only contemplates transfer of funds from one branch of the bank
where they are actually and physically held to the other branch of the
bank which has received the cheque for processing and payment of the
amount thereunder and this transfer of funds must take place within a
time which is of not more than 30 minutes and if there is no transfer of
funds from the bank branch where they are actually and physically
held, the payment of the cheque amount cannot be made. In other
words, refusal to transfer funds would be the factor determining what
is considered as dishonour of cheque by the the Hon'ble Apex Court in
the judgment in the case of Dashrath Rupsingh Rathod. It would then
follow that when funds are not transferred for the reason of
insufficiency of funds, etc. as contemplated under Section 138 of the
N. I. Act by the drawee or remitting bank (the term used by Reserve
Bank of India in it's above answer to describe the drawee bank), the
essential ingredient of dishonour of cheque is fulfilled. It means that
dishonour of cheque takes place because of failure or refusal to
transfer funds and therefore, it takes place at the place where the bank
which so fails or refuses, which is the “drawee bank”, is situated.
Therefore, the petitioner cannot be allowed to say that the system of
funds transfer, which is RTGS, has expanded the concept of the
“drawee bank” by making all the branches of the drawee bank as the
drawee bank themselves in their own right. Even in the RTGS, there is
a transfer of funds, though through paper entries from the drawee
bank to its another branch which has accepted the cheque for
processing and which makes payment on receiving approval or funds
In this view of the matter, I find neither any illegality nor
transfer.
arbitrariness in the order impugned herein by which the complaint has
been returned to the complainant, which order has been passed on
03/11/2014 by learned Judicial Magistrate, First Class, Nagpur. The
writ petition deserves to be dismissed.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
CRIMINAL WRIT PETITION NO. 951 OF 2014
Smt. Sangita wd/o Ajay Shah
.. Versus ..
Judicial Magistrate, First Class..
(deleted vide order dtd. 5/12/2014).
Sukrant s/o Harilal Shah,
CORAM : S. B. SHUKRE, J.
DATED : 13th JANUARY, 2015.
2. Leave to amend paragraph No.13, after accepting
unconditional apology tendered by learned Counsel for the petitioner,
is granted. He states that the contentions made therein are absolutely
unintentional and without really meaning what is mentioned therein.
Accordingly, the portion starting from the words, “But it is mentioned
therein..... to the last line ending with the words, “....and illogical
interpretation” are permitted to be deleted. Amendment to be carried
out forthwith.
3. Heard.
4. Rule. Rule made returnable forthwith. Heard finally by
The whole crux of the issue involved in this case is about
5.
consent.
understanding of the concept of “the drawee bank”. In the case of
Dashrath Rupsingh Rathod Vs. State of Maharashtra and another
(Criminal Appeal No. 2287 of 2009) the Hon'ble Apex Court has held
that it is the Court within whose territorial jurisdiction the drawee
bank has dishonoured the cheque which has jurisdiction to deal with
the complaint filed under Section 138 of the Negotiable Instruments
Act.
6.
According to learned Counsel for the petitioner, the concept
of the drawee bank has been enlarged after the advent of Real Time
Gross Settlement (RTGS) system. He submits that this is a system
wherein payments are made to the payee of the cheques by any of the
branches of the same bank on one of whose branches the cheque is
drawn, across the country whenever they are presented to any of those
branches and, therefore, any or all of these branches of the bank, for
the purposes of Section 138 of the Negotiable Instruments Act, 1881
(hereinafter called N. I. Act) offence, can be called as the drawee bank.
This contention has been opposed by learned Counsel for the
respondent, Shri Daga, who submits that RTGS system is only the
system for expediting payment of amounts of cheque which does not
expand the concept of “drawee bank” and nothing more.
In support of his contentions, learned Counsel for the
7.
