The High Court of Delhi has dismissed a criminal revision petition challenging the conviction of a property dealer under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The Court held that a person who issues a cheque from their personal account to discharge a liability under a settlement agreement cannot evade criminal liability by claiming that the underlying debt belonged to a society, especially when the agreement was executed in an individual capacity.
Justice Swarana Kanta Sharma upheld the orders of the Trial Court and the Sessions Court, directing the petitioner to surrender within three weeks to serve the sentence of one year of simple imprisonment and pay the fine of ₹9,72,000.
Case Background
The case arose from a property transaction dating back to November 6, 1987, where the petitioner, Rajendra Singh, a property dealer, sold a property measuring 167.40 sq. yards in Radha Kunj Colony, Sikandra, Agra, to the respondent, Saroj Singh. However, possession was never handed over.
Decades later, on September 27, 2015, the parties entered into a settlement agreement. It was agreed that the petitioner would pay ₹6,48,000 to the respondent, who in turn would relinquish any claim over the property. Pursuant to this agreement, the petitioner issued a cheque for the said amount. The cheque was dishonoured on January 11, 2016, leading the respondent to file a complaint under Section 138 of the NI Act.
On August 31, 2020, the Metropolitan Magistrate (NI-02), South-East, Saket Courts, convicted the petitioner and sentenced him to one year of simple imprisonment and a fine of ₹9,72,000. This conviction was upheld by the Additional Sessions Judge-05, Saket Courts, on July 7, 2023. The petitioner subsequently approached the High Court via a revision petition.
Arguments of the Parties
The counsel for the petitioner argued that the dishonoured cheque was issued as “advance consideration” under the 2015 agreement, which the respondent allegedly breached by failing to cancel the 1987 sale deed. The defence contended that there was no “legally enforceable debt” at the time of presentation. Crucially, the petitioner argued that the liability, if any, belonged to the “Shiva Shakti Educational Society” and not him personally, asserting that he acted merely as a member/secretary.
Conversely, the respondent’s counsel submitted that the settlement was executed voluntarily in the petitioner’s individual capacity. It was highlighted that the petitioner issued the cheque from his personal account, not the society’s. The counsel argued, “Had he been acting on behalf of the society, the agreement would have clearly stated so.”
Court’s Analysis and Observations
Justice Sharma examined the scope of the revision jurisdiction under Section 397 of the CrPC, noting that interference is limited to satisfying the court regarding the correctness, legality, or propriety of the finding.
On the core legal issue of liability, the Court relied on the statutory presumptions under Sections 118 and 139 of the NI Act, citing the Supreme Court judgment in Bir Singh v. Mukesh Kumar (2019). The Court observed that once the signature is admitted, the onus is on the accused to rebut the presumption of a legally enforceable debt.
Addressing the petitioner’s defence regarding the society’s liability, the Court noted that the settlement agreement (Ex. CW1/D) was executed between the complainant and the accused without any indication that the petitioner signed it in a representative capacity.
The Court observed:
“The agreement bears only the name and signature of the accused without any expression suggesting that he had acted for or on behalf of the society… The language of the document is unequivocal and does not suggest at any point that the agreement was entered into by him in a representative or fiduciary capacity.”
Furthermore, regarding the source of the funds, the Court stated:
“It is also undisputed that the cheque in question was drawn on the personal bank account of the accused and was signed by him… Even if it were assumed that the underlying liability was of the society, the accused, having issued a cheque from his personal account in discharge of such liability, would still be liable under Section 138 of the NI Act.”
The Court also rejected the argument that the society should have been impleaded as an accused, stating that since the cheque was drawn on a personal account, there was no legal requirement to array the society.
Decision
The High Court found that the petitioner failed to rebut the statutory presumptions or produce credible evidence to support the claim that the cheque was a security instrument obtained under coercion.
Concluding the judgment, Justice Sharma held:
“Accordingly, this Court agrees with the concurrent findings of the learned Trial Court and the learned Sessions Court that the cheque in question was issued in discharge of a legally enforceable debt, and the accused was personally liable for its payment.”
The petition was dismissed, and the petitioner was directed to surrender to serve the awarded sentence.
Case Details:
- Case Title: Rajendra Singh v. Saroj Singh
- Case Number: CRL.REV.P. 19/2024
- Bench: Justice Swarana Kanta Sharma
