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Case Title: Tripurari Kumar Jha v. Faculty of Law, University of Delhi & Anr.

Case Number: LPA 703/2023

 Dated On: Reserved on 03.05.2024, Pronounced on 31.05.2024 

Quorum: Hon’ble Mr Justice Rajiv Shakdher, Hon’ble Mr Justice Amit Bansal

FACTS OF THE CASE

The appellant, a student in the LLB program at Delhi University, was detained due to insufficient attendance during the first term of the academic year. The University asserted that there was no provision for readmission if a student was detained for attendance issues in the first term. Delhi University maintained that the amendments made to Ordinance V, specifically Appendix II, in 2007, prohibited the readmission of students who failed to meet the attendance criteria in the first term. This stance was supported by a resolution passed by the University’s Academic Council on December 12, 2007. On July 12, 2012, an amendment to Ordinance IV introduced Article 5(b), which allowed for the readmission of students detained due to a shortage of attendance. This amendment came after the changes to Ordinance V and was argued to supersede it. The appellant argued that the readmission provision in Ordinance IV should prevail over the earlier amendments to Ordinance V. The appellant asserted that under Article 5(b) of Ordinance IV, the University had the power to readmit students, and this provision should apply to all disciplines, including professional courses like LLB. The University cited previous judgments to support its position that provisions in the Prospectus or Information Bulletin are binding on students. However, these cases dealt with different contexts and did not specifically address readmission due to attendance shortfalls. The Bar Council of India indicated that students could be readmitted if they failed to meet attendance requirements for genuine reasons. The BCI suggested that such students could be accommodated in the subsequent academic year within the sanctioned seats. The court analysed the hierarchical structure and powers conferred by the DU Act, highlighting that the Court is the supreme authority with the power to review acts of the Executive Council (EC) and the Academic Council (AC). The court found that the provision for readmission in Ordinance IV, added later, should prevail over the earlier amendments to Ordinance V. The court concluded that the University’s contention was flawed and that it indeed had the power to readmit students under Article 5(b) of Ordinance IV. The court emphasised the need for the University to exercise compassion and consideration for students facing genuine difficulties, aligning with the BCI’s perspective on maintaining educational standards while accommodating genuine cases.

ISSUES

• Whether the amendments to Ordinance V in 2007 restricting readmission were superseded by the later insertion of Article 5(b) in Ordinance IV in 2012.
• Whether the powers of university bodies like the EC, AC, and Court in matters of readmission were clearly defined under the Delhi University Act.
• Whether the university’s policies on readmission were in line with BCI recommendations, especially in accommodating students facing genuine difficulties.

LEGAL PROVISIONS

• Delhi University Act: The primary legislation governing the establishment, structure, and functioning of the University of Delhi.
• Statutes: Rules and regulations derived from the Delhi University Act, providing detailed provisions on various aspects of the university’s administration and operations.
• Ordinances: Specific regulations within the university’s framework, derived from the Delhi University Act and statutes, detailing procedures and criteria for matters such as admission, promotion, examination, and readmission.
• Bar Council of India (BCI) Guidelines: External standards and recommendations provided by the Bar Council of India, particularly relevant in matters concerning legal education, curriculum, and student welfare within the university’s law programs.

CONTENTIONS OF THE APPELLANT

The appellant argued that the power of readmission for students detained due to attendance issues is vested in the University under Article 5(b) of Ordinance IV. The amendments made to Ordinance V in 2007, which seemingly restricted readmission, were superseded by the subsequent insertion of Article 5(b) in Ordinance IV in 2012. The University’s contention that the provision for readmission in Ordinance IV was inapplicable to professional courses, such as LLB, is flawed. The University’s failure to exercise the power conferred upon it by Article 5(b) of Ordinance IV resulted in the erroneous denial of readmission to the appellant. These contentions formed the basis of the appellant’s argument challenging the University’s decision regarding student readmission.

