Delhi High Court
Maheshwari Proteins Ltd. And Ors. vs State-Delhi Administration And Anr. on 1 November, 1993
Equivalent citations: 1993IVAD(DELHI)912, I(1994)BC80, 1994(29)DRJ379
JUDGMENT S.C. Jain, J.
(1) Briefly stated the facts of the case as are apparant on the record are that M/s Maheshwari Proteins Ltd. (hereinafter referred to as petitioner No.1) and M/s As com International (hereinafter referred to as respondent No. 2) entered into an agreement on 9th October, 1992 under which the petitioners had to process Soyabean at their factory for respondent No. 2 on terms and conditions mentioned in the agreement. Soyabean had to be supplied by respondent No.2. Respondent No.2 had to place order on petitioners of minimum quantity of 25,()()()MT during the processing period from 1st October, 1992 to 30th September, 1993. Out to 25,000 Mt, 10,000 Mt Soyabean for processing had to be supplied from 1st October. 1992 to 31st December. 1992 and 15,000 Mt of of left over soyabean had to be supplied to the petitioners between 1st January, 1993 to 31st March, 1993. Respondent No. 2 for the due performance of the agreement dated 9th October, 1992 advanced Rs. 25 lakh to petitioners as mobilisation amount and the same was repayable by the petitioners to respondent No. 2 with quarterly interest at the end of the said agreement or on termination of said agreement. Petitioners in turn had delivered undated cheque of Rs. 25 lakhs bearing No. MPZ/BFS/CA - 2134399 drawn on Bank of India, Siyaganj Branch, Indore as security for due performance of the terms of agreement.
(2) The respondent No. 2 i.e. As com International terminated the agreement and Memorandum of Understanding dated 9.10.1992 vide legal notice dated S.I.1993. Despite this notice the petitioners herein did not pay Rs. 25 lakhs plus interest and therefore the respondent No. 2 with prior information to the petitioners presented the said undated cheque of Rs. 25 lakhs before the Bank of India, Siyaganj Branch, Indore through Sh.Vinod Tibrewala on18.1.1993. The said cheque was dishonoured and the bank has stated in "CHEQUE Return MEMO" dated 18.1.1993 that the cheque could not be honoured because of insufficient funds. The respondent No.1 sent a legal notice dated 19.1.1993 to the petitioners 1 to 3 stating that they have committed an offence u/s 138 and 141 of the Negotiable Instruments Act 1988 and also u/s 420 IPC. Despite this notice the petitioners have not paid Rs. 25 lakhs with interest and in the process they have dishonoured their own Corporate Guarantee dated 9.10.1992 which made respondent No. 2 to file a complaint u/s 138 and 141 of the Negotiable Instruments Act 1988 against these petitioners i.e.M/s Maheshwari Proteins Limited, its Chairman, Mr. Pramod Taparia, its Director, Mr. Harsh Maheshwari and its Company Secretary, Mr. C.S.Bhandari.
(3) On the basis of this complaint these petitioners were summoned u/s 138 and 141 of the Negotiable Instruments Act, 1988. In this petition u/s 482 Cr. P.C. the petitioners have sought the quashing of the complaint and the consequent proceedings before the Metropolitan Magistrate and also the order calling upon the petitioners to be present before the Metropolitan Magistrate in these proceedings. This petition has been contested by the respondents.
(4) I have heard the learned counsel for the parties and have gone through the record. Learned counsel for the petitioner, Ms. Kitty Kumarmanglam challenged the jurisdiction of the courts at Delhi and submitted that courts at Delhi has no jurisdiction to entertain the complaint of the respondents. According to her, Section 138 and 142 of Negotiable Instruments Act 1988 read with Section 177 of Cr. P.C. clearly show that it is the Courts at Indore alone who has jurisdiction in this matter. According to the learned counsel, the cheque No. MPZ/BFS/CA - 2134399 in dispute which is undated was drawn on Bank of India, Siyaganj Branch, Indore and the same was returned unpaid by that very bank at Indore. This bouncing of the cheque was at Indore and therefore court at Indore has jurisdiction and not court at Delhi. According to her,Section 177 of the Cr. P.C. provides that every offence shall ordinarily be enquired into and tried by a court within whose local jurisdiction it was committed. According to her. Section 138 and 142 forms a series of act which together when completed and complied with, creates an offence. It is the jurisdiction of the court of the area where the cheque was bounced which could be in invoked. According to the learned counsel, the cheque in dispute has bounced at Indore and therefore the cause of action was at Indore court alone which can have jurisdiction to try the complaint.
(5) The other points stressed by the learned counsel for the petitioner is that no offence is made out against these petitioners in view of the provisions of Section 138 of the Negotiable Instruments Act. According to the learned counsel Section 138 comes into play the moment cheque bounces on a specific ground of insufficient funds or understanding between bank and drawer not to release such funds.
