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Sec.138 N.I.Act – Sec.201 of Cr.p.c. – Power of magistrate to recall it’s orders – Jurisdiction of court for cheque bounce case = (i) Whether the Magistrate after having found sufficient ground for proceeding in case and issued summons under Section 204 Cr.P.C. has the jurisdiction to recall or review the order by exercising its power under Section 201 Cr.P.C.; = Apex court held – No. (ii) Whether the petition under Section 138 of the N.I. Act was maintainable at Mumbai on the ground that goods were supplied from Mumbai to Delhi and cheques were handed over at Mumbai and legal notice was issued from Mumbai. = Apex court held – Yes = DEVENDRA KISHANLAL DAGALIA … APPELLANT VERUS DWARKESH DIAMONDS PVT. LTD. AND ORS. … RESPONDENTS = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=40991

Sec.138 N.I.Act – Sec.201 of Cr.p.c. – Power of magistrate to recall it’s orders – Jurisdiction of

A cheque drawn on the Regent Street (Clifton) ...

A cheque drawn on the Regent Street (Clifton) Branch of Westminster Bank, dated 14 August 1956. (Photo credit: Wikipedia)

court for cheque bounce case =

(i)   Whether the Magistrate after having found sufficient ground  for

      proceeding in case and issued summons under Section  204  Cr.P.C.  has

      the jurisdiction to recall or review the order by exercising its power

      under Section 201 Cr.P.C.;  = Apex court held – No.

 

 (ii)  Whether the      petition under Section 138 of the N.I. Act  was

      maintainable at Mumbai on the ground that  goods  were  supplied  from

      Mumbai to Delhi and cheques were  handed  over  at  Mumbai  and  legal

      notice was issued from Mumbai.      = Apex court held  – Yes =

 

(i)   Whether the Magistrate after having found sufficient ground  for

      proceeding in case and issued summons under Section  204  Cr.P.C.  has

      the jurisdiction to recall or review the order by exercising its power

      under Section 201 Cr.P.C.;

Ans :- Once  the  Magistrate  taking  cognizance  of  an

offence forms his opinion that there is  sufficient  ground  for  proceeding and issues summons under Section 204 Cr.P.C., there is no question of  going back following the procedure under Section 201 Cr.P.C.  In  absence  of  any power of review or recall the order of issuance of summons,  the  Magistrate

cannot recall the summon in exercise of power under Section 201 Cr.P.C.  The first  question  is  thus  answered  in  negative  and   in  favour  of  the appellant.

 (ii)  Whether the      petition under Section 138 of the N.I. Act  was

      maintainable at Mumbai on the ground that  goods  were  supplied  from

      Mumbai to Delhi and cheques were  handed  over  at  Mumbai  and  legal

      notice was issued from Mumbai.

Ans :-

in  Nishant

            Aggarwal vs. Kailash Kumar Sharma, [2013(7) Scale 753] 

Therein

            it has been concluded, that 

the Court  within  the  jurisdiction

            whereof, the dishonoured cheque was  presented  for  encashment,

            would have the jurisdiction to  entertain  the  complaint  filed

            under Section 138 of the Negotiable Instruments Act.

   in  M/s.  Escorts  Limited

vs. Rama Mukherjee(Criminal Appeal No.1457 of 2013), 2013  (11)  Scale  487.

 K. Bhaskaran  vs.

Shankaran Vaidhyam Balan & Anr., (1999) 7 SCC 510    

 language used in Section 138 of the Act, 

the Court found five components  in

Section 138 of the Act, namely,

           (1)   drawing of the cheque;

           (2)   presentation of the cheque to the bank;

           (3)   returning the cheque unpaid by the drawee bank;

           (4)   giving notice in writing  to  the  drawer  of  the  cheque

                 demanding payment of the cheque amount; and

           (5)   failure of the drawer to make payment within  15  days  of

                 the receipt of the notice.”          

