as M/s. Kumar Exports v. M/s. Sharma Carpets [2009(2) SCC 513], wherein it has been held that:
"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 non-existence 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 CC No. 4853/09 Page 6 of 31 not insist in every case that the accused should disprove the non-existence 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 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 to 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. The accused has also an option to prove the non-existence of consideration and debt or liability either by letting in evidence or in some clear and exceptional cases, from the case set out by the complainant, that is, the averments in the complaint, the CC No. 4853/09 Page 7 of 31 case set out in the statutory notice and evidence adduced by the complainant during the trial. Once such rebuttal evidence is adduced and accepted by the court, having regard to all the circumstances of the case and the preponderance of probabilities, the evidential burden shifts back to the complainant and, thereafter, the presumptions under Sections 118 and 139 of the Act will not again come to the complainant's rescue".
11.The Hon'ble Court had reiterated its earlier view so laid down in case titled as M. S. Narayana Menon v. State of Kerala [AIR 2006 SC 3366].
12.In the present case, the factual position is not in dispute and it is the interpretation that is the decisive factor. It is pertinent to note that the accused is not disputing the execution of the lease deed Ex. CW-1/2 or any of its terms and conditions. It is not his case that the said document is a forged or manipulated one, or that the same does not bear his signatures, or that its clauses were not voluntarily agreed to by him, or that he signed the same under any mistake, force, fraud, misrepresentation, or coercion. Similarly, the accused has not disputed the fact that he was a lawful tenant of the complainants. The rate of rent is not in dispute. It is not disputed that the complainants were entitled to the rent. It is admitted that the property was occupied and possessed by the accused for residential purpose.
CC No. 4853/09 Page 8 of 3113.Further, the accused has not disputed that the cheques have been issued by him and bears his signatures, though he has claimed that they were issued not in his personal capacity but as the proprietor of his proprietorship concern 'Champion Advisors'. He has not denied the factum of dishonour of the cheques in question. It is not his case that the cheques were not so dishonoured or were dishonoured for any reason other than that mentioned on the cheque returning memos. Though while cross-examining CW-1, suggestion was given that he (CW-1) had induced the bank officials by wrong means to issue false returning memos, yet there is nothing on record to substantiate this defence. There is no material on record to show that these memos, prepared in ordinary course of business of the bank, were false, fabricated or manipulated documents. There is no allegation of collusion of any bank official. The bank official CW-3 proved issuance of the four memos and established their genuineness. No suggestion was given to the CW-3 that these memos were false. Similarly, CW-2 proved that the funds in the account of M/s. Champion Advisors, being operated by the accused as proprietor, were not sufficient to honour the cheques. It is not the case of the accused that the funds in his account were sufficient to honour the cheques or that the memos mention incorrect remarks. There is nothing on record to suggest any reason for dishonour of cheques other than the insufficiency of funds.
14.The accused has not denied receipt of the legal demand notice from the complainant, though claimed that the same was containing false CC No. 4853/09 Page 9 of 31 averments and was contrary to law. He admitted this fact even when notice under section 251 CrPC was framed against him on 01.05.2012. Once receipt of demand notice is accepted, no infirmity can be attached to the case of the complainant for not placing on record proof of service of notice. The correctness of address at which the notice was sent is not disputed and the notice was sent at a proper address through registered post. There is also a presumption of valid service under section 27 of the General Clauses Act. It is also not disputed that no payment was made by the accused despite expiry of fifteen days from service of the said demand notice.
15.Once these facts are established, the court has to see if the cheques were issued towards debt or liability so as to make out the offence under section 138 NI Act. This is the prime issue on which horns are being locked by the two sides.
16.The complainant examined himself as CW-1 and discharged his initial burden by proving on record the necessary documents. As such, the presumptions of law under sections 118 and 139 of the Act come into force regarding consideration and liability. Now the burden would shift upon the accused to rebut these presumptions. This burden can be discharged by the accused by raising a probable defence either by pointing out the deficiencies in the case of the complainant and/or by leading evidence in defence. At the same time, it cannot be forgotten that the complainant is still required to establish the CC No. 4853/09 Page 10 of 31 existence of a legally enforceable debt or liability, as per the law laid down in Krishna Janardhan Bhat v. Dattatraya G. Hegde [AIR 2008 SC 1325].
