Gujarat High Court
Krishnai Hospital Pvt. Ltd. Through ... vs State Of Gujarat on 23 August, 2023
NEUTRAL CITATION
R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CRIMINAL APPLICATION NO. 3942 of 2018
With
R/SPECIAL CRIMINAL APPLICATION NO. 3947 of 2018
With
R/SPECIAL CRIMINAL APPLICATION NO. 3953 of 2018
With
R/SPECIAL CRIMINAL APPLICATION NO. 3954 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE SANDEEP N. BHATT
==========================================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== KRISHNAI HOSPITAL PVT. LTD. THROUGH DIRECTOR KETAN ANANT RAJ & 1 other(s) Versus STATE OF GUJARAT & 1 other(s) ========================================================== Appearance:
MR VIMAL PATEL FOR VMP LEGAL(7210) for the Applicant(s) No. 1,2 MR ANAND B GOGIA(5849) for the Respondent(s) No. 2 MR BB GOGIA(5851) for the Respondent(s) No. 2 MS MUSKAN A GOGIA(6624) for the Respondent(s) No. 2 MR DHAWAN JAYSWAL, APP for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT Date : 23/08/2023 Page 1 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined COMMON CAV JUDGMENT
1. All these petitions are filed under Article 227 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (`the Code' for short) for quashing and setting aside the order dated 7.4.2018 passed below Exh.12 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case Nos.5061 of 2017;
order dated 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5062 of 2017; order dated 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5063 of 2017 and order dated 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5064 of 2017.
2. As the common question of facts and law are involved in all these petitions, at the request of learned advocates for the parties, they are heard together and disposed of by this common judgment.
3. Rule. Learned APP Mr.Jayswal waives service Page 2 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined of notice of rule for respondent no.1-state. Learned advocate Mr.Anand Gogia waives service of notice of rule for respondent no.2.
4. For the sake of convenience, the facts of Special Criminal Application No.3942 of 2018 are considered, which are as under:
4.1 It is averred in the petition that the respondent no.2 filed private complaints against the applicant under Section 138 of the Negotiable Instruments Act, 1881 (`NI Act' for short) before the learned Judicial Magistrate, First Class, Rajkot. That as none of the alleged documents were signed between the parties at Rajkot and on the face of it, the subject cheques bore the rubber stamp of Kalbadevi Mumbai branch of respondent no.2 bank evidencing the presentation of the subject cheque at Mumbai, the learned JMFC, Rajkot had no jurisdiction to entertain the said complaint and therefore the present applicant filed an application under Section 142(2) of the NI Act praying that the said complaints be returned to the respondent no.2 for presentation before the appropriate Page 3 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined Court, to which the respondent no.2 filed its objection.
The said applications came to be rejected by the learned Magistrate, against which these petitions are filed.
5. Heard learned advocate Mr.Vimal Patel for the petitioner, learned APP Mr.Jayswal for respondent no.1- state and learned advocate Mr.Gogia for respondent no.2- complainant.
5.1 Learned advocate Mr.Patel for the petitioner submits that the petitioner is having a bank account with RBL Bank Ltd., Dombiwali, Mumbai; that the Rajkot Nagrik Sahkari Bank Ltd. Kalbadevi Branch, Mumbai and the petitioner signed the sanctioned letter for sanction of the loan; letter of standing instruction was given to Rajkot Nagrik Sahkari Bank Ltd., Kalbadevi Branch, Mumbai; that deed of simple mortgage between the petitioner and Rajkot Nagrik Sahkari Bank Ltd. Kalbadevi Branch, Mumbai was entered into and registered before the sub-registrar, Mumbai; undertaken was given by the petitioner to maintain paid up share capital, hypothecation agreement between the Rajkot Nagrik Sahkari Bank Ltd. Kalbadevi branch, Mumbai Page 4 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined and the petitioner, Kabulatnama was given by the petitioner duly stamped of Rs.100/- affixed by State of Maharashtra, off lien and set off form stamped of Rs.100/- affixed by State of Maharashtra and given by the petitioner; request for disbursement of balance amount of loan was given by the petitioner to Rajkot Nagrik Sahakari Bank ltd,. At Kalbadevi Branch, Mumbai; the cheque drawn on the loan account of the petitioner was deposited for encashment with Rajkot Nagrik Sahakari Bank Ltd. At Kalbadevi branch; the said cheque was returned from Rajkot Nagrik Sahakari Bank Ltd. At Kalbadevi branch, Mumbai. Thereafter, after issuance of letter, notice under Section 138 of the NI Act, the impugned complaints are filed.
