according to the amendment :
(1) 'A' holds an account with the Navrangpura Branch,
Ahmedabad, of 'XYZ' Bank, issues a cheque payable at
par in favour of 'B'. 'B' holds an account with the M.S.
University Road Branch, Vadodara, of the 'PQR' Bank,
deposits the said cheque at the Surat Branch of the 'PQR'
Bank and the cheque is dishonoured. The complaint will
have to be filed before the Court having the local
jurisdiction where the M.S.University Road Branch,
Vadodara, of the 'PQR' Bank is situated.
(2) 'A' holds an account with the Navranpura Branch,
Ahmedabad, of 'XYZ' Bank, issues a cheque payable at
par in favour of 'B'. 'B' presents the said cheque at the
Vadodara Branch of the 'XYZ' Bank (but 'B' does not hold
account in any branch of the 'XYZ' Bank) and the cheque
is dishonoured. The complaint will have to be filed before
the Court having the local jurisdiction where the
Navrangpura Branch, Ahmedabad, of the 'XYZ' Bank is
situated.
Therefore, to summarise, first, when the cheque is
delivered for collection through an account, the complaint is to
be filed before the Court where the branch of the bank is
situated, where the payee or the holder in due course
maintains his account and, secondly, when the cheque is
presented for payment over the counter, the complaint is to be
filed before the Court where the drawer maintains his account.
Secondly, once a complaint for dishonour of the cheque is
filed in one particular Court at a particular place, then later on
if there is any other cheque of the same party (drawer) which
has also dishonoured, then all such subsequent complaints for
dishonour of the cheques against the same drawer will also
have to be filed in the same Court (even if the person presents
them in some bank in some other city or area). This would
ensure that the drawer of the cheques is not harassed by filing
multiple complaints for dishonour at different places. It
necessarily implies that even multiple complaints for dishonour
of cheques against the same party can be filed only in one
Court even though the cheques might have been presented in
different banks at different places.
Thirdly, all criminal complaints for dishonour of cheques
pending as on 15th June 2015 in different Courts in India would
be transferred to the Court which has the jurisdiction to try
such case in the manner mentioned above, i.e. such pending
cases will stand transferred to the Court having jurisdiction
over the place where the bank of the payee is located. If there
are multiple complaints of dishonour pending between the
same parties as on 15th June 2015, then all such complaints
would be transferred to the Court having jurisdiction to try the
first case.
To put it briefly, the (Amendment) Act takes care of the
interest of the payee of the cheque while, at the same time,
also takes care to see that the drawer of the multiple cheques
is not harassed by filing different complaints at different
locations to harass him (if more than one cheque is bounced).
The (Amendment) Act virtually supersedes the decision of
the Supreme Court in the case of Dashrath Rupsingh Rathod
(supra).
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION NO. 13062 of 2011
BRIJENDRA ENTERPRISE C/O SHAIL ENTERPRISE &
Versus
STATE OF GUJARAT & 1.
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 30/03/2016
Criminal Procedure, 1973, the applicants – original accused
persons seek to invoke the inherent powers of this Court,
praying for quashing of the proceedings of the Criminal Case
No.8758 of 2009 filed in the Court of the learned Metropolitan
Magistrate (Negotiable Instruments Act), Court No.7,
Ahmedabad. They have also prayed to quash the order dated
3rd April 2010 passed below application Exh.3, by which the
learned Magistrate recorded a finding that it had the territorial
jurisdiction to proceed with the case. The applicant no.1 is a
proprietory concern of which the applicant no.2 is the
proprietor.
The facts of this case may be summarised as under :
The respondent no.2, a company registered under the
provisions of the Companies Act, 1956, filed a private
complaint No.8758 of 2009 in the Court of the learned
Metropolitan Magistrate (Negotiable Instruments Act), Court
No.7, Ahmedabad, for dishonour of the cheque punishable
under Section 138 of the Negotiable Instruments Act, 1881 (for
short, 'the Act').
It the case of the respondent no.2 that it had business
relations with the accused. The accused had been purchasing
the goods from them as ordered. The accused issued a cheque
bearing No.064039 dated 4th June 2009 drawn on the Union
Bank of India for the amount of Rs.15,21,741=00 duly signed
by him as the proprietor of the proprietory concern.
The cheque was drawn by the accused no.2 of the
account maintained by him with the Union Bank of India,
Badalapur, District Jaunpur, State of Uttar Pradesh. The
complainant deposited the cheque with the ICICI Bank Limited,
Gorakhpur Branch, Gorakhpur, State of Uttar Pradesh. The
cheque was dishonoured as the funds were insufficient in the
account maintained by the complainant with the Union Bank of
India. The complainant issued a statutory notice under Section
138 of the Act dated 6th July 2009. As the complainant failed to
make the payment with the statutory time period, the
complaint was lodged. The learned Magistrate took cognizance
upon the said complaint.
It appears that the accused herein filed an application
Exh.3, stating therein that as the entire transaction had taken
place in the State of Uttar Pradesh, the Court at Ahmedabad
had no territorial jurisdiction to entertain the complaint for the
dishonour of the cheque although the registered office of the
complainant is situated in Ahmedabad.
The learned Magistrate, by order dated 3rd April 2010,
rejected the application. Hence, this petition.
On 19th September 2011, this Court passed the following
order :
“Notice to the Respondents returnable on 10.10.2011.