CONTENTIONS OF THE RESPONDENT

The respondent argued that the provision for readmission in Ordinance IV did not apply to professional courses like LLB. They contended that the amendments made to Ordinance V in 2007, which restricted readmission, were still applicable and had not been superseded by the insertion of Article 5(b) in Ordinance IV. The University maintained that the appellant’s admission was cancelled due to a shortfall in attendance, and they did not have the authority to grant readmission under the prevailing ordinances. Additionally, the University asserted that accommodating readmissions for students like the appellant would adversely affect available seats for fresh admissions, creating logistical challenges. These contentions formed the core of the respondent’s defence against the appellant’s claims regarding readmission.

COURT’S ANALYSIS AND JUDGEMENT

The court examined the provisions of Ordinance IV and Ordinance V to determine the university’s authority regarding readmission for students detained due to attendance issues. It concluded that the insertion of Article 5(b) in Ordinance IV in 2012 superseded the amendments made to Ordinance V in 2007, thereby conferring the power of readmission to the university.

The court clarified the authority of various university bodies, including the Executive Council (EC), the Academic Council (AC), and the Court, in matters related to readmission. It emphasised that the university had the power to grant readmission, particularly in cases where genuine reasons, such as illness, warranted leniency.

The court highlighted the importance of aligning university policies with the guidelines and recommendations of the Bar Council of India (BCI). It emphasised the need for compassion and understanding towards students facing genuine difficulties, as advised by the BCI.

In conclusion, the court ruled in favour of the appellant, allowing the appeal and directing the university to re-admit the appellant with suitable adjustments. The judgement underscored the university’s responsibility to consider genuine reasons for readmission and ensure alignment with BCI guidelines to maintain high standards in education.

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 Judgement Reviewed by – Shruti Gattani

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Case Title: Ravinder Tyagi vs. Municipal Corporation of Delhi and Another

Case Number: W.P.(C) 4708/2024 & C.M.No.19283/2024

Dated On: 02nd April, 2024

Qoram: Hon’ble Acting Chief Justice and Hon’ble Ms. Justice Manmeet Pritam Singh Arora

FACTS OF THE CASE

The case involves a public interest litigation (PIL) filed by Ravinder Tyagi against the Municipal Corporation of Delhi (MCD) and another respondent, with Mr. Nikhil Palli representing the MCD. The petitioner, appearing in person, has raised several issues related to the alleged removal of trees and illegal encroachments in the Gandhi Maidan Parking area and H.C. Sen Road in Delhi. Ravinder Tyagi asserts that 23 Peepal trees, which existed between the entry and exit gates of Gandhi Maidan Car Parking towards the eastern side, were illegally cut or removed by the respondents. He further claims that respondent no. 2 has encroached upon the side pavement, merging it with the space occupied by Omaxe Mall. Additionally, the petitioner contends that iron grills and barricades were installed on the side pavement, resulting in the area being used for staff parking, thereby causing inconvenience to the public. The petitioner references an earlier court order dated 30th August 2018, where the then Deputy Commissioner of Delhi Municipal Corporation assured that 65 trees around the proposed Multi-Level Car Parking at Gandhi Maidan would not be cut for redevelopment purposes. Despite this assurance, the petitioner alleges that the respondents violated this undertaking by removing the trees and making unauthorized constructions. Upon reviewing the petition, the court noted that the petitioner had not provided any prior notice to the respondents before filing the writ petition. Furthermore, the petitioner did not obtain any sanction plan under the Right to Information (RTI) Act from the MCD. The photographs submitted by the petitioner did not provide clear evidence that the 23 Peepal trees were cut for the construction project, contrary to the MCD’s previous undertaking. The court acknowledged the importance of the issues raised and disposed of the writ petition with a directive. The Deputy Commissioner of City Sadar Paharganj Zone, MCD, was instructed to treat the writ petition as a representation and to issue a reasoned order within four weeks, after providing the petitioner an opportunity for a hearing. The court also allowed the petitioner the liberty to pursue appropriate legal proceedings if he is dissatisfied with the Deputy Commissioner’s decision.

