Sundarlal Bansidhar (Huf) vs State Of Gujarat & on 2 April, 2013

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Gujarat High Court

Sundarlal Bansidhar (Huf) vs State Of Gujarat & on 2 April, 2013

Bench: R.M.Chhaya

  
	 
	 SUNDARLAL BANSIDHAR (HUF) - THRO' "KARTA" LAV KUMAR GARGV/SSTATE OF GUJARAT
	 
	 
	 
	 
	 
	 
	 
	 
	

 
 


	 


	R/CR.MA/15118/2011
	                                                                    
	                           CAV JUDGMENT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION NO. 15118 of 2011 With CRIMINAL MISC.APPLICATION NO. 15119 of 2011 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE R.M.CHHAYA Sd/-

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?

NO 2 To be referred to the Reporter or not ?

NO 3 Whether their Lordships wish to see the fair copy of the judgment ?

NO 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?

NO 5 Whether it is to be circulated to the civil judge?

NO ================================================================ SUNDARLAL BANSIDHAR (HUF) -

THRO' "KARTA" LAV KUMAR GARG & 1....Applicant(s) Versus STATE OF GUJARAT &

1....Respondent(s) ================================================================ Appearance:

MR PRASHANT SHARMA, COUNSEL with MR ABHAYKUMAR P SHAH, ADVOCATE for the Applicant(s) No. 1 - 2 MS MOXA THAKKAR, ADDITIONAL PUBLIC PROSECUTOR for the Respondent(s) No. 1 MR GAURAV S MATHUR, ADVOCATE for the Respondent(s) No. 2 =========================================================== CORAM:

HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 02/04/2013 COMMON CAV JUDGMENT

1. As identical questions of facts and law arise in both these applications, the same were heard together and are being disposed of by this common judgment and order.

2. By way of Criminal Misc. Application No.15118 of 2011, the applicants original accused have prayed for quashing and setting aside the complaint being Criminal Complaint No.5052 of 2010 pending before the Court of Metropolitan Magistrate, Court No.7, Ahmedabad and further consequent proceedings filed by respondent No.2 original complainant under Section 138 read with Sections 141 and 142 of the Negotiable Instruments Act, 1881 as amended (hereinafter referred to as the Act for the sake of brevity).

Similarly, by way of Criminal Misc. Application No.15119 of 2011, the applicants original accused have prayed for quashing and setting aside the complaint being Criminal Complaint No.5053 of 2010 pending before the Court of Metropolitan Magistrate, Court No.7, Ahmedabad and further consequent proceedings filed by respondent No.2 original complainant under Section 138 read with Sections 141 and 142 of the Act.

3. The facts arising out of Criminal Misc. Application No. 15118 of 2011 are as follows:-

3.1 The original complainant - respondent No.2 Nirma Limited has filed the present Criminal Complaint No.5052 of 2010 before the Metropolitan Magistrate, Court No.7, Ahmedabad on 24.11.2010. It is alleged in the complaint that respondent No.2 - original complainant is authorized person of the Company named Nirma Limited which is having its registered office at Nirma House, Ashram Road, Ahmedabad and is engaged in the business of Nima and Nirma brand products all over India.

3.2 It is averred in the complaint that applicant No.1 is the firm and applicant No.2 being the Karta of applicant No.1 firm, manages and conducts day to day affairs of the business of the said firm. It is further alleged that the applicants had business relations with the complainant and that applicant No.1 firm had been purchasing the goods from the complainant as ordered by applicant No.2 and used to make ad-hoc/bill to bill payments to the complainant for the goods supplied. It is further alleged that applicant No.2, as Karta of applicant No.1 firm in discharge of legal liability towards the payment for the goods purchased by applicant No.1, gave three cheques, which are as under:-

Cheque No. Cheque Dt.