Learned APP Mr.K.P.Raval waives service of Notice for
Respondent No.1 – State of Gujarat.
Ad interim relief in terms of paragraph 7(C) is granted till
then.”
Mr.Bipin Mehta, the learned advocate appearing for the
applicants, vehemently submitted that when the entire
transaction took place at Uttar Pradesh, the complaint could
not have been filed by the complainant in Ahmedabad on the
premise that it has its registered office at Ahmedabad. He
submitted that no cause of action could be said to have arisen
within the territorial limits of the learned Metropolitan
Magistrate, Ahmedabad. In such circumstances, he prays that
the order passed by the learned Magistrate below application
Exh.3 be quashed and the complaint be returned to the
complainant to be filed before the appropriate Court in the
State of Uttar Pradesh.
On the other hand, this application has been vehemently
opposed by Mr.Gaurav Mathur, the learned counsel appearing
for the respondent no.2 – original complainant.
Mr.Mathur invited my attention to the affidavit-in-reply
filed on behalf of the complainant, inter alia, stating that :
“3. The contents of paragraph nos.1 and 2 are formal in
nature and do not warrant any comments.
4. With reference to the contents of paragraph nos. 3.1
to 3.6, I submit that the place at which the Petitioners are
carrying on business is not relevant for the purpose of
determining jurisdiction for legal proceedings, more
particularly, proceedings under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter referred to
as 'the Act'). It is denied that the Petitioner has no
business dealings with the Answering Respondent at its
Ahmedabad office. I say that the Petitioner has
purchased goods manufactured by the Answering
Respondent. The order for the goods delivered are
processed at Ahmedabad office. The Answering
Respondent in turns maintains a current and running
account of the purchasers, in the present case, the
Petitioners herein. The Invoices issued for the goods
dispatched were subject to Ahmedabad Jurisdiction. Copy
of a sample invoices dt. 12.02.09 & 05.03.09 in respect
of the Petitioners are annexed hereto and marked
Annexure - A (Colly). The Petitioners have issued the
subject cheques in discharge of their obligation to make
payment for the goods purchased. The said payment is
payable at Ahmedabad.
5. I submit that since the Answering Respondent
undertakes numerous transactions all across India, the
Answering Respondent has entered into a CMS (Cash
Management Service) agreement with its bankers, ICICI
Bank Limited. In the said system, a centralised pooling
account is created at Ahmedabad. Cheques received by
the Answering Respondent at any place in India can be
deposited in any ICICI Bank Ltd branch in India and the
credit thereof is made available at the Central Pooling
Account in Ahmedabad. Such a system has been worked
out in order to simplify the banking transactions of large
corporations and obviate delay in realizing payments. In
the facts of the present case. the subject cheque, though
deposited, the credit of dishonour cheque was to be
given to the centralised pooling account of the Answering
Respondent at Ahmedabad. On account of its dishonour,
the intimation thereof was given by the ICICI Bank
Limited, JMC House, Ahmedabad branch to the Answering
Respondent at its Ahmedabad office. A certificate dated
26.12.2011 issued by the ICICI Bank Limited, Ahmedabad
to this effect is annexed hereto and marked Annexure-B.
I state that the notice u/s 138 of the Act was issued to
the Petitioners from Ahmedabad. As such necessary
ingredients for instituting proceedings u/s 138 of the Act
at Ahmedabad are fulfilled and the Criminal Case
No.8758 of 2009 is rightly instituted before the court of
Ld. Metropolitan Magistrate, Court No. 7 at Ahmedabad.
6. I, however, deny that the Answering Respondent is
required to prove that the said cheque was issued in
discharge of a legal liability, as alleged or at all. I submit
that once a cheque is issued, it is presumed to be issued
in discharge of a debt. The onus to prove to the contrary
is on the issuer of the cheque. In any case, the
Complainants have not denied the fact that they have
purchased goods from the Answering Respondent and
issued the subject cheque for payment of the price of
goods.
7. With reference to the contents of Grounds (A) to (H), I
deny that the impugned FIR is an abuse of the process or
an attempt to harass the Petitioners, as alleged or at all.
It is not open to the Petitioners, having not paid the price
of goods, to allege harassment. I deny that the impugned
complaint is unsustainable or that the Ld. Magistrate did
not have jurisdiction to try the case, as alleged or at all. I
deny that the Petitioners' place of residence or business
or place of handing over the cheque is relevant for
deciding the territorial jurisdiction for a complaint under
Section 138 of the Act. The Petitioners have admitted
that one of the vital elements for deciding jurisdiction i.e.
place from which notice is issued is at Ahmedabad. I
deny that the case of Harman Electronics is applicable to
the facts of the present case. In the facts of that case, it
was not known where the intimation of dishonour of
cheque is received. On the contrary, in the facts of the
present case, it is clear that the notice of intimation of
dishonour of cheque was received at Ahmedabad. It is
denied that the complaint is general or vague or does not
create an offence under Section 138 of the Act. The
offence was created pursuant to non- payment of the
amount of dishonoured cheque pursuant to the Notice
dated 6.7.2009 issued under Section 138 of the Act. It is
denied that the Complaint suffers from the vice of nondisclosure
or is vitiated, as alleged or at all. I deny that
the complainant requires to plead or prove as to
pursuant to which business deal or order is the
dishonoured cheque issued, as alleged or at all. I deny
that the impugned Complaint and Order dated 8.9.2009
issuing summons deserve to be quashed and set aside. I
submit that the contentions 'raised in the said Petition
are nothing but an after thought, raised only to avoid the
proceedings instituted under provisions of the Act.”