ISSUES

• Whether the respondents illegally removed 23 Peepal trees
• Whether the respondents engaged in unauthorized encroachment and construction.
• Whether the installation of iron grills and barricades by the respondents caused public inconvenience.

LEGAL PROVISIONS

• Environmental Protection Act, 1986: This Act provides a framework for the protection and improvement of the environment and for matters connected therewith.
• Forest (Conservation) Act, 1980: This Act aims to conserve forests and regulate diversion of forest lands for non-forest purposes, which may include tree removal.
• Public Interest Litigation (PIL): PIL allows citizens to seek judicial intervention in matters of public interest, including environmental issues.
• Municipal Laws and Regulations: Local municipal laws and regulations may govern land use, construction, and environmental protection within their jurisdictions.
• Right to Information Act, 2005 (RTI Act): The RTI Act empowers citizens to request information from public authorities, which may be relevant for obtaining documents such as sanction plans for construction projects.

CONTENTIONS OF THE APPELLANT

The petitioner contends that 23 Peepal trees between the entry and exit gates of Gandhi Maidan Car Parking were unlawfully removed by the respondents, contrary to an assurance by the Delhi Municipal Corporation. The removal of these trees is alleged to be in violation of prior commitments regarding redevelopment plans for the parking area. The petitioner asserts that respondent no. 2 has engaged in unauthorized encroachment by merging the side pavement with the space occupied by Omaxe Mall. Additionally, unauthorized constructions have allegedly been raised in areas previously occupied by Bapu Market and where the 23 Peepal trees stood. The petitioner claims that respondent no. 2 installed iron grills on the side pavements and placed barricades around the area, causing public inconvenience and restricting access. These installations are purportedly used for parking staff vehicles, leading to inconvenience for the general public.

CONTENTIOS OF TE RESPONDENT

The respondent may deny the allegations of illegally removing 23 Peepal trees and argue that any tree removal was conducted lawfully and in accordance with relevant regulations. They might contend that the removal was necessary for legitimate reasons, such as redevelopment or maintenance purposes. Regarding the alleged unauthorized encroachment and construction, the respondent may argue that any constructions made were duly authorized and compliant with applicable laws and regulations. They might present evidence to support the legality of the constructions and dispute the petitioner’s claims of encroachment. The respondent could justify the installation of iron grills and barricades on the side pavements as necessary measures for public safety or traffic management. They might argue that these installations were implemented in accordance with relevant regulations and were essential for the efficient operation of the area. The respondent may raise procedural defenses, such as the petitioner’s failure to provide prior notice or obtain necessary approvals before filing the petition. They might argue that proper procedures were not followed in initiating the legal action and request the court to dismiss the petition on procedural grounds.

COURT’S ANALYSIS AND JUDGEMENT

The court observes that the petitioner has alleged the illegal removal of 23 Peepal trees, unauthorized encroachment, and construction by the respondent, as well as the installation of iron grills and barricades causing public inconvenience. However, upon reviewing the evidence presented, the court finds it unable to conclusively determine at this stage whether the allegations are valid. The court notes the absence of prior notice to the respondents before filing the petition and the petitioner’s failure to obtain necessary approvals under the Right to Information (RTI) Act.

Despite the uncertainties regarding the allegations, the court acknowledges the importance of the issues raised by the petitioner. Given the significance of the matter, the court decides to dispose of the petition with a directive to the Deputy Commissioner, City Sadar Paharganj Zone, MCD.

The court instructs the Deputy Commissioner to treat the writ petition as a representation and decide on it through a reasoned order within four weeks. The Deputy Commissioner is directed to provide the petitioner with an opportunity for a hearing before making a decision. In the event that the petitioner is dissatisfied with the Deputy Commissioner’s decision, the petitioner is granted liberty to pursue appropriate legal proceedings in accordance with the law.

