Kerala High Court
Athikulla Shariff Atheeq vs M/S/Shaan Finance Ltd on 2 December, 2010
Author: M.Sasidharan Nambiar
Bench: M.Sasidharan Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Crl.MC.No. 4449 of 2010()
1. ATHIKULLA SHARIFF ATHEEQ,
... Petitioner
Vs
1. M/S/SHAAN FINANCE LTD.,
... Respondent
2. STATE OF KERALA,
For Petitioner :SRI.V.PHILIP MATHEW
For Respondent :SRI.G.RAJAGOPAL
The Hon'ble MR. Justice M.SASIDHARAN NAMBIAR
Dated :02/12/2010
O R D E R
M.SASIDHARAN NAMBIAR,J.
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CRL.M.C.No. 4449 OF 2010
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Dated this the 2nd day of December,2010
ORDER
Whether Judicial First Class Magistrate Court I, Ernakulam can take cognizance of an offence under section 138 of Negotiable Instruments Act on Annexure 1 complaint filed by the first respondent on the allegation that the cheque issued by the petitioner in an account maintained in Bangalore was presented for encashment in a bank at Cochin, where first respondent has an account and on its dishonour issued a notice from Ernakulam demanding the amount covered by the dishonoured cheque?
2. First respondent filed Annexure I complaint alleging an offence under section 138 of Negotiable Instruments Act before Judicial First Class Magistrate-I, Ernakulam. Crl.M.C.4449/2010 2 The complaint itself discloses that first respondent is a public limited Company with its registered office at Bangalore. Petitioner the accused is also a resident of Baneerghatta, Bangalore. The allegation in the complaint is that petitioner hired a vehicle from first respondent under a hire purchase agreement. Though he is bound to pay hire amount along with other amount due, he failed to pay the same. In partial discharge of the debt, petitioner issued a cheque dated 17.5.2005 drawn on an account maintained by him in Jayanagar Extension Branch of Central Bank of India for Rs.50,000/-. First respondent presented the cheque for collection through Panampilly Nagar Branch of ING Vysya Bank. It was dishonoured for want of sufficient funds. It is also alleged that first respondent caused to send a lawyer notice from Ernakulam demanding the amount and on receipt of the notice, petitioner failed to pay the same and thereby he committed the offence under section 138 of Negotiable Instruments Act. Crl.M.C.4449/2010 3 Petition is filed under section 482 of Code of Criminal Procedure contending that when first respondent Company is having its registered office at Bangalore and petitioner is a resident of Bangalore and the hire purchase agreement was entered into at Bangalore and the hire charges are payable at Bangalore and the dishonoured cheque was issued at Bangalore in an account maintained by the petitioner at Bangalore and hence Judicial First Class Magistrate at Ernakulam has no territorial jurisdiction to try the case and for the sole reason that first respondent had executed a power of attorney to a person residing at Ernakulam or for the reason that the cheque was presented in a bank at Ernakulam or for the reason that notice demanding the amount covered by the dishonoured cheque, as provided under section 138
(b) was sent at Ernakulam learned Magistrate cannot try the case. It is contended that though petitioner filed CMP 3097/2010 to dismiss the complaint on the ground that learned Magistrate has Crl.M.C.4449/2010 4 no jurisdiction, by Annxure 4 order, the petition was dismissed relying on the decision of the Apex Court in Shamshad Begum v. Mohammed (2009(1) KLT
886) and Purushothaman v. State of Kerala (2009(2) KLT 540).
