Delhi High Court
Pratap Singh Yadav And Anr. vs Atal Behari Pandey on 5 September, 2002
Equivalent citations: 2003CRILJ705, 100(2002)DLT673, 2003(66)DRJ101
Author: Mahmood Ali Khan
Bench: Mahmood Ali Khan
JUDGMENT Mahmood Ali Khan, J.
1. This criminal revision petition under Section 397 Cr.P.C. is directed against an order of an Additional Sessions Judge dated 7.5.2002 by which he has served notice under Section 251 Cr.P.C. for the trial of the petitioners for offence under Section 138 of Negotiable Instrument Act (the Act).
2. The relevant facts for appreciating the controversy on merit are that the petitioners are father and son respectively. They are residents of Bangalore. Petitioner No. 1, who was carrying on business there, had taken a friendly loan of Rs. 1,50,000/- from the respondent. Respondent was also residing in Bangalore and was in employment there. Petitioner No. 1 issued a cheque for re-payment of the loan amount. The cheque was dishonoured on presentation which led to the filing of a criminal complaint by the respondent at Bangalore for the prosecution of petitioner No. 1 under Section 138 of the Act. However, the matter was compromised between the parties. Petitioner No. 1 paid a sum of Rs. 45,000/- to the respondent and the petitioner No. 1 also gave a cheque drawn by his son, the petitioner No. 2 for Rs. 1,05,000/- at Bangalore drawn on a Bangalore bank in favor of the respondent. In the meantime, the respondent shifted his residence to Delhi. He presented the cheque issued by petitioner No. 2 for payment but the cheque was dishonoured for closure of the account at Bangalore and its intimation was received by the respondent at Delhi. In terms of Section 138 of the Act the respondent issued a demand notice to the petitioners. It was also not complied with and the amount claimed was not paid. Consequently, the petitioner filed the instant criminal complaint for the prosecution of both the petitioners for offence under Section 138 of Negotiable Instrument Act, which at present is pending in the court of Additional Sessions Judge at Delhi. At the time of serving of notice under Section 251 Cr.P.C. the trial court brushed aside the contention of the petitioners that no part of cause of action had arisen at Delhi, therefore, Delhi Court has no territorial jurisdiction to entertain the complaint and take cognizance of the offence and further that petitioner No. 1 is also not the drawer of the cheque, therefore, no offence can be said to have been committed by him under Section 138. The Additional Sessions Judge has served notice on both the petitioners and proceeded against them for trial for offence under Section 138 of the Act. The petitioners are aggrieved and have filed this petition.
3. The contention of the counsel for the petitioners is two fold. Firstly, the cheque was drawn by petitioner No. 2 on his own bank account so petitioner No. 1 cannot be said to have committed any offence within the purview of Section 138 of the Act. Therefore, taking of cognizance of the offence under Section 138 of the Act and summoning of the petitioner No. 1 to stand trial is illegal and it has resulted in miscarriage of justice. His second contention is that both the parties had resided at Bangalore where the loan transaction had taken place, the cheque was issued in favor of the respondent by petitioner No. 2 drawn at his bank which is situated in Bangalore and that the cheque was payable at Bangalore, it was dishonoured at Bangalore, therefore, no part of cause of action could be said to have arisen in Delhi to give jurisdiction to a Delhi court to entertain and try the criminal complaint.
4. Counsel for the respondent, conversely, has argued that the original loan transaction had taken place between the respondent and petitioner No. 1 and that during the pendency of a criminal complaint under Section 138 of the Act against petitioner No. 1 the matter was compromised. Petitioner No. 1 had paid a sum of Rs. 45,000/- to the respondent and for the balance amount of Rs. 1,05,000/- petitioner No. 2 had issued the cheque. According to him, since the original transaction had taken place with petitioner No. 1 and the compromise in pursuance to which the cheque in question was given by the petitioner No. 1 he has also committed an offence under Section 138 of the Act and has been rightly summoned by the court.