This judgment demonstrates the court’s commitment to addressing issues of public interest while ensuring procedural fairness and adherence to legal requirements. The court’s directive allows for the resolution of the matter through administrative channels, providing the petitioner with an opportunity to present their case and seek redressal in a structured manner.

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Judgement Reviewed by – Shruti Gattani

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Case Name: Maj. Pankaj Rai v. M/S NIIT LTD.

 Case Number: O.M.P. (COMM) 55/2024 & I.A. 2137/2024

 Dated on: 29th February, 2024

 Quorum: Hon’ble Mr. Justice Prateek Jalan

 FACTS OF THE CASE

An agreement titled “NIIT License Agreement (Urban)” was signed on December 30, 2015, between Maj. Pankaj Rai (petitioner) and M/S NIIT Ltd. (respondent). The agreement allowed Rai to use NIIT’s trade names, designs, copyrights, technical knowhow, and course materials to set up a computer education centre in A.S. Rao Nagar, Hyderabad. Following the agreement, Rai incorporated a limited company to establish the education centre. Disputes arose, leading Rai to invoke arbitration on July 26, 2017. The Arbitral Tribunal was constituted by an order of the Delhi High Court on March 4, 2022. Rai claimed Rs. 99.43 lakhs for losses, Rs. 35.42 lakhs as an assured amount by NIIT, interest, and costs. His claims included issues of unfair courseware pricing, improper GST rounding, territory restrictions, student poaching, and non-disclosure of adverse orders against NIIT. NIIT Ltd. contested the claims, arguing that Rai’s claims were not maintainable as the agreement was intended for Rai’s company. NIIT denied any breach of terms and disputed providing any assured returns. Rai was the sole witness for his case, while NIIT produced two witnesses who were cross-examined. Rai’s additional witnesses were not produced for cross-examination. An email from Rai on June 27, 2018, acknowledged the receipt of Rs. 297810.39 as a final settlement. The Arbitral Tribunal found no breach of contract or proof of losses as claimed by Rai.

ISSUES

• Whether the petitioner, in his capacity as ‘Indemnifier’ under the Licence Agreement, can maintain the present arbitration proceedings.
• Whether the arbitration agreement as well as the Licence Agreement stand discharged and extinguished.
• Whether the petitioner is entitled to the claims raised in the Statement of Claim.

LEGAL PROVISIONS

Arbitration and Conciliation Act, 1996 (the Act):

• Section 34: This section deals with the application for setting aside an arbitral award. The petitioner invoked this section to seek the setting aside of the Arbitral Award dated 19.10.2023.

Consumer Protection Act, 1986:

• Section 2(1)(r): This section defines “unfair trade practice.” The petitioner referenced this provision to argue that the agreement was one-sided and constituted an unfair trade practice.

CONTENTIONS OF THE APPELLANT

The appellant argued that the learned Arbitrator wrongly implemented a one-sided Agreement and erroneously applied the principle of caveat emptor. He contended that had he been aware of the full facts, including the respondent’s antecedents and price differences for metro and non-metro cities, he would not have entered into the Agreement. He relied on Supreme Court judgments, such as IREO Grace Realtech (P) Ltd. v. Abhishek Khanna & Others and Mrs. Manju Bhatia & Anr. v. New Delhi Municipal Council & Anr., to support his claim. The appellant contended that his consent to enter into the Agreement was vitiated by the respondent’s failure to disclose certain adverse orders from the Monopolies and Restrictive Trade Practices Commission (MRTPC) and the National Consumer Disputes Redressal Commission (NCDRC). He argued that this lack of disclosure constituted a material misrepresentation, which should render the Agreement void. The appellant claimed that he was unable to realise the assured profits indicated by the respondent, amounting to Rs. 35.42 lakhs over three years. He argued that the respondent had provided assurances of fixed returns prior to signing the Licence Agreement, which were not fulfilled. The appellant alleged that the respondent sold courseware to him at a higher rate than that sold to a licensee in a neighbouring area and engaged in “petty cheating” by rounding off amounts payable on account of GST. He claimed these actions resulted in significant financial losses. The appellant argued that the respondent did not permit him to approach institutes within his territory or offer discounts from his share of earnings. He also alleged that the respondent poached his students by operating a portal (NIIT.tv) that provided free pre-recorded videos to students, undermining his business.