Thus, it appears from the stance of the complainant that
it had entered into a cash management service agreement
with its banker i.e. ICICI Bank Limited. In the said system, a
centralized pooling account is created at Ahmedabad. The
cheques received by the complainant at any place in India
could be deposited in any branch of the ICICI Bank Limited in
India and the credit thereof would be given at the centralized
pooling account in Ahmedabad.
Mr.Mathur, the learned counsel appearing for the
complainant submitted that such system has been introduced
with a view to simplify the banking transactions of large
corporations. It would obviate the delay in realizing payments.
He submitted that although the cheque was handed over by
the accused in the State of Uttar Pradesh and deposited also in
the ICICI Bank at Uttar Pradesh, yet the credit of the
dishonoured cheque was to be given to the centralized pooling
account of the company at Ahmedabad. He submitted that the
intimation of dishonour was given by the ICICI Bank Limited
having its office at the JMC House, Ahmedabad.
In such circumstances referred to above, according to
Mr.Mathur, since the intimation of the dishonour of the cheque
was received by the complainant from the ICICI Bank Limited
situated in Ahmedabad, the complaint is maintainable in the
Court of the learned Metropolitan Magistrate, Ahmedabad.
Having heard the learned counsel appearing for the
parties and having considered the materials on record, the
only question that falls for my consideration is, whether the
Court of the learned Metropolitan Magistrate, Ahmedabad, has
the territorial jurisdiction to try the offence of dishonour of
cheque, punishable under Section 138 of the Act.
This matter is of the year 2011. The same will have to be
now considered keeping in mind the Negotiable Instruments
(Amendment) Act, 2015.
The President of India promulgated an Ordinance called,
the “Negotiable Instruments (Amendment) Ordinance, 2015”,
on 15th June 2015, effecting certain amendments in the
Negotiable Instruments Act, 1881. The jurisdiction to file
complaints of dishonour of cheques has now been changed by
virtue of the said Ordinance, superseding the judgment of the
Supreme Court in the case of Dashrath Rupsingh Rathod v.
State of Maharashtra, (2014) 9 SCC 129. A complaint for the
dishonour of cheque under Section 138 of the Act needs to be
now filed in a Court at a place in accordance with the
provisions of Section 142(2) of the Act, which has been
inserted by the new Ordinance referred to above. According to
the new Ordinance, even the pending cases would stand
transferred to the Courts.
In Dashrath Rupsingh Rathod (supra), a three Judge
bench of the Supreme Court took the view that a complaint for
dishonour of cheque can be filed only in a Court which has the
territorial jurisdiction over the place where the cheque is
dishonoured by the bank on which it is drawn. Thus, if a
cheque is drawn by a person of the account maintained with
his bank at Ahmedabad, the complaint for dishonour in respect
of such cheque could be filed only in a Court at Ahmedabad
within whose territorial jurisdiction the said bank is located.
According to the decision of the Supreme Court, such a case
cannot be filed in any other Court at any other place. For
example, if 'X' is the payee of the cheque and if he presents a
cheque for clearing at Vadodara, it cannot be filed at
Vadodara. The judgment of the Supreme Court proceeded on
the footing that the payee of a cheque should not necessarily
harass the drawer of the cheque by filing complaint for
dishonour at the place of his choice by deliberately choosing a
different place for presenting the cheque or for sending the
notice, etc. The above was the position according to the
decision of the Supreme Court.
It appears that the Legislature took notice of the
difficulties experienced by the people at large and, therefore,
thought fit to introduce the amendment by way of an
Ordinance in the Act itself.
The Negotiable Instruments (Amendment) Ordinance,
2015 (No.6 of 2015) was promulgated by the President of India
further to amend the Negotiable Instruments Act. The
Ordinance was published in the Gazette, dated 15th June 2015.
As per the Ordinance, sub-section (2) of Section 142 of the
Negotiable Instruments Act was inserted, which reads as
follows:
"(2) The offence under Section 138 shall be inquired into
and tried only by a Court within whose local jurisdiction:--
(a) If the cheque is delivered for collection through
an account, the branch of the Bank where the
payee or holder in due course, as the case may be,
maintains the account, is situated: or
(b) If the cheque is presented for payment by the
payee or holder in due course otherwise through an
account, the branch of the drawee bank where the
drawer maintains the account, is situated.
Explanation.--For the purposes of Clause (a), where a
cheque is delivered for collection at any branch of the
Bank of the payee or holder in due course, then, the
cheque shall be deemed to have been delivered to the
branch of the Bank in which the payee or holder in due
course, as the case may be, maintains the account."
By the said Ordinance, Section 142A was inserted in the
Principal Act. Section 142A reads as follows:
"142A.--(1) Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974) or any
judgment, decree, order or directions of any Court, all
cases arising out of Section 138 which were pending in
any Court, whether filed before it, or transferred to it,
before the commencement of the Negotiable Instruments
(Amendment) Ordinance, 2015 shall be transferred to the
Court having jurisdiction under sub-section (2) of Section
142 as if that sub-section had been in force at all
material times.