3. Learned counsel appearing for the petitioner pointed out that Section 72 of Negotiable Instruments Act provides that in order to charge the drawer, a cheque must be presented at the Bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer and therefore presentation of the cheque necessary to attract an offence under section 138 could only be at the drawers bank and not the drawee bank and if that be so, presentation of the cheque which is part of cause of action could only be at Bangalore where petitioner has an account and not at Ernakulam. Learned counsel relied on the three Bench decision of the Apex Court in Ishar Alloy Steels Ltd v. Jayaswants Neco Ltd (2001(2) KLT 148) and argued Crl.M.C.4449/2010 5 that this question has been settled by the Honourable Supreme Court. It is pointed out that subsequent decision in Shamhad Begum v. B. Mohammed (2008 KHC 6963) i.e. 2009 (1) KLT 886) did not notice the earlier decision by a Bench consisting of three Judges. Learned counsel also pointed out that the decision of this court in Purushothaman v. State of Kerala (2009(2) KLT 540), which was against the two other decisions of this court in Santhosh Kumar v. Mohanan (2008(3) KLT
461) and in Ahammedkutty Haji v. State of Kerala (ILR 2006(4) 949) is not the good law, in view of the decision of the Apex Court in Harman Electronics (P) Ltd v. National Panasonic India (P) Ltd (2009(2) KLT 113).Learned counsel also pointed out that this court in Philipose P.M. v. P.C. Chandy and another (2009(4) KHC 277) considered the said question and held that where no part of the transaction has taken place at the place of residence of the complainant and there is no Crl.M.C.4449/2010 6 stipulation that payment is to be made at the place of residence of the complainant presentation of the cheque at his bank will not confer territorial jurisdiction and sending of notice from his place of residence also will not enable the court to try the case, when it has no territorial jurisdiction. It is also pointed out that the Division Bench in Thressiamma v. State of Kerala (2010(4) KLT 598) concluded the question holding that presentation before the drawer bank and dishonour thereon alone would give rise to cause of action for prosecution and presentation of the cheque before the Bank of the complainant is not relevant and would not amount to a cause of action and the decision of this court in Santhoshkumar's case is perfectly correct and giving notice in writing to the drawer could only be at the place where the drawer resides and therefore by sending notice alone, complainant is not entitled to lodge the complaint at Ernakulam and the learned Magistrate has no jurisdiction to try the case.
Crl.M.C.4449/2010 7
4. Learned counsel appearing for the first respondent argued that as rightly found by the learned Magistrate as settled in Bhaskaran v. Balan (1999(3) KLT 440) an offence under section 138 of Negotiable Instruments Act can be completed only with the concatenation of a number of acts and (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 receipt of the notice and each of them are components of the said offence and therefore each locality where each of the components had taken place has jurisdiction and if so, presentation of the cheque to the bank is also one of the components which constituted the offence under section 138 of Negotiable Instruments Act and therefore when the dishonoured cheque was presented for encashment in a bank at Ernakulam , the court at Ernakulam has territorial jurisdiction Crl.M.C.4449/2010 8 to try the case. It is also argued that as the notice was sent demanding the amount covered by the dishonoured cheque, at Ernakulam and giving notice in writing to the drawer of the cheque is also one of the components, Judicial First Class Magistrate, Ernakulam has jurisdiction to try the case. Learned counsel also pointed out that facts of the case in Harman Electronics (P) Ltd v. National Panasonic India (P) Ltd (2009(2) KLT 113) shows that though in that case it was contended that cheque was presented for encashment at New Delhi, there was no material on record to show that the cheque was presented at New Delhi and therefore their Lordships held that there is no other option but to presume that the cheque was presented at Chandigarh and the question considered was whether sending of notice from New Delhi would vest jurisdiction at New Delhi and therefore based on the said decision, it cannot be held that Judicial First Class Magistrate, Ernakulam has no jurisdiction to try the case.
Crl.M.C.4449/2010 9
5. Learned counsel appearing for the petitioner pointed out that there is no allegation in the complaint that the power of attorney holder of the first respondent is an employee of the first respondent or that first respondent has even an office at Ernakulam and the only allegation is that he is the power of attorney holder and for that reason alone first respondent is not entitled to present the cheque at Ernakulam or sent a notice from Ernakulam and claim jurisdiction to the court at Ernakulam.
