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Sec.138 of N.I.Act – Territorial Jurisdiction -where the cheque was dishonored – Bhaskaran judgment was overruled – 3 bench judges held that 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. – The general rule stipulated under Section 177 of Cr.P.C 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. and further held that – 1. this judgment will have only prospective pertinence, i.e. applicability to Complaints that may be filed after this pronouncement.- 2.where, post the summoning and appearance of the alleged Accused, the recording of evidence has commenced as envisaged in Section 145(2) of the Negotiable Instruments Act, 1881, will proceeding continue at that place.- 3.whether evidence has been led before the Magistrate at the pre-summoning stage, either by affidavit or by oral statement, the Complaint will be maintainable only at the place where the cheque stands dishonoured. – 4.the category of Complaint cases where proceedings have gone to the stage of Section 145(2) or beyond shall be deemed to have been transferred by us from the Court ordinarily possessing territorial jurisdiction, as now clarified, to the Court where it is presently pending. – 5.All other Complaints (obviously including those where the accused/respondent has not been properly served) shall be returned to the Complainant for filing in the proper Court, in consonance with our exposition of the law. – 6. If such Complaints are filed/refiled within thirty days of their return, they shall be deemed to have been filed within the time prescribed by law, unless the initial or prior filing was itself time barred.= CRIMINAL APPEAL NO. 2287 OF 2009 Dashrath Rupsingh Rathod …..Appellant Versus State of Maharashtra & Anr. …..Respondents = 2014 – Aug – Part – http://judis.nic.in/supremecourt/filename=41801

Sec.138 of N.I.Act – Territorial Jurisdiction –where the cheque was dishonored – Bhaskaran judgment was overruled – 3 bench judges held that 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.- The general rule stipulated under Section 177 of  Cr.P.C  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.  and further held that –

1. this  judgment will have only prospective  pertinence,  i.e.  applicability  to  Complaints that  may  be  filed  after  this  pronouncement.-

2.where, post the summoning and appearance of the alleged  Accused,  the recording of evidence has commenced as envisaged in Section  145(2)  of  the Negotiable Instruments Act, 1881, will proceeding continue  at  that  place.-

3.whether  evidence  has  been  led  before  the Magistrate at the pre-summoning  stage,  either  by  affidavit  or  by  oral statement, the Complaint will be maintainable only at the  place  where  the cheque  stands  dishonoured. – 

4.the category of Complaint cases where proceedings  have  gone to the stage of Section 145(2) or  beyond  shall  be  deemed  to  have  been transferred  by  us  from  the  Court  ordinarily   possessing   territorial jurisdiction, as now clarified, to the Court where it is presently  pending. – 

5.All   other   Complaints   (obviously   including   those   where    the accused/respondent has not been properly served) shall be  returned  to  the Complainant  for  filing  in  the  proper  Court,  in  consonance  with  our exposition of the law.  –

6.  If such Complaints are filed/refiled  within  thirty days of their return, they shall be deemed to have  been  filed  within  the time prescribed by law, unless the initial or prior filing was  itself  time barred.=

Court’s  territorial

jurisdiction concerning criminal complaints filed under Chapter XVII of  the

Negotiable Instruments Act, 1881 (for short, ‘the NI Act’)=


PRECEDENTS


  The earliest and the most often quoted decision of this Court relevant  to

the present conundrum is K. Bhaskaran v. Sankaran Vaidhyan  Balan  (1999)  7

SCC 510 wherein a two-Judge Bench has, inter alia, interpreted  Section  138

of the NI Act to indicate that,  “the  offence  under  Section  138  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.”

The provisions of Sections 177 to 179 of the  Code  of  Criminal  Procedure,

1973 (for short, ‘CrPC’) have also been dealt with in detail.   Furthermore,

Bhaskaran in terms draws  a  distinction  between  ‘giving  of  notice’  and

‘receiving of notice’.

This is for the reason that clause  (b)  of  proviso

to Section 138 of the NI Act postulates a demand being made by the payee  or

the holder in due course of the dishonoured cheque by  giving  a  notice  in

writing to the drawer thereof.

While doing so, the question of the  receipt of the notice has also been cogitated upon.

subsequent judgment of a Coordinate Bench, namely, Harman  Electronics  Pvt.

Ltd. v. National Panasonic India Pvt. Ltd. (2009) 1  SCC  720  

emphasis  has

been laid on the receipt of the notice, inter alia, holding that  the  cause

of action cannot arise by any act of omission or commission on the  part  of

the ‘accused’, which on a holistic reading has to be read as  ‘complainant’.

It appears that Harman transacted business out of  Chandigarh  only,  where

the Complainant also maintained an office, although its Head Office  was  in

Delhi.

Harman issued the cheque to the Complainant  at  Chandigarh;

Harman had its  bank  account  in  Chandigarh  alone.

It  is  unclear  where  the

Complainant presented the cheque for encashment

but it  issued  the  Section 138 notice from Delhi.

In those  circumstances,  this  Court  had  observed

that the only question for consideration  was

“whether  sending  of  notice

from Delhi  itself  would  give  rise  to  a  cause  of  action  for  taking cognizance under the NI Act.” 

It then went on to opine that the proviso  to

this Section “imposes certain further conditions which are  required  to  be fulfilled before cognizance of the offence can be taken.”


 interpretation to be imparted to  Section  138  of

the NI Act also arose before a three-Judge Bench in Shri Ishar Alloy  Steels

Ltd. v. Jayaswals Neco  Ltd.  (2001)  3  SCC  609  

close  on  the  heels  of Bhaskaran.

So far as the  factual  matrix  is  concerned,  

the  dishonoured

cheque had been presented for encashment by the  Complainant/holder  in  his

bank within the statutory period of six months

but by the  time  it  reached

the drawer’s bank the aforementioned period of limitation had expired.