(6) In this case the interpretation of the agreement dated 9th October, 1992 duly entered into between the parties is a cause of dispute and it is the respondent who has breached the agreement and they are not entitled to encash the cheque which was only given by way of security as a mobilisation fund. Moreover, cheque in dispute was undated and provisions of Section 138 of the Negotiable Instruments Act was not fulfillled and therefore, the complaint and the proceedings which have arisen from it are liable to be quashed u/s 482 Cr. P.C. (7) Learned counsel for the respondent Sh. C. Ramaswami, Sr. Advocate countered the arguments of the learned counsel for the petitioner and submitted that the venue of enquiry or trial has primarily to be determined by the averments contained in the complaint. If on the basis of such averments the court has jurisdiction, it has to proceed with the complaint. The place where the creditor resides or the place where the debtor resides cannot be said to be the place of pay ment unless there is any indication to that effect either expressly or impliedly. The cause of action as contemplated in Section 142 of the Art arises at the place where the drawer of the cheque fails to make payment of money. That can be the place where the bank to which the cheque was issued is located. It can also be the place where the cheque was issued or delivered. The court within whose jurisdiction any of the above mentioned places falls has therefore, got Jurisdiction 1dictjon to try the offence u/s 138 of the Negotiable Instruments Act. He relied upon a decision of the Kerala High Court in P.K.Muraleedharan Vs. C.K. Pareed and another 1992 Crl.L.J. 1965 in support of his contention. According to him, the cheque in dispute was handed over to the respondent at Delhi. The agreement was signed at Delhi and therefore, Delhi courts have also got jurisdiction besides that the courts at Indore have also jurisdiction. At cither of the two places i.e. at Indore or Delhi the complaint could have been filed and the respondent has chosen Delhi courts to file this complaint and the courts at Delhi have jurisdiction to proceed with the matter. According to the learned counsel, the debtor has to find creditor. The creditor company has got its office at Delhi and therefore the court Delhi has jurisdiction to proceed with the matter. He has relied upon the decision of the Punjab & Haryana High Court in case M.M.Malik Vs. Prem Kumar Goyal 1991 CrI.L.J. 2594 in support of his contention.
(8) Regarding the maintainability of the complaint u/s 138 of the Negotiable Instruments Act, learned counsel submitted that all the three provisos of Section 138 must be complied with before the dishonoring for want of funds can create an offence. According to the learned counsel, admittedly all the three conditions of the three provisos to Section 138 have been complied with in this case before the dishonouring of the cheque. The cheque was dishonoured for want of funds. The bank slip shows 'refer to drawer'.
(9) There are no grounds for quashing the complaint or the proceedings which have arisen out of it.
(10) As far as the question of jurisdiction is concerned the cause of action as contemplated in S.142 of the Act arises at the place where the drawer of the cheque fails to make payment of money. That can be the place where the bank to which the cheque was issued is located. It can also be the place where the cheque was issued or delivered. The court within whose jurisdiction any of the above mentioned places falls has therefore, got jurisdiction to try the offence u/s 138 of the Act.
(11) In this case, admittedly, the cheque in question was brought by Mr. Harsh Maheshwari,Directorofthe petitioner company Delhi on 19th October, 1992 when he came and signed the agreement. He handed over the cheque as a security in advance which respondent No. 2 accepted at Delhi. The said cheque was drawn on the bank of India, Siyaganj,lndoreand the same was returned by that very bank at Indore. Both the courts at Delhi as well as at Indore have jurisdiction in this matter.
(12) In this case dishonouring of the cheque is only a part of the cause of action and the offence was completed only when the petitioner company failed to discharge its liability to the creditor (the respondent herein). For discharging the debt, the petitioners were to find out their creditors and since the creditors have their office at Delhi, the offence was completed at that place and in this situation the court at Delhi has also territorial jurisdiction to try the matter.
(13) The other submission of the learned counsel for the petitioner that the provisions of Sections 138 of the Negotiable Instruments Act are not attracted in this case has also got no force. Section 138 reads as under: "DISHONOUR of cheque for insufficiency, etc. of funds in the account- 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 provisions of this Act, be punished with imprisonment for a term which may extend for 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 if 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 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 purpose of this section, "debt or liability" means a legally enforceable debt or other liability."
(14) A perusal of this section shows that all three provisos of Section 138 must be complied with before the dishonouring of a cheque issued in order to discharge the liability and dishonouring for want of funds can create an offence. Section 142(b) provides a clincher. The cause of action will be complete when the drawer of the cheque fails to make the payment within 15 days of the receipt of notice contemplated by proviso(b). The offence shall be deemed to have been committed only from the date when the notice period expired.
(15) In this case the agreement and the memo of understanding dated 9th October, 1992 were terminated vide legal notice dated 8.1.1993 and that through this legal notice the complainant demanded Rs.25 lakhs plus interest @19.5% from 9.10.1992 till its realisation in addition to other claims. Inspite of this legal notice dated 8.1.1993 the petitioners did not pay Rs. 25 lakhs plus interest and the complainant with prior information to the petitioners presented the said undated cheque before the Bank of India, Siyaganj Branch, Indore through Sh. Vinod Tiberawala on 18.1.1993. The said cheque was dishonoured and the bank has stated in "CHEQUERETURNMEMO" dated 18.1.1993 that the cheque could not be honoured because of insufficient funds. Immediately thereafter the complainant sent a legal notice dated 19.1.1993 to the petitioners stating that they have committed an offence u/s 138 and 141 of the Negotiable Instruments Act 1988 and also u/s 420 IPC. Despite that notice the petitioners did not pay Rs. 25 lakhs with interest and in the process they have dishonoured their own corporate Guarantee dated 9.10.1992. Despite the fact that the petitioners have the knowledge about the dishonourment of the cheque they did not make payment of this amount of the cheque and by their own acts the petitioners have rendered themselves liable to be prosecuted under the provisions of Negotiable Instruments Act, 1988.
(16) Under these circumstances, I find no ground in quashing the Fir or the proceedings and the summoning order u/s 482 of the Cr. P.C. This petition is therefore, dismissed.
(17) However, these findings will have no effect on the merits of the case as these findings are based on the prima facie nature of the case.
(18) Record of the lower court be sent back immediately to proceed further in the matter in accordance with law.