Calcutta High Court
Inmark Finance And Investment Co. Pvt. ... vs Metropolitan Magistrate And Ors. on 25 June, 1991
Equivalent citations: [1993]76COMPCAS155(CAL)
JUDGMENT Nirendra Krishna Mitra, J.
1. In this writ application, the petitioners have challenged the complaint case No. 84G /B of 1989 arising out of a complaint lodged by respondent No. 2 before the learned Metropolitan Magistrate, 28 Court, Bombay, so far as the writ petitioners are concerned.
2. Shorn of all details, the facts as stated by the petitioners in the writ application, inter alia, are that petitioner No. 1 is a private company and carries on business as a finance and investment company at 95, Park Street, Calcutta-700 016, within the territorial jurisdiction of this Hon'ble court and petitioner No. 2 is a shareholder and director of petitioner No. 1 company. In the month of March, 1989, respondent No. 3 approached petitioner No. 1 for a loan and/or advance of rupees two lakhs which was sanctioned after negotiation, and at the request of respondent No. 3, petitioner No. 1 issued two cheques of rupees one lakh each in the name of respondent No. 2 under the signature of petitioner No. 2, on March 17, 1989, drawn on Vijaya Bank at Shakespeare Sarani, Calcutta, with a request to deposit one cheque on March 30, 1989, and the other on April 10, 1989. The petitioners have further stated in their writ application that the petitioners came to learn from respondent No. 3 that it had entered into an agreement with respondent No. 2 to purchase the shares of his company and also the technical know-how and other devices for the manufacture of medicine which the company of respondent No. 2 used to manufacture and, as such, respondent No. 3 had requested the petitioners to jmake payment of rupees two lakhs to respondent No. 2 as aforesaid as part payment under the said agreement. However, respondent No. 3 did not provide petitioner No. 1 with the necessary securities in the matter after issuance of the aforesaid cheques and also informed subsequently that such payment was not required to be made to respondent No. 2 and terminated the loan agreement with petitioner No. 1 on the ground that the loan was no longer necessary and as such,.the petitioners did not arrange for the necessary funds for encashment of the aforesaid two cheques issued to respondent No. 2. On May 17, 1989, petitioner No. 2 received a letter from respondent No. 2 ( annexure 'B') with the information that the aforesaid two cheques were returned unrealised by his bankers. Standard Chartered Bank, Bombay. Petitioner No. 1, by its letters dated May 27, 1989 and June 16, 1989 (collectively marked as annexure " C"), informed respondent No. 2 that, on the request of respondent No! 3, the said two cheques were issued in favour of respondent No. 2 but, as respondent No. 3 subsequently instructed petitioner No. 1 not to make such payment and/or recalled its loan agreement with petitioner No. 1, petitioner No. 1 did not make any arrangement for payment of the said two cheques and there was no privity of contract between the petitioners and respondent No. 2.
3. Thereafter, petitioner No. 1 had received summons from respondent >{o. 1 in February, 1991, together with a copy of the complaint in complaint case No. 840/B of 1989 lodged by respondent No. 2, against the petitioners for their alleged offence under section 138 of the Negotiable Instruments Act, 1881 {annexure " D " ).
4. The petitioners have challenged the aforesaid proceeding and prayed for quashing of the same so far as the petitioners are concerned, inter alia, on the grounds that, on the facts and circumstances of the case, the complaint lodged by respondent No. 2 ( annexure " D") does not disclose any cognizable offence against the petitioners and the petitioners had obtained an interim order on March 15, 1989, when the writ application was moved.
5. Subsequently, respondent No. 2 prayed for vacating the said interim order on the ground of lack of territorial jurisdiction of this Hon'ble court to entertain the writ application.
6. Mr. Sudipta Sarkar, learned counsel appearing on behalf of respondent No. 2, has contended inter alia, that, since the disputed criminal-proceeding has been started in Bombay, this Hon'ble Court has no territorial jurisdiction to entertain any writ application challenging such criminal proceeding and has referred to the decision of the Supreme Court in State of Rajasthan v. Swaika Properties, , in support of his contention.
7. Mr. Saktinath Mukherjee, learned senior counsel, appearing on behalf of the petitioners has, however, contended that this Hon'ble Court has jurisdiction to entertain the present writ application and in support of his contentions has referred to a catena of decisions and also to the provisions of article 226(2) of the Constitution of India.