(2) Notwithstanding anything contained in sub-section (2)
of Section 142 or sub-section (1), where the payee or the
holder in due course, as the case may be, has filed a
complaint against the drawer of a cheque in the Court
having jurisdiction under sub-section (2) of Section 142
or the case has been transferred to that Court under subsection
(1), and such complaint is pending in that Court,
all subsequent complaints arising out of Section 138
against the same drawer shall be filed before the same
Court irrespective of whether those cheques were
delivered for collection or presented for payment within
the territorial jurisdiction of that Court.
(3) If, on the date of the commencement of the
Negotiable Instruments (Amendment) Ordinance, 2015,
more than one prosecution filed by the same payee or
holder in due course, as the case may be, against the
same drawer of cheques is pending before different
Courts, upon the said fact having been brought to the
notice of the Court, such Court shall transfer the case to
the Court having jurisdiction under sub-section (2) of
Section 142 before which the first case was filed and is
pending, as if that sub-section had been in force at all
material times."
The Negotiable Instruments (Amendment) Ordinance,
2015 (Ordinance 6 of 2015) came to be replaced with the
Negotiable Instruments (Amendment) Bill, 2015. The
Negotiable Instruments (Amendment) Bill, 2015, inter alia,
provides for the following, namely :
(i) cases relating to dishonor of cheques under section
138 of the said Act to be inquired and tried only by a
court within whose local jurisdiction the branch of the
bank, where the payee or the holder in due course
maintains the account, is situated;
(ii) cases under section 138 pending in any court before
the commencement of the proposed legislation to be
transferred to the court in accordance with the new
scheme of jurisdiction for such cases as proposed under
sub-section (2 ) of section 142;
(iii) where a complaint has been filed against the drawer
of a cheque in the court having jurisdiction under the new
scheme of jurisdiction, all subsequent complaints arising
out of section 138 of the said Act against the same
drawer shall be filed before the same court, irrespective
of whether those cheques were presented for payment
within the territorial jurisdiction of that court;
(iv) where, if more than one prosecution filed by the
same payee or holder in due course against the same
drawer of cheques is pending before different courts,
upon the said fact having been brought to the notice of
the court, the court shall transfer the case of the court
having jurisdiction as per the new scheme of jurisdiction
proposed under sub-section (2 ) of section 142; and
(v) amending Explanation I under section 6 of the said
Act which relates to the meaning of expression “a cheque
in the electronic form”, as the said meaning is found to
be deficient because it presumes drawing of a physical
cheque, which is not the objective in preparing “a cheque
in the electronic form” and therefore, inserting a new
Explanation III in the said section giving reference of the
expressions contained in the Information Technology Act,
2000.
The (Amendment) Act, 2015, provides as under :
“5. (1) The Negotiable Instruments (Amendment)
Ordinance, 2015, is hereby repealed.
(2) Notwithstanding such repeal, anything done or any
action taken under the principal Act, as amended by the
said Ordinance, shall be deemed to have been done or
taken under the corresponding provisions of the principal
Act, as amended by this Act.”
In view of the amendment, a complaint for dishonour of
cheque under Section 138 of the Act can be now filed only in
the Court situated at the place where the bank, in which the
payee has account, is located.
Let me give an example to understand the jurisdiction
according to the amendment :
(1) 'A' holds an account with the Navrangpura Branch,
Ahmedabad, of 'XYZ' Bank, issues a cheque payable at
par in favour of 'B'. 'B' holds an account with the M.S.
University Road Branch, Vadodara, of the 'PQR' Bank,
deposits the said cheque at the Surat Branch of the 'PQR'
Bank and the cheque is dishonoured. The complaint will
have to be filed before the Court having the local
jurisdiction where the M.S.University Road Branch,
Vadodara, of the 'PQR' Bank is situated.
(2) 'A' holds an account with the Navranpura Branch,
Ahmedabad, of 'XYZ' Bank, issues a cheque payable at
par in favour of 'B'. 'B' presents the said cheque at the
Vadodara Branch of the 'XYZ' Bank (but 'B' does not hold
account in any branch of the 'XYZ' Bank) and the cheque
is dishonoured. The complaint will have to be filed before
the Court having the local jurisdiction where the
Navrangpura Branch, Ahmedabad, of the 'XYZ' Bank is
situated.
Therefore, to summarise, first, when the cheque is
delivered for collection through an account, the complaint is to
be filed before the Court where the branch of the bank is
situated, where the payee or the holder in due course
maintains his account and, secondly, when the cheque is
presented for payment over the counter, the complaint is to be
filed before the Court where the drawer maintains his account.
Secondly, once a complaint for dishonour of the cheque is
filed in one particular Court at a particular place, then later on
if there is any other cheque of the same party (drawer) which
has also dishonoured, then all such subsequent complaints for
dishonour of the cheques against the same drawer will also
have to be filed in the same Court (even if the person presents
them in some bank in some other city or area). This would
ensure that the drawer of the cheques is not harassed by filing
multiple complaints for dishonour at different places. It
necessarily implies that even multiple complaints for dishonour
of cheques against the same party can be filed only in one
Court even though the cheques might have been presented in
different banks at different places.
Thirdly, all criminal complaints for dishonour of cheques
pending as on 15th June 2015 in different Courts in India would
be transferred to the Court which has the jurisdiction to try
such case in the manner mentioned above, i.e. such pending
cases will stand transferred to the Court having jurisdiction
over the place where the bank of the payee is located. If there
are multiple complaints of dishonour pending between the
same parties as on 15th June 2015, then all such complaints
would be transferred to the Court having jurisdiction to try the
first case.
