Dishonour of cheque-jurisdiction of court

Copy of decision given by this Court in Criminal Writ Petition No. 30/2011 [Rajendra Marga Gaikwad VS. Kail Limited] Bombay High Court, Aurangabad Bench, is also produced. It is already observed that facts of each and every case are always different. It is up to the Court to ascertain as to which Court will have jurisdiction over a particular offence. The ratios laid down in this regard are already discussed.1

Bombay High Court

Mr. Madan S/O. Motichand Gupta vs Videocon Industries Ltd on 29 November, 2012

Bench: T.V. Nalawade

Citation; 2013 (4) Crimes 477 bombay

2. The petition is filed under Articles 226 and 227 of Constitution of India and also under section 482 of Criminal Procedure Code (for short "Cr.P.C.") by the accused from S.C.C. No. 2032/2010, which is pending in the Court of Judicial Magistrate, First Class, Aurangabad. The case is filed by the respondent under section 138 of Negotiable Instruments Act (for short "N.I. Act"). The application at Exh. 9 was filed for dismissal of the complaint under section 203 of Cr.P.C. by the petitioner/accused and it is rejected by J.M.F.C. In the application at Exh. 9, defence was taken that the cheque was given by way of security and it is misused by the complainant. The other defence of absence of service of statutory notice was also taken.

3. In the present proceedings, the accused has contended that the Court of J.M.F.C., Aurangabad has no territorial jurisdiction in respect of offence described in the complaint. Some other grounds are also mentioned in the petition. In view of the nature of other defences taken, this Court made it clear that only the ground of territorial jurisdiction can be considered at this stage. In the present proceedings, a relief of quashing the proceeding of criminal case is claimed. The relief of setting aside the order made by J.M.F.C. at Exh. 9 is also claimed. Alternatively, Cri.W.P. No. 1074/11

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the relief is claimed for giving a direction to J.M.F.C. to return the complaint to complainant on the ground of want of territorial jurisdiction.

4. In view of the provisions of 462 of Cr.P.C., this Court made it clear to the petitioner/accused that the quashing of the proceeding on the ground of want of territorial jurisdiction is not possible. In view of this circumstance, the advocate for the petitioner argued mainly for alternative relief like for direction to return the complaint to complainant by holding that the Court of J.M.F.C., Aurangabad, has no territorial jurisdiction over the offence.

5. The contentions made in the complaint show that the complainant - company is a public limited company, having registered office at Chitegaon, Tahsil Paithan, District Aurangabad. Its branch offices are at various places in India including Aurangabad. The accused is proprietor of a private concern and he is doing business in Delhi. At paragraph No. 4 of the complaint, it is specifically contended that credit facility was given to the accused in Delhi branch of complainant company and as against this facility, goods were supplied to the accused. As against these transactions, the amount of Rs. 5,09,643/- was due from accused Cri.W.P. No. 1074/11

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to the complainant. It is contended that in discharge of this liability, the cheque in question was issued by the accused. The cheque was drawn on the account of accused from a bank of Delhi. This cheque was presented for encashment by the complainant in H.D.F.C. Bank, Branch Aurangabad. When the cheque bounced, statutory notice came to be given from Aurangabad. In the notice the complainant asked the accused to make the payment of cheque amount at Aurangabad, but during the period prescribed by law, such payment was not made and so the complaint came to be filed.

6. It is the case of the complainant that there is agreement between parties that the dispute about such transactions will be subject to the jurisdiction of Aurangabad Court. According to the complainant, such condition is mentioned in invoice prepared during the transaction. It is also the case of the complainant that intimation of bouncing of cheque was received at Aurangabad. It is contended that as in the invoice there is aforesaid contention, as the cheque was deposited at Aurangabad, as the intimation of bouncing of cheque was received at Aurangabad, as statutory notice was given from Aurangabad and as in the statutory notice the accused was directed to make payment at Aurangabad, the Court from Cri.W.P. No. 1074/11

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Aurangabad has jurisdiction over the offence. Copies of some documents titled as 'Tax Invoice' are produced by the complainant in this proceeding. These documents show that the transactions shall be subject to Aurangabad jurisdiction. Similarly, copy of notice sent by R.P.A.D. to the accused from Aurangabad is produced by the complainant.

