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Judgment
Gh. Hasnain Massodi, J.—Trade and Commerce are of pivotal importance for over all development of a country. These while making
contributions in shape of direct and indirect taxes to the State exchequer provide employment to a large number of people. It has been thus, all
along endeavor of the law makers to enact laws that guarantee freedom of trade and commerce, facilitate and promote trade and commerce and
impart credibility to the commercial transactions and respectability to the Negotiable Instruments. It needs no emphasis, that with new strides in
trade and commerce, it is impracticable to rely on cash transactions alone. The parties to commercial transactions invariably rely on Negotiable
Instruments like cheques to clinch commercial deals. It is thus of utmost importance that cheques are honoured as to discredit cheques as medium
of commercial transactions is bound to have a negative spill over for over all health of economy. It is for the said reason that failure to adhere to the
commitments by drawer of a cheque has been viewed seriously and frowned upon by the social planners. Before a special law, dealing with
dishonor of cheques, was enacted, Section 420 RPC used to be pressed into service to deal with the problem. It was soon realized that,
deception"", and ""fraudulent or dishonest inducement"" being necessary components of the offence of cheating it may not be possible for drawee or
holder in due course of a bounced cheque to prove existence of such basic components of the offence of cheating. Cases are conceivable where
the drawer of cheque at the time of issuing cheque had no intention to deceive a drawee and thus would go, of the hook, once the drawer failed to
prove deception. In the circumstances a law was required to be enacted which would make return of cheque unpaid, an offence even when no
deception was proved against the drawer of the cheque. The legislative effort in this regard crystallized in shape of Negotiable Instruments Act.
The law relating to Negotiable Instruments is law of commercial world and is primarily concerned with sanctity to the instruments of the credit,
convertible into money and easily passable from one person or other.
Should societal concern for respectability of negotiable instruments like cheques, be stretched to an extent that permit the drawer or holder in
due course to make a departure from settled principles governing jurisdiction of Criminal courts, and choose jurisdiction of his choice, is the
question stared at the court in the present bunch of petitions u/s 561-A Code of Criminal Procedure;
The facts of petitions 102/2009, 103/2009 and 106/2009 to 113/2009 u/s 561A Code of Criminal Procedure, if not similar, the contours of
controversy in all the ten petitions are identical and all the ten petitions may very well be taken-up together. This order thus shall govern the fate of
all the above captioned petitions.
The Respondent - Punjab Tractors Limited was a company incorporated under Companies Act, 1956 with its registered office at Phase-IV
Industrial Area S.A.S Nagar (District Mohalla) 160055 Chandigarh and regional office at Bhopal, Madhya Pradesh India. The Respondent
Company had also a branch office at Srinagar. The Respondent Company - Punjab Tractors, appears to have later merged with Mahindra and
Mahindra Limited, a Company incorporated under the Companies Act, 1913 having its registered office at Gate Way Building Apollo Bhandra
Mumbai 480001, in terms of order passed in scheme of amalgamation by Hon'ble High Courts of Bombay and Punjab and Haryana. It is in the
said back ground that a few of the complaints have been filed by Mahindra and Mahindra Limited and the company resultantly figures as
Respondent in some of the petitions relating to said complaints, though the cheques were drawn in favour of Punjab Tractors Limited.
The Petitioners in all the petitions are business concerns dealing in sale and service of Tractors and have been at some point of time appointed as
authorized dealers"" by the Respondent Company. The Petitioners in connection with business dealing with the Respondent company - Punjab
Tractors Limited, issued cheques drawn on different Banks and payable at different places in M.P., U.P., and Uttrak-hand States. In none of the
cases the cheques were drawn on a bank at Srinagar or made payable at Srinagar;
For facility of reference necessary details in respect of cheques forming subject matter of complaints/petitions may be tabulated here under:
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561-A No's. Cheque No & date. Bank on which Place of
amount. drawn payment.
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102//2009 Rs. 35,00,000 003947 Union Bank of Mandla M.P.
20.8.2008 India Sakla Disstt,
Mandla M.P.
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103/2009 Rs. 70,00,000 284379 Union Bank of Damoh M.P.
30.10.2008 India Damoh M.P.
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106/2009 Rs. 34,16,000 642488 State Bank of India Lakhmipure
20.10.2008 Lakhmipure Kheri
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107/2009 Rs. 25,00,000 642487 State Bank of India Lakhmipure
28.2.2008 Lakhmipure Kheri
U.P.