5. As regards the second contention of the counsel for the petitioner, it was argued that the respondent resided in Delhi, the notice of demand was also issued to the petitioners at Delhi, the dishonouring of the cheque was at Delhi, therefore, part of cause of action had arisen at Delhi which gave the necessary territorial jurisdiction to the Delhi court to take cognizance of the offence and try the accused. He also argued that as per the affidavits submitted in the trial court by both the petitioners they have shown their residential address of Delhi so these accused are also residing at Delhi and for this reason also the courts at Delhi have territorial jurisdiction. Counsel for the respondent has relied on the judgment of the Supreme Court in K. Bhasakaran v. Sanakaran Vaidhyan Balan and Anr., 1999 SCC (Crl.) 1284 in support of his arguments.
6. Counsel for the petitioners in the rejoinder argued that the petitioners had come to Delhi in connection with this case and had sworn affidavits in Delhi. Therefore, in the affidavits their address of Delhi was given but the fact is that they are permanent residents of Bangalore where they are carrying on their business and they are not ordinary residents of Delhi. Counsel also contended that the petitioners' residence does not give jurisdiction to Delhi courts.
7. The first question is whether the notice under Section 251 Cr.P.C. served on petitioner No. 1 is in accordance with Section 138 of the Act. The proceedings under Section 138 of the Act are not proceedings of civil nature. They are not filed for recovery of money on the basis of the dishonoured cheque. The criminal complaint is filed for punishing the person who had issued the cheque for discharge of a debt and liability but did not have sufficient funds in his bank account to pay the amount of the cheque and despite getting an opportunity of making the payment on receipt of notice of demand has again committed default. Purpose of enactment of Section 138 is to give sanctity to the cheque and has made the drawer of the cheque, which is dishonoured for insufficiency of fund of amount of cheque exceeding the arrangement, liable for the offence. Certain other conditions are to be satisfied before fastening criminal liability on the drawer of the cheque. Section 138 provided "whereany cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account". The dishonour of the cheque and subsequent default in payment of the amount of cheque is made an offence. The section is required to be construed strictly. The person who has handed over the cheque, even though it is for discharging his own liability, may have incurred civil liability but criminal liability of the offence is squarely upon the person who has drawn the cheque on his own bank for discharging a debt and liability may be of another person. For the purpose of Section 138 the maker of the cheque will be guilty of offence if the cheque bounces. Section 138 speaks of the drawing of cheque for discharging debt and liability as necessary ingredient of the offence. But Section 139 raises a presumption that cheque issued was for discharging a debt or liability. Like other presumption this presumption is also rebuttable. Fact remains that it is the drawer of the cheque who will commit offence if other requirement of Section 138 also fulfillled Section 138 has provided the punishment for such persons. The sentence of imprisonment and the fine both are prescribed as punishment under this section to be awarded to the drawer of the cheque.
8. In the instant case, petitioner No. 1 has not drawn any cheque in favor of the respondent. It is petitioner No. 2 who had drawn the cheque for Rs. 1,05,000/- at his own bank account for discharging the liability, payment of debt of his father, petitioner No. 1 herein. The offence within the purview of Section 138 is committed by petitioner No. 2 whose cheque was bounced by the bank on which it was drawn for insufficiency of funds in the account of petitioner No. 2 (to be precise closure of account) and his subsequent failure to make the payment. It is a criminal offence. Only petitioner No. 2 can be said to have committed the offence covered by Section 138. How will petitioner No. 1 be guilty of an offence under Section 138 of the Act has not been explained. He cannot have vicarious liability for offence by implication or otherwise as certain other persons have by application of Section 141 of the Act. There is no other provision under the Act or under the ordinary criminal law under which petitioner No. 1 could be held guilty of an offence which has been committed by petitioner No. 2 under Section 138 of the Act. Therefore, there is gross miscarriage of justice when the trial court took cognizance of the offence under Section 138 against petitioner No. 1 and summoned him for standing trial Along with petitioner No. 2 and issued notice for offence under Section 138 for trial of petitioner No. 1. To that extent, the notice under Section 251 Cr.P.C. issued by the trial court is unsustainable in law and certainly has resulted in miscarriage of justice which warrants interference by this Court.