5.2 He submitted that the loan sanction letter, letter of guarantee, hypothecation agreement, deed of simple mortgage, letter of undertaking, letter of standing instructions are executed at Mumbai at Dombivali and none of the documents are executed at Rajkot. He further submitted that the paragraph 20 of the complaint discloses cause of action is only on the fact that the respondent bank-its registered office or head office is at Page 5 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined Rajkot and therefore it means that all the other cause has occurred at Dombivali at Mumbai. He referred to Section 142(2) of the NI Act and submitted that it leaves no room for any doubt, specially in view of the explanation thereunder, that with reference to an offence under Section 138 of the NI Act, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains the account would be determinative of the place of jurisdiction. He, therefore, submitted that the loan account of the petitioner is with Kalbadevi branch, Mumbai and the account payee cheque is of RBL Bank Ltd. At Mumbai given by the petitioner which was presented and dishonoured at Kalbadevi Branch, Mumbai and therefore as no cause of action has arisen at Rajkot, the impugned orders be set aside and the complaints may be directed to be presented before the appropriate court of law.
5.3 In support of his submissions, learned advocate for the applicant has relied on the following decisions:
(1) Bridgestone India Private Limited V/s Inderpal Singh Page 6 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined reported in (2016)2 SCC 75, more particularly, paragraphs 12, 13 and 16.
(2) Mahendra Kumar Kedarnath Modi V/s State of Gujarat reported in 2018(1) GLH 288, more particularly, paragraphs 33 to 41 and 49.
(3) Siddharth Exports V/s Kotak Mahindra Bank Ltd., reported in 2019(0) AIJEL-HC 241156.
6. Per contra, learned APP Mr.Jayswal for respondent no.2-state has objected these applications and submitted that this Court should not exercise its powers by interfering with the proceedings of recovery of amount and the proceedings initiated under Section 138 of the Act are perfectly justified and therefore, this Court should not exercise inherent powers under Section 482 of the Code, which otherwise, should be exercised sparingly.
He, therefore, prayed to dismiss all these applications.
7. Learned advocate Mr.Gogia for respondent no.2- complainant has submitted that at the relevant point of time, only the head office at Rajkot of the respondent Page 7 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined bank was possessing the authority to sanction the loan to the tune of Rs.25,00,000/- and therefore the loan proposal of the applicant which was received at Kalbadevi branch was forwarded to the head office of the bank at Rajkot and it was their loan policy that in case of the loan of above Rs.25,00,000/-, the loan department in the head office at Rajkot was possessing the authority of sanction and the concerned branch could not sanction such loans. He submits that the respondent bank is having various branches, situated at different places and the head office/registered office is at Rajkot, the main account of delivery for collection of cheque is at Rajkot and every cheque presented for collection in any branch of the bank, is honoured or dishonoured through Central Truncation System) at Rajkot in the account maintained by the bank and in the present case also, the subject cheques were dishonoured at Rajkot.
7.1 He further submitted that in view of the amendment to Section 142 of the NI Act, the complaint for dishonour of cheque under NI Act can be filed only in the Court situated at the place where the bank, in which the payee has account, is located and in the Page 8 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined present case, the cheque was presented at Kalbadevi Branch of the bank at Mumbai for collection, however, as per the CTS, the credit/debit was to be given in the centralized pooling account maintained at Rajkot and therefore it can be said that bank/payee of the cheque is having account at Rajkot and the Court at Rajkot have only jurisdiction to entertain the complaint.
7.2 In support of his submission, learned advocate for the respondent no.2-complainant has relied on the decision in the case of Brijendra Enterprise C/o Shail Enterprise V/s State of Gujarat, reported in 2016(3) GLH
143.
8. I have considered the rival submissions and perused the material on record.
9. At the outset, the provisions of Sections 138, 141 and 142 of the NI Act are required to be seen, which read as under:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account.