 It is not necessary that all the above five acts  should

               have been perpetrated at the same locality. It  is  possible

               that each of those five acts could be done  at  5  different

               localities. But concatenation of all the  above  five  is  a

               sine qua non for the completion of the offence under Section

               138 of the Act.

 

 In  this  context  a  reference  to  Section

               178(d) of the Code is useful. It is extracted below:

 

 

 

 

                 “Where  the  offence  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.” 

= the respondent, however,  relied

              on the decision of this Court in

 Harman  Electronics  Private

              Limited and Another  v.  National   Panasonic  India  Private

              Limite,d, (2009) 1 SCC 720,

whether  sending  of  a

              notice from Delhi itself would give rise to a cause of action

              for taking cognizance of a case  under  Section  138  of  the

              Negotiable Instruments Act when the parties had been carrying

              on business at Chandigarh, the Head Office of the respondent-

              complainant was at Delhi but it had a  branch  at  Chandigarh

              and  all  the  transactions  were  carried  out   only   from

              Chandigarh. On these facts, this Court held that  Delhi  from

              where  the  notice  under  Section  138  of  the   Negotiable

              Instruments Act was issued by the respondent would  not  have

              had jurisdiction to entertain the complaint under Section 138

              of the Negotiable Instruments Act.  

This  question  does  not

              arise in the facts of the present case.=

In the case in hand it is admitted that the business dealing was  held

at Mumbai;  

the products were supplied from Mumbai  to  New  Delhi,  

cheques

were handed over at Mumbai and 

the cheques were dishounoured by the  bankers

of respondents at New Delhi, and 

legal notice was issued from Mumbai.  

Thus,

at least one act out of the five ingredients  of  Section  138  of  the  Act

having committed at Mumbai,  

the  complaint  preferred  by  the  complainant

before the Magistrate at Mumbai was maintainable.  

The  second  question  is

thereby, answered in affirmative and in favour of the appellant.

 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NOS. 1997-1998 OF 2013
(arising out of SLP(Crl.)Nos.2595-2596 of 2013)
DEVENDRA KISHANLAL DAGALIA … APPELLANT

VERUS

DWARKESH DIAMONDS PVT. LTD. AND ORS. … RESPONDENTS
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.

Leave granted. These appeals have been preferred by the appellant-
complainant against the judgment and order dated 6th December, 2012 passed
by the High Court of Judicature at Bombay in Criminal Writ Petition
Nos.3992 and 3993 of 2011. By the impugned judgment the High Court set
aside the order passed by Sessions Judge in CRA No.301 of 2010 and upheld
the order passed by the Special Metropolitan Magistrate.
2. The appellant filed complaints being CC No.3142/SS/2008 and CC
No.3286/SS/2008 under Section 138 of Negotiable Instruments Act
(hereinafter referred to as ‘the N.I. Act’) in the Court of the Special
Metropolitan Magistrate at Small Causes Court on 28th July, 2008 and 18th
August, 2008. Learned Metropolitan Magistrate after recording of the pre-
summoning evidence issued summons on the accused under Section 204 Cr.P.C.
The accused-respondents 1, 2 & 3 then filed application under Section 201
Cr.P.C. for return of complaint for want of jurisdiction. They alleged that
the entire transaction took place at New Delhi and only the legal notice
was issued from Mumbai and hence the learned Magistrate has no jurisdiction
to try and entertain the complaint. A similar application was filed by the
accused in CC No.3286/SS/2008. Thereafter, the learned Magistrate by order
dated 5th January, 2010 allowed the application under Section 201 Cr.P.C.
and returned the complaint for want of jurisdiction. A similar order was
passed by the learned Magistrate in CC No.3286/SS/2008.
3. Being aggrieved, the appellant-complainant filed Criminal Revision
Applications Nos.301 & 302 of 2010 before the Sessions Court, Greater
Bombay. Learned Sessions Judge by the judgment and order dated 2nd
November, 2011 allowed the criminal revision applications and set aside the
orders of learned Magistrate and the matter was remitted back to the
Magistrate. However, at the instance of Respondent Nos.1, 2 & 3 the order
passed by the Sessions Judge was set aside by the High Court by the order
impugned.
4. Learned counsel appearing on behalf of the appellant submitted that
the Magistrate after finding sufficient ground for proceeding and after
issuance of summons under Section 204 Cr.P.C., has no jurisdiction to
recall or review the order by exercising power under Section 201 Cr.P.C. It
is further contended that the High Court failed to consider the aforesaid
fact and has no answer to the issue as was raised and decided by the
learned Magistrate. Further, according to the learned counsel for the
appellant, in the matter under Section 138 of the N.I.Act the appellant
having been issued legal notice from Mumbai, the Magistrate has
jurisdiction to try and entertain the complaint.
5. Per contra, according to the learned counsel for the respondents, the
High Court of Bombay has taken due course and settled all the questions
raised in the complaint filed by the appellant. The complaint filed by the
appellant is silent with regard to place where (a) the order was given by
the respondent; (b) goods were supplied; (c) the payment was agreed to be
made: (d) the cheques in question were issued: (e) the cheques in question
were dishonoured and (f) the parties to the petition intended to make and
receive the same. It is accepted that the notice in question was issued
from Mumbai. It is contended that issuance of notice would not by itself
give rise to a cause of action for filing the complaint at Mumbai.
6. Further, according to the respondents the appellant has concealed the
relevant facts purposefully, particularly the fact that the entire
transaction had taken place at Delhi and, therefore, the Magistrate has
returned the complaint under Section 201 Cr.P.C.
7. We have heard learned counsel for the parties and perused the record.