To put it briefly, the (Amendment) Act takes care of the
interest of the payee of the cheque while, at the same time,
also takes care to see that the drawer of the multiple cheques
is not harassed by filing different complaints at different
locations to harass him (if more than one cheque is bounced).
The (Amendment) Act virtually supersedes the decision of
the Supreme Court in the case of Dashrath Rupsingh Rathod
(supra).
It is not in dispute that the accused is a resident of
Badalapur, State of Uttar Pradesh. The cheque in question was
issued at Uttar Pradesh. It appears that the complainant
deposited the cheque with the ICICI Bank Limited, Gorakhpur
Branch, Gorakhpur, Uttar Pradesh. The same was accepted by
the bank without there being any account of the complainant
with the same. It was dishonoured with the intimation “funds
insufficient”. However, as explained by the complainant, the
complainant was to receive the credit of the said cheque at the
centralized pooling account in Ahmedabad. Since the cheque
could not be cleared, the intimation regarding the same was
given by the ICICI Bank Limited, JMC House, Ahmedabad
Branch, to the complainant at its address of the registered
office in Ahmedabad.
Whatever may be the arrangement of the complainant
with its banker, could it be said that the cheque was deposited
in the ICICI Bank Limited at Ahmedabad i.e. the branch which
actually gave intimation to the complainant regarding the
dishonour of the cheque. The argument canvassed on behalf of
the complainant is that since the requisite cheque amount was
to be credited in the account maintained by the company with
the ICICI Bank Limited at Ahmedabad and the intimation of
dishonour was also by the branch of the ICICI Bank Limited at
Ahmedabad, his complaint at Ahmedabad in the Court of the
learned Metropolitan Magistrate is maintainable.
Before adverting to the rival submissions canvassed on
either side, let me look into the decision of the Supreme Court
in the case of Bridgestone India Pvt. Ltd. v. Inderpal Singh,
2016(2) SCC 75.
In the case before the Supreme Court, a cheque drawn on
the Union Bank of India, Chandigarh, was issued by the
respondent to the appellant. The appellant presented the
cheque at the IDBI Bank in Indore. The appellant received
intimation of its being dishonoured on account of “exceeds
arrangement” at Indore. The appellant issued a legal notice,
which was served on the respondent, demanding the amount
depicted in the cheque. Ultimately, proceedings were initiated
by the appellant in the Court of the learned JMFC, Indore,
under Section 138 of the Negotiable Instruments Act. The
respondent preferred an application before the learned JMFC,
Indore, Madhya Pradesh, under Section 177 of the Code of
Criminal Procedure, contesting the territorial jurisdiction with
respect to the cheque drawn on the Union Bank of India,
Chandigarh. The prayer made by the respondent that the
learned JMFC, Indore, did not have the jurisdiction to entertain
the proceedings initiated by the appellant was declined on 2nd
June 2009. The respondent being dissatisfied with the order
passed by the learned JMFC, Indore, preferred a petition under
Section 482 of the Code in the High Court of Madhya Pradesh
before its Indore Bench. The High Court remitted the case to
the learned JMFC, Indore, directing him to pass a fresh order
after taking into consideration some additional documents
relied upon and the judgments. The learned JMFC, Indore, once
again passed an order, holding that he had the territorial
jurisdiction to adjudicate the controversy raised by the
appellant under Section 138 of the Act. The matter again
reached to the High Court and the High Court took the view
that the jurisdiction lay only before the Court wherein the
original drawee bank was located, namely, at Chandigarh. The
appellant, being dissatisfied with the order passed by the High
Court of Madhya Pradesh, approached the Supreme Court. The
Supreme Court, while allowing the appeal of the appellant and
set-asiding the order passed by the High Court of Madhya
Pradesh, observed thus :
“[9] During the course of hearing, learned counsel for the
appellant cited the decision rendered by a three-Judge
Bench of this Court in Dashrath Rupsingh Rathod vs.
State of Maharashtra and another, 2014 9 SCC 129, and
pointedly invited our attention to the conclusions drawn
by this Court in paragraph 58, which is extracted
hereunder:
"58. To sum up:
58.1 An offence under Section 138 of the
Negotiable Instruments Act, 1881 is committed no
sooner a cheque drawn by the accused on an
account being maintained by him in a bank for
discharge of debt/liability is returned unpaid for
insufficiency of funds or for the reason that the
amount exceeds the arrangement made with the
bank.
58.2 Cognizance of any such offence is however
forbidden under Section 142 of the Act except upon
a complaint in writing made by the payee or holder
of the cheque in due course within a period of one
month from the date the cause of action accrues to
such payee or holder under clause (c) of proviso to
Section 138.
58.3 The cause of action to file a complaint accrues
to a complainant/payee/holder of a cheque in due
course if
(a) the dishonoured cheque is presented to
the drawee bank within a period of six months
from the date of its issue.
(b) If the complainant has demanded payment
of cheque amount within thirty days of receipt
of information by him from the bank regarding
the dishonour of the cheque, and
(c) If the drawer has failed to pay the cheque
amount within fifteen days of receipt of such
notice.
58.4 The facts constituting cause of action do not
constitute the ingredients of the offence under
Section 138 of the Act.
58.5 The proviso to Section 138 simply
postpones/defers institution of criminal proceedings
and taking of cognizance by the court till such time
cause of action in terms of clause (c) of proviso
accrues to the complainant.