Where any cheque drawn by a person on an account Page 9 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for "a term which may extend to two year", or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, "within thirty days" of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and
(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may Page 10 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation: For the purpose of this section, "debt or other liability"
means a legally enforceable debt or other liability."
"141 Offences by companies. (1) If the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and proceeded against and punished accordingly:
Provided that nothing contained in this subsection shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.Page 11 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023
NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined (2) Notwithstanding anything contained in subsection (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attribute to, any neglect on the part of, any director, Manager, secretary, or other office of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation. For the purposes of this section,
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "Director", in relating to a firm, means a partner in the firm."
142. Cognizance of offences.--
[(1)] Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),--
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: 2 [Provided that the cognizance of a Page 12 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.].
[(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation.--For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.] [142A. Validation for transfer of pending cases.--
(1) Notwithstanding anything contained in the Code of Page 13 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times. (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.
(3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26 of 2015), more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under Page 14 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.]
10. The main grievance in these petitions is about the jurisdiction. The present complainant is a cooperative bank and is having its main office at Rajkot. As per the say of the complainant, the main office is approving the loans of more than Rs.25,00,000/- which is disbursed in any part of India and the branch offices are approving such loans below Rs.25,00,000/-. It is the say of the complainant that since the loan is approved by the main office at Rajkot, the cheque is deposited at Mumbai branch but is cleared by CTS at Rajkot and therefore the cause of action has arisen at Rajkot.
11. In the case of Bridgestone India Private Limited (supra), it is held in paragraphs 12, 13 and 16 as under:
"12. Sections 3 and 4 of the Negotiable Instruments (Amendment) Second Ordinance, 2015 are being extracted hereunder:Page 15 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023
NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined "3. Amendment to Section 142: - In the principal Act, section 142 shall be numbered as sub-section (1) thereof and after sub-section (1) as so numbered, the following sub- section shall be inserted, namely:-
142(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,--
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation - For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account."
4. In the principal Act, after section 142, the following section shall be inserted, namely:-
Page 16 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined 142A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or directions of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, shall be deemed to have been transferred under this Ordinance, as if that sub-section had been in force at all material times.
(2) Notwithstanding anything contained in subsection (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under subsection (1), and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.
(3) If, on the date of the commencement of this Ordinance, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, Page 17 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, before which the first case was filed and is pending, as if that subsection had been in force at all material times."
(Emphasis is ours)
13. A perusal of the amended Section 142(2), extracted above, leaves no room for any doubt, specially in view of the explanation thereunder, that with reference to an offence under Section 138 of the Negotiable Instruments Act, 1881, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction.
16. Since cheque No.1950, in the sum of Rs.26,958/-, drawn on the Union Bank of India, Chandigarh, dated 02.05.2006, was presented for encashment at the IDBI Bank, Indore, which intimated its dishonor to the appellant on 04.08.2006, we are of the view that the Judicial Magistrate, First Class, Indore, would have the territorial jurisdiction to take cognizance of the proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881, after the promulgation of the Negotiable Instruments (Amendment) Second Ordinance, 2015. The words "...as if that sub-section had been in force at all material times..."
Page 18 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined used with reference to Section 142(2), in Section 142A(1) gives retrospectivity to the provision."
12. In the case of Mahendra Kumar Kedarnath Modi (supra), it is held in paragraphs 33 to 41 and 49 as under:
"33. To meet with such a situation, the legislature thought fit to bring in an ordinance. Section 142(2) of the N.I. Act now makes it clear that the offence under section 138 shall be inquired into and tried only by a court, within whose local jurisdiction, the cheque is delivered for collection through an account, the branch of the Bank where the payee or holder, in due course, as the case may be, maintains the account is situated or if the cheque is presented for payment by the payee or holder, in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account is situated.
34. In my view, the legislature has given importance to the mode of delivery,i.e., the fact of a cheque being delivered for collection through an account rather than the place where the cheque is delivered. The explanation for the purposes of clause (a) makes the picture more clear. The intention of the legislature in enacting section 142(2) was to ensure that Page 19 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined undue hardship is not caused to the complainant. The complainant should not suffer at both the ends. First, he has not been able to realise the money due and payable to him and, secondly, if he has to chase the drawer, the same will be more cumbersome for the complainant. The new law on the issue of territorial jurisdiction now introduces the clarity and uniformity. It takes care of the interests of the payee of the cheque while, at the same time, also taking care that the drawer of the multiple cheques is not harassed by filing the multiple litigations at different locations to harass him ( if more than one cheque has bounced). It would not be out of place to state at this stage that in the N.I. Amendment Bill, 2015, as introduced in the Lok Sabha section 142 (2) intended to be amended as follows;
Section 142, Cognizance of offences:-
"(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated."
