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TMI Blog2014 (4) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... 837 - SUPREME COURT ], the Supreme Court clarified that dishonour on account of stop payment instructions would also be covered under Section 138 NI Act and that presumption under Section 139 NI Act would be attracted even in such a case. However, it was clarified that the said presumption is rebuttable. As long as the Respondents were able to show that the stop payment instructions were issued for bona fide reasons, no liability under Section 138 NI Act would be attracted - In the present case, however, IBPL did not urge before the trial Court that the offence under Section 138 NI Act was attracted due to insufficient funds. The proceedings under Section 138 NI Act were initiated only when the cheques when presented for the third time on 29th March 2007 were dishonoured on account of the stop payment instructions. No question was asked of the defence witnesses as to whether on the date of the presentation of the cheques in question for third time on 29th March 2007, the balance in the accounts of ADPL was sufficient to honour the cheques. In Laxmi Dyechem v. State of Gujarat [ 2012 (12) TMI 106 - SUPREME COURT] , the issue was addressed in the context of dishonour of the cheque d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khaira, Tehsil Najafgarh, New Delhi with the owners of the said land. On 2nd January 2007, IBPL entered into two further separate agreements to sell in respect of land measuring 10 bighas and 14 biswas and 45 bighas and 4 biswas respectively situated in the same village with the respective land owners. The total sale consideration was Rs. 1.15 crores per acre. IBPL paid Rs. 1,92,92,500 to the owners as part consideration. According to IBPL, ADPL offered to purchase the rights of IBPL under the aforementioned three agreements with a profit of Rs. 10 lakhs per acre. Accordingly, an agreement dated 24th February 2007 was entered into between IBPL and ADPL whereby all rights of IBPL under the three agreements to sell were transferred to ADPL. 3. It is stated that ADPL handed over the following six cheques dated 24th February 2007 to IBPL towards the payment of the consideration under the aforementioned agreements: Sl. No. Cheque No. Amount 01. 520572 1,08,31,500/- 02. 520573 51,21,530/- 03. 520574 22,29,167/- 04. 520575 94,16,667/- 05. 520599 58,98,000/- 06. 520600 25,63,000/- 4. The aforementioned six cheques were dishonoured and complaints were filed under Section 138 of the Negotia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h March 2007. Mr. Satbir, Property Dealer was examined as DW-4. He confirmed that the three agreements to sell were executed between IBPL and the villagers in respect of the land in question and that the said agreements were valid till 15th-17th February 2007. He stated that IBPL failed to get the sale deeds registered in their favour. 9. From an analysis of the testimonies of CW-1 and CW-4, the trial Court came to the conclusion that the three agreements between IBPL and the land owners (Ex. P-2 to Ex. P-4) were executed at different points in time and at different places and that they did not bear signatures of any official of IBPL. Further, the trial Court held that certain conditions were to be fulfilled by both the parties under the agreements to sell for IBPL to get transferable rights in respect of the properties in question. However, it had nowhere been shown on record that the parties performed their respective obligations thereunder. With the land owners not obtaining a 'no objection certificate' ('NOC') from the concerned authorities, the question of vesting of any right or title to the properties in question in favour of IBPL under the three agreements d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued, i.e., 24th February 2007, there was no doubt as regards the rights of IBPL to title to the properties in question which rights IBPL agreed to sell to ADPL. 11. Countering the above submissions, Mr. Sanjay Manchanda, learned counsel for the Respondents, submitted that the land in question was represented at the time of the agreement dated 24th February 2007 to be free from encumbrances. However, as deposed by DW-2, an order had been passed by the SDM on 16th January 2007 directing maintenance of status quo. The third party with whom the agreements to sell had been entered into with respect to the very same land had filed CS (OS) No. 461 of 2007 in which an order was passed on 5th March 2007 by this Court restraining the land owners from creating any third party interest in the properties in question. The evidence of DW-4 further showed that Mr. R.C. Agarwal, Director of ADPL had come to know of the dispute between the villagers and the third party and had been requesting IBPL not to present the cheques in question. It had also come in the evidence of CW-1 and CW-4 the IBPL had unilaterally cut a para of the agreement dated 24th February 2007 and had failed to hand over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NI Act was attracted due to insufficient funds. The proceedings under Section 138 NI Act were initiated only when the cheques when presented for the third time on 29th March 2007 were dishonoured on account of the stop payment instructions. No question was asked of the defence witnesses as to whether on the date of the presentation of the cheques in question for third time on 29th March 2007, the balance in the accounts of ADPL was sufficient to honour the cheques. 14. In Laxmi Dyechem v. State of Gujarat (supra), the issue was addressed in the context of dishonour of the cheque due to closure of the account. After referring to the decision of the Supreme Court in Rangappa v. Sri Mohan (2010) 11 SCC 441, it was held that even in such cases, the question whether or not there was a lawfully recoverable debt or liability for discharge whereof the cheque was issued would be a matter that the trial Court will examine having regard to the evidence adduced before it and keeping in view the statutory presumption that unless rebutted the cheque is presumed to have been issued for a valid consideration . In the concurring judgment of Gyan Sudha Misra, J. it was further clarified as under: 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient funds in his account and yet stops payment for bona fide reasons, the same cannot be put on par with other variety of cases where the cheque has bounced on account of insufficiency of funds or where it exceeds the amount arranged to be paid from that account, since Section 138 cannot be applied in isolation ignoring Section 139 which envisages a right of rebuttal before an offence could be made out under Section 138 of the Act as the Legislature already incorporates the expression unless the contrary is proved which means that the presumption of law shall stand and unless it is rebutted or disproved, the holder of a cheque shall be presumed to have received the cheque of the nature referred to in Section 138 of the NI Act, for the discharge of a debt or other liability. Hence, unless the contrary is proved, the presumption shall be made that the holder of a negotiable instrument is holder in due course. 15. Recently in Indus Airways P. Ltd. v. Magnum Aviation P. Ltd. 2014 (4) SCALE 645, the Supreme Court held that there is a fine distinction between the civil liability and criminal liability under Section 138 NI Act. It was observed as under: If at the time of entering into ..... X X X X Extracts X X X X X X X X Extracts X X X X
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