7. On the other hand, it is the case of the petitioner/accused that all the transactions took place at Delhi. The accused has contended that the goods were supplied at Delhi, the cheque bearing No. 004919, which was drawn on Bank from Delhi was handed over to the complainant at Delhi, the bank from Delhi must have been given intimation with regard to bouncing of cheque, even subsequent cheques in respect of the transactions were given on the same bank, the remaining cheques were deposited by the complainant for encashment in bank from Delhi. Civil suit in respect of cheque in question is filed by the complainant for recovery of amount in a Court from Delhi and in that suit specific contention is made that the Delhi Court has jurisdiction as the transaction took place in Delhi. At paragraph No. 6 of the petition, the contention made in the suit at paragraph No. 12 is quoted and it is as under :- Cri.W.P. No. 1074/11

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"12. The Defendant carry on business at Delhi and the defendant reside at Delhi. The goods were ordered and received by the Defendant at Delhi and payments with respect thereto were to be made at Delhi. This Hon'ble Court, therefore, has the territorial jurisdiction, to entertain and adjudicate the instant suit." Copy of plaint of the aforesaid suit is filed. Some record is filed to show that that subsequent cheque bearing No. 004920 given by the accused to the complainant was presented to bank from Delhi for encashment and it was honoured by the Bank. It is the case of the accused that in view of the aforesaid facts and circumstances, the J.M.F.C., Aurangabad has no territorial jurisdiction over the offence.

8. On the aforesaid points, both the sides have cited some reported cases. Before going to the observations made by the Apex Court and High Courts, it is desirable to see the relevant provisions in the aforesaid regard.

9. Section 177 of Cr.P.C. runs as under :- "177.Ordinary place of inquiry and trial.- Every offence shall ordinarily be inquired into and tried by a Court within whose local

jurisdiction it was committed. "

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The term "ordinarily" used in section 177 of Cr.P.C. shows that this is general provision, however, in this section there is no reference to other sections like sections 178 to 186 of Cr.P.C. which also govern the jurisdiction of the Criminal Court in inquiries and trials and which are also placed in Chapter XIII of Cr.P.C. Thus, section 177 of Cr.P.C. has left the place open for trial. It is settled law that aforesaid subsequent provisions are not to be treated as the only exceptions to section 177 of Cr.P.C. [Relied on AIR 1961 SC 1589 (Purushottamdas Dalmia Vs. State of West Bengal)]. In the landmark case reported as AIR 1999 SC 3762 [K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Anr.] also, it is laid down that the word "ordinarily" used in section 177 indicates that the rule is not invariable in all cases.

10. In the landmark case of K. Bhaskaran cited supra the Apex Court has observed that following five acts are the components of the offence punishable under section 138 of N.I. Act :-

(i) Drawing of the cheque,

(ii) Presentation of the cheque to the bank, (iii) Returning the cheque unpaid by the drawee bank, (iv) Giving notice in writing to the drawer of the demanding of Cri.W.P. No. 1074/11

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payment of the cheque amount,

(v) Failure of the drawer to make payment within 15 days of the receipt of the notice.

11. At paragraph No. 11 of the aforesaid landmark case of K. Bhaskaran, the Apex Court has laid down that the offence is completed only when there is failure of the drawer of the cheque to pay the cheque amount within 15 days of receipt of notice. In this case and the case reported as 2009 CRI.L.J. 1109 (Supreme Court) [M/s. Harman Electronics (P) Ltd. & Anr. Vs. M/s. National Panasonic India Ltd.] the law with regard to statutory notice mentioned in section 138 of N.I. Act is interpreted. It is observed that for filing of the complaint, some procedure is required to be followed by the complainant, which includes sending of notice. But, in view of the provision of section 138 of N.I. Act, the offence does not become complete unless and until the period given for making payment of the cheque amount after receipt of notice is over. In K. Bhaskaran's case, it is observed by the Apex Court that it is normally difficult to fix up particular locality as a place of failure to pay the amount covered by the cheque and a place for that purpose would depend upon a variety of the factors. In view of this difficulty, the Apex Court went on discussing the components of the offence and observed Cri.W.P. No. 1074/11

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that these five components can be considered for determination of the jurisdiction of the Court. It is further observed that it is not necessary that all the above five acts should have been perpetrated at the same locality. It is observed that it is possible that each of these five acts could be done at different locality, but concatenation of all the above five is sine qua non for the completion of the offence punishable under section 138 of N.I. Act. After making this observation, the Apex Court discussed the provision of section 178 (d) of Cr.P.C. and the Apex Court laid down that in view of section 178 (d) of Cr.P.C., the Court exercising jurisdiction in one of the five local areas, where the aforesaid five acts were done, can become the place of trial for the offence under section 138 of N.I. Act.

