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.
advocatemmmohan 
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