6. A reading of the complaint shows that entire transaction took place at Bangalore. The registered office of the first respondent Company is at Bangalore. The accused is a resident of Bangalore. The dishonoured cheque was drawn in an account maintained in a bank at Bangalore. The cheque was dishonoured by that Bank at Bangalore. The only reason for claiming jurisdiction to the court at Ernakulam is presentation of the cheque for encashment in a bank, where first respondent Crl.M.C.4449/2010 10 has an account, at Ernakulam and sending of a notice under section 138(b) of Negotiable Instruments Act from Ernakulam. Question is whether on these two grounds, Judicial First Class Magistrate has jurisdiction to try the case.
7. True, the two Judge Bench in Bhaskaran's case (supra) held that an offence under section 138 of Negotiable Instruments Act can be completed only with the concatenation of a number of acts and the components of the said offence are (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 and (5) failure to make payment within 15 days of the receipt of the notice and the five localities from where the different acts were done are the five different places where part of the components of cause of action for an offence under section 138 of Negotiable Instruments Act occurred and therefore court of each of the five localities has Crl.M.C.4449/2010 11 jurisdiction to try the case. It is based on the said decision, learned counsel appearing for the first respondent supports the decision of the learned Magistrate. The decision in Bhaskaran's case (supra) was rendered by two Judges Bench. The decision of three Judges Bench in Ishar Alloy Steels Ltd (supra) was subsequent to the decision in Bhaskaran's case. One of the Honourable Judges who rendered the decision in Bhaskaran's case (supra) was one of the three judge Bench in Ishar Alloy Steels Ltd case. The question considered in Ishar Alloy Steels Ltd was what is meant by "the Bank" as mentioned in clause (a) of proviso to Section 138 of Negotiable Instruments Act and does such bank mean the bank of the drawer or covers within its ambit any bank including the collecting bank of the payee of the cheque and to which bank the cheque is to be presented for the purpose of attracting the penal provision of Section 138 of the Act. Their Lordships held that the use of the words "a bank" and "the bank" in the Section is Crl.M.C.4449/2010 12 indicator of the intention of the Legislature and if the legislature intended to have the same meaning for "a bank" and "the bank" there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It was held that "the bank referred to in clause (a) to the proviso to Section 138 of the Act would mean that drawee bank on which the cheque is drawn and not all the banks where the cheque is presented for collection including the bank of the payee in whose favour the cheque is issued. It was also held that though the payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has an account, but to attract the criminal liability of the drawer of the cheque, such collecting bank is obliged to present the cheque in the drawee bank on which the cheque is drawn. Therefore out of the five localities provided in Bhaskaran's case (supra), presentation of the cheque to the bank, in view of the larger Bench decision in Ishar Alloy Steels Ltd (supra) Crl.M.C.4449/2010 13 could only be the bank of the drawer of the cheque and not the bank of the payee. If that be so when the cheque was admittedly drawn in the account maintained by the petitioner at Bangalore the presentation of the cheque could only be to that bank at Bangalore. If that be so, by presenting the cheque before a bank at Ernakulam for collection, where first respondent has an account, it cannot be contended that part of the cause of action has arisen at Ernakulam. It is more clear in view of Section 72 of the Negotiable Instruments Act which mandates that to charge the drawer, the cheque must be presented to the bank where the cheque is drawn. If that be so, it can only be found that by presenting the cheque drawn in Bangalore, at Ernakulam first respondent is not entitled to contend that court at Ernakulam has territorial jurisdiction to try the case.