12. In view of the aforesaid discussion made by the Apex Court, it becomes duty of the Criminal Court to ascertain, where the payment of the amount covered by the cheque was to be made. If it is difficult for the Court to fix up particular locality as the place of occurrence of offence on the basis of such criteria, then the Court is expected to follow the procedure laid down by the Apex Court in K. Bhaskaran's case. The Apex Court has referred section 178 (a) and even section 179 of Cr.P.C. in this regard.

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Section 178 (a) of Cr.P.C. runs as under :- "178. Place of inquiry or trial.- (a) When it is uncertain in which of several local areas an offence was committed, or"

Section 178 (d) of Cr.P.C. runs as under :- "(d) where it consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas."

Thus, as provided in section 178 (a) of Cr.P.C., when there is no certainty about the place, where the offence was committed, the Court can take recourse of section 178 (d) and by using both these sections and the aforesaid five components, the Court can ascertain as to which Court can have local jurisdiction over the offence.

13. In the present case, the relevant facts are already quoted. The record and the submissions are sufficient to infer that the transaction took place at Delhi, the credit facility was given to the accused in Delhi branch of the complainant company and so the payment in respect of goods purchased was to be made at Delhi and for making the payment, the cheque was given in Delhi. On the basis of these facts, inference is easy in the present case Cri.W.P. No. 1074/11

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that the Court from Delhi has jurisdiction over the offence. Only because there is the mention in invoice like "the dispute will be subject to Aurangabad jurisdiction", inference is not possible that offence was committed in Aurangabad. In this regard also, the law is developed and it is being discussed hereinafter.

14. If we consider five components mentioned in K. Bhaskaran's case one by one, in the present case, it is not possible to hold that J.M.F.C. Aurangabad has jurisdiction over the offence.

15. The first component is "drawing of the cheque". In the present case the cheque was drawn on account of the accused from a bank of Delhi. The second component is "presentation of the cheque to the bank". This point is discussed by the Apex Court in the case reported as 2001 Bom.C.R.(Cri.) 419 [Ishar Alley Steels Ltd. Vs. Jayaswals Neco Limited]. K. Bhaskaran's case was decided on 29.9.1999 and Ishar Alley's case was decided on 22.2.2001. Though the point involved in Ishar Alley's case was different viz. in which bank the cheque should be deposited within a prescribed period of six months for encashment, whether it is the bank of the drawer or the bank of payee, the second component is a part of this point. In view of the Cri.W.P. No. 1074/11

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ratio of Ishar Alley's case, it needs to be presumed that the cheque needs to be presented in the bank of drawer for the compliance of requirement of second component. In Ishar Alley's case it is made clear that for encashment the payee may present the cheque in his own bank, collecting bank, but that bank is not referred in section 138 of N.I. Act. Third component is "returning the cheque unpaid by the drawee bank". In this regard also, it needs to be presumed that it refers to bouncing of cheque in the bank where the accused had the account. Thus, the component Nos. (ii) and (iii) in the present case had the place, Delhi. Only because the cheque was presented at the bank from Aurangabad by the complainant, the place for component Nos. (ii) and (iii) cannot become Aurangabad.

16. Component No. (iv) is "giving the notice in writing to the drawer of the cheque to demand the payment of cheque amount". This component has two parts. It is mandatory for the complainant to give statutory notice to make the demand of cheque amount. However, this component does not give liberty to the complainant to change the place, where the amount was to be paid under the transaction. On this point, there is the case of Harman Electronics cited supra. This case was decided on 12.12.2008. The advocate of complainant placed reliance on the Cri.W.P. No. 1074/11

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decision of the Apex Court given in Criminal Appeal No. 1715/2008 [Smt. Shamshad Begum Vs. B. Mohammed]. This case was decided by the Apex Court on 3.11.2008. In Shamshad Begum's case the complainant changed his address and shifted to Manglore from Banglore. He had sent statutory notice from Manglore and in view of this peculiar circumstance, the Apex Court held that Manglore Court can also have jurisdiction. The Apex Court referred the landmark case of K. Bhaskaran cited supra. In any case, in subsequently decided case viz. Harman Electronics cited supra at paragraph No. 14, the Apex Court has laid down that issuance of notice would not by itself give rise to cause of action, but the communication of the notice would. The facts of the case Harman Electronics cited supra show that only on the basis of notice sent from a particular place, Delhi, the complaint was filed at Delhi. The transaction had taken place at Chandigarh and the payment was also to be made as per transaction in Chandigarh. The cheque was drawn on a bank from Chandigarh and there was the facility with this bank to encash the cheque there. In view of these circumstances, the Apex Court held that only because the notice was given from Delhi, the jurisdiction cannot be given to the Court from Delhi. Harman Electronics' case is referred and discussed by Division Bench of this Court in the case reported as 2010 (3) Mh.L.J. 234 Cri.W.P. No. 1074/11

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[ Preetha S. Babu, Ernakulum Vs. Voltas Ltd., Chochin and Anr.]. The Division Bench of this Court has held that on the aforesaid point, the ratio of Harman Electronics is binding on the Courts. The facts of Harman Electronics are very much similar to the facts of present case. So, even if the fourth component it is considered, it cannot be said that due to giving of notice from Aurangabad, the Court from Aurangabad has got jurisdiction over the offence.