58.6 Once the cause of action accrues to the
complainant, the jurisdiction of the Court to try the
case will be determined by reference to the place
where the cheque is dishonoured.
58.7 The general rule stipulated under Section 177
CrPC applies to cases under Section 138 of the
Negotiable Instruments Act. Prosecution in such
cases can, therefore, be launched against the
drawer of the cheque only before the court within
whose jurisdiction the dishonour takes place except
in situations where the offence of dishonour of the
cheque punishable under Section 138 is committed
along with other offences in a single transaction
within the meaning of Section 220(1) read with
Section 184 of the Code of Criminal Procedure or is
covered by the provisions of Section 182(1) read
with Sections 184 and 220 thereof."
In view of the decision rendered by this Court in Dashrath
Rupsingh Rathod's case, it is apparent, that the
impugned order dated 05.05.2011, passed by the High
Court of Madhya Pradesh, Bench at Indore, was wholly
justified.
10. In order to overcome the legal position declared by
this Court in Dashrath Rupsingh Rathod's case, learned
counsel for the appellant has drawn our attention to the
Negotiable Instruments (Amendment) Second Ordinance,
2015 (hereinafter referred to as 'the Ordinance'). A
perusal of Section 1(2) thereof reveals, that the
Ordinance would be deemed to have come into force
with effect from 15.06.2015. It is therefore pointed out to
us, that the Negotiable Instruments (Amendment)
Second Ordinance, 2015 is in force. Our attention was
then invited to Section 3 thereof, whereby, the original
Section 142 of the Negotiable Instruments Act, 1881,
came to be amended, and also, Section 4 thereof,
whereby, Section 142A was inserted into the Negotiable
Instruments Act. Sections 3 and 4 of the Negotiable
Instruments (Amendment) Second Ordinance, 2015 are
being extracted hereunder:
"3. In the principal Act, section 142 shall be
numbered as sub-section (1) thereof and after subsection
(1) as so numbered, the following sub-section
shall be inserted, namely:-
(2) The offence under section 138 shall be
inquired into and tried only by a court within
whose local jurisdiction,--
(a) if the cheque is delivered for collection
through an account, the branch of the bank
where the payee or holder in due course, as
the case may be, maintains the account, is
situated; or
(b) if the cheque is presented for payment by
the payee or holder in due course otherwise
through an account, the branch of the drawee
bank where the drawer maintains the account,
is situated.
Explanation For the purposes of clause (a), where a
cheque is delivered for collection at any branch of
the bank of the payee or holder in due course, then,
the cheque shall be deemed to have been delivered
to the branch of the bank in which the payee or
holder in due course, as the case may be, maintains
the account."
4. In the principal Act, after section 142, the
following section shall be inserted, namely:-
“142A. (1) Notwithstanding anything
contained in the Code of Criminal Procedure,
1973 or any judgment, decree, order or
directions of any court, all cases transferred to
the court having jurisdiction under sub-section
(2) of section 142, as amended by the
Negotiable Instruments (Amendment)
Ordinance, 2015, shall be deemed to have
been transferred under this Ordinance, as if
that sub-section had been in force at all
material times.
(2) Notwithstanding anything contained in
subsection (2) of section 142 or sub-section
(1), where the payee or the holder in due
course, as the case may be, has filed a
complaint against the drawer of a cheque in
the court having jurisdiction under sub-section
(2) of section 142 or the case has been
transferred to that court under subsection (1),
and such complaint is pending in that court,
all subsequent complaints arising out of
section 138 against the same drawer shall be
filed before the same court irrespective of
whether those cheques were delivered for
collection or presented for payment within the
territorial jurisdiction of that court.
(3) If, on the date of the commencement of
this Ordinance, more than one prosecution
filed by the same payee or holder in due
course, as the case may be, against the same
drawer of cheques is pending before different
courts, upon the said fact having been
brought to the notice of the court, such court
shall transfer the case to the court having
jurisdiction under sub-section (2) of section
142, as amended by the Negotiable
Instruments (Amendment) Ordinance, 2015,
before which the first case was filed and is
pending, as if that subsection had been in
force at all material times."
A perusal of the amended Section 142(2), extracted
above, leaves no room for any doubt, specially in
view of the explanation thereunder, that with
reference to an offence under Section 138 of the
Negotiable Instruments Act, 1881, the place where
a cheque is delivered for collection i.e. the branch
of the bank of the payee or holder in due course,
where the drawee maintains an account, would be
determinative of the place of territorial jurisdiction.
11. It is, however, imperative for the present controversy,
that the appellant overcomes the legal position declared
by this Court, as well as, the provisions of the Code of
Criminal Procedure. Insofar as the instant aspect of the
matter is concerned, a reference may be made to Section
4 of the Negotiable Instruments (Amendment) Second
Ordinance, 2015, whereby Section 142A was inserted
into the Negotiable Instruments Act. A perusal of Subsection
(1) thereof leaves no room for any doubt, that
insofar as the offence under Section 138 of the
Negotiable Instruments Act is concerned, on the issue of
jurisdiction, the provisions of the Code of Criminal
Procedure, 1973, would have to give way to the
provisions of the instant enactment on account of the
non-obstante clause in sub-section (1) of Section 142A.
Likewise, any judgment, decree, order or direction issued
by a Court would have no effect insofar as the territorial
jurisdiction for initiating proceedings under Section 138
of the Negotiable Instruments Act is concerned. In the
above view of the matter, we are satisfied, that the
judgment rendered by this Court in Dashrath Rupsingh
Rathod's case would also not non-suit the appellant for
the relief claimed.