17.The stand of the accused, on the contrary, has been that as on the date when the cheques were drawn, that is, 26.11.2010, there existed no debt or liability to be discharged, as no lease deed had come into existence by that time. According to him, the lease was a month-to- month lease, the rent of which had to be paid monthly only and it could not have been paid for the whole year in advance. It is contended that handing over of post dated cheques for a contingent future event (of his continuing with the tenancy) would not invite the provisions of section 138 NI Act.
18.The stand of the accused is based on the premise that the tenancy was a month-to-month tenancy for which the payment could have been made only month-wise. He has relied upon the statement of the CW-1 wherein he deposed that no payment was due for the rent for the period December 2010 to November 2011 "of month-to-month lease". He has also relied upon a document Mark-D, which is copy of the legal notice by which the lease was terminated by the complainants, wherein it was mentioned that the lease was a month- to-month lease.
CC No. 4853/09 Page 11 of 3119.Well, to my mind, the difference between a month-to-month lease and an year-to-year lease would become relevant only in the absence of a specific contract of lease fixing duration thereof or upon determination of the said lease. Section 106 of the Transfer of Property Act, that recognises distinction between a month-to-month lease and an year-to-year lease, also begins with the words "In the absence of a contract... to the contrary...". Thus, a contract between the parties and the terms and conditions mentioned therein are of paramount importance to determine their rights and liabilities. Unless the contract or any of its terms is in violation of law, the court has to give effect to the contract agreed into between the parties mutually. Applying the said principle, where the duration of lease has been fixed mutually by the parties, then, till the time the lease is in existence, the rights and liabilities shall flow from the contract/lease deed only. Irrespective of the fact that the lease was month-to-month lease or year-to-year lease, the lease deed would govern the terms of payment of rent. It has to be understood that the duration of lease would not be conclusively dependent upon the manner in or period by which the rent is to be paid. There are enough precedents which lay down that payment of yearly rent would not necessarily mean that the tenancy was yearly tenancy and not month-to-month tenancy. Similarly, there can be monthly or quarterly or half-yearly payments of rent even in yearly tenancy. The manner of payment of rent is not the sole and determinative criteria to ascertain duration of lease and the position has to be ascertained strictly by what was agreed to between the parties.
CC No. 4853/09 Page 12 of 3120.In the case in hand, the lease deed Ex. CW-1/2 shows that a payment schedule had been agreed to between the parties, jointly and with mutual understanding. No party can be now allowed to deviate from the written terms of this contract. As per the scheme of the lease deed, the rent of the property for the first year, from 01.12.2010 to 30.11.2010 was to be paid every month (except for the first three months for which advance rent was taken). For the second year from 01.12.2011 to 30.11.2012 and third year from 01.12.2012 to 30.11.2013, the rent for the whole year was to be paid in one go for each year. The cheques in question were towards the rent of second year. Thus, without going into the question as to if it was a month-to- month lease or year-to-year lease, the fact is that it was a lease for three years (as per clause (1) of the deed) and the rent had been agreed to be paid in a particular scheme. Once the accused himself agreed to pay rent as per the payment schedule mentioned in the lease deed, he cannot now back out from his promise and contend that rent of the whole year could not have been paid in one go. Apparently, such a clause was not impermissible or in violation of any law. Once the parties had agreed to this scheme, their rights and liabilities have to be appreciated accordingly. Irrespective of the statement of CW-1that no payment for the rent from December 2010 to November 2011 of month to month lease was due, or the legal notice Mark-D wherein notice for termination of tenancy was given stating that it was a month-to-month tenancy, the fact remains that rent was still to paid as CC No. 4853/09 Page 13 of 31 per the agreed schedule only. Thus, such a stand would not help the accused in any manner.