9. Adverting on the main dispute between the parties about the territorial jurisdiction of Delhi court of entertain the criminal complaint, take cognizance and serve notice on the petitioners it will be appropriate to recapitulate a few facts about which there is no controversy. Both the petitioners and the respondent were residents of Bangalore. Petitioner No. 1 had taken a friendly loan of Rs. 1,50,000/- from the respondent at Bangalore. He had issued the cheque for payment of the loan amount at Bangalore. The cheque was drawn on a bank in Bangalore. The cheque was dishonoured on presentation to the bank by the respondent. Statutory notice of demand was served by the respondent on petitioner No. 1 at Bangalore. The respondent filed the criminal complaint under Section 138 of the Act in a Bangalore court. The dispute was compromised between the parties and the criminal complaint was withdrawn. In terms of the compromise the petitioner No. 1 paid a sum of Rs. 45,000/- to the respondent and his son petitioner No. 2 issued in Bangalore cheque of the balance amount of Rs. 1,05,000/- in favor of the respondent drawn at Bangalore bank. The respondent was at that time residing in Bangalore or nearabout that place. Later on the respondent shifted to Delhi and now he is residing within the territorial jurisdiction of Delhi court. He sent the requisite notice of demand in accordance with Section 138 of the Act to the petitioners from Delhi to Bangalore. The payment of the amount by cheque was not made by the petitioners to the respondent within the stipulated period of 15 days from the date of receipt of notice. The respondent instituted the criminal complaint in a Delhi court.
10. The critical question is whether any part of cause of action has arisen within the territorial jurisdiction of Delhi court in this case. According to the respondent, he is residing at Delhi and further the notice of demand was also sent to the petitioners from Delhi and the payment was also to be made at Delhi to him and the dishonouring of the cheque was also intimated to him at Delhi, therefore, part of cause of action had arisen in Delhi. The Supreme Court in K. Bhaskaran (supra) considered as to what are the various causes of action in a case under Section 138 of the Act to give territorial jurisdiction to a court. In para 11 of the judgment the Supreme Court held as under:
"11. We fail to comprehend as to how the trial court could have found so regarding the jurisdiction question. Under Section 177 of the Code "every offence shall ordinarily be inquired 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 under Section 138 would not be completed wit 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 under Section 138 of the Act."
11. It is manifest from the law laid down in the aforementioned judgment that the cause of action for filing a complaint under Section 138 of the Act may also be at a place where the drawer of the cheque resided or the place where the payee resided or the place where either of them carried on business or the place where payment was to be made. The complaint can be filed before the court which has jurisdiction over any of these places. In the cited case a complaint under Section 138 was filed before a Magistrate at Adoor in Pathanamthitta District in Kerala. The accused challenged the territorial jurisdiction of the court to try the case. His contention was that the cheque was dishonoured at the bank of the Branch at kayamkulam, situated in another District. He also denied the issue of cheque and also receipt of notice of demand. The latter two objections were decided against the accused. On the first question the Supreme Court enunciated the law as reproduced above.