8. The main questions involved in the present case are :
(i) Whether the Magistrate after having found sufficient ground for
proceeding in case and issued summons under Section 204 Cr.P.C. has
the jurisdiction to recall or review the order by exercising its power
under Section 201 Cr.P.C.; and
(ii) Whether the petition under Section 138 of the N.I. Act was
maintainable at Mumbai on the ground that goods were supplied from
Mumbai to Delhi and cheques were handed over at Mumbai and legal
notice was issued from Mumbai.
9. To decide the issue, it is necessary to notice the relevant
provisions of the Cr.P.C. as discussed hereunder:
Chapter XV of Cr.P.C. relates to complaints to the Magistrates whereas
Chapter XVI relates to commencement of proceedings before the Magistrates.
10. Section 200 of Cr.P.C. relates to examination of complaint. A
Magsitrate taking cognizance of an offence on complaint is required to
examine the complaint and both the complainant and witness present, if
any. On such examination of the complaint and the witness, if the
Magistrate is of the opinion that there is no ground for proceeding, he has
to dismiss the complaint under Section 203 Cr.P.C.
11. Section 201 Cr.P.C. lays down the procedure to be followed by the
Magistrate not competent to take cognizance of the offence. If the
complaint is made to a Magistrate who is not competent to take cognizance
of the complaint he shall return the written complaint for its presentation
before a proper court and if the complaint is not in writing, direct the
complainant to move before the proper court.
12. Section 202 contemplates “postponement of issue of process” on
receipt of a complaint in the circumstances mentioned therein. If the
Magistrate is of the opinion that there is no sufficient ground for
proceeding, under Section 203 Cr.P.C. he can dismiss the complaint by
briefly recording his reasons.
13. The commencement of proceedings before the Magistrate under Chapter
XVI starts with issue of process under Section 204 Cr.P.C. If in the
opinion of a Magistrate taking cognizance of the offence there is
sufficient ground for proceeding, and the case appears to be a summons-
case, he shall issue his summons for the attendance of the accused, but if
it is a warrant-case, he may issue a warrant, or, if he thinks fit, a
summons, for causing the accused to be brought or to appear at a certain
time before such Magistrate or (if he has no jurisdiction himself) some
other Magistrate having jurisdiction. No summons or warrant shall be issued
against the accused under sub-section (1) until a list of the prosecution
witnesses has been filed. In a proceeding instituted upon a complaint made
in writing, every summons or warrant issued under sub-section (1) shall be
accompanied by a copy of such complaint.
14. The aforesaid provisions make it clear that the Magistrate is
required to issue summons for attendance of the accused only on examination
of the complaint and on satisfaction that there is sufficient ground for
taking cognizance of the offence and that it is competent to take such
cognizance of offence. Once the decision is taken and summon is issued, in
the absence of a power of review including inherent power to do so, remedy
lies before the High Court under Section 482 Cr. P.C or under Article 227
of the Constitution of India and not before the Magistrate.
15. Issue with regard to the power of Magistrate to recall process of
summons fell for consideration before a three-Judge Bench of this Court in
Adalat Prasad vs. Rooplal Jindal and others, (2004) 7 SCC 338. Therein the
following observation was made by this Court:
“15. It is true that if a Magistrate takes cognizance of an
offence, issues process without there being any allegation
against the accused or any material implicating the accused or
in contravention of provisions of Sections 200 and 202, the
order of the Magistrate may be vitiated, but then the relief an
aggrieved accused can obtain at that stage is not by invoking
Section 203 of the Code because the Criminal Procedure Code does
not contemplate a review of an order. Hence in the absence of
any review power or inherent power with the subordinate criminal
courts, the remedy lies in invoking Section 482 of the Code.”