8. Then the question is whether by sending a notice from Ernakulam demanding the amount covered by the dishonoured cheque, a court at Ernakulam Crl.M.C.4449/2010 14 would get territorial jurisdiction. That question has been now concluded by the decision in Harman Electronics (P) Ltd case. The facts of the case shown that the cheque in question was issued at Chandigarh. Complainant also has a branch at Chandigarh. Cheque was dishonoured at Chandigarh. There was dispute whether cheque was presented at Chandigarh or was sent for collection to Delhi. Notice asking the drawer to pay the cheque amount was sent from Delhi. Their Lordships on facts found that there was no evidence to prove that cheque was presented at New Delhi and hence there was no "other option but to presume that the cheque was presented at Chandigarh" and the only question was whether sending notice from Delhi would give rise to a cause of action for taking cognizance under the Negotiable Instruments Act. Their Lordships held that "a distinction must be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable Crl.M.C.4449/2010 15 instrument is necessary, service thereof is also imperative. "Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an offence completes. Giving of notice, therefore, cannot have any precedent over the service". It is only from that view of the matter in Dalmia Cement (Bharat) Ltd v. Galaxy Traders & Agencies Ltd (2001(1) KLT 528) emphasis has been laid on service of notice. In Dalmia Cement (Bharat) Ltd case (supra) it was settled as follows:-
"To constitute an offence under section 138 of the Act, the complainant is obliged to prove its ingredients which include the receipt of notice by the accused under clause (b). It is to be kept in mind that it is not the 'giving' of the notice which makes the offence but it is the Crl.M.C.4449/2010 16 'receipt' of the notice by the drawer which gives the cause of action to the complainant to file the complaint within the statutory period."
In the light of the settled position, it can only be found that by sending the notice from Ernakulam to Bangalore, first respondent cannot be heard to contend that learned Magistrate at Ernakulam has the jurisdiction to take cognizance or to try the case.
9. Though a learned single Judge in Purushothaman's case had taken a contrary view to the decisions of single Judges in Ahammedkutty Haji's case (supra) and Harihara Puthra Sharma v. State of Kerala (ILR 2006(4) Ker.901) the Division Bench of this Court in Thressiamma's case (supra) concluded the matter as follows:-
"The law laid down in Harihara Puthra Sharma's case and Ahammedkutty's Crl.M.C.4449/2010 17 case is the correct law."
The Division Bench considering the similar question held:
"23. Having gone through the dictum laid down in Santhosh Kumar;s case(supra) we find merit in the argument advanced. Suppose the complainant presented the cheque at a distant place and it reaches the drawer bank after the expiry of the period of six months, the drawer bank may dishonour the cheque as it is beyond the period of validity.
Instances may also occur where the bank fails to forward the cheque at all and for that reason the complainant could not encash Crl.M.C.4449/2010 18 the cheque. In either case, the complainant is not entitled to prosecute the drawer. Therefore, we find that the presentation of the cheque before the drawee bank would not give rise to cause of action. The presentation of the cheque before the drawer bank and dishonour thereon alone would give rise to cause of action for prosecution. In this view of the matter, the presentation of the cheque before the bank of the complainant is not relevant and would not amount to a cause of action. Whereas what is essential is the presentation of the cheque before the drawer bank. In Crl.M.C.4449/2010 19 the event the drawee bank is situated at a different station other than drawer bank and where the transaction had taken place, the magistrate having territorial jurisdiction over the area where the drawee bank is situated would not get territorial jurisdiction to entertain the complaint. The dictum laid down by the leaned single Judge in Santhosh Kumar's case (supra) is perfectly correct. The above interpretation regarding presentation of cheque to the bank is identical to the interpretation of 'giving notice' in writing to the Crl.M.C.4449/2010 20 drawer in Harman Electronics case (supra). Therefore, we find that the presentation of the the cheque mentioned in Bhaskaran's case, as we quoted earlier, is presentation before the drawer and not before the drawee bank. Therefore, it goes without saying that in such event the complainant cannot file prosecution in a court having territorial jurisdiction over an area where the drawee bank in which the cheque was presented for collection if such bank is situated at a place other than that of the drawer bank or at a place other than where transaction Crl.M.C.4449/2010 21 had taken place. The references are answered accordingly."
In the light of the settled legal position, it can only be found that Judicial First Class Magistrate- I, Ernakulam has no jurisdiction to try the case.
Petition is allowed. The cognizance taken on Annexure 1 complaint in C.C.675/2008 is quashed. Additional Chief Judicial Magistrate (E&o), Ernakulam is directed to return the complaint to the first respondent for presentation before the proper court, in accordance with law.
M.SASIDHARAN NAMBIAR JUDGE tpl/-
M.SASIDHARAN NAMBIAR, J.
--------------------- W.P.(C).NO. /06
--------------------- JUDGMENT SEPTEMBER,2006