12. A similar question came up for consideration before the Supreme Court in Canbank Financial Services ltd. v. Gitanjali Motors Ltd. and Ors., 1995 Crl.L.J. 1222. It was also a case which arose out of a criminal complaint filed under Section 138 of the Act. The complaint was a finance company. It received a cheque from respondent No. 1 towards payment of the Installments due towards lease finance charges. The complainant deposited it with the bank at Delhi for encashment. The cheques were dishonoured. The notice of dishonour was given as per Section 138 of the Act but to no effect. Respondent defaulted in making the payment. The complaint was, therefore, filed in a Delhi court. It was noticed that the complainant was in Delhi, money was advanced at Delhi and was repayable at Delhi. The cheques were, however drawn on a bank in NOIDA, Distt. Ghaziabad, UP. The cheques were dishonoured by the drawee bank at NOIDA. For this reason the trial court held that it had no territorial jurisdiction in the matter. The Supreme Court after considering the ingredients of Section 138 held:
"Payment for purposes of the proviso is required to be made to the creditor at his place. In the present case the cheques in question were handed over to the complainant at Delhi. After the service of the notice if debtor had to pay, it had to pay to the creditor at Delhi. Therefore, place of payment will always be important and relevant in such matters. I am supported in this view by a judgment of Division Bench of this Court in R.K. Jain v. State, (1988) 1 Crimes 514. In this case the cheque was given at Delhi but was deposited by the payee in his account at Rajouri (J & K). Prosecution was sought to be launched at Jammu for dishonour of the cheque. It was held that such cheque was given at Delhi. The alleged incident was committed at Delhi and Delhi Courts will have jurisdiction.
13. The Supreme Court further held that "The place of payment is thus material for purpose of jurisdiction of a court to try an offence under Section 138 of Negotiable Instruments Act".
Again in para 14 the Supreme Court made the following observations:
"14. That as per Section 179 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 inquired into or tried by a court within whose legal jurisdiction such thing has been done or such consequence has ensued. Payment of cheque against an account having insufficient funds to meet the liability under the cheque is one act while dishonour of the cheque is a consequence of such an act. Therefore as per Section 179 also the place where the cheque was given or handed over will have jurisdiction and the courts of that place will have jurisdiction to try the offence. Likewise for purposes of Section 178(b) payment of cheque may be one part of an offence and dishonour of the cheque may be another part and, therefore, both places, i.e. place where the cheque was handed over and the place where it was dishonoured will have jurisdiction."
14. It is clear from the reading of the principles of law laid down in this judgment that the place where the payment is to be made is relevant for determining the jurisdiction of the court. It is also clear that the drawer of the cheque on receipt of notice of demand is bound to tender the amount of the cheque to the payee at the place of the payee of the cheque to the payee at the place of the payee of the cheque i.e. the complainant. It is on the basis of well known principle of civil law that a debtor should seek the creditor.
15. In M.M. Malik and Ors. v. Prem Kumar Goel and Anr., 1991 (2) CC Cases 157 (HC) it was held in para 7 as under:
"Dishonouring of the cheque was only a part of cause of action and the offence was completed only when the petitioner-Company failed to discharge its liability to creditors (the complainant herein). For discharging the debt, the petitioners had to find out their creditors and since the creditor had its office at Pehowa, the offence was completed at the place and in this situation, the court at Kurukshetra had the territorial jurisdiction to try the matter. No ground for quashing the impugned complaint and the subsequent proceedings is made out."
16. The facts of the present case when examined in the light of the principles of law which have been laid down in the aforementioned judgments it has to be held that the part of cause of action has arisen to the respondent at Delhi where he was residing since it response to the statutory notice of demand as per Section 138 the drawer of the cheque was to tender the amount of the cheque to the respondent at the place where he was available. In the present case the respondent was residing at Delhi. The petitioner No. 2 was obliged to tender the amount of the cheque and meet the demand raised in the notice of demand at Delhi. Therefore, part of cause of action has arisen at Delhi. The court at Delhi has territorial jurisdiction to entertain the complaint under Section 138 of the Act, take cognizance and also try the petitioner No. 2.
17. It has already been held that the order of the learned trial court giving notive for offence under Section 138 of the Act against petitioner No. 1 suffers from impropriety and illegality and has resulted in miscarriage of justice. Therefore, it is necessary to interfere with it in order to secure the ends of justice.
18. The result is that the petition partly succeeds. Service of notice under Section 251 Cr.P.C. dated 7.5.2002 on petitioner No. 1 is quashed and petitioner No. 1 stands discharged. However, the trial court will proceed with the criminal complaint against petitioner No. 2 in accordance with law.