Amount (in Rs.) Name of the Drawee Bank 285411 11.09.2010 4,68,682/-

Uco Bank 285412 12.09.2010 6,60,015/-

Uco Bank 285413 16.09.2010 5,65,972/-

Uco Bank Total 16,94,669/-

3.3 It is further alleged that the said cheques came to be presented by the complainant for encashment through its bankers. However, the said cheques were dishonoured by the bankers of the applicants and returned back to the bankers of the complainant along with the cheque return memo dated 4.10.2010 stating reason TODAY S OPENING BALANCE IS INSUFFICIENT and PAYMENT STOPPED BY THE DRAWER and the said cheques and the cheque return memo were returned back to the complainant by its bankers vide cheque return memo dated 6.10.2010. The complaint further reveals that the complainant sent a statutory notice on 21.10.2010 through its advocate by RPAD as well as UPC to both the applicants under Section 138 of the Act and the said notice came to be served upon both the applicants on 26.10.2010. However, as the same was not complied with and no payment was made, the present complaint is filed under Section 138 read with Sections 141 and 142 of the Act. The Magistrate vide order dated 24.11.2010 issued summons on the basis of the verification of the complainant, the complaint and the documents produced on record.

4. The facts arising out of Criminal Misc. Application No.15119 of 2011 are as follows:-

4.1 The original complainant - respondent No.2 Nirma Limited has filed the present Criminal Complaint No.5053 of 2010 before the Metropolitan Magistrate, Court No.7, Ahmedabad on 24.11.2010. It is alleged in the complaint that respondent No.2 - original complainant is authorized person of the Company named Nirma Limited which is having its registered office at Nirma House, Ashram Road, Ahmedabad and is engaged in the business of Nima and Nirma brand products all over India.

4.2 It is averred in the complaint that applicant No.1 is the firm and applicant No.2 being the Karta of applicant No.1 firm, manages and conducts day to day affairs of the business of the said firm. It is further alleged that the applicants had business relations with the complainant and that applicant No.1 firm had been purchasing the goods from the complainant as ordered by applicant No.2 and used to make ad-hoc/bill to bill payments to the complainant for the goods supplied. It is further alleged that applicant No.2, as Karta of applicant No.1 firm in discharge of legal liability towards the payment for the goods purchased by applicant No.1, gave the cheque, which is as under:-

Cheque No. Cheque Dt.

Amount (in Rs.) Name of the Drawee Bank 285414 19.09.2010 11,19,918/-

Uco Bank 4.3 It is further alleged that the said cheque came to be presented by the complainant for encashment through its bankers. However, the said cheque was dishonoured by the bankers of the applicants and returned back to the bankers of the complainant along with the cheque return memo dated 4.10.2010 stating reason TODAY S OPENING BALANCE IS INSUFFICIENT and the said cheque and the cheque return memo were returned back to the complainant by its bankers vide cheque return memo dated 6.10.2010. The complaint further reveals that the complainant sent a statutory notice on 21.10.2010 through its advocate by RPAD as well as UPC to both the applicants under Section 138 of the Act and the said notice came to be served upon both the applicants on 26.10.2010. However, as the same was not complied with and no payment was made, the present complaint is filed under Section 138 read with Sections 141 and 142 of the Act. The Magistrate vide order dated 24.11.2010 issued summons on the basis of the verification of the complainant, the complaint and the documents produced on record.

5. Heard Mr. Prashant Sharma, learned Counsel with Mr. Abhaykumar P. Shah for the applicants, Ms. Moxa Thakkar, learned Additional Public Prosecutor for the State and Mr. Gaurav S. Mathur, learned advocate for respondent No.2 original complainant in both the matters.

6. Mr. Prashant Sharma, learned counsel for the applicants has raised two-fold submissions, (i) that the present complaints in both the applications are barred by limitation, and (ii) that the Court, which has taken cognizance, lacks territorial jurisdiction. Though other questions are raised in the memo of the applications, no further contentions have been raised by the learned counsel for the applicants.

6.1 Mr. Sharma, learned counsel for the applicants has taken this Court through the factual matrix arising out of both these applications. It was contended by Mr. Sharma that the Court of Magistrate has no territorial jurisdiction. It was contended that the complaints were filed at Ahmedabad for dishonour of cheques at Gwalior. It was contended that only because the cheques were presented at Ahmedabad by the complainant with their banker would not mean that the cheques were dishonoured at Ahmedabad.

