The Delhi High Court has upheld the conviction of an accused in a cheque dishonour case, ruling that the limitation period for filing a complaint under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act) is computed from the date of presentation and dishonour of the instrument, and not from the date of the underlying agreement (MoU).
Justice Saurabh Banerjee, while dismissing a revision petition filed by the convict, Ompal Yadav, affirmed the findings of the Courts below that the liability was legally enforceable and not time-barred.
Background of the Case
The case stems from a Memorandum of Understanding (MoU) dated May 22, 2009, executed between the respondent, Farhan Empexo Export and Import Co., and the petitioner’s brother, Mr. Gajender Singh. The agreement involved joint construction of a property at Batla House, Jamia Nagar, Okhla, New Delhi, with profits to be shared proportionately.
According to the complaint, after the construction was completed, the petitioner and his brother sold the property without the respondent’s consent and failed to pay the agreed share of profits. To discharge this liability, Ompal Yadav issued a cheque dated March 14, 2017, for Rs. 8,00,000/-.
The cheque was dishonoured on May 18, 2017, with the remark “Account Closed.” Despite a legal notice dated June 7, 2017, the petitioner failed to make the payment, prompting the respondent to file a complaint under Section 138 of the N.I. Act.
The learned Metropolitan Magistrate, South East District, Saket Courts, convicted the petitioner on April 26, 2022, and sentenced him to pay a fine of Rs. 12,50,000/- or undergo simple imprisonment for six months. This conviction was upheld by the learned Additional Sessions Judge (ASJ) on April 10, 2024.
Arguments Before the High Court
The petitioner, through Advocate Piyush Pahuja, challenged the ASJ’s order on several grounds:
- Privity of Contract: It was argued that the MoU was executed by the petitioner’s brother, not the petitioner himself. Therefore, there was no “legally enforceable debt” against the petitioner, and liability could not extend to a third party.
- Limitation: The petitioner contended that the MoU was executed in 2009 and construction was completed in 2009-2010. Consequently, the liability was time-barred when the complaint was filed in 2016-2017.
- Proof of Status: It was alleged that the respondent failed to prove his status as the sole proprietor of the complainant firm.
Per contra, the respondent’s counsel, Advocate Raj Kumar, argued that the statutory presumptions under Section 118(a) and Section 139 of the N.I. Act were rightly applied, especially since the petitioner led no evidence to rebut them.
Court’s Analysis and Observations
Justice Saurabh Banerjee observed that the execution of the cheque and receipt of the legal notice were admitted. Consequently, the presumption under the N.I. Act arose in favour of the respondent.
The Court noted that the petitioner failed to lead any evidence and relied solely on his statement under Section 313 of the Code of Criminal Procedure (Cr.P.C.), which was insufficient to rebut the presumption.
On Privity and Third-Party Liability: Addressing the argument regarding the petitioner issuing a cheque for his brother’s liability, the Court upheld the ASJ’s finding:
“In view of assertions made and evidence led by complainant/respondent, there was nothing suspicious or unbelievable about accused/appellant issuing cheque in question on behalf of his brother in favour of respondent/complainant towards payment of his share in profit.”
The Court further noted that the petitioner is an employee of the Delhi Police and “well-versed with law and working of criminal justice system.”
On Limitation: The High Court rejected the contention that the debt was time-barred because the MoU dated back to 2009. Justice Banerjee affirmed the findings of the lower court:
“In reference to issue of limitation, Ld. Trial Court rightly observed that it was the date of issuance of cheque and dishonour thereof that is relevant to compute limitation in complaint case filed U/s. 138 NI Act; the date of MOU had no relevancy in computation of limitation period.”
On Proprietorship: Regarding the respondent’s status, the Court held:
“Since the Cheque involved [Ex. CWI/B] was issued under the name of M/s Farhan Empexo Export and Import Co., there was no requirement for the respondent to show his relationship with it.”
Revisional Jurisdiction: The High Court emphasized that its revisional jurisdiction under Section 397/401 Cr.P.C. is limited and intended only to test legality, correctness, or propriety. It cannot assume the role of a Court of Appeal to re-agitate settled issues.
Conclusion
Relying on the Supreme Court judgment in Rajesh Jain vs. Ajay Singh (2023) regarding the burden of proof, the High Court concluded that the petitioner failed to discharge the onus of rebutting the statutory presumption.
The Court dismissed the revision petition, upholding the conviction and the sentence of a fine of Rs. 12,50,000/-.
Case Details:
- Case Title: Ompal Yadav vs. Farhan Empexo Export and Import Co.
- Case Number: CRL.REV.P. 633/2024
- Coram: Justice Saurabh Banerjee
- Counsel for Petitioner: Mr. Piyush Pahuja and Mr. Upender Kumar, Advocates
- Counsel for Respondent: Mr. Raj Kumar and Mr. H. Rehman, Advocates