21.Now it to be seen as to when the cheques were handed over to the complainants by the accused. Before dealing with this issue, it has to be understood as to what "handing over" or "delivering" the cheque would mean. Does it mean only actual physical possession of the cheques or something more. To my mind, it is the intention of the parties that would determine if the cheques have been delivered or handed over to a person or not and mere physical handing over of the cheque would not be the sole criteria to determine the same. For instance, if a servant is given a cheque to be delivered to a third person, it cannot be said that the cheque was delivered or handed over to the servant, as no rights in the cheque had been intended to be transferred. Similarly, if a typist is handed over certain cheques to be mentioned in a document, that does not mean that the cheques had been handed over or delivered to the typist. Going a step further, if the cheques had been handed over even to the payee of the cheques, with the only purpose of enabling him to enter their details in lease deed, that would not mean handing over of delivering the cheques. The intention of the parties at that time was not to transfer any rights in the cheques but for the sole purpose of getting their details mentioned. In case the deed failed to be have been executed, then the payee would not have got any rights in the cheques. Thus, till that time, the payee was having custody of the cheques only as a trustee and nothing more. He could not have used the cheques in any CC No. 4853/09 Page 14 of 31 capacity. He would have got the right to possess the cheques as payee only on the date when the lease deed was executed, as his authority, rights and duties flowed only from this document.
22.In the case in hand, there is nothing in the evidence of CW-1 showing as to for what purpose the cheques in question were handed over to him prior to execution of lease deed. But the stand of the accused as taken by him in his statement under section 313 CrPC appears to be quite probable that the only purpose of the cheques having been handed over to the complainants prior to execution of lease deed was to enable him to enter the details thereof in the deed. The lease deed Ex. CW-1/2 is a computer-typed document. It is obvious that in order to mention such details of the cheques, the cheques had to be handed over to the typist before hand. And the position would not change if the same were handed over to the complainants for this purpose only. Such handing over the cheques would not mean transfer of possession of the cheques. To my mind, the actual legal possession of the cheques and the rights therein stood delivered to the complainants only on 03.12.2010 when the lease deed was executed and not prior thereto, despite the fact that the actual physical possession of the cheques had been given prior to the lease deed. In such a case, the accused cannot simply absolve himself of his liabilities claiming that there was no existing liability on the date of delivering the cheques.
CC No. 4853/09 Page 15 of 3123.At this stage, it is pertinent to note that it is the date of delivery of the cheques that is relevant and not the date mentioned on the cheque. Date of a cheque can be ante-dated as well but that would not make it invalid. For instance, to pay a bill dated 05.02.2010, a person delivers a cheque on 05.02.2010 by dating it as 03.02.2010. Upon dishonour of the said cheque, the person would not be allowed to say that there was no liability towards him on date of the cheque, that is, 03.02.2010. The liability has to be established on the day when the cheque was delivered.
24.Having said so, it is now to be considered as to if the accused in this case was having any debt or liability to be discharged as on 03.12.2010, when the lease deed was executed and cheques had been actually delivered for the purpose of payment of rent. According to the complainant, the cheques had been issued towards payment of rent from 01.12.2011 to 30.11.2012. And the claim of the accused is that as on that day, there was no existing liability as the rent would have accrued only in future and it depended on contingency that he continues with the lease. It is argued that as per the terms of the lease deed, he was at liberty to terminate the lease at any previous day, after giving two months' advance notice. The accused has heavily relied upon the judgements titled as Shanku Concretes Pvt. Ltd. v. State of Gujarat [2000 CrLJ 1988] and M/s. Collage Culture v. Apparel Export Promotion Council [2007 (4) JCC (NI) 388], to impress that a post dated cheque issued for discharging a future liability that was yet to arise upon happening of a contingent event and as a collateral CC No. 4853/09 Page 16 of 31 security, would not attract the provisions of section 138 NI Act. The question now to be answered is, as to if the cheques in question given by the accused were for future contingency or not.
25.To answer this question, the fine difference between a cheque issued towards collateral security to ensure performance of terms of the contract, and the cheque issued towards discharge of debt, has to be appreciated. When a post dated cheque is issued as collateral security just to ensure performance of a term of the agreement, an action under section 138 NI Act would not lie, on the ground that the debt or liability has to be in existence on the day when the cheque is delivered. In Shanku Concretes Pvt. Ltd. v. State of Gujarat (supra), the liability was to repay the advance amount after six months, and to ensure said repayment, the cheques were issued. Thus, the liability was yet to arise in future upon happening of an event, that is, non-payment of amount after six months. Similarly, in M/s. Collage Culture v. Apparel Export Promotion Council (supra), the liability qua the cheque was contingent only upon the forfeiture of the earnest money deposit only if the petitioner therein failed to exhaust the quota issued by the complainant for export of garments.