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108/2009 Rs. 30,00,000 0526298 Bank of Baroda, Pala Kalan
10.10.2008 Palla Kalan Kheri
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109/2009 Rs. 88,90,000 518074 Bank of Baroda Kashipure
28.1.2009 Kashipure Udham
Nagar Uttrakhand
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110/2009 Rs. 88,90,000 518074 Bank of Baroda Kashipure
20.09.2008 Kashipure Udham
Nagar Uttrakhand
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111/2009 Rs. 20,00,000 118944 State Bank of India Mohammadi
29.2.2008 Mohammadi
Lakhmipure Kheri
U.P.
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112/2009 Rs. 30,00,000 118945 State Bank of India Mohammadi
15.10.2008 Mohammadi
Lakhmipure Kheri
U.P.
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113/2009 Rs. 36,47,000 118944 State Bank of India Mohamamdi
31.10.2008 Mohammadi
Lakhmipure Kheri
U.P.
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The cheqeus were presented by the Company for collection at its bank namely Jammu and Kashmir Bank branch Residency Road Srinagar.
The cheques were forwarded by the collecting bank to the respective banks on which the cheques were drawn. The Respondent company,
however, did not get the cheque amount as the funds were reported by the concerned banks to be ""not sufficient"". The Respondent company after
receiving said information from its Bank i.e. the Collecting Bank, dispatched a demand notice through its lawyer Sh. Irfan Andleeb Advocate, from
Srinagar, asking the Petitioners to pay the cheque amount within 15 days from the date of receipt of notice. The demand notice in each case was
sent to the Petitioner at its business address in States other than the State of Jammu and Kashmir. The Petitioners, in each case, failed to act upon
the demand notice and pay the cheque amount. The Respondent thereafter through its attorney Sh. Khursheed Ahmad Thoker Son of Ali
Mohammad Thoker Resident of Khanyar Srinagar also an employee of Respondent company filed a complaint in respect of each of the
dishonoured cheques u/s 138 Negotiable Instruments Act, and 420 RPC.
The complainant in each case narrated the facts and events and alleged that the cheque issued by the Petitioner had been dis-honored by the
bank on which it was drawn and that the Petitioner-drawer of the cheque had failed to pay the cheque amount within 15 days after the receipt of
the demand notice. The Learned Trial Magistrate, after recording statements of the complainant in each complaint, took cognizance of the offences
punishable u/s 138 Negotiable Instruments Act, and 420 RPC, and issued process against the Petitioner.
The Petitioners aggrieved of the order, taking cognizance of aforementioned offences on the complaint filed by the Respondent company, have
filed petition u/s 561-A Code of Criminal Procedure invoking inherent jurisdiction of this Court and seek quashment of the orders taking
cognizance in the matter as also directing issue of process against the Petitioners.
The main plank of the Petitioners case in all the petitions is that the Court at Srinagar lacked jurisdiction to entertain and deal with the
complaint. Resultantly, it is urged, the order taking cognizance of offences punishable u/s 138 Negotiable Instruments Act, and 420 RPC in
complaints filed by the Respondent company is without jurisdiction and amounts to abuse of process of court within the meaning of Section 561-A
Code of Criminal Procedure. In some petitions peripheral issues like competence of the complainant to file complaint on behalf of the Respondent
company, liability of the Petitioners to pay the cheque amount and back ground in which cheque/s was/were issued are also raised. But in view of
the jurisdictional issues raised in the petitions all other grounds recede to the back ground. The court is thus to deal with the primary or
jurisdictional issue set out in the petitions. In case the Court at Srinagar is found to have jurisdiction to entertain and proceed with the complaint,
the focus is to shift to other grounds of challenge taken up in the petition.
I have gone through each of the petitions as well as record in each case received from the Court below.
I have heard learned Counsel for the parties.