CONTENTIONS OF THE RESPONDENT

The respondent took a preliminary objection against the maintainability of the claims at the instance of the petitioner. They argued that the Agreement contemplated the establishment of the education centre by the petitioner’s company, not the petitioner himself. Thus, the petitioner did not have the standing to bring these claims. The respondent disputed any breach of the terms and conditions of the Agreement. They denied allegations of overcharging for courseware, engaging in petty cheating by rounding off GST amounts, and preventing the petitioner from approaching institutes or offering discounts. They asserted that all actions taken were in compliance with the Agreement. The respondent denied providing any assurance of fixed returns or profits to the petitioner. They contended that the Agreement did not include any clause guaranteeing assured profits, and the claims of assured profits were unfounded.The respondent argued that the petitioner’s claims were fully and finally settled, as evidenced by an email dated 27.06.2018, where the petitioner acknowledged receipt of a sum towards final settlement. They asserted that this settlement discharged all claims under the Agreement. The respondent alleged that the petitioner had instituted numerous litigations against them before various forums and had started a campaign of defamation against the respondent. In response, the respondent had filed a suit before the High Court, which resulted in a consent decree dated 03.09.2019, restraining the petitioner from making defamatory statements.The respondent maintained that the claims brought by the petitioner were outside the scope of the Agreement and that the Arbitral Tribunal had no jurisdiction over matters not arising directly from the contractual terms. They also contended that the issues raised by the petitioner had already been settled through prior legal proceedings.

COURT’S ANALYSIS AND JUDGEMENT

The court first addressed the issue of full and final settlement, noting the petitioner’s acknowledgment of receipt of a sum as final settlement in an email dated 27.06.2018. This acknowledgment, coupled with the petitioner’s admission in the petition, led the court to agree with the Arbitrator’s conclusion that the petitioner’s claims were fully discharged. Regarding the petitioner’s contention of the Agreement being one-sided, the court explained that the context of the cited Supreme Court case, IREO Grace Realtech, under the Consumer Protection Act, did not apply here. The court upheld the Arbitrator’s decision to adjudicate the case within the contractual framework. The application of the caveat emptor principle was also examined, with the court finding no error in the Arbitrator’s application, given the petitioner’s obligation to conduct due diligence before entering the Agreement.

Moving on to the merits of the claims, the court reviewed the Arbitrator’s findings. The petitioner’s allegations regarding overcharging for courseware, GST rounding off, restrictions on territory, and student poaching were all rejected by the Arbitrator based on evidence and contractual analysis. The petitioner’s claim of assurance of minimum revenues was also dismissed, with the Arbitrator finding no supporting evidence. The court emphasized the limited scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996, reaffirming the Supreme Court’s guidelines. Since the Arbitrator’s findings were based on a thorough analysis of evidence and contractual terms, the court found no grounds for interference and dismissed the petition, upholding the Arbitral Award.

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Case title:- Mrs. Santosh Rani Dhariwal vs. State (Govt. of NCT of Delhi) and Anr.

Case No. :- CRL.M.C. 6017 of 2023

Dated on:- March 28, 2024

Qoram:- Hon’ble Mr. Justice Manoj Kumar Ohri

FACTS OF THE CASE

Mrs. Santosh Rani Dhariwal’s involvement in a legal dispute stems from a loan her husband, Mr. Sandeep Singh Deswal, secured from M/s Sachdeva Land and Finance Pvt. Ltd., an NBFC. Mr. Deswal entered a loan agreement on 07.09.2015, seeking Rs. 1 crore for business purposes, with the petitioner also signing a Term Sheet and executing a surety bond on the same date. To secure the loan, the petitioner provided original property documents as collateral. Following her husband’s default, he issued a cheque for Rs. 60 lacs on 02.06.2018, which bounced due to insufficient funds. Despite a legal demand notice, repayment was not made, leading to a case under Section 138 NI Act. Subsequently, the petitioner issued a Rs. 25 lacs cheque from her account, which also bounced, resulting in a criminal complaint against her under the same Act. This sequence of events led to a summoning order from the Metropolitan Magistrate, Rohini Courts, Delhi, dated 18.09.2018.