6.2 Relying upon the ratio laid down by the Hon'ble Apex Court in the case of Harman Electronics Private Limited & Anr. Vs. National Panasonic India Private Limited, reported in (2009) 1 SCC 720, it was contended on behalf of the applicants that sending of notice from Ahmedabad would not give cause of action. It was further contended that the complaint itself reveals the fact that the complaint has been filed at Ahmedabad because the notice was issued from Ahmedabad and the cheques were presented at Ahmedabad. Relying upon the judgment of the Hon'ble Apex Court in the case of Shri Ishar Alloy Steels Ltd. Vs. Jayaswals Neco Ltd., reported in (2001) 3 SCC 609, it was contended on behalf of the applicants that mere act of presentation of cheques before the Bank at Ahmedabad would not give territorial jurisdiction to the Courts in Ahmedabad. It was further contended that the act of presentation of cheques, in the instant case, has happened at Gwalior. It was further contended that the cheques were drawn on Uco Bank, Gwalior Branch and only because these cheques were presented at Ahmedabad or that the notice has been given at Ahmedabad, the Court at Ahmedabad would not get jurisdiction to entertain the present complaint. It was further contended on behalf of the applicants that the judgment of the Hon'ble Apex Court in the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan & Anr. reported in (1999) 7 SCC 510 is required to be read in light of the another judgment of the Hon'ble Apex Court in the case of Shri Ishar Alloy Steels Ltd.

(supra). Mr. Sharma has pressed into service the judgment of the Hon'ble Apex Court in the case of Harman Electronics Private Limited (supra) and the judgment of the Hon ble Kerala High Court in the case of Santhoshkumar, M.S. Vs. Mohanan, K.G., reported in 2008 ILR (Kerala)-3-303. Mr. Sharma further pointed out that presentation of the cheques in the collection Bank, issuance of notice or agreement between the parties does not give jurisdiction and therefore, the jurisdiction cannot be vested in the Court at Ahmedabad. It was further contended that the sole jurisdiction which could be there on account of return of cheques is the place where the cheques are drawn i.e. mother Bank which, in the instant case, is Uco Bank, Gwalior. It was further pointed out that respondent No.2 original complainant has relied upon the unreported judgment of this Court (Coram: M.R. Shah, J.) passed in Criminal Misc. Application No.9273 of 2010 dated 15.11.2010 in the case of Shree Laxmi Agency & Anr. Vs. State of Gujarat & Anr. However, the said judgment of this Court in the case of Shree Laxmi Agency (supra) is subject matter of challenge before the Hon'ble Apex Court by way of Special Leave to Appeal (Criminal) No.4764 of 2011 and the said Special Leave to Appeal is pending. It was therefore contended that the Court at Ahmedabad had no territorial jurisdiction.

6.3 It was contended on behalf of the applicants that the present complaints are barred by limitation and that the limitation has to be counted from the issuance of first notice and issuance of a notice thereafter would not give jurisdiction and would not further extend the period of limitation. It was contended on behalf of the applicants that the cheques in question came to be deposited for the first time and were dishonoured on 14.9.2010 and 24.9.2010. It was further contended that on account of dishonour of cheques, a notice was sent on 30.9.2010 by e-mail and therefore, the period of 30 days would expire on 30.10.2010, whereas in the instant case, the complaints have been filed on 24.11.2010. It is also alleged on behalf of the applicants that the complainant has in fact concealed these facts.

