Patiram Jain vs Union of India

Shacheendra Dwivedi, J.—This petition has been preferred by the petitioners u/s 482 of the Code of Criminal Procedure, 1898, submitting that the respondents'' act of launching the prosecution itself being illegal and mala fide, the Court of Addl. Chief Judicial Magistrate (Economic Offences), Indore, could not take cognizance of the alleged offences and, therefore, the directions from this Court are sought against the respondents seeking the quashing of the proceedings and the notices/summonses issued by that Court and filed as Annexures P-10A to P-10E. This order shall dispose of the question of maintainability of the petition and the jurisdiction of the Bench seat. This order shall also dispose of the question of jurisdiction also arising in Patiram Jain v. Union of India [Crl. Misc. Case No. 1988 of 1992] as the facts and the points of controversy being identical.

The petition raises an issue of vital importance at the instance of respondents challenging the jurisdiction and the maintainability of the very petitions before this Bench seat. The main contention advanced by the respondents is that the proceedings wherein the notices have been issued by the Court, being situated at Indore, no directions by this Bench seat can be issued as that Court is not within the territorial jurisdiction of this Court.

In the State of Madhya Pradesh, the High Court functions at three places. The main seat being at Jabalpur, the two Benches have been established at Gwalior and Indore. This arrangement has been made under the Presidential order dated 28-11-1968. In order to deal with the issue, it would be relevant to reproduce the order, with regard to Gwalior Bench, which reads as follows:

In exercise of the powers conferred by sub-section (2) of section 51 of the States Reorganisation Act, 1956 (37 of 1956), I, Zakir Hussain, President of India, after consultation with the Governor of Madhya Pradesh and the Chief Justice of the High Court of Madhya Pradesh, hereby establish a permanent Bench of the Madhya Pradesh High Court at Gwalior and further direct that such Judges of the High Court of Madhya Pradesh, being not less than two in number, as the Chief Justice may from time to time nominate, shall sit at Gwalior in order to exercise the jurisdiction and power for the time being vested in that High Court in respect of cases arising in the revenue districts of Gwalior, Shivpuri, Datia, Guna, Vidisha (Bhilsa), Bhind and Moreno. [Emphasis supplied].

The crux of the controversy would, therefore, be on the construction of expression in respect of the cases arising in the revenue districts of Gwalior, Shivpuri, Datia, Guna, Vidisha (Bhilsa), Bhind and Morena, as used in the Presidential order, above described.

The Supreme Court in Sri Nasiruddin Vs. State Transport Appellate Tribunal, had to deal with the similar expression occurring in paragraph 14 of the United Provinces High Courts (Amalgamation) Order, 1948, which runs thus:

The new High Court, and the judges and division courts thereof, shall sit at Allahabad or at such other places in the United Provinces as the Chief Justice may, with the approval of the Governor of the United Provinces, appoint:

Provided that unless the Governor of the United Provinces with the concurrence of the Chief Justice, otherwise directs, such judges of the new High Court, not less than two in number, as the Chief Justice, may, from time to time nominate, shall sit at Lucknow in order to exercise in respect of cases arising in such areas in Oudh, as the Chief Justice may direct, the jurisdiction and power for the time being vested in the new High Court:

Provided further that the Chief Justice may in his discretion order that any case or class of cases arising in the said areas shall be heard at Allahabad. (p. 335)

It would also be necessary to state some facts before dealing with the issue. The petitioners of both petitions are the residents of Gwalior city. The two partnership concerns were constituted by the petitioners of these petitions. The petitioners of Cr. Misc. Case No. 1987 of 1992 constituted Prakash Iron Stores and the petitioners of Cr. Misc. Case No. 1988 of 1992 constituted Santosh Steel Sales. The two firms are stated to be the sister concerns and it was for the convenience of working and to meet the day-to-day financial exigencies that a current bank account for the mutual accommodation was continued, although separate account books were maintained by the two firms.

Under the Selective Security Scheme, the Department of income tax, had taken up the assessment of the two firms for the year 1988-89. By the department, after the perusal of all the records including that of current bank account along with the books of account of the two firms and on their thorough scrutiny, the assessment was finally completed on 22-6-1989, the copy of which is filed with the petition as Annexure P/3. Being fully satisfied and convinced of the bona fides of the petitioners about the accounts of the two concerns, the assessing authorities dropped the proposed action, finding that the amounts transferred from one concern to the other, being of one family, was to accommodate the emergency needs and it was only a temporary accommodation which was genuine. It was found that for launching the prosecution under sections 276DD and 276E of the income tax Act, 1961 (''the Act''), it was not a fit case and the proceedings had concluded and dropped. The abovesaid assessment was made by non-petitioner No. 4, i.e., ITO of Ward No. 1 with the approval of the Dy. Commissioner, i.e., respondent No. 3.

After a lapse of about two years, the show-cause notices to the two firms were again issued for launching prosecution under sections 276DD and 276E. The detailed explanation was, therefore, tendered by the two firms and it was also prayed that in the circumstances an opportunity of personal hearing to the petitioners may be afforded before taking any final decision. The written submissions in that regard were also filed on 4-3-1991, but nothing was heard thereafter.