26.The law laid down in Shanku Concretes Pvt. Ltd. v. State of Gujarat (supra), as relied upon by the accused, has been held to be correct law by the Hon'ble Supreme Court of India in recent judgement titled as Indus Airways Pvt. Ltd. v. Magnum Aviation CC No. 4853/09 Page 17 of 31 Pvt. Ltd. [Crl. Appeal no. 380/2014, decided on 07.04.2014], wherein the Hon'ble Supreme Court also set aside the judgement titled as Magnum Aviation (Pvt.) Ltd. v. State [2010 (172) DLT 91] relied upon by the complainants. Even in this precedent, the cheques were issued in advance for payment of future supplies that were yet to be made by the suppliers and in fact, no such supplies were made. It can be thus seen that in all these cases, something was required to be performed at a future date by either of the parties and the post dated cheque had been issued only as security to ensure that performance.
27.The present case is distinguishable on this very point. It is to be understood that the cheques in question were never given as collateral security to ensure payment of rent, but were rather given only towards payment of rent. It is not the case that the accused was to make payment of rent otherwise than through these cheques and just to ensure that he paid the rent the cheques had been issued. Rather the cheques had been issued only a payment of the rent as mutually agreed. There is no mode other than these cheques through which the rent was paid in past, was to be paid in present or was agreed to be paid in future. The stand of the accused that prior payments were made month-wise in cash or through other cheques, has no takers in the absence of any material to establish this defence. CW-1 admitted that he received payment in cash only qua few cheques that had got dishonoured. Otherwise, all the payments in the first year were made only through those very cheques that find mention in the lease deed.
CC No. 4853/09 Page 18 of 31When the cheques were not issued to ensure payment of rent through any other mode, but were themselves the mode of payment of rent, it can be said that the same were not issued as any collateral security so as to bring them out of the purview of section 138 NI Act.
28.It is to be noted that the the cheques in question did not stipulate any future performance of any act on the part of the two sides. Rather the acts were duly performed by both the sides on the date of execution of the agreement. As is clear from the lease deed, the property was let out to the accused for three years and rent for the same was paid as per the schedule. Instead of taking the rent of entire three years in single go, the payment schedule was agreed and payment of rent was deferred to future dates as per the agreement. Thus, the payment of rent was made not for a future contingent event, but only towards existing liability only, though payments were deferred only for future. Possession of the property was handed over to the accused and no further performance that could be termed as contingent, was required on the part of the complainants. Unlike in above precedents where cheques were to be paid to ensure performance of a future event, the cheques in the present case were towards consideration of an existing liability. Plainly stated, the cheques were not towards future rent for second year of tenancy, but towards the rent of existing tenancy payable on a future date.
CC No. 4853/09 Page 19 of 3129.There is also another angle to this situation. As per the accused, he was at liberty to terminate the lease and his liability to pay the rent was thus contingent to his continuing with the lease. To appreciate the said contention, a few provisions of the lease deed are necessary to be looked into.
30.As per clause (10) of the lease deed, the lease could have been terminated by the lessee earlier than the period of three years, by giving two months' advance notice in writing. However, this was subject to condition that the lease could not have been terminated for the first two years and six months. In case it was so terminated prior to expiry of first two years and six months, the lessee was liable to pay lease rent for the balance of months remaining. This provision was made applicable to lessors as well.
31.As per clause (17) of the deed, in case the lessee made any violation of any of the clauses of the deed, the lease was deemed to have been automatically cancelled / terminated without any further notice.
32.According to the accused, the lease could not have been terminated prior to expiry of first two years and six months and since the same was terminated by the complainants prior to this period by issuing the legal notice Mark-D, he was entitled to receive the rent amount of balance months remaining. It is further claimed that since he was also CC No. 4853/09 Page 20 of 31 having an option to terminate the lease deed, his continuing with the lease was a contingent event.