petitioner has produced before the Court the answers given by Reserve
Bank of India to various queries made in relation to the doubts arising
from RTGS system. Copy of these answers is taken on record and for
the purpose of identification, it is marked as document 'X'. On perusal
of the answers given by Reserve Bank of India, it becomes quite clear,
as rightly submitted by learned Counsel for the respondent, that the
system called as RTGS is really a system meant for facilitating speedy
payment of amounts of the cheque by reducing to minimum the time
taken for processing of cheque and it has got nothing to do with, which
is the drawee bank and which is not. In conventional processing of
cheques, considerable time is spent on obtaining instructions regarding
payment or otherwise from the branch of the Bank on which cheque is
drawn and where the funds are physically lodged. This processing time
is saved in RTGS mode of payment by taking resort to modern
technology which has, through webworld or internet, made it possible
to quickly access information including information contained in Bank
accounts under certain conditions. At this juncture, it must be
understood that there is a difference between processing of cheque for
the purpose of making payment and giving nod or approval to the
processing branch for payment. The branch which processes the
cheque in the sense obtains approval for payment of the branch where
funds are actually and physically held and makes the payment can only
be called as the processing or facilitator branch. Such branch cannot
be called as the “dawee” within the meaning of Section 7, N. I. Act,
which defines the term “drawee” as the person directed under the bill
of exchange or cheque by it's maker to pay. Such a direction can be
given and is given only to the branch where the account is actually
opened and maintained and funds are physically held. If this were not
true, there would be no need to seek transfer of funds by processing
branch to it from the branch where the drawer of the cheque has
maintained a physical account. Therefore, there can be only one
drawee bank and not several and when the RTGS cheques bear an
endorsement “payable at all our branches” it only means “payment
instructions expedited” enabling receipt thereof immediately. Such an
endorsement, however, cannot be seen as a direction independently
made, dehors the branch, where funds are physically available, to the
processing branch to pay. All these conclusions can be seen as arising
logically from the clarifications given by the Reserve Bank of India of
which judicial notice can be taken and is taken They are discussed in
8.
subsequent paragraphs.
In the answer to question No.1, the Reserve Bank of India
has made it clear that 'Real Time' means the time taken for processing
of instructions at the time they are received rather than at some later
time and “Gross Settlement” means the settlement of funds transfer
instructions which occurs individually on an instruction to instruction
basis. It is also made clear that cheques are immediately processed by
the branch to which they are presented because of the fact that funds
are to be settled only in the books of the Reserve Bank of India. There
is a question No.4 which also broadly indicates the nature of system
called RTGS. Answer to this question further makes it clear that what
is contemplated under RTGS is only transfer of funds by the drawee
bank where they are actually and physically maintained to the other
branch of the bank which has received the cheque for making payment
of the amount thereunder. The question and answer thereto read as
under.:
“Q4. What is the time taken for effecting funds transfer
from one account to another under RTGS?
Ans. Under normal circumstances the beneficiary
branches are expected to receive the funds in real time as
soon as funds are transferred by the remitting bank. The
beneficiary bank has to credit the beneficiary's account
within 30 minutes of receiving the funds transfer
message.”
9.
From the above clarifications, it would be clear that RTGS
only contemplates transfer of funds from one branch of the bank
where they are actually and physically held to the other branch of the
bank which has received the cheque for processing and payment of the
amount thereunder and this transfer of funds must take place within a
time which is of not more than 30 minutes and if there is no transfer of
funds from the bankbranch where they are actually and physically
held, the payment of the cheque amount cannot be made. In other
words, refusal to transfer funds would be the factor determining what
is considered as dishonour of cheque by the the Hon'ble Apex Court in
the judgment in the case of Dashrath Rupsingh Rathod. It would then
follow that when funds are not transferred for the reason of
insufficiency of funds, etc. as contemplated under Section 138 of the
N. I. Act by the drawee or remitting bank (the term used by Reserve
Bank of India in it's above answer to describe the drawee bank), the
essential ingredient of dishonour of cheque is fulfilled. It means that
dishonour of cheque takes place because of failure or refusal to
transfer funds and therefore, it takes place at the place where the bank
which so fails or refuses, which is the “drawee bank”, is situated.
Therefore, the petitioner cannot be allowed to say that the system of
funds transfer, which is RTGS, has expanded the concept of the
“drawee bank” by making all the branches of the drawee bank as the
drawee bank themselves in their own right. Even in the RTGS, there is
a transfer of funds, though through paper entries from the drawee
bank to its another branch which has accepted the cheque for
processing and which makes payment on receiving approval or funds
In this view of the matter, I find neither any illegality nor
10.
transfer.
arbitrariness in the order impugned herein by which the complaint has
been returned to the complainant, which order has been passed on
03/11/2014 by learned Judicial Magistrate, First Class, Nagpur. The
writ petition deserves to be dismissed.
Interim stay granted by this Court on 19/11/2014, at the
request of learned Counsel for the petitioner, is extended by ten days
to enable the petitioner to resort to appropriate remedy in law.
The writ petition stands dismissed.
Rule is discharged.
JUDGE
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