16. Section 201 Cr.P.C., as noticed earlier, can be applied immediately
on receipt of a complaint, if the Magistrate is not competent to take
cognizance of the offence. Once the Magistrate taking cognizance of an
offence forms his opinion that there is sufficient ground for proceeding
and issues summons under Section 204 Cr.P.C., there is no question of going
back following the procedure under Section 201 Cr.P.C. In absence of any
power of review or recall the order of issuance of summons, the Magistrate
cannot recall the summon in exercise of power under Section 201 Cr.P.C. The
first question is thus answered in negative and in favour of the
appellant.
17. The question concerning the jurisdiction of Magistrate to issue
summons fell for consideration before this Court in M/s. Escorts Limited
vs. Rama Mukherjee(Criminal Appeal No.1457 of 2013), 2013 (11) Scale 487.
In the said case the Court noticed the earlier decision in K. Bhaskaran vs.
Shankaran Vaidhyam Balan & Anr., (1999) 7 SCC 510. In the light of the
language used in Section 138 of the Act, the Court found five components in
Section 138 of the Act, namely,
(1) drawing of the cheque;
(2) presentation of the cheque to the bank;
(3) returning the cheque unpaid by the drawee bank;
(4) giving notice in writing to the drawer of the cheque
demanding payment of the cheque amount; and
(5) failure of the drawer to make payment within 15 days of
the receipt of the notice.”
After saying so, this Court held that offence under Section 138 of
the Act can be completed only with the concatenation of all the above
components and for that it is not necessary that all the above five acts
should have perpetrated at the same locality; it is possible that each of
those five acts were done at five different localities, but a concatenation
of all the above five is a sine qua non for the completion of the offence
under Section 138 of the Act. Having noticed the aforesaid provisions, this
court in Escorts Ltd. held as follow:
“5. It is apparent, that the conclusion drawn by the High
Court, in the impugned order dated 27.4.2012, is not in
consonance with the decision rendered by this Court in Nishant
Aggarwal vs. Kailash Kumar Sharma, [2013(7) Scale 753] . Therein
it has been concluded, that the Court within the jurisdiction
whereof, the dishonoured cheque was presented for encashment,
would have the jurisdiction to entertain the complaint filed
under Section 138 of the Negotiable Instruments Act.