Again on 11-3-1991, the notices were issued to the petitioners proposing to launch the prosecution on the same stale and concluded allegations to which a detailed explanation was again submitted and the prayer of personal hearing was again repeated. However, the petitioners received no information.

Thereafter, the notices Annex. P-10A to P-10E were received by the petitioners from the Court of the Addl. Chief Judicial Magistrate (Economic Offences), Indore, as the prosecution was launched by the respondents against the petitioners. It is the act of launching prosecution in the above stated circumstances which is challenged by the petitioners submitting that the prosecution is illegal and they crave for the quashing of prosecution and the resultant proceedings are prayed to be dropped with the further prayer that the notices issued by the Court against the petitioners be also quashed.

As is disclosed from the above narration of facts, the very case arises out of the District of Gwalior. It is well-settled that in the matter of criminal proceedings, a case would arise from the area where the offence is committed. It could no more be disputed that the alleged offences as stated were committed at Gwalior. The tax-assessments were made at Gwalior and the decision of launching the prosecution was taken at Gwalior, as such, in all respects it is a case arising from the district of Gwalior. It is no doubt true that after launching the prosecution, the cognizance of the offences has been taken by the Court at Indore and on this ground it is contended by the respondents that this Bench seat had no jurisdiction to entertain the petitions. But in my view that should create no difficulty in the matter of jurisdiction of this Court. The High Court is one and the writs issued by the Court while sitting at Jabalpur, Gwalior or Indore run throughout the State. The subordinate Courts are under the jurisdiction and control of the High Court and it is immaterial where the sitting is held and the order is passed, so far as the effect of an order or direction is concerned. The territorial jurisdiction of the three seats - the Principal and the Benches - is for specified areas over the cases of which they have to exercise the jurisdiction. The Gwalior Bench shall not exercise its jurisdiction when a case does not arise out of the specified districts but when a case arises out of the specified districts, even if the case be pending in a Court beyond the territorial jurisdiction of the Bench, it may exercise its jurisdiction in that matter.

It is then further contended by Shri R.D. Jain, Advocate, appearing for the respondents, that this Bench seat will have no jurisdiction as the cause of action did not arise within its jurisdiction. The cognizance of the alleged offences has been taken by a Court situated at Indore, i.e., beyond the jurisdiction of this Bench seat, as such, the jurisdiction cannot be exercised by this Court on a Court which is not within its territorial jurisdiction, i.e., not within the above specified districts. It is argued that the cause of action arose at Indore as the order taking cognizance and the issuance of notices was passed at Indore.

The argument may appear to be attractive but is of no substance. Cause of action means a situation or state of facts which would entitle a party to sustain action and give him right to such a judicial remedy in his behalf. Their Lordships of the Supreme Court have very elaborately dealt with the point with its effect in similar situation in Nasiruddin''s case (supra) and held:

36....The expression ''cause of action'' is well known. If the cause of action arises wholly or in part at a place within the specified Oudh area, the Lucknow Bench will have jurisdiction. If the cause of action arises wholly within the specified Oudh areas, it is indisputable that the Lucknow Bench would have exclusive jurisdiction in such a matter. If the cause of action arises in part within the specified areas in Oudh it would be open to the litigant who is the dominus litis to have his forum conveniens. The litigant has the right to go to a Court where part of his cause of action arises. In such cases, it is incorrect to say that the litigant chooses any particular Court. The choice is by reason of the jurisdiction of the Court being attracted by part of cause of action arising within the jurisdiction of the Court. Similarly, if the cause of action can be said to have arisen partly within specified areas in Oudh and partly outside the specified Oudh areas, the litigant will have the choice to institute proceedings either at Allahabad or Lucknow. The Court will find out in each case whether the jurisdiction of the Court is rightly attracted by the alleged cause of action. (p. 340)

Even if we accept the contentions advanced by the respondents'' counsel, about cause of action, it is only the part cause of action which can be stated to arise at Indore. The cause of action in part also arose within the territorial jurisdiction of this Bench as the offences alleged are stated to have been committed in the city of Gwalior where the assessments in that regard were also made by respondents and thereafter the decision for launching the prosecution was taken up against the petitioners. As observed by the Apex Court in Nasiruddin''s case (supra) : "If the cause of action in part arises in the specified Oudh area and part of the cause of action arises outside the specified areas, it will be open to the litigant to frame the case appropriately to attract the jurisdiction either at Lucknow or at Allahabad".

And, "a criminal case arises where the offence has been committed or otherwise as provided in the Criminal Procedure Code. That will attract the jurisdiction of the Court at Allahabad or Lucknow. In some cases depending on the facts and the provision regarding jurisdiction, it may arise in either place", therefore, when the cause of action arises at two or more places, it is for the party aggrieved to approach the Court of any of those places.

In the above circumstances, even when the order is passed by a Court at Indore of taking the cognizance and issuing notices which is beyond the territorial jurisdiction of this Bench seat, the Indore Bench seat may have the jurisdiction, but not to the exclusion of the jurisdiction of this Bench seat, as part cause of action also arose within the territorial jurisdiction of this Bench.

On the above discussions, I am of the view that in the circumstances the jurisdiction of this Bench seat cannot be said to be not available or curtailed or restricted and on the facts and circumstances, this Court is also vested with the powers to entertain the petitions. The petitions are, therefore, held to be maintainable in this Court.