Galaxy Amaze Kingdom Limited vs Union of India and Others

K. Chandru, J.—The petitioner has filed the present writ petition seeking for a writ in the nature of declaration declaring that by the contract

if the parties have restricted settling of disputes between them at a particular place, any prosecution or proceedings launched by the other party

away from the restricted/agreed jurisdiction even in cases of Section 138 of the Negotiable Instruments Act falling within the said contract will not

be valid and binding in law and non-est against the petitioner. The petitioner has made the Union of India and the State of Tamil Nadu as first and

second respondents. Apart from that, there are 17 respondents, including seven learned Magistrates whose courts are situated in New Delhi,

Haryana and Mumbai.

The contention of the petitioner was that the petitioner is the limited company registered under the Companies Act, 1956. The company had

entered into contracts with some super stockiest, Channel Partners covering for a period of 6-1/2 years. Under the said Contract, it was agreed

between the parties that any dispute arising out of the contract will be settled by the Arbitrator at Chennai. For terminating the contract, either of

the parties should give six months notice. For settling the matter, one has to wait for 180 days, during which period the contracting party will have

to return the material accounts. Therefore, any dispute arising out of the said contract between the petitioner and the other contracting parties, the

Court at Chennai alone will have the jurisdiction. The petitioner had appointed Distributors/stockiest at various cadres and respondents 3, 5, 7, 9,

11, 13 and 18 and has valid contracts. They have breached the contracts even at the initial stage itself. The counter guarantee cheque which was

issued to them was misused by them. They filed criminal complaints before various courts in terms of Section 138 of the Negotiable Instruments

Act. The learned Magistrates of respective courts have also issued process in respect of those complaints. The details of transactions which the

petitioner had entered into with various contesting respondents and also the nature of process issued by various learned Magistrates who were also

made as party respondents to the writ petition were furnished in the typed set.

It is the case of the petitioner that filing complaints in all over the India, even though they had agreed to sue the petitioner only within the

jurisdiction of the Chennai city has resulted in nuisance and harassment besides causing mental agony and business loss to the petitioner. The

contractual obligation that they had with the petitioner debar them from suing the petitioner in various Magistrates'' Courts in terms of Section 138

of the NI Act. Such proceedings initiated will not be binding on the petitioner in view of the subsisting of contracts. It is in that view of the matter,

the petitioner has sought for declaratory relief. He also stated that similar writ petitions have been admitted by this court. The copies of various

proceedings initiated against the petitioner before various Magistrate Courts have been enclosed in the typed set. The petitioner also relied upon a

judgment of the Supreme Court in Bir Bajrang Kumar Vs. State of Bihar and Others, for contending that when similar writ petitions have been

admitted for identical relief, the court should not dismiss the writ petition.

However, this court is not inclined to admit the writ petition for more than one ground. Except by giving number of those writ petitions, the

petitioner has not made out any case as to how they are similar to the case of the petitioner. On the other hand, he has made several magistrates of

the Country as party respondents as if the writ petition is a quash petition filed u/s 482 Cr.P.C. In respect of each process issued by the learned

Magistrates, it is the separate cause of action and the petitioner cannot file a consolidated writ petition and challenge all kinds of processes issued

by the learned Magistrates, Even in one cheque bounce case, the petitioner has challenged the process issued.

In this context, it is necessary to refer to a judgment of the Supreme Court which arose u/s 138 of the N.I. Act, wherein the Supreme Court in

M.M.T.C. Ltd. and Another Vs. Medchl Chemicals and Pharma (P) Ltd. and Another, held as follows:

The learned Judge has next gone into facts and arrived at a conclusion that the cheques were issued as security and not for any debt or liability

existing on the date they were issued. In so doing the learned Judge has ignored the well-settled law that the power of quashing criminal

proceedings should be exercised very stringently and with circumspection. It is settled law that at this stage the Court is not justified in embarking

upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. The inherent powers do not confer an

arbitrary jurisdiction on the court to act according to its whim or caprice. At this stage the Court could not have gone into merits and/or come to a

conclusion that there was no existing debt or liability.

The Supreme Court has held that a person aggrieved can resort to proceedings in respect of dishonour of cheque before the civil court as well

as before the criminal court u/s 138 of the N.I. Act and that both proceedings are maintainable vide judgment in D. Purushotama Reddy and

Another Vs. K. Sateesh, and in paragraph 9, it was observed as follows:

A suit for recovery of money due from a borrower indisputably is maintainable at the instance of the creditor. It is furthermore beyond any doubt

or dispute that for the same cause of action a complaint petition under terms of Section 138 of the Act would also be maintainable.