35. Accordingly, the N.I. Amendment Bill, 2015, which, in fact was approved by the Lok Sabha, but couldn't make it through the Rajya Sabha, provided that the Court will try the case within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for Page 20 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined payment, is situated. However, the N.I. Ordinance, 2015, did not stick to what the N.I. Amendment Bill, 2015 suggested and provided additional set of rules for the cases not presented through the payee's bank account. What I am trying to drive at is that it was not possible for the legislature to keep in mind all the possible permutations and combinations of the problems arising in filing the cases under section 138 of the N.I. Act. The N.I. Ordinance, 2015, finally put an end to the confusion of territorial jurisdiction in cases under section 138 of the N.I. Act by clearly laying down that (I) if the payee presents the cheque through the account, the court will try the case within whose local jurisdiction the bank branch of the payee (collecting bank) is situated & (ii) if the payee presents the cheque through the counter of the drawee bank for payment, the court will try the case within whose local jurisdiction the bank branch of the drawer (drawee bank) is situated. 36. It is appropriate for me, at this stage, to look into a document on record in the form of a certificate dated 07.09.2015 issued by the Corporation Bank, which reads as under;
"CERTIFICATE TO WHOM SO EVER IT MAY CONCERN CORPORATION BANK HAS PROVIDED FACILITY OF FCS (FUND COLLECTION SYSTEM) AT NEW DELHI (PARENT CAPS-AHMEDABAD) FOR CLIENT GUJARAT STAGE FERTILIZERS & CHEMICALS LTD., BY WHICH FACILITY Page 21 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined DAILY FUND / AMOUNT IS COLLECTED FROM ALL CENTRES AND CREDITED IN ACCOUNT NO.02090500000002 AT BANK OF BORODA, FERTILIZER NAGAR MAIN BRANCH, VADODARA GUJARAT.
OUR CLIENT NAME: GUJARAT STATE FERTLIZERS & CHEMICAL LTD., CLIENT CODE: GFC 563 IS HAVING A/ C/ NO. 02090500000002 AT BANK OF BARODA, FERTILIZERS NAGAR BRANCH AT VODODARA - 391750, GUJARAT IS OPERATIVE SINCE 1993. THE FOLLOWING CHEQUES ANNEXED AS A HAVE BEEN DEPOSITED AND DISHONOURED TO ACCOUNT NO. 02090500000002 AT BANK OF BARODA, FERTILIZER NAGAR BRANCH, VADODARA, GUJARAT."
37. The terms and conditions of the facility, namely, the Fast Collection Service, is as under;
"1) Name of Facility: Fast Collection Service.
2) Exposure Level: Rs. 4.75 crore (Rupees Four Crore Seventy Five Laskh Only)
3) Name & Address: M/s. Gujarat State Fertilizers & Chemicals Ltd., P.O. Fertilizernagar, Vadodara391750.
4) Location, process flow & charges. Location Process Flow Charges 1000 Metro Locations Day 0-Day 1 Rs.0.03 Mini Metro Location Day 0-Day 1 Rs.0.03 RBI Locations Day 0-
Day 1 Rs.0.03 SBI Locations Day 0-Day 1 Rs.0.06 Other SBI Locations Day 0-Day21 Rs.0.10 Page 22 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined
5) Pooling Branch Bank of Baroda, Fertilizernagar, Main Branch, Vadodara.
6) Mode of Pooling By way of credit to client's BOB banks CC a/c. No. 02090500000002 maintained with Bank of Baroda, Ferlitizernagar, Vadodara.
7) Return Instrument Charges Rs. 100/- per instrument + interest @ 14.50% p.a. i.e. Base Rate (10.25% p.a.) + 4.25% for the period bank is rendered out of funds.
8) Interest on RIA 14.50% p.a. i.e. Base Rate (10.25% p.a.) + 4.25%, till the date of recovery.