Chapter (XV) of Criminal Procedure Svt 1989, deals with the jurisdiction of Criminal Courts in enquires and trials Section 177 of the Code
lays down that every offence shall ordinarily inquired into and tried by court within local limits of whose jurisdiction it was committed. There is thus
no scope for controversy as regards jurisdiction of a court to inquire into and try an offence where a single act constitutes the alleged offence. The
difficulty arises when series of acts together constitute offence, Section 179 takes care of the cases where the act is done at one place and the
consequences which ensue, take place at a different place. In such cases the offences may be inquired into and tried by the Court within local limits
of whose jurisdiction the Act has been done or any such consequences have ensued. The illustrations (a) to (d) illustrate the cases where Section
179 may come into play. Thus where a person is wounded within territorial jurisdiction of court A and he thereafter moves to territorial jurisdiction
of Court B where he breaths his last in consequence of wounds received at the former place, both the Courts i.e. one having jurisdiction over the
place of attack and other having the jurisdiction over the place where the death occurred have jurisdiction to inquire into and try the case. Section
182 Code of Criminal Procedure incorporates yet another exception to the general rules embodied in Section 177 Criminal Producer Code. It
would be advantageous to reproduce Section 182 Code of Criminal Procedure here under:
Place of inquiry or trial where scene of offence is uncertain or not in one district only; or where offence is continuing, or consists of several
acts
When it is uncertain in which of several local areas an offence was committed, or
Where an offence is committed partly in one local area and partly in another; or
Where an offence is a continuing one; and continues to be committed in more local areas than one; or
Where it 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 offence u/s 138 Negotiable Instruments Act, is not a local offence i.e. it does not comprise of a single act, and thus Section 177 of the
Code is not relevant for the purpose of jurisdiction of the Court to inquire into and try the offence punishable u/s 138 Negotiable Instruments Act,
The offence u/s 138 Negotiable Instruments Act, as laid down in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, , is complete only
with the concatenation of a number of acts namely;
(i) drawing of the cheque
(ii) presentation of cheque to the Bank
(iii) Return of the cheque by drawee Bank
(iv) Giving notice of the demand, to the drawer of the cheque for payment of the cheque amount.
(v) Failure of the drawer to make payment within 15 days of receipt of the notice.
The offence u/s 138 of the Act, (for short Act) consists of several Acts within the meaning of Section 182 code of Criminal Procedure and
obviously the Court having jurisdiction over any of such local areas has jurisdiction to inquire and try the offence. This however, does not clinch the
mater. It remains to be seen as to what are the acts that together constitute the offence. It needs no emphasis that some of the acts done while
committing the offence, that attract Section 182 Code of Criminal Procedure may be taken in aid of the main acts and such steps are not to be
allowed to decide the jurisdiction of the Court. To illustrate the drawee, after he gets cheque back unpaid, may go to his lawyer at place A to get
the demand notice drafted and then return to place B where he hands-over demand notice to the drawer. The drafting of demand notice is just a
step towards the one of the key or crucial acts and not by itself decisive of jurisdiction. In K. Bhaskaran's case (supra), the Supreme Court held
that as the offence punishable u/s 138 of the Act, can be complete only with concatenation of five acts (supra) and the five different acts, may be
done at five different localities, any one of the courts exercising jurisdiction in any one of the five local areas can become the place of trial for
offence u/s 138 of the Act. From the law laid down in K. Bhaskaran's case, relied upon by the Learned Counsel for the Respondent, it emerges
that a complainant can choose any one of the courts having jurisdiction over any one of the local areas within territorial limits of which any of the
following acts was done;
(i) the cheque was drawn
(ii) the cheque was presented
(iii) the drawee Bank returned the cheque unpaid.
(iv) Notice was given to the drawer of the cheque demanding payment and cheque amount.
(v) the drawer failed to make payment within 15 days of the receipt of the notice.