12. We are in complete agreement with the contention
advanced at the hands of the learned counsel for the
appellant. We are satisfied, that Section 142(2)(a),
amended through the Negotiable Instruments
(Amendment) Second Ordinance, 2015, vests jurisdiction
for initiating proceedings for the offence under Section
138 of the Negotiable Instruments Act, inter alia in the
territorial jurisdiction of the Court, where the cheque is
delivered for collection (through an account of the branch
of the bank where the payee or holder in due course
maintains an account). We are also satisfied, based on
Section 142A(1) to the effect, that the judgment
rendered by this Court in Dashrath Rupsingh Rathod's
case, would not stand in the way of the appellant, insofar
as the territorial jurisdiction for initiating proceedings
emerging from the dishonor of the cheque in the present
case arises.
13. Since cheque No.1950, in the sum of Rs.26,958/-,
drawn on the Union Bank of India, Chandigarh, dated
02.05.2006, was presented for encashment at the IDBI
Bank, Indore, which intimated its dishonor to the
appellant on 04.08.2006, we are of the view that the
Judicial Magistrate, First Class, Indore, would have the
territorial jurisdiction to take cognizance of the
proceedings initiated by the appellant under Section 138
of the Negotiable Instruments Act, 1881, after the
promulgation of the Negotiable Instruments
(Amendment) Second Ordinance, 2015. The words "...as
if that sub-section had been in force at all material
times..." used with reference to Section 142(2), in Section
142A(1) gives retrospectivity to the provision.
14. In the above view of the matter, the instant appeal is
allowed, and the impugned order passed by the High
Court of Madhya Pradesh, by its Indore Bench, dated
05.05.2011, is set aside. The parties are directed to
appear before the Judicial Magistrate, First Class, Indore,
on 15.01.2016. In case the complaint filed by the
appellant has been returned, it shall be re-presented
before the Judicial Magistrate, First Class, Indore, Madhya
Pradesh, on the date of appearance indicated
hereinabove. ”
Thus, the decision of the Supreme Court makes it clear
that the offence under Section 138 of the Act can be inquired
into and tried only by a Court within whose local jurisdiction
the bank branch of the payee, where the payee presents the
cheque for payment, is situated. Indisputably, in the case in
hand, the cheque was collected by the complainant at Uttar
Pradesh and was presented in the ICICI Bank Limited,
Gorakhpur Branch, Gorakhpur, Uttar Pradesh. Thereafter, the
bank acted according to the cash management service
agreement as explained by me earlier.
The new banking system provides that the payee can
present the cheque for collection in any branch of the ICICI
Bank anywhere in the country without there being any account
being maintained in the said branch. The branch bank which
accepts the cheques will thereafter process the same, and as
explained above, the credit of the requisite amounts
mentioned in the cheque would be given in the centralized
pooling account, i.e. like in the present case, in the centralized
pooling account maintained by the complainant at
Ahmedabad.
At this stage, it is important to look into the explanation
in Section 142(2). The explanation provides that for the
purposes of clause (a), where a cheque is delivered for
collection at any branch of the bank of the payee or the holder
in due course, then, the cheque shall be deemed to have been
delivered to the branch of the bank in which the payee or the
holder in due course, as the case may be, maintains the
account. For example, like in the present case, the cheque was
delivered for collection at the ICICI Bank, Gorakhpur branch,
Uttar Pradesh, where the complainant has no account but, by
virtue of the said explanation, it is deemed to have been
delivered at the ICICI Bank, JMC House Branch, Ahmedabad,
where the account is maintained.
It is now well settled that an Explanation added to a
statutory provision is not a substantive provision in any sense
of the term but as the plain meaning of the word itself shows it
is merely meant to explain or clarify certain ambiguities which
may have crept in the statutory provision. Sarathi in
'Interpretation of Statutes' while dwelling on the various aspect
of an Explanation observes as follows:
"(a) The object of an explanation is to understand the Act
in the light of the explanation.
(b) It does not ordinarily enlarge the scope of the original
section which it explains, but only makes the meaning
clear beyond dispute."
Swarup in 'Legislation and Interpretation' very aptly sums
up the scope and effect of an Explanation thus :
"Sometimes an explanation is appended to stress upon a
particular thing which ordinarily would not appear clearly
from the provisions of the section. The proper function of
an explanation is to make plain or elucidate what is
enacted in the substantive provision and not to add or
subtract from it. Thus an explanation does not either
restrict or extend the enacting part; it does not enlarge
or narrow down the scope of the original section that it is
supposed to explain.......... The Explanation must be
interpreted according to its own tenor; that it is meant to
explain and not vice versa ."
Bindra in 'Interpretation of Statutes' (5th Edn.) at page 67
states thus :
"An explanation does not enlarge the scope of the
original section that it is supposed to explain. It is
axiomatic that an explanation only explains and does not
expand or add to the scope of the original section.... The
purpose of an explanation is, however, not to limit the
scope of the main provision.... The construction of the
explanation must depend upon its terms, and no theory
of its purpose can be entertained unless it is to be
inferred from the language used. An 'explanation' must
be interpreted according to its own tenor."
The principles laid down by the aforesaid authors are fully
supported by various authorities of the Supreme Court. In
Burmah Shell Oil Storage and Distributing Co. of India Ltd. v.