33.However, I do not find myself in agreement to the said plea taken by the accused or the interpretation sought to be given by him to the clauses of the lease deed. Plain reading of the said clauses would show that both the clauses had separate domains. Clause (10) would apply only in case when all other terms of the lease deed were fulfilled by both the sides. And clause (17) would apply only in case of violation of terms of the lease deed by the accused. In case of such violation, clause (10) would not apply and the lease would be deemed to be automatically cancelled. In the case in hand, non-payment of rent was definitely a violation of terms of the contract and in such a case, clause (10) would not apply. Even if the complainants chose to issue notice Mark-D as abundant caution, that would not have negated the rigours of clause (17) against the accused.
34.If the interpretation sought to be given to these clauses by the accused is to be accepted, that would lead to inequitable and unreasonable results. It might have happened that after paying rent for initial months, say for six months, the accused deliberately stopped paying rent and upon the complainant issuing notice to vacate the premises, he started claiming that since the lease was terminated prior to first two years and six months, he was entitled to rent for balance twenty four months remaining. Such a result could never have been CC No. 4853/09 Page 21 of 31 intention of the parties nor was reasonably expected. The accused could not be given benefit of his own wrongs in such a fashion. Thus, it cannot be said that there existed no liability to pay the rent. It has come on record that the accused had been in occupation of the premises for the period for which the cheques in question were issued. It has been informed that part of the property was vacated by the accused on 01.05.2013 and remaining part was vacated on 27.05.2013.
35.Applying the clause (10) itself, it can be said that the alleged contingency of the accused continuing with the lease was not going to affect his liability to pay rent for the first two years and six months at least. It is clear that even if the accused had chosen to terminate the lease deed before expiry of first two years and six months, he would have been still be liable to pay rent for the entire said period. The period from 01.12.2011 to 30.11.12, qua which the cheques in question had been issued, pertain to second year only and were thus covered under the said period of first two years and six months. Thus, the liability of the accused to pay rent for these months through the cheques in question was not dependent upon any such contingency of his continuing or terminating the tenancy before the relevant period. The argument of the accused in this regard is thus liable to be rejected.
36.Another contention of the accused is that complainants were having security deposit of Rs. 4,80,000/- that should have been utilized in case of default in payment of rent and that he was not liable CC No. 4853/09 Page 22 of 31 to pay the mentioned cheque amount. Plain reading of clauses (2) and (14) of the lease deed would leave nothing to doubt. It has been clearly agreed by the parties that the security deposit was to be refunded only at the time of vacation of the premises by the lessee, after adjusting unpaid rent, outstanding dues, damages, etc. The said security deposit was not in the nature of advance rent as such. If the interpretation as given by the accused is to be accepted, then the accused would have been at liberty not to pay the rent for initial months and compel the complainants to adjust the same from security deposit. But it could not have been the position and this would have nullified the very purpose of taking refundable security deposit. The liability qua the cheques would operate independent of the amount taken as security deposit.
37.The accused also wants the court to believe that the payment schedule as mentioned in the lease deed only pertains to time schedule and not mode of payment. There is no strength in the said plea. It is not explained what else was the mode of payment of rent if not this schedule. It is clear that rent of all previous months was paid by the accused only through the cheques mentioned in the payment schedule, except in case of few cheques that had got dishonoured which were paid by way of cash. There is no other mode by which the rent was paid earlier or which was to be adopted for payment in future. No evidence has been brought in defence to establish any such mode. Rather the payment schedule as mentioned in the lease deed speaks for itself. Had it be only for time schedule, there was no need for its CC No. 4853/09 Page 23 of 31 containing all the details of the cheques, with specific cheque numbers, dates of the cheques, period for which rent was to be paid, etc. Mere fact that all such details were duly mentioned, and agreed between both the sides, duly signed by them and got registered, that would leave nothing to doubt. The court cannot accept the bald averments of the accused without any supportive evidence as correct, as against express and unambiguous written terms of the agreement the correctness of which has never been questioned.