9) Courier charges per Instrument Location. No.
10) Courier Arrangement No.
11) Interest on delayed realization No."
38. Thus, although the cheques issued by the accused were collected by the complainant at New Delhi and were presented for clearance with the Corporation Bank at New Delhi, yet in my view, it could be said that the cheques were presented through an account, i.e., the account maintained by the complainant with the Bank of Baroda, Fertilizer Nagar Branch, Vadodara. Without the account of the complainant maintained with the Bank of Baroda, Fertilizer Nagar Branch, Vadodara, the Corporation Bank could not have given credit if, ultimately, the cheques would have been cleared. What is important is the account Page 23 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined maintained by the complainant with the Bank of Baroda, Fertilizer Nagar Branch at Vadodara. The Corporation Bank has made itself very clear in the certificate dated 07.09.2015 that the cheques were deposited and dishonoured to the account No. 02090500000002 at the Bank of Baroda, Fertilizer Nagar Branch, Vadodara, Gujarat. Giving strict interpretation to the words "through an account", as suggested by the learned counsel appearing for the applicants will frustrate the very object, with which, section 142 of the N.I. Act came to be amended. I find it extremely difficult to accept the argument of Mr. Parikh that in the case on hand, the payee could not be said to have used his account nor his Bank to deal with the cheques. If the cheques are account payee, such cheques, for the purpose of clearance, are bound to be "through an account". Of course, it is the argument of Mr. Parikh that a situation like the one on hand would fall within the clause (b) to section 142(2) and presenting the cheques across the counter is not the only mode, which would bring the case within the ambit of clause(b). However, I do not find merit in such submission. It is also difficult for me to accept the argument that the original account of the complainant with the Bank of Baroda has nothing to do with the independent agreement and understanding between the GSFC and the Corporation Bank. As noted above, it is the original account of the complainant maintained with the Bank of Baroda, which is important and without the said account, the Page 24 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined arrangement with the Corporation Bank can never come into play.
39. My above noted interpretation of the words "through an account" would subserve the object of the amendment of section 142 of the N.I. Act and insertion of new section 142(A) by amendment. Any other interpretation would frustrate the object. The complainant company is a government undertaking and its business is spread across the various parts of the country. The Fast Collection Service provided by the Corporation Bank helps the complainant to a considerable extent. The cheques received at the different places in the country can be deposited at a convenient FCS Branch of the Corporation Bank and the funds so collected are credited to the bank account of the complainant.
40. The effect of the rule of strict construction might almost be summed up in the remark that where an equivocal word or ambiguous sentence leaves a reasonable doubt of its meaning which the canons of interpretation fail to solve, the benefit of the doubt should be given to the subject and against the legislature which has failed to explain itself. But it yields to the paramount rule that every statute is to be expounded according to its expressed or manifest intention and that all cases within the mischiefs aimed at are, if the language permit, to be held to fall within its remedial influence.
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41. I do agree, to a certain extent, with Mr. Parikh, the learned senior counsel appearing for the applicants that in the complaint lodged by the complainant, there is not even a passing reference to the account maintained by the complainant with the Bank of Baroda, Fertilizer Nagar Branch, Vadodara. The territorial jurisdiction of a particular court to try the case can be determined on the basis of the averments made in the complaint in that regard. However, there is overwhelming materials on record as regards the Bank of Baroda account, which is otherwise not in dispute. At this stage, let me deal with the contention raised by Mr. Nanavati, the learned senior counsel appearing for the complainant as regards section 201 of the Cr.P.C. According to Mr. Nanavati, the accused persons should have raised the issue of territorial jurisdiction of the court at Vadodara at the earliest so that the court concerned could have looked into the same keeping in mind the provisions of section 201 of the Cr.P.C. In my view, at this stage, section 201 of the Cr.P.C will have no application.
49. For the foregoing reasons, I hold that the Court at Vadodara has the territorial jurisdiction and the complaints filed by the complainant for the offence under section 138 of the N.I. Act are maintainable."