Learned Counsel for the Respondents relying upon the law laid down in K. Bhaskaran's case insists that as the cheque was presented to the
Bank for payment at Srinagar and the notice of demand was also dispatched from Srinagar, the court at Srinagar having jurisdiction over the area,
where the cheque was presented and notice given, has jurisdiction to take cognizance of the offence and issue process against the Petitioner(s). If
the arguments advanced by the Learned Counsel for the Respondent is accepted then a business concern like a company or a Bank or a financial
Institution having network of offices through-out the country may receive a cheque in connection with its business transactions at a place in any part
of the country say at Aizwal (Mizoram) -Easternmost part of the country and present it for collection at Barmir (Rajasthan) western most part of
the country, and in the event of cheque being received unpaid issue a demand notice from Barmir (Rajasthan), file a complaint u/s 138 Negotiable
Instruments Act, at Barmir and drag small time businessman from Aizwal (Mizoram) to Barmir (Rajasthan) a few thousand k.m's from his
residence. The same can be true about a businessman from Kanyakumari, made to appear in a Court at Nobra, (Ladakh) or for that matter from
any part of the country to any farthest place of the country. It would amount to virtually penalizing the accused in a complaint u/s 138 Negotiable
Instruments Act, before he is actually afforded a opportunity to face the trial and the complainant embarks on a exercise to prove his case against
the drawer of the cheque and before he is found guilty. Such, an interpretation of law laid down in K. Bhaskaran's case would be repugnant to and
violative of right to life and liberty guaranteed under Article 21 of the Constitution of India. No person in terms of the aforesaid constitutional
provision is to be deprived of his life or personal liberty except according to procedure established by law. It is well settled law that the procedure
established by law"" must be reasonable, fair and just and the law that makes room for prosecution of a person a few thousand k.m's. or for that
matter even a few hundred km's from his place of residence when the offence alleged is not committed within the local limits of the court where the
prosecution is launched, can not be said to be reasonable, fair and just. The law laid down in K. Bhaskaran's case is thus to be interpreted in such
a manner that the constitutional mandate is not violated. It is pertinent to point out that the offence punishable u/s 138 is a statutory offence and
unlike other offences it is not complete unless and until the accused is given an opportunity to set right. The lapse/mistake and the accused does not
within the statutory period set right lapse/mistake. In other words the offence u/s 138 Negotiable Instruments Act, is not complete when cheque is
drawn even if at the time the cheque is drawn, the drawer of the cheque may be aware that on that date there were not sufficient funds in his
account to pay the cheque amount, the offence is not complete even when the cheque is dishonored and the drawee or the holder in due course
informed by the Bank that there are no sufficient funds in drawer's account to pay. The offence is incomplete even when the drawer issues demand
notice to the drawer requiring him to pay the cheque amount within 15 days from the date of receipt of the cheque notice, for the simple reason
that the drawee may respond to the notice and pay the cheque amount. In the event the drawer pays the cheque amount to the drawee, no offence
is committed even if at the time the cheque was drawn no amount was available in the account and that the drawer knew that the cheque was
dishonored. Why should an offence u/s 138 of the Act, be declared complete only after the drawer fails to pay the cheque amount despite demand
notice, is not difficult answer. Section 138 of the Act, does not make element of ""deceit"" as a sine qua non for the offence. In other words, the
complainant has not to prove that there was any deception on the part of the drawer of the cheque that preceded ""fraudulent or dishonest
inducement"" of the drawee. If a cheque is dishonored for paucity of funds, offence u/s 138 is complete, no matter that the drawer had or had not
the dishonest intention at the time of drawing the cheque. It is because of said reason that even when the cheque is dishonored the drawer is to be
given a fair opportunity (15 days time) to make the payment after receipt of the demand notice. The law visualizes that the drawer might having
bonafide belief at the time of drawing the cheque, expected the cheque amount to have been credited to his account and because of some reason
beyond his control, the amount did not reach the drawers account. In the circumstances the failure to pay the cheque amount within 15 days after
receipt of the demand notice assumes pivotal importance in commission of the offence u/s 138 of the Act. If we go a step further, the receipt of the
demand notice by the drawer of the cheque is the key event in commission of the offence. The receipt of the demand notice by the drawer of the
cheque, whether actually received or presumed to have been received in terms of Section 27 of the General Clauses Act, and Section 118 of the
Evidence Act, is to be integral part of act of giving of the notice, as mere giving of notice can not be said to be by itself a component of offence u/s
138 of the Act. In the circumstances component IV identified in K. Bhaskaran's case is to be interpreted to refer to giving and receipt of the
demand notice. It follows that when the place from which a demand notice is given and the place where the demand notice is to go are situated
within local limits of territorial jurisdiction of the same Court, the complaint u/s 138 Negotiable Instruments Act, may be filed in that court.
However, when the place from which the demand notice is dispatched and the place where demand notice is to go are two different jurisdictional
areas, the complaint u/s 138 may be filed at the place where the notice is received or presumed to have been received as the giving of notice is
only a step towards the key act of receipt of notice and is complete only when the notice is received or presumed to have been received. Again the
presentation of the cheque for collection by drawee or holder in due course in a Bank, where the drawee/holder in due course, has an account is
not the deciding factor of identifying the Court that has jurisdiction to try Complaint u/s 138 of the Act. The drawee of the cheque or holder in due
course may present the cheque for collection at any place in the country and if such presentation before Collecting Bank is held to give jurisdiction
to the Court where Collecting Bank is situated, it shall have disastrous consequences for the drawer of the cheque and expose the drawer to
immense hardship. It may be reiterated that procedure contemplated by Article 21 of the constitution is to be reasonable, fair and just. It follows
that component No. 2 identified in the K. Bhaskaran's case is to be interpreted to mean presentation of the cheque to the Bank on which the
cheque is drawn. To illustrate if the cheque is drawn on a Bank at Srinagar and presented for collection at Kanyakumari, it is the court at Srinagar
where the Bank on which the cheque is drawn that has jurisdiction to inquire into and try the offence.