 ISSUES

• Whether Mrs. Santosh Rani Dhariwal can be held liable under Section 138 of the NI Act for a cheque issued as a guarantor for her husband’s loan.
• Whether proceedings can continue against the petitioner without implicating her husband, the principal borrower, since she was only a guarantor.
• Whether the presumption that a cheque was issued for discharging a debt or liability applies to the petitioner and if it can only be rebutted with evidence during a trial.

LEGAL PROVISIONS 

Section 138 of the Negotiable Instruments Act, 1881 (NI Act):

• This section deals with the dishonour of cheques for insufficiency of funds or if it exceeds the amount arranged to be paid from that account. It specifies that such dishonour constitutes an offence, provided certain conditions are met:
  • The cheque is presented to the bank within six months from the date on which it is drawn or within its validity period, whichever is earlier.
  • The payee or holder in due course of the cheque gives a written notice to the drawer within 30 days of receiving information from the bank about the dishonour.
  • The drawer fails to make the payment of the cheque amount to the payee or holder in due course within 15 days of receiving the notice.

Section 139 of the Negotiable Instruments Act, 1881:

• This section provides a presumption in favour of the holder that the cheque was issued for the discharge of any debt or other liability. It states:
  • “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.”

Section 482 of the Criminal Procedure Code (Cr.P.C.):

• This section grants inherent powers to the High Court to make such orders as may be necessary to give effect to any order under Cr.P.C., to prevent abuse of the process of any court, or to secure the ends of justice. This provision is often invoked to quash criminal proceedings where the allegations do not disclose a prima facie case or are otherwise frivolous.

CONTENTIONS OF THE APPELLANT

The appellant contended that the cheque she issued was not towards the discharge of any legal liability but was issued merely as a surety/security in her capacity as a guarantor for the loan taken by her husband, Mr. Sandeep Singh Deswal. She argued that issuing a cheque as security does not attract liability under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The appellant argued that the loan was taken by her husband in the name of his sole proprietorship firm, and she only stood as a guarantor. Therefore, legal proceedings under Section 138 NI Act should not proceed against her without also implicating her husband, the principal borrower. She asserted that her liability as a guarantor is secondary and contingent upon the default of the principal borrower. The appellant submitted that the presumption under Section 139 of the NI Act, which assumes that a cheque is issued for the discharge of any debt or other liability, should not apply in her case. She contended that this presumption can be rebutted by demonstrating that the cheque was issued as security and not for the payment of any debt. She argued that this rebuttal should be considered without necessitating a trial, as the cheque was not issued for any immediate legal obligation. In support of her contentions, the appellant relied on various judicial precedents, including: Pooja Ravinder Devidasani v. State of Maharashtra & Anr., which discusses the limitations of a guarantor’s liability under Section 138 NI Act. Dilip Hariramani v. Bank of Baroda, reinforcing the view that a guarantor cannot be held liable under Section 138 NI Act without clear evidence of involvement in the company’s day-to-day affairs. She emphasised that as a guarantor, her liability should not automatically translate to criminal liability under Section 138 NI Act unless there are specific allegations and evidence proving her active involvement in the transactions leading to the issuance of the cheque. The appellant also raised procedural objections, arguing that the proceedings were flawed as they did not properly account for her role as a guarantor. She contended that the complaint and the resulting summoning order did not adequately differentiate between the liabilities of the principal borrower and the guarantor, leading to an improper application of the law.