6.4 It was further contended on behalf of the applicants that the reliance placed for and on behalf of the respondents upon the judgment of the Hon'ble Apex Court in the case of Msr Leathers Vs. S. Palaniappan, reported in (2013) 1 SCC 177, whereby the judgment in the case of Sadanandan Bhadran Vs. Madhavan Sunil Kumar, reported in (1998) 6 SCC 514 came to be overruled is misplaced. It was contended on behalf of the applicants that even in the case of Msr Leathers (supra), the Hon'ble Apex Court has specifically observed that the successive dishonour of cheques is also permissible so long as the same satisfies the requirements stipulated in proviso to Section 138 of the Act as amended. It was further contended that in absence of condonation of delay being sought for and since there is no application for condonation of delay, the complaint becomes barred by limitation from the date of the notice. It was further contended by the applicants that the judgment of Msr Leathers (supra) deals with the proviso coupled with the fact that it lays down only successive presentation not being barred, but the same is subject to proviso. It was further contended by Mr. Sharma on behalf of the applicants that all that is being explained is that since proviso deals with limitation and even on the basis of the subsequent dishonour and notice thereupon, the complaints may be entertained provided the delay is explained. However, in the instant case, in the first demand notice, there is clear categoric demand of the amount of dishonoured cheques and the same relates to these very facts as no other cheques were dishonoured. It was contended that the reliance placed by the respondents upon the judgment of the Hon'ble Apex Court in the case of Suman Sethi Vs. Ajay K. Churiwal & Anr. reported in AIR 2000 SC 828 would not take the case of the complainant any further as the said judgment of the Hon'ble Apex Court is not applicable. It was also contended that once the limitation starts, the subsequent notice would not give any further extension of limitation for the purpose of filing complaint under Section 138 of the Act. It was therefore contended that in facts and circumstances arising out of the complaints, it is clear that the cheques were presented, dishonoured and thereafter, a notice was issued. However, the present complaints are filed without disclosure of such vital facts on false averments only for the purpose to bring the same within the prescribed period of limitation. The learned counsel for the applicants has also relied upon the judgments of the Hon'ble Apex Court in the cases of SIL Import, USA Vs. Exim Aides Silk Exporters, Bangalore, reported in (1999) 4 SCC 567 and Sadanandan Bhadran (supra).

It was therefore contended that the applications deserve to be allowed with heavy costs upon the respondents since the same amounts to abuse of process of Court for the purpose of maliciously prosecuting the applicants while no case is made out for such prosecution.

6.5 It may further be noted that after the arguments were over, the learned counsel for the applicants was permitted to tender written submissions. The written submissions deal with the similar arguments which are noted hereinabove. However, it is found that the applicants have also further taken one more contention to the effect that the instrument on the basis of which the said impugned complaints have been lodged was never handed over to the complainant in the shape of negotiable instrument and prior to converting the documents into the negotiable instrument, no pre or post notice has been given. It is submitted that since no such submission was made at the time of arguments, the applicants cannot be permitted to raise any additional contention in the written submissions.

Per contra, Mr. Gaurav S. Mathur, learned advocate for respondent No.2 original complainant contended that the email dated 30.9.2010 can never be considered as a notice or demand as per Section 138 of the Act and more particularly proviso (b) of Section 138 of the Act. Mr. Mathur, on the basis of the facts arising in the present complaints, submitted that after the first presentation of the cheques in question, the same were dishonoured. However, pursuant to such dishonour, respondent No.2 did not take any steps under Section 138 of the Act, but the cheques came to be presented before the Corporation Bank, Navrangpura Branch at Ahmedabad. It is submitted that these cheques came to be dishonoured on 4.10.2010 and the notice under Section 138 of the Act came to be issued on 21.10.2010 and thereafter, the present complaints have been filed on 24.11.2010. It is contended that there is no bar in law for a holder of a cheque to represent the same during its period of validity and in the instant case, therefore, respondent No.2 as a holder of the cheques was entitled and justified to have represented the cheques for the second time and on the basis of which the notice came to be given and subsequently, the present complaints have been filed. It is further submitted that a bare reading of the email dated 30.9.2010 at Page-24 which, according to the applicants, is termed as notice was only a request to the applicants to clear all outstanding dues before their claims can be resolved. Relying upon the judgment of the Hon'ble Apex Court in the case of Suman Sethi (supra), Mr. Mathur contended that the said email cannot be termed as notice as provided under Section 138 of the Act. Mr. Mathur also further relied upon the judgment of the Hon ble Delhi High Court in the case of Laltech Engineering Projects Vs. Gypsum Structural India Pvt. Ltd.

reported in IV (2006) BC 283.