In dealing with the territorial jurisdiction of the court trying the offences u/s 138 of the N.I. Act came to be considered by the Supreme Court in

the light of the relevant provisions of Cr.P.C., vide its judgment in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, and in paragraphs 11

to 16, it was observed as follows:

We fail to comprehend as to how the trial court could have found so regarding the jurisdiction question. u/s 177 of the Code ""every offence

shall ordinarily be enquired into and tried in a court within whose jurisdiction it was committed"". The locality where the Bank (which dishonoured

the cheque) is situated cannot be regarded as the sole criterion to determine the place of offence. It must be remembered that offence u/s 138

would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque

amount within the expiry of 15 days mentioned in clause (c) of the proviso to Section 138 of the Act. It is normally difficult to fix up a particular

locality as the place of failure to pay the amount covered by the cheque. A place, for that purpose, would depend upon a variety of factors. It can

either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business.

Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence u/s 138 of the Act.

Even otherwise the rule that every offence shall be tried by a court within whose jurisdiction it was committed is not an unexceptional or

unchangeable principle. Section 177 itself has been framed by the legislature thoughtfully by using the precautionary word ""ordinarily"" to indicate

mat the rule is not invariable in all cases. Section 178 of the Code suggests that if there is uncertainty as to where, among different localities, the

offence would have been committed the trial can be had in a court having jurisdiction over any of those localities. The provision has further

widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area the court in

either of the localities can exercise jurisdiction to try the case. Further again, Section 179 of the Code stretches its scope to a still wider horizon. It

reads thus:

Offence triable where act is done or consequence ensues. When an act is an offence by reason of anything which has been done and of a

consequence which has ensued, the offence may be enquired into or tried by a court within whose local jurisdiction such thing has been done or

such consequence has ensued.

The above provisions in the Code should have been borne in mind when the question regarding territorial jurisdiction of the courts to try the

offence was sought to be determined.

The offence u/s 138 of the Act can be completed only with the concatenation of a number of acts. The 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.

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 five different localities. But a concatenation of all the above five is a sine qua non for the completion of the offence u/s 138 of the Code.

In this context a reference to Section 178(d) of the Code is useful. It is extracted below:

178.(a)-(c)***

(d) where the offence consists of several acts done in different local areas,

it may be enquired into or tried by a court having jurisdiction over any of such local areas.

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 u/s 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 u/s 138 of the Act.

(Emphasis added)

Therefore, this court cannot by a declaratory relief restrict the scope of the aggrieved party from suing the petitioner before the appropriate

court. It is only when they filed Civil cases against the petitioner, the petitioner can rely upon the contract between the parties to oust the civil

court''s jurisdiction in terms of Section 20 of C.P.C. But when it comes to criminal cases like the one u/s 138 of the N.I. Act, the Act itself enables

the party to sue the defaulter in any court where the jurisdiction arose and that cannot be curtailed by any private agreement. Even the law

applicable to the civil cases relating to such agreement will not be extended to criminal offence.

The same view has been reiterated by the Supreme Court regarding deriving the jurisdiction u/s 138 of the N.I. Act vide judgment in Harman

Electronics (P) Ltd. and Another Vs. National Panasonic India Ltd., and in paragraphs 20 to 22, it was observed as follows:

Indisputably all statutes deserve their strict application, but while doing so the cardinal principles therefor cannot be lost sight of. A court

derives a jurisdiction only when the cause of action arose within its jurisdiction. The same cannot be conferred by any act of omission or

commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of

the offence......

We cannot, as things stand today, be oblivious of the fact that a banking institution holding several cheques signed by the same borrower can

not only present the cheque for its encashment at four different places but also may serve notices from four different places so as to enable it to file

four complaint cases at four different places. This only causes grave harassment to the accused. It is, therefore, necessary in a case of this nature to

strike a balance between the right of the complainant and the right of an accused vis-a-vis the provisions of the Code of Criminal Procedure.

Learned counsel for the respondent contends that the principle that the debtor must seek the creditor should be applied in a case of this nature.

We regret that such a principle cannot be applied in a criminal case. Jurisdiction of the court to try a criminal case is governed by the provisions of

the Criminal Procedure Code and not on common law principle.

The observations made by the Supreme Court will not apply to the case of the petitioner as it is not the same party which has sued the

petitioner in different forums. Even otherwise as pointed out by the Supreme Court in the above passages, if there are any inconvenience, it is for

the petitioner to file an appropriate transfer application before the appropriate court. In view of the above, the writ petition will stand dismissed.

No costs. Consequently connected miscellaneous petition stands closed.