6. In addition to the judgment rendered by this Court in
Nishant Aggarwal’s case, another bench of this Court has also
arrived at the conclusion drawn in Nishant Aggarwal’s case, on
the pointed issue under consideration. In this behalf, reference
may be made to the decision rendered in FIL Industries Limited
vs. Imtiyaz Ahmed Bhat, Criminal Appeal No. 1168 of 2013
(arising out of SLP (Crl.) No.8096 of 2012), decided on
12.8.2013. This Court in the above matter held as under:
“3. The facts very briefly are that the respondent delivered
a cheque dated 23rd December, 2010 for an amount of
`29,69,746/-(Rupees Twenty Nine lakhs sixty nine thousand
seven hundred forty six only) on Jammu and Kashmir Bank
Limited, Branch Imam Saheb, Shopian, to the appellant
towards some business dealings and the appellant deposited
the same in UCO Bank, Sopore. When the cheque amount was not
encashed and collected in the account of the appellant in
UCO Bank Sopore, the appellant filed a complaint under
Section 138 of the Negotiable Instruments Act, 1881 before
the Chief Judicial Magistrate, Sopore. The respondent sought
dismissal of the complaint on the ground that the Chief
Judicial Magistrate had no territorial jurisdiction to
entertain the complaint. By order dated 29th November, 2011,
the learned Chief Judicial Magistrate, Sopore, however,
held that he had the jurisdiction to entertain the
complaint. Aggrieved, the appellant filed Criminal
Miscellaneous Petition No. 431 of 2011 under Section 561A
of the Jammu and Kashmir Criminal Procedure Code and by the
impugned order dated 2nd June, 2012, the High Court quashed
the complaint saying that the Court at Sopore had no
jurisdiction to receive and entertain the complaint.
4. We have heard learned counsel for the parties and we find
that in K.Bhaskaran v. Sankaran Vidyabalan and Another,
(1999) 7 SCC 510, this Court had the occasion to consider as
to which Court would have the jurisdiction to entertain the
complaint under Section 138 of the Negotiable Instruments
Act and in paras 14, 15 and 16 of the judgment in the
aforesaid case held as under:-
“14. The offence under Section 138 of the Act can be
completed only with the concatenation of a number of acts.
Following are the acts which are components of the said
offence: (1) Drawing of the cheque, (2) Presentation of the
cheque to the bank, (3) Returning the cheque unpaid by the
drawee bank, (4) Giving notice in writing to the drawer of
the cheque demanding payment of the cheque amount, (5)
failure of the drawer to make payment within 15 days of the
receipt of the notice.

15. It is not necessary that all the above five acts should
have been perpetrated at the same locality. It is possible
that each of those five acts could be done at 5 different
localities. But concatenation of all the above five is a
sine qua non for the completion of the offence under Section
138 of the Act. In this context a reference to Section
178(d) of the Code is useful. It is extracted below:
“Where the offence 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.”
16. Thus it is clear, if the five different acts were done
in five different localities any one of the courts
exercising jurisdiction in one of the five local areas can
become the place of trial for the offence under Section 138
of the Act. In other words, the complainant can choose any
one of those courts having jurisdiction over any one of the
local areas within the territorial limits of which any one
of those five acts was done. As the amplitude stands so
widened and so expansive it is an idle exercise to raise
jurisdictional question regarding the offence under Section
138 of the Act.”
5. It will be clear from the aforesaid paragraphs of the
judgment in K. Bhaskaran’s case (Supra) that five different
acts compose the offence under Section 138 of the Negotiable
Instruments Act and if any one of these five different acts
was done in a particular locality the Court having
territorial jurisdiction on that locality can become the
place of trial for the offence under Section 138 of the
Negotiable Instruments Act and, therefore, the complainant
can choose any one of those courts having jurisdiction over
any one of the local area within the territorial limits of
which any one of the five acts was done. In the facts of the
present case, it is not disputed that the cheque was
presented to the UCO Bank at Sopore in which the appellant
had an account and, therefore the Court at Sopore had
territorial jurisdiction to entertain and try the complaint.
6. Learned counsel for the respondent, however, relied
on the decision of this Court in Harman Electronics Private
Limited and Another v. National Panasonic India Private
Limite,d, (2009) 1 SCC 720, to submit that the Court at
Shopian would have the territorial jurisdiction. We have
perused the aforesaid decision of this Court in Harman
Electronics Private Limited (Supra) and we find on a reading
of paragraphs 11 and 12 of the judgment in the aforesaid case
that in that case the issue was as to whether sending of a
notice from Delhi itself would give rise to a cause of action
for taking cognizance of a case under Section 138 of the
Negotiable Instruments Act when the parties had been carrying
on business at Chandigarh, the Head Office of the respondent-
complainant was at Delhi but it had a branch at Chandigarh
and all the transactions were carried out only from
Chandigarh. On these facts, this Court held that Delhi from
where the notice under Section 138 of the Negotiable
Instruments Act was issued by the respondent would not have
had jurisdiction to entertain the complaint under Section 138
of the Negotiable Instruments Act. This question does not
arise in the facts of the present case.
7. For the aforesaid reasons, we allow the appeal, set aside
the impugned judgment of the High Court and remand the matter
to the Chief Judicial Magistrate, Sopore for decision in
accordance with law.”