17. Fifth component is that "failure of the drawer to make payment within 15 days of the receipt of notice". It is already observed that as per the transaction, the payment was to be made in Delhi in the credit account opened for the accused in Delhi branch of the complainant. Thus, the place of payment was fixed and this component is also not in favour of the complainant. The complainant made the demand to the accused in the statutory notice and asked him to make payment at Aurangabad. Such a situation is also discussed by the Apex Court in Harman Electronics' case cited supra. Paragraph Nos. 24 and 25 of the reported case are relevant in this regard. Those are as under :- "24. Indisputably all statues deserve their strict application, but while doing so the cardinal principles therefor cannot be lost sight of. A Court derives a jurisdiction only when the Cri.W.P. No. 1074/11

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cause of action arose within his jurisdiction. The same cannot be conferred by any act of

omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a

negotiable instrument is necessary, service thereof is also imperative. Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an completes. Giving of notice, therefore, cannot have any precedent over the service It is only from that view of the matter in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd., [(2001) 6 SCC 463] emphasis has been laid on service of notice.

25. We cannot, as things stand today, be oblivious of the fact that a banking institution holding several cheques signed by the same borrower cannot only present the cheque for its encashment at four different places but also may serve noties from four different places so as to enable it to file four complaint cases at four different places. This only causes grave harassment to the accused. It is, therefore, necessary in a case of this nature to strike a balance between the right of the complainant Cri.W.P. No. 1074/11

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and the right of an accused viz-a-viz the provisions of the Code of Criminal Procedure." So, place of payment fixed by transaction cannot be ordinarily changed by subsequent acts like notice.

18. For complainant, reliance was placed on some more reported cases. The cases are as follows :- (i) 1993 CRI.L.J. 680 Bombay High Court [Rakesh Nemkumar Porwal Vs. Narayan Dhondu Joglekar and Anr.],

(ii) 2010 (3) Mh.L.J. 246 Bombay High Court, [Crompton Greaves Ltd., Mumbai Vs. Shivam Traders, Thane and Ors.],

(iii) 2012 (2) Mh.L.J. 780 Bombay High Court [Mahindra and Mahindra Financial Services Ltd., Nagpur Vs. Nitin s/o. Vishnupant Thakre], (iv) 2011 (4) Mh.L.J. 275 Bombay High Court [ASR Systems Pvt. Ltd. New Delhi and Anr. Vs. Kimberly Clark Hygiene Products] and

(v) 2011 (1) DCR 78 Bombay High Court [M/s. Sai Auto Agencies Vs. Sheikh Yusuf Sheikh Umar].

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Copy of decision given by this Court in Criminal Writ Petition No. 30/2011 [Rajendra Marga Gaikwad VS. Kail Limited] Bombay High Court, Aurangabad Bench, is also produced. It is already observed that facts of each and every case are always different. It is up to the Court to ascertain as to which Court will have jurisdiction over a particular offence. The ratios laid down in this regard are already discussed.

19. In view of the discussion made above, this Court holds that the Court of J.M.F.C., Aurangabad has no jurisdiction over the offence described in the complaint filed by the respondent. So the order.

ORDER

(I) Petition is allowed.

(II) Process issued by the Judicial Magistrate, First Class, Aurangabad at Exh. 9 in S.C.C. No. 2032/2010 is hereby quashed and set aside.

(III) After receipt of this order, within four weeks from that day, the Magistrate is to return the complaint to the complaint along with entire record for presentation before competent Court having Cri.W.P. No. 1074/11

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jurisdiction.

(IV) The complainant may file the complaint before Magistrate having jurisdiction within two weeks thereafter.

(V) The complainant will be at liberty to move the Magistrate for refund of Court fee and refund is to be given to the complainant.

(VI) To see that the process, if any, issued in future by the competent Judicial Magistrate (First Class), is served on the accused, the accused to supply his E-mail address and postal address and he changes the address and such address may be used by the complainant for service of summons.

Rule made absolute in aforesaid terms.

[ T. V. NALAWADE, J. ]

ssc/

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