The

question before the Court was

whether the bank  within  the  postulation  of

Section 138 read with Sections 3 and 72 of the NI Act was  the  drawee  bank

or the collecting bank and this Court held that it was the former.

It  was

observed that

“non-presentation of the cheque to the drawee bank within  the

period specified in the Section would absolve the person issuing the  cheque

of his criminal liability under Section 138 of the  NI  Act,  

who  otherwise

may be liable to pay the cheque amount  to  the  payee  in  a  civil  action

initiated under the law.

Conclusion


The principle of precedence should promptly and  precisely  be  paraphrased.

A co-ordinate Bench is bound to follow the previously published view;

it  is

certainly competent to add  to  the  precedent  to  make  it  logically  and

dialectically compelling.

Inasmuch as the  three-Judge  Bench  in  Ishar  Alloy  has

categorically stated that  for  criminal  liability  to  be  attracted,  the

subject cheque has to be presented to the bank on which it is  drawn  within

the prescribed period, Bhaskaran has been  significantly  whittled  down  if

not overruled.

Bhaskaran  has  also  been  drastically  diluted  by  Harman

inasmuch as it has given primacy to the service of a notice on  the  Accused

instead of its mere issuance by the Complainant.

In Prem Chand Vijay Kumar v. Yashpal Singh (2005) 4 SCC  417,

another  two-

Judge Bench held that upon a notice under Section 138 of the  NI  Act  being

issued, a subsequent presentation of a cheque and its  dishonour  would  not

create another ‘cause of action’ which could set the Section  138  machinery

in motion.

In that view, if the period of limitation had run out,  a  fresh

notice of demand was bereft of any legal efficacy.

SIL Import, USA v.  Exim

Aides  Silk  Exporters  (1999)  4  SCC  567  was  applied   in   which   the

determination was that since the requisite notice  had  been  despatched  by

FAX on 26.6.1996  the  limitation  for  filing  the  Section  138  Complaint

expired on 26.7.1996.

What is interesting is  the  observation  that

“four constituents of Section 138  are  required  to  be  proved  to  successfully

prosecute the drawer of  an  offence  under  Section  138  of  the  NI  Act”

(emphasis supplied).

It  is  also  noteworthy  that  instead  of  the  five

Bhaskaran concomitants, only four have been  spelt  out  in  the  subsequent

judgment in Prem Chand.


Apex court held that


1. We clarify that the place of the  issuance  or

delivery of the  statutory  notice  or  where  the  Complainant  chooses  to

present the cheque for encashment by his bank are not relevant for  purposes

of territorial jurisdiction of the  Complaints  even  though  non-compliance

thereof will inexorably lead to the dismissal of the complaint.

2. We clarify that the  Complainant  is  statutorily  bound  to

comply with Section 177 etc. of the CrPC and therefore the  place  or  situs

where the Section 138 Complaint is to be filed is not of his choosing.   The

territorial jurisdiction is restricted  to  the  Court  within  whose  local

jurisdiction the offence was committed, which  in  the  present  context  is

where the cheque is dishonoured by the bank on which it is drawn.

3. One approach could be to declare  that  this  judgment

will have only prospective  pertinence,  i.e.  applicability  to  Complaints

that  may  be  filed  after  this  pronouncement.

4. Consequent  on

considerable  consideration we think it expedient to direct that only  those

cases where, post the summoning and appearance of the alleged  Accused,  the

recording of evidence has commenced as envisaged in Section  145(2)  of  the

Negotiable Instruments Act, 1881, will proceeding continue  at  that  place.

5.To  clarify,  regardless  of  whether  evidence  has  been  led  before  the

Magistrate at the pre-summoning  stage,  either  by  affidavit  or  by  oral

statement, the Complaint will be maintainable only at the  place  where  the

cheque  stands  dishonoured.    

6. To   obviate   and   eradicate   any   legal

complications, the category of Complaint cases where proceedings  have  gone

to the stage of Section 145(2) or  beyond  shall  be  deemed  to  have  been

transferred  by  us  from  the  Court  ordinarily   possessing   territorial

jurisdiction, as now clarified, to the Court where it is presently  pending.

 7. All   other   Complaints   (obviously   including   those   where    the

accused/respondent has not been properly served) shall be  returned  to  the

Complainant  for  filing  in  the  proper  Court,  in  consonance  with  our

exposition of the law.  

8. If such Complaints are filed/refiled  within  thirty

days of their return, they shall be deemed to have  been  filed  within  the

time prescribed by law, unless the initial or prior filing was  itself  time

barred.=


Further held that  :-

31.   To sum up:


(i)   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.

(ii)  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.

(iii)  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.


(iv)   The  facts  constituting  cause  of  action  do  not  constitute  the

ingredients of the offence under Section 138 of the Act.

(v)   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.

(vi)  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.

(vii)  The general rule stipulated under Section 177 of  Cr.P.C  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.

2014 – Aug – Part – http://judis.nic.in/supremecourt/filename=41801


T.S. THAKUR, VIKRAMAJIT SEN, C. NAGAPPAN

NOTE :- 

 

With great respect to their Lordships, I am deviating with the opinion mentioned in this judgment –

1. as a matter of fact – No Territorial jurisdiction was defined in the N.I.Act .

2. further more as per sec.143 to 147 – only Cr.P.C. applies – Jurisdiction should be interpreted basing on the back ground of the case but not on the ingredients of sec.138 as those are triggers to launch a prosecution. Back ground of the case was totally neglected /nor considered in this judgement.

3. for filing civil case – one has to look at C.P.C – like wise for filing criminal complaint – one has to look at Cr.P.C. only.

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