(emphasis is ours).
7. In view of the above, having taken into consideration the
factual position noticed by the High Court in paragraph 13 of
the impugned judgment, we are of the view, that the High Court
erred in concluding that the courts at Delhi, did not have the
jurisdiction to try the petition filed by the appellant under
Section 138 of the Negotiable Instruments Act. The impugned
order dated 27.4.2012 passed by the High Court is accordingly
liable to be set aside. The same is, therefore, hereby set
aside.

8. Despite the conclusion drawn by us hereinabove, it would be
relevant to mention, that our instant determination is based on
the factual position expressed by the High Court in paragraph 13
of the impugned order. During the course of hearing, whilst it
was the case of the learned counsel for the appellant (based on
certain documents available on the file of the present case) to
reiterate that the cheque in question, which was the subject
matter of the appellant’s claim under Section 138 of the
Negotiable Instruments Act, was presented for encashment at
Delhi; it was the contention of the learned counsel for the
respondent, that the aforesaid cheque was presented for
encashment at Faridabad. It was accordingly submitted, that the
jurisdictional issue needed to be decided by accepting, that the
dishonoured cheque was presented at Faridabad. It is not
possible for us to entertain and adjudicate upon a disputed
question of fact. We have rendered the instant decision, on the
factual position taken into consideration by the High Court. In
case, the respondent herein is so advised, it would be open to
him to raise an objection on the issue of jurisdiction, based on
a factual position now asserted before us. The determination
rendered by us must be deemed to be on the factual position
taken into consideration by the High Court (in paragraph 13,
extracted above), while disposing of the issue of jurisdiction.
In case the respondent raises such a plea, the same shall be
entertained and disposed of in accordance with law.”
18. In the case in hand it is admitted that the business dealing was held
at Mumbai; the products were supplied from Mumbai to New Delhi, cheques
were handed over at Mumbai and the cheques were dishounoured by the bankers
of respondents at New Delhi, and legal notice was issued from Mumbai. Thus,
at least one act out of the five ingredients of Section 138 of the Act
having committed at Mumbai, the complaint preferred by the complainant
before the Magistrate at Mumbai was maintainable. The second question is
thereby, answered in affirmative and in favour of the appellant.
19. In view of the reasons recorded above, we have no other option but to
interfere with the impugned order passed by the High Court. We
accordingly, set aside the order dated 6th December, 2012 passed by the
High Court, affirm the order passed by the Sessions Judge and allow the
appeals.

……………………………………………….J.
(SUDHANSU JYOTI MUKHOPADHAYA)
……………………………………………….J.
(V. GOPALA GOWDA)
NEW DELHI,
NOVEMBER 25, 2013.

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