13. In the case of Siddharth Exports (supra), it is Page 26 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined held in paragraphs 13 to 17 and 23 as under:
"13. So far as the issue of jurisdiction is concerned, it is to be regarded that in wake of decision of Dashrath Rupsinh Rathod V/s. State of Maharashtra reported in (2014)9 SCC 129, the parliament amended the N.I. Act and Sections 142(2) and 142A of the N.I. Act are introduced limiting jurisdiction to two places. Both the provisions and their implications are referred to in the decision of Bridge Stone India (pvt) Ltd. (supra) 13.1 Apt would be to refer to the said decision of Bridge Stone India Pvt. Ltd. which clearly provides guidelines with regard to the jurisdiction of the Court:
"9. During the course of hearing, the learned counsel for the appellant cited the decision rendered by a three-
Judge Bench of this Court in Dashrath Rupsingh
Rathod vs. State of Maharashtra, and pointedly
invited our attention to the conclusions drawn
by this Court in paragraph 58, which is
extracted hereunder:
"58. To sum up:
58.1 An offence under Section 138 of the Negotiable
Instruments Act, 1881 is committed no sooner a cheque Page 27 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank. 58.2 Cognizance of any such offence is however forbidden under Section 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause
(c) of proviso to Section 138.
58.3 The cause of action to file a complaint accrues to a complainant/payee/holder of a cheque in due course if
(a) the dishonoured cheque is presented to the drawee bank within a period of six months from the date of its issue,
(b) If the complainant has demanded payment of cheque amount within thirty days of receipt of information by him from the bank regarding the dishonour of the cheque, and
(c) If the drawer has failed to pay the cheque amount within fifteen days of receipt of such notice.
58.4 The facts constituting cause of action do not constitute the ingredients of the offence under Section 138 of the Act.
58.5 The proviso to Section 138 simply Page 28 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined postpones/defers institution of criminal proceedings and taking of cognizance by the court till such time cause of action in terms of clause (c) of proviso accrues to the complainant.
58.6 Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured.
58.7 The general rule stipulated under Section 177 CrPC applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before the court within whose jurisdiction the dishonour takes place except in situations where the offence of dishonour of the cheque punishable under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof."
10. In view of the decision rendered by this Court in Dashrath Rupsingh Rathod case, it is apparent that the impugned order dated 05.05.2011, passed by the High Court of Madhya Pradesh, Bench at Indore, was wholly justified.
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11. In order to overcome the legal position declared by this Court in Dashrath Rupsingh Rathod case, the learned counsel for the appellant has drawn our attention to the Negotiable Instruments (Amendment) Second Ordinance, 2015 (hereinafter referred to as 'the Ordinance'). A perusal of Section 1(2) thereof reveals that the Ordinance would be deemed to have come into force with effect from 15.06.2015. It is therefore pointed out to us that the Negotiable Instruments (Amendment) Second Ordinance, 2015 is in force. Our attention was then invited to Section 3 thereof, whereby, the original Section 142 of the Negotiable Instruments Act, 1881, came to be amended, and also, Section 4 thereof, whereby, Section 142A was inserted into the Negotiable Instruments Act.
12. Sections 3 and 4 of the Negotiable Instruments (Amendment) Second Ordinance, 2015 are being extracted hereunder:
"3. Amendment of Section 142. In the principal Act, section 142 shall be numbered as sub section (1) thereof and after subsection (1) as so numbered, the following subsection shall be inserted, namely:
142.(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction, Page 30 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined
(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b) if the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account."
4. Insertion of new section. - In the principal Act, after section 142, the following section shall be inserted, namely:
142A. Validation for transfer of pending cases.
-
(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or directions of any court, all cases transferred to the court having jurisdiction under subsection (2) of Page 31 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, (6 of 2015) shall be deemed to have been transferred under this Ordinance, as if that subsection had been in force at all material times.
(2) Notwithstanding anything contained in sub-
section (2) of section 142 or subsection (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under subsection (2) of section 142 or the case has been transferred to that court under subsection (1), and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.
(3) If, on the date of the commencement of this Ordinance, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under subsection (2) of section 142, as amended by the Negotiable Instruments Page 32 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined (Amendment) Ordinance, 2015, before which the first case was filed and is pending, as if that subsection had been in force at all material times." (Emphasis supplied)
13. A perusal of the amended Section 142(2), extracted above, leaves no room for any doubt, specially in view of the explanation thereunder, that with reference to an offence under Section 138 of the Negotiable Instruments Act, 1881, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction."