8. Article 226 of the Constitution of India deals with the powers of High Courts to issue certain writs. The provisions of article 226(1)" and (2), as the same stand now, are as follows :
" 226. (1) Notwithstanding anything in article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in app -opriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. "
From the wording of article 226(2), il is thus clear that, if the cause of action in a matter, wholly or partly, arises within the territories over which a High Court exercises jurisdiction under article 226(1), the High court can issue writs or directions upon any Government, authority or person, notwithstanding that the seat of such Government, authority or the residence of such person is outside such territories. Accordingly, Mr. Mukherjee contends that, since the summons in the aforesaid criminal proceeding have been served upon the writ petitioners in Calcutta, the same gives rise to a cause of action to enable the writ petitioners to move the present writ application in this Hon'ble Court, to challenge the said proceeding, even though the impugned criminal proceeding has been started in Bombay.
9. Regarding the place of suing, Mr. Mukherjee has referred to the provisions of sections 16, 17, 19 and 20 of the Code of Civil Procedure and regarding the accrual of cause of action by service of summons, Mr. Mukherjee has referred to the decisions of different High Courts, namely, Alexander Brault v. Indrakrishna Kaul ; Khanchand Pokardas v. Harumal D. Varma AIR 1965 Bom 109 ; Pannalal Ratanlal Suranna v. Manakchand Lodha, and Dr. R. P. Goala v. Amarpal Singh, . Mr. Mukherjee has also contended that, regarding the proceeding involving payment by cheque, it is quite clear that the cause of action in such a proceeding arises partly at the place where the cheque is issued and partly at the place where it is honoured and/or dishonoured and refers to the decisions of the Supreme Court in the case of CIT v. Ogale Glass Works Ltd., ; relied upon by the Patna High court in the case of Gouri Shankar Bajoria v. Ram Banka, , and the decision of the Punjab and Haryana High Court in the case of Finn Bodh Raj Mahesh Kumary. Earl Chawla and Co. (P.) Ltd., which also endorsed the same view getting support from a decision of this Hon'ble Court in the case of Borakar Engineering and Foundry Works v. State of Bihar, . Apart from the said decision, Mr. Mukherjee also refers to two old decisions of the Bombay High Court in Mnkhand Joharimal v. Suganchand Shivdas [1875] ILR 1 Bom 23 and Pragdas Thakurdas v. Dowlatram Namtram [1887] ILR 11 Bom 257. Mr. Mukherjee, regarding the extra-territorial jurisdiction of a High Court under article 226 of the Constitution of India, has also relied upon several decisions of the Bombay High Court, viz., W. W. Joshi v. State of Bombay, ; Damomal Kausomal Raisinghani v. Union of India, , which had followed W. W. Joshi v. State of Bombay, and also upon several decisions of this Hon'ble Court in Union of India v. Hindustan Aluminium Corporation Ltd., ; State of Orissa v. Goenka Investment and Mining Industries Pvt. Ltd. [1983] 1 CHN 354, Punjab National Bank v. Dilip Kumar De [1987] 1 CLJ 354 and Industrial Fuel Marketing Co. v. Union of India and, lastly, has submitted that, since the complaint lodged by respondent No. 2 (annexure "D") before the learned Metropolitan Magistrate, 28th Court in Bombay, giving rise to Complaint Case No. 840/B of 1989, does not disclose any cognizable offence under section 138 of the Negotiable Instruments Act, 1881, against the writ petitioners, the writ petitioners are within their rights to pray for quashing such proceeding against them in this Hon'ble Court, under its writ jurisdiction, as summons have been served upon them in Calcutta and refers to the decision of the Supreme Court in the case of State of West Bengal v. Swapan Kumar Guha, . So farces the decision of the Supreme Court cited by Mr. Sarkar in the case of State of Rajasthan v, Swaika Properties, , is concerned, according to Mr. Mukherjee, the said decision is clearly distinguishable on facts and as such the ratio of that decision cannot be applied to the facts of the present case.