38.I also do not find merit in the contention of the accused that the cheques had been presented without any authorisation from him. There is nothing to show that any such authorisation was required to be obtained from the accused before presentation of the cheques. Issuance of a cheque in the name of a payee, duly signed by the drawer, mentioning the amount and date thereupon, would be an authorisation in itself for the payee to present the cheque. No further authorisation is required unless agreed between the parties. There is nothing on record to show that the accused had given any such authorisation to the complainants at any earlier occasion when his other cheques towards rent of previous months had been presented and encashed. Thus, it does not lie in the mouth of the accused to claim that any further authorisation was required to be obtained from him before presenting cheques issued by him.
CC No. 4853/09 Page 24 of 3139.Now to see whose liability it was to be discharged. Of course, admittedly, the lease deed was signed by the accused in his personal capacity. His proprietorship concern M/s. Champion Advisors was nowhere into the picture, except that the cheques handed over to the complainants had been drawn on an account maintained under its name. The stand of the accused is that the said proprietorship concern is a separate and distinct legal entity which had no concern with the lease agreement and had no liability to be discharged.
40.I do not find force in the said contention. It is well settled that in such cases, a proprietorship concern has no separate existence different and distinct from its proprietor. A proprietorship concern has no separate juristic entity as in case of a corporation. It is known by its proprietor and acts by its proprietor. When a cheque has been issued by a proprietorship concern, it necessarily means that it has been signed by its proprietor only. In such a case, a complaint lies against the proprietor only and not the proprietorship concern as such a proprietorship concern has no separate legal entity. Similarly, such a signatory cannot claim his dual existence/identities, one as personal/individual and other as proprietor of his proprietorship concern. If a person issues a cheque from his own personal account or from an account of his proprietorship concern of which he is the sole proprietor, no difference would it make, as the said person is the signatory in both the cases. The proprietorship account is also maintained and operated by none other than the proprietor only.
CC No. 4853/09 Page 25 of 3141.In the case at hand, even if the cheques were issued on an account maintained by the accused under the name and style of Champion Advisors, that would not absolve him of his liability, as he is the only one behind that proprietorship concern. The said concern has no separate legal existence other than the accused himself. Once demand notice has been issued to and its service effected upon the accused, that would be sufficient compliance of legal requirement. No separate notice was required to be issued to the accused as the proprietor of M/s. Champion Advisors.
42.Similarly, I do not find strength in the plea that the trial should have been faced by the said drawer M/s. Champion Advisors. As such a proprietorship concern had no separate legal entity, trial has to be faced by its proprietor accused only. There is no difference in the accused facing trial as an individual and the accused facing trial as proprietor of his proprietorship firm. The accused is only and solely responsible in both the cases, unlike in cases of corporations.
43.Even otherwise, it cannot be said that M/s. Champion Advisors cannot be prosecuted for an offence under section 138 NI Act as it had no concern with the lease between the accused and the complainants. It is well settled that debt or liability to be discharged by a drawer need not necessarily be that of the drawer himself but it can be that of any other person as well. Even if M/s. Champion Advisors is assumed CC No. 4853/09 Page 26 of 31 to be a separate entity, it could have validly discharged the liability of any other person. Dishonour of a cheque issued by this proprietorship concern to discharge liability of any third person would have entailed same consequences. And in this case, the said liability was not that of any third person but that of its sole proprietor only. In such cases, the court can always lift the veil to ascertain who is operating behind the scenes. If M/s. Champion Advisors, through its proprietor accused, had nothing to do with the lease deed in question, it is not understood why the cheques had been issued on its behalf.