Commercial Tax Officer [(1961) 1 SCR 902 : (AIR 1961 SC
315)], a Constitution Bench decision of the Supreme Court
observed thus :
"Now, the Explanation must be interpreted according to
its own tenor, and it is meant to explain cl. (1)(a) of the
Article and not vice versa . It is an error to explain the
Explanation with the aid of the Article, because this
reverses their roles."
In Bihar Co-operative Development Cane Marketing Union
Ltd. v. Bank of Bihar (1967) 1 SCR 848 : (AIR 1967 SC 389), the
Supreme Court observed thus :
"The Explanation must be read so as to harmonise with
and clear up any ambiguity in the main section. It should
not be so construed as to widen the ambit of the
section."
In Hiralal Rattanlal etc. v. State of U.P. [(AIR 1973 SC
1034)], the Supreme Court observed thus :
"On the basis, of the language of the Explanation this
Court held that it did not widen the scope of clause (c).
But from what has been said in the case, it is clear that if
on a true reading of an Explanation it appears that it has
widened the scope of the main section, effect be given to
legislative intent notwithstanding the fact that the
legislature named that provision as an Explanation. "
In Dattatraya Govind Mahajan v. State of Maharashtra
[(1977) 2 SCR 790: (AIR 1977 SC 915), the Supreme Court
observed thus :
"It is true that the orthodox function of an explanation is
to explain the meaning and effect of the main provision
to which it is an explanation and to clear up any doubt or
ambiguity in it.......... Therefore, even though the
provision in question has been called an Explanation, we
must construe it according to its plain language and not
on any a priori considerations."
Thus, from a conspectus of the authorities referred to
above, it is manifest that the object of an Explanation to a
statutory provision is -
(a) to explain the meaning and intendment of the Act
itself,
(b) where there is any obscurity or vagueness in the main
enactment, to clarify the same so as to make it
consistent with the dominant object which it seems to
subserve,
(c) to provide an additional support to the dominant
object of the Act in order to make it meaningful and
purposeful,
(d) an Explanation cannot in any way interfere with or
change the enactment or any part thereof but where
some gap is left which is relevant for the purpose of the
Explanation, in order to suppress the mischief and
advance the object of the Act it can help or assist the
Court in interpreting the true purport and intendment of
the enactment, and
(e) it cannot, however, take away a statutory right with
which any person under a statute has been clothed or set
at naught the working of an Act by becoming an
hindrance in the interpretation of the same.
A deeming fiction is a supposition of law that the thing is
true without inquiring whether it be so or not, that it may have
the effect of truth so far as it is consistent with justice. A
deeming provision is made to include what is obvious or what
is uncertain or to impose, for the purpose of statute, an
ordinary construction of a word or phrase that would not
otherwise prevail but, in each case, it would be a separate
question as to that what object the Legislature has made on
such a deeming fiction.
The word deemed is used in various senses. Sometimes,
it means generally regarded. At other time, it signifies 'taken
prima facie to be', while in other case, it means, 'taken
conclusively'. Its various meanings are, - 'to deem' is 'to hold in
belief, estimation or opinion'; to judge; adjudge; decide;
considered to be; to have or to be of an opinion; to esteem; to
suppose, to think, decide or believe on considerations; to
account, to regard; to adjudge or decide; to conclude upon
consideration. (see Major Law Lexicon by P.Ramanatha Aiyar,
4th Edition 2010 Vol.2).
I find it difficult to accept the argument of the learned
counsel appearing for the accused that the case in hand is
covered by Section 142(2)(b). The argument is that as the
cheque was delivered for collection at the ICICI Bank,
Gorakhpur branch, Uttar Pradesh, without any account
maintained in the said branch, it could be said that the cheque
was presented for payment by the complainant “otherwise
through an account”, and if that be so, the complaint for
dishonour could be filed in a Court within whose local
jurisdiction the branch of the drawee bank where the drawer
maintains the account, is situated. In my view, the words
“otherwise through an account” would mean that the cheque
is presented for payment over the counter.
In the case in hand, there is no question of presenting the
cheque for payment over the counter because the cheque is
crossed. When a cheque is crossed, the holder cannot encash
it at the counter of the bank. The payment of such cheque is
only credited to the bank account of the payee. A cheque is
either 'open' or 'crossed'. An open cheque can be presented by
the payee to the paying banker and is paid over the counter. A
crossed cheque cannot be paid across the counter but must be
collected through a banker. A crossing is a direction to the
paying banker to pay the money generally to a banker or to a
particular banker, and not to pay otherwise. The object of
crossing is to secure payment to a banker so that it could be
traced to the person receiving the amount of the cheque.
Crossing is a direction to the paying banker that the cheque
should be paid only to a banker or a specified banker. To
restrain negotiability, addition of words 'Not Negotiable' or
“Account Payee Only' is necessary. A crossed bearer cheque
can be negotiated by delivery and crossed order cheque by
endorsement and delivery. Crossing affords security and
protection to the holder of the cheque.
Thus, in my view, the learned Metropolitan Magistrate at
Ahmedabad has the jurisdiction to try the case instituted by
the complainant for the dishonour of the cheque.
For the aforesaid reasons, this application fails and is
hereby rejected. The ad-interim relief granted earlier stands
vacated forthwith.
The trial Court shall now proceed further with the
Criminal Case and dispose it off expeditiously.
(J.B.PARDIWALA, J.)
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