10. So far as sections 16, 17, 19 and 20 of the Code of Civil Procedure are concerned, those relate to the place of institution of civil suits of certain particular nature. Sections 16 and 17 of the Code deal with the filing of suits and the place of suing in respect of immovable properties, while section 19 of the Code deals with suits for compensation for wrong done to the person or movable properties but, under that section, such a suit can be filed either in the court within whoso local jurisdiction the wrong was done or in the court within the local jurisdiction of which the defendant resides or carries on business or personally works for gain and section 20 deals with the filing of other suits at the place where the defendant resides or the cause of action arises. The aforesaid sections, therefore, all relate to filing of civil suits and not of criminal proceedings and, according to me, will not be of any help to the petitioners so far as the present writ application is concerned. So far as the decisions in CITv. Ogale Glass Works Lid. , Court Shanhar Bajoria v. Ram Banka, , Firm Bodh Raj Mahesh Kttmar v. Earl Chawla and Co. (P.) Ltd., and Borakar Engineering and Foundry Works v. .State of Bihar, , as referred to above are concerned, all relate to filing of suits for malicious prosecution consequent to the dismissal of a criminal proceeding started by the defendant against the plaintiff and it has been uniformly held in all the said decisions that such a suit has to be filed at the place where the summons of such criminal proceeding had been served and, therefore, it is quite clear that service of summons gives rise to a cause of action.
11. Section 177 of the Code of Criminal Procedure states that every offence shall, ordinarily, be enquired into and tried by a court within whose local jurisdiction it was committed and section 179 of the said Code states that 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 local jurisdiction such thing has been done or such a consequence has ensued. So far as the complaint lodged by respondent No. 2 against the petitioners for an alleged offence under section 138 of the Negotiable Instruments Act, 1881, is concerned, from the complaint, it is evident that the cheques that were issued by petitioner No. 1 under the signature of petitioner No. 2 in the name of respondent No. 2, were drawn on the Vijaya Bank at Shakespeare Sarani in Calcutta, although sent to Bombay, and the cheques were produced at Vijaya Bank at Shakespeare Sarani in Calcutta, for encashment where those were dishonoured. Accordingly, if any offence was committed by the petitioners at all, it was committed in Calcutta as per the provisions of section 179 read with section 177 of the Code of Criminal Procedure and such an offence is to be tried by the court within whose local jurisdiction such offence was committed, namely, by a competent criminal court in Calcutta. The ratio of the decisions in CIT v. Ogale Glass Works Ltd. , Borakar Engineering and Foundry Works v. State ofBihar, , Court Shankar Bajoria v. Ram Banka; and Find Bodh Raj Mahesh Kumar v. Earl Chawla and Co, (P.) Ltd., , therefore, in my view, applies with full force so far as the contention of Mr. Mukherjee regarding the lack of jurisdiction of the Metropolitan Magistrate's Court in Bombay, to entertain the disputed complaint against the petitioners is concerned as, from the facts of the present case, it becomes quite clear that, if there be any cause of action for starting a criminal proceeding against the writ petitioners for their alleged offence at all, such cause of action has arisen wholly in Calcutta, where the alleged offence has been committed and not in Bombay, as no part of such cause of action has arisen there.
12. Lastly, comes the alleged offence of the writ petitioners under section 138 of the Negotiable Instruments Act, 1881. The said section is quoted below :
" Where any 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 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 provision of this Act, be punished with imprisonment for a term which may extend to one 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 in due 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid ; and
(c) the drawer of such cheque fails to make the payment of the said amount of the money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation, ~ For the purposes of this section, * debt or other liability' means a legally enforceable debt or other liability."
13. From the wording of the said section 138, it is clear that where any 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 for the discharge, in whole or in part, of any debt or other liability, is dishonoured by the bank, such person shall be deemed to have committed an offence under that section. Admittedly, there was no agreement and/or privity of contract between the writ petitioners and respondent No. 2, the complainant, regarding the payment of the disputed amount. The disputed cheques were issued by the petitioners only at the request of respondent No. 3 and as per the loan agreement entered into by and between the said respondent and the writ petitioners. The complainant, namely, respondent No. 2 also, in paragraph 8 of the disputed complaint (annexure 'D'), has stated in clear terms that the disputed cheques were signed by the petitioners on the instructions of respondent No. 3. The petitioners had also clearly informed respondent No. 2 by their letters dated May 27, 1989 and June 16, 1989 (annexure 'C') that they had issued the disputed cheques at the request of respondent Mp. 3 and as, subsequently, they were informed by the said respondent No. 2, that the loan as prayed for by respondent No. 3 was no longer necessary, the petitioners did not arrange for sufficient funds in their bank accounts for encashment of the said cheques. In paragraph 10 of the disputed complaint (annexure 'D'), respondent No. 2 also referred to the said letter dated 27th and also referred to the letter dated June 1, 1989, written by respondent No. 3 wherein the said respondent clearly informed respondent No. 2, that, under some mistake, the said respondent No. 3 requested petitioner No. 1 to issue the disputed cheques and immediately on detection of the mistake, instructions were given to petitioner No. 1 to stop payment. In paragraph 14 of the complaint, respondent No. 2 categorically stated that there was a legally enforceable debt by respondent No. 3 to respondent No. 2 and respondent No. 3 sought to discharge its debt by directing the petitioners to issue two cheques in part payment of such amount due to respondent No. 2.