44.The version of the accused in this regard does not appear to be probable or appealing to senses. As per the accused, the cheques were issued at a time when the negotiations were going between the two sides. According to him, he wanted two floors of the premises to be taken on rent, and the complainants wanted an assurance for the same so that they may not go ahead with talks with some other person. In such a situation, the accused who was carrying cheque book of his law firm Champion Advisors, took out "some cheque leaves" and handed them as post dated cheques in order to establish his bona fide as security for going ahead with his decision to take two floors on rent. If such a stand is to be believed, it is not understood as to why the accused allowed the said "some cheque leaves" to be mentioned in the lease deed, with specific dates, cheque numbers, period, etc. If the only purpose of the said cheques was to ensure that the accused take two floors, then the said purpose stood satisfied ion the day when lease deed was duly executed. The accused, who happens to be a legal CC No. 4853/09 Page 27 of 31 expert, never objected to the said cheques to be misused like this. He voluntarily signed and executed the deed after understanding the same. Ordinarily, no person would issue several cheques, with various dates mentioned in them, just to ensure his bona fide for going ahead with his decision to take property. A single cheque would have been sufficient for that. And after the purpose was achieved upon execution of lease deed, the said cheques ought to have been returned. But the cheques were never returned to the accused and not even demanded back by him ever. Instead of demanding the cheques back, the accused allowed them to be mentioned in lease deed. He never sent any notice or even replied to the demand notice to claim that the said cheques had been issued for such an assurance and nothing further. Not only this, the accused allowed the other similar cheques to be encashed towards payment of rent. He never objected to or took any action against the payee complainants when they presented the other cheques issued by the accused from the account of Champion Advisors on account of rent for previous months. The accused, or his proprietorship concern to be specific, never gave any stop payment instructions to his/its bankers in case such a misuse was noticed. Any ordinary prudent person would have acted immediately after coming to know of misuse of his single cheque. But in this case, the accused never questioned the acts of the complainant in getting the other such cheques encashed towards rent. Such a conduct on the part of the accused would falsify his stand and negate his defence.
CC No. 4853/09 Page 28 of 3145.The defence of the accused could not be substantiated even otherwise. No evidence has been led by him to prove his assertions. It is well settled that an averment of the accused in his statement under section 313 CrPC cannot be not considered as proof of any particular fact as it is without oath and has to be taken only as an explanation of the incriminating evidence [V. S. Yadav v. Reena, 2010 (4) CCC (HC) 319]. It is upon the accused to establish his stand. There is no evidence to show that the accused had made any cash payment towards rent of any previous month. CW-1 merely admitted that cash was received by him for a few months when some cheques of the accused had been dishonoured. The stand of the accused that he had been making any cash payment or through cheques other than the cheques mentioned in the lease deed, towards rent on previous occasions, has not been established by leading suitable evidence. There is nothing on record to show that any other mode was adopted by the accused to pay rent except the mode mentioned in the lease deed.
46.Similarly, the allegations levelled by the accused that the complainant is a dishonest person, having ready evil mind to cheat others for their rightful money, has remained unsubstantiated. His other allegations made when his statement under section 313 CrPC was recorded have also remained not proved. There is no force even in pointing out that the cheques were presented consecutively after a few days. It is well settled that a payee has a right to present the cheque in his favour any number of times. No adverse inference can CC No. 4853/09 Page 29 of 31 be drawn against the complainants on their presenting the cheques for four times, even if in quick succession. Thus, such defences without any evidence, have remained bald averments and liable to be rejected. There are no other points raised that could come to the rescue of the accused.
47.I have also perused the bunch of case-law filed by the accused in support of his contentions. Suffice would it be to say that the law laid down by most of these judgements is well settled and recognised. However, there are divergent views in some cases and few are not directly related to the issue in controversy. The said judgements are in different factual set up are not directly applicable to the facts of this case, though the law laid down by them is well established. The accused has not given the citation of the judgement of the Hon'ble High Court of Katrnataka, relied upon by him in his written submissions and it could therefore be not gone into, but the same is distinguishable as in the present case, the accused remained in occupation of the premises unlike in the said case, and even if he had not remained so, he would have still been liable to pay the agreed rent.
48.In view of the above facts and circumstances, it is very much clear that all the ingredients of offence under section 138 of the Act have been duly proved by the complainants beyond reasonable doubt. The cheques being issued and signed by the accused from his bank account towards discharge of liability and their dishonour for want of CC No. 4853/09 Page 30 of 31 sufficient funds have been proved. The service of the legal notice and non-payment of amount within 15 days thereof are also established. The accused has failed to raise a probable defence so as to rebut the presumptions arising in favour of the complainants.
49.For the forgoing reasons, the accused is hereby held guilty and is convicted for the offence punishable under section 138 of the Act.
50.Matter be now listed for arguments on sentence.
Announced in the open court this 21st day of April 2014 ASHU GARG JSCC/ASCJ/GJ/MM (New Delhi District) Patiala House Courts, New Delhi CC No. 4853/09 Page 31 of 31