CONTENTIONS OF THE RESPONDENT

The respondent argued that Mrs. Santosh Rani Dhariwal is liable under Section 138 of the NI Act for the dishonour of the cheque she issued as a guarantor for her husband’s loan. They maintained that even though the cheque was issued as security, it still constitutes a valid instrument for discharging a liability under the NI Act. The respondent contended that the term ‘other liability’ under Section 138 NI Act includes the liabilities of a guarantor. They referenced the Supreme Court’s decision in ICDS Ltd. v. Beena Shabeer and Anr., which clarifies that a guarantor can be held liable for a dishonoured cheque issued in relation to the guaranteed debt. The respondent emphasised that there is a legal presumption under Section 139 NI Act that the cheque was issued for the discharge of a debt or liability. This presumption applies to the petitioner and can only be rebutted with evidence during a trial, not at the preliminary stage. The respondent asserted that the complaint and legal notice clearly stated that the petitioner issued the cheque to discharge her husband’s loan liability. They argued that the petitioner admitted the cheque’s issuance and dishonour, as well as the receipt of the legal notice, fulfilling the necessary conditions for action under Section 138 NI Act. The respondent argued that legal proceedings under Section 138 NI Act can proceed against the petitioner independently of her husband, the principal borrower. They noted that the petitioner issued a separate cheque from her personal account, creating an independent cause of action. The respondent cited precedents such as Four Seasons Energy Ventures Pvt. Ltd. & Ors. v. State of NCT of Delhi & Anr., supporting the view that a guarantor can be prosecuted under Section 138 NI Act for issuing a cheque in discharge of a guaranteed debt. The respondent highlighted that the petitioner did not dispute key facts such as the loan, her role as a guarantor, the issuance and dishonour of the cheque, and the receipt of the legal demand notice. These admissions, they argued, satisfy the conditions for an offence under Section 138 NI Act.

COURT’S ANALYSIS AND JUDGEMENT

The court meticulously examined the relevant legal provisions, specifically Sections 138 and 139 of the Negotiable Instruments Act, 1881 (NI Act). It highlighted that Section 138 imposes liability for dishonoring a cheque due to insufficient funds, while Section 139 establishes a legal presumption regarding the purpose of issuing the cheque. Additionally, the court considered precedents such as ICDS Ltd. v. Beena Shabeer and Anr. to interpret the term ‘other liability’ and its applicability to guarantors. Delving into the nature of a guarantor’s liability under the NI Act, the court acknowledged the petitioner’s argument that she acted solely as a guarantor, issuing the cheque as security for her husband’s loan. However, the court emphasized that the NI Act explicitly encompasses the liability of guarantors within the scope of ‘other liability’ under Section 138, thereby rejecting the petitioner’s contention.

Furthermore, the court affirmed the applicability of the legal presumption under Section 139 NI Act to the petitioner, reasoning that this presumption stands unless rebutted with evidence. Notably, the court underscored that the examination of the petitioner’s contentions regarding the cheque’s purpose must occur during trial, where evidence can be adequately assessed. Taking into account the petitioner’s admissions regarding the issuance and dishonor of the cheque, as well as the receipt of the legal demand notice, the court concluded that these admissions, coupled with the legal notice specifying the petitioner’s liability, fulfilled the basic requirements for proceeding under Section 138 NI Act.

Addressing the petitioner’s argument concerning the necessity of involving her husband, the principal borrower, the court clarified that legal proceedings against a guarantor can proceed independently of the principal borrower. Highlighting that the petitioner issued the cheque from her individual account, the court emphasized the creation of a distinct cause of action under the NI Act. Ultimately, after carefully balancing the legal provisions, precedents, and factual circumstances, the court upheld the lower court’s decision, dismissing the petitioner’s plea to set aside the summoning order. It emphasized that detailed appreciation of evidence and rebuttal of presumptions should occur during trial, reinforcing the continuation of legal proceedings against the petitioner under Section 138 NI Act.

PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Reviewed by – Shruti Gattani

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