14. Taking the wording of section 138 of the Negotiable Instruments Act, 1881, and the alleged complaint ( annexure 'D') as a whole, and also the letters {annexure 'C), it is thus quite clear that the petitioners had no debt or other liability to respondent No. 3 as per the loan application made by respondent No. 3 which ultimately was withdrawn and/or recalled by respondent No. 3 and as per the intimation of respondent No. 3, the petitioners did not arrange for sufficient funds to have the said cheques encashed and neither was there any privity of contract between the petitioners and respondent No. 2 nor were the said cheques issued for discharge of any debt or other liability of the petitioners to respondent No. 3, and so prima facie, the complaint (annexure 'D') does not disclose any cognizable offence against the petitioners and that the case, the criminal proceeding started on such complaint, can be quashed in a writ proceeding by a High Court as per the decision of the Supreme Court in State of West Bengal v. Swapan Kitmar Gnha, , as referred to above.
15. Lastly, so far as the decision of the Supreme Court in State of Rajasthan v, Swaika Properties. , as referred to above is concerned, the said decision is quite distinguishable on facts as, in that case, it was held, inter alia, by the Supreme Court, while dealing with the question of acquisition of land in the State of Rajasthan as per Gazette notification and the subsequent service of notice upon the respondents therein in Calcutta regarding such acquisition that the notification dated February 8, 1984, issued by the State Government under section 52(1) of the Rajasthan Urban Improvement Act, 1959 became effective the moment it was published in the Official Gazette as, thereupon, the notified land became vested in the State Government free from all encumbrances and it was not necessary for the respondents to plead the service of notice on them by the Special Officer, Town Planning Department, Jaipur, under section 52(2) of the said Act, for the grant of an appropriate writ, direction or order under article 226 of the Constitution for quashing the notification issued by the State Government under section 52(1) of the Act. In the present case, however, service of summons of the disputed criminal proceeding which was a must and not a mere formality was served upon the petitioners in Calcutta, the disputed criminal proceeding was started by respondent No. 2 against the writ petitioners in Bombay, for an alleged offence under section 138 of the Negotiable Instruments Act, 1881, committed in Calcutta as the cheques were drawn by the petitioners in favour of respondent No. 2 on Vijaya Bank in Calcutta, and the same were presented and dishonoured in Calcutta, and the said facts, in my view, are sufficient to give rise to cause of action for moving the present writ application in this Hon'ble Court.
16. Accordingly, on a consideration of the facts and circumstances, as, at least a part of cause of action in the matter has arisen within the territorial jurisdiction of this Hon'ble Court, I hold that this Hon'ble Court has jurisdiction to entertain the writ application filed by the petitioners. I further hold that the petitioners have also been able to make out a case that the complaint as lodged by respondent No. 2 before the learned Metropolitan Magistrate, 28th Court, Bombay, consequent to which Complaint Case No. 840/8 of 1989 has been started against the accused therein including the petitioners, charging the petitioners under sec tion 138 of the Negotiable Instruments Act, 1881, does not disclose prima facie any cognizable offence under the said section 138 so far as the writ petitioners are concerned, because of the reasons stated hereinbefore, specially when the petitioners have no loan or debt due to the complainant. Accordingly, the said proceeding is quashed so far as the writ petitioners are concerned and the writ application thus succeeds with costs, hearing fees being assessed at 60 Cms.
17. On the prayer made by learned counsel for respondent No. 2, let the operation of this order remain stayed for a week from date.
18. All parties to act on a signed copy of the operative part of this judgment on the usual undertaking.