I am fortified in my view by law laid down, in Harman Electronics (P) Limited and Ors. v. National Panasonic Limited : AIR 2009 SC 1166,
where it has been held that the issuance of notice by itself would not give rise to the cause of action and that the cause of action for the complaint
u/s 138 would rise only on receipt of the notice and failure of the accused to pay the cheque amount within 15 days thereafter. The court held that
while issuance of a notice by the drawer or holder in due course is necessary, the service of the demand notice is equally imperative. The court
held that giving of notice, therefore, can not have any precedence over its service. It was further held that the principle that debtor must seek the
creditor can not be applied in criminal case as jurisdiction to try the case is governed by the provision of Code of Criminal Procedure and not of
common-law principle. In Ishar Alloy Steel Limited v. Jayaswals NECO Limited 2001 (2) KLT 148 (SC) it has been held that the Bank referred
to in the proviso (a) Section 138 is the drawee Bank and not the Collecting Bank i.e. Bank where, cheque is presented by the complainant for
collection. The principle has been reiterated in Santosh Kumar v. Mohanan 1 (2009) BC 384. From the above discussion, it emerges that
complaint u/s 138 Negotiable Instruments Act, may be filed in a Court within the local limits of whose jurisdiction any of the following acts are
done:
(i) Cheque is drawn
(ii) The cheque is presented to the drawee Bank and returned unpaid.
(iv) The demand notice is given and received or presumed to have been received and where the notice is dispatched from a place different from
the place where it is to be received, where the notice is received or presumed to have been received.
(vi) Where the drawer fails to make the payments within 15 days of the receipt of the notice.
In the present cases the cheque was neither drawn within local limits of jurisdiction at Srinagar nor presented to the drawee Bank within said
limits and the demand notice was not received or presumed to have been received within the jurisdiction of the Court at Srinagar. Again the drawer
did not fail to make the payment within 15 days of the receipt of the aforesaid notice within jurisdiction of court at Srinagar. The court at Srinagar
thus lacked jurisdiction to entertain much less proceed with the complaint and take cognizance of the offence u/s 138 of the Act. The Court
resultantly had no jurisdiction to issue process against the Petitioner.
The order taking cognizance and directing issuance of the process against the Petitioner in each of the compliant in the circumstances amounts
to abuse of process of court and thus liable to be quashed u/s 561-A Code of Criminal Procedure.
So viewed, all ten petitions under Sections 561-A captioned above are allowed and orders taking cognizance and directing issuance of
process detailed below, are quashed.
(1) Order dated 24.01.2009 passed by 1st. Addl. Munsiff (JMIC) Srinagar in Cr. Complaint No. 89/A.
(2) Order elated 24.02.2009 passed by 3rd Addl. Munsiff Srinagar.
(3) Order dated 30.03.2009 passed by Judicial Magistrate, Srinagar in Cr. Complaint No. 81/A
(4) Order dated 07.05.2008 passed by 3rd Addl. Munsiff, Srinagar in Cr. Compliant 10/A
(5) Order dated 09.06.2009 passed by Ist. Addl. Munsiff (JMIC) Srinagar in Cr. Complaint No. 12/X
(6) Order dated 16.3.2009 passed by Ist. Addl. Munsiff Srinagar, in Cr. Complaint 106/A
(7) Order dated 16.3.2009 passed by Ist. Addi. Munsiff Srinagar, in Cr. Complaint 106/A
(8) Order dated 07.10.2008 passed by 3'd, Addl. Munsiff Srinagar, in file No. 31/C
(9) Order dated 01.04.2009 passed by Forest Judl. Judicial Magistrate, Srinagar in Cr. Complaint No. 1/A.
(10) Order dated 01.04.2009 passed by Judge Small Causes Court Srinagar, Srinagar in Cr. Complaint No. 2/A. Disposed of. The record in all
the ten petitions be send down.