14 It is quite apparent from the said provision that ordinarily, at two places, jurisdiction would lie (1) when cheque is presented for collection through an account, the branch where the payee or holder in due course, maintains the account, is situated (2) when presented otherwise through an account, the branch of bank where the drawer maintains the account. In case of the corporates, banks jurisdiction would lie with the Court having jurisdiction over the branch bank of drawer for the cheque having been presented otherwise through an account.
15 In the case on hand, drawer's bank is at Noida and Page 33 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined the head quarter of Kotak Mahindra Bank is at Mumbai, it also has its branch in Noida and yet, it has chosen to tender the cheque at the branch bank at Ahmedabad.
16 Complainant being the Bank, it naturally would have branches almost in all parts of the country, but, what would be relevant for the purpose of deciding the aspect of jurisdiction is whether the Bank ought to have deposited the cheque at Ahmedabad and whether it had valid reason for such deposits.
17 This Court notices that the entire transaction is at Noida, New Delhi. The notice of dishonour of cheque also has been from Noida, New Delhi. The Head Office of the Bank is at Mumbai. Ahmedabad branch does not come into the picture at all so far as the customer is concerned. An attempt is made by the learned counsel on raising of query by the Court that the loan department is being handled at Ahmedabad. It is surprising as to how Ahmedabad would have a jurisdiction because each branch would have a loan department."
14. This contention is required to be dealt with in light of the judgments relied on by the learned advocate for the applicant, as referred to hereinabove. It is clearly transpires that this Court as well the the Hon'ble Apex Page 34 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined Court has found that the issue of territorial jurisdiction is always a very complex one for both, the legislature as well as the Courts. By way of the amendment in Section 142(2) of the NI Act, the legislature has given importance to the mode of delivery i.e. the fact of a cheque being delivered for collection through an account holder rather than the place where the cheque is delivered. The intention of the legislature in enacting Section 142(2) of the NI Act was to ensure that undue hardship is not caused to the complainant and the complainant has not been able to realise the money due and payable to him and if he has to chase the drawer, the same will be more cumbersome for the complainant and therefore, the amendment which is brought in Section 138 read with Section 141 of the NI Act finally put an end to confusion of territorial jurisdiction in cases under Section 138 of the NI Act by clearly laying down that (i) if payee presents the cheque through account, court will try the case within whose local jurisdiction the bank branch of the payee (collecting bank) is situated;
(ii) if payee presents cheque through counter of drawee bank for payment, Court will try case within whose local jurisdiction the bank branch of the drawer (drawee bank) Page 35 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined is situated. Therefore, in the present case, where the loan is applied at Mumbai, the cheque is also deposited at Mumbai, the bank which has given finance is also situated at Mumbai and the cheque is also bounced from Mumbai. The fact that the bank is having centralized clearing centre at Rajkot itself would not be helpful to the case of the complainant to file complaint at Rajkot, as in view of the above discussion, the court at Mumbai has only the jurisdiction and the court at Rajkot cannot entertain the complaints as the court at Rajkot cannot be said to have any territorial jurisdiction.
15. There cannot be any dispute regarding the ratio laid down in the judgment relied on by learned advocate Mr.Gogia for respondent no.2-complainant in the case of Brijendra Enterprise C/o Shail Enterprise, however, the facts of the said case are different to the facts of the case on hand.
16. In view of the above discussion, these petitions are allowed. The impugned orders dated 7.4.2018 passed below Exh.12 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case Nos.5061 of 2017; dated Page 36 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023 NEUTRAL CITATION R/SCR.A/3942/2018 CAV JUDGMENT DATED: 23/08/2023 undefined 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5062 of 2017; dated 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5063 of 2017 and dated 7.4.2018 passed below Exh.7 by the learned Judicial Magistrate, First Class, Rajkot in Criminal Case No.5064 of 2017 are hereby quashed and set aside and the said applications are allowed. The trial Court is directed to return the criminal complaints to the complainant, to be presented at the competent Court at Mumbai. Rule is made absolute to the aforesaid extent. Direct service is permitted.
(SANDEEP N. BHATT,J) SRILATHA Page 37 of 37 Downloaded on : Sun Sep 17 02:14:59 IST 2023