7.1 Mr. Mathur further relying upon the judgment of the Hon'ble Apex Court in the case of Msr Leathers (supra) submitted that respondent No.2 was entitled to represent the cheque and the limitation would start running from the date of the notice dated 21.10.2010, after dishonour of the cheques. It is therefore contended that the contention raised by the applicants to the effect that immediately after sending the email dated 30.9.2010, the complaints should have been filed within one month therefrom and therefore, the present complaints are barred by limitation is misconceived and deserves to be rejected. It is asserted that in light of the judgment of the Hon'ble Apex Court in the case of Msr Leathers (supra), it is permissible for respondent No.2 to launch prosecution pursuant to notice dated 21.10.2010.

7.2 Mr. Mathur submitted that the second contention raised by the applicants as regards territorial jurisdiction is misconceived. It is further submitted that Shri Ishar Alloy Steels Ltd.(supra) is not the judgment on territorial jurisdiction at all. However, the said judgment is an authority on the statutory period within which a cheque is required to be presented for clearance. It is contended that as such the judgment of Shri Ishar Alloy Steels Ltd. (supra) is on the period of validity of the presentation of a cheque and the issue of territorial jurisdiction is not at all decided by the Hon'ble Apex Court in the said judgment. It is further submitted that the judgment of the Hon'ble Apex Court in the case of Harman Electronics Private Limited (supra) is clearly distinguishable as in the facts of the said case, the cheque was found to be presented to the drawer Bank at Chandigarh and also to the payee Bank at Chandigarh and on facts of the case, the Court has held that mere issuing of notice from Delhi will not confer territorial jurisdiction of the Courts at Delhi. Mr. Mathur relying upon the observations of the Hon'ble Apex Court in the case of K. Bhaskaran (supra) submitted that the said judgment applies to the facts of the present case from all four corners and the ratio laid down by the Hon'ble Apex Court in the said judgment is not diluted in any manner by the judgment of Shri Ishar Alloy Steels Ltd. (supra).

It was contended on behalf of respondent No.2 that in facts of this case, it cannot be said that presentation of a cheque to the drawer Bank is not a material fact, not forming part of the cause of action in so far as territorial jurisdiction is concerned. Mr. Mathur further relied upon the following judgments, namely, (i) Shree Laxmi Agency (supra), (ii) judgment of the Hon ble Mumbai High Court in the case of Mrs. Preetha S. Babu Vs. Voltas rendered in Criminal Writ Petition No.3158 of 2009 dated 3.3.2010, (iii) judgment of the Hon ble Delhi High Court in the case of M/s. Religare Finvest Limited Vs. State & Anr. rendered in Criminal Revision Petition No.170 of 2009 and allied matters dated 23.9.2010,

(iv) judgment of this Court in the case of Simran Steel Industries Vs. ICICI Bank passed in Special Criminal Application No.1208 of 2011 dated 29.7.2011, (v) judgment of this Court in the case of Shezar Technologies Vs. State of Gujarat passed in Special Criminal Application No.2017 of 2010 dated 17.1.2012. Mr. Mathur therefore contended that the applications are misconceived and the same deserve to be dismissed. Mr. Mathur also submitted the written submissions dealing with the identical contentions as observed hereinabove.

8. Ms. Moxa Thakkar, learned Additional Public Prosecutor has opposed the applications and has prayed that the applications may be dismissed.

9. Before considering and reverting to the contentions raised by the learned counsel appearing for the respective parties, it would be necessary to refer to the basic facts of both the applications.

10. Details of Criminal Misc. Application Nos.15118 and 15119 of 2011:-

Cheque No. Date Notice Date Notice served Limitation 285411

11.09.2010 21.10.2010 26.10.2010 09.12.2010 285412 12.09.2010 21.10.2010 26.10.2010 09.12.2010 285413 16.09.2010 21.10.2010 26.10.2010 09.12.2010 285414 19.09.2010 21.10.2010 26.10.2010 09.12.2010 In view of the aforesaid admitted facts therefore, the 15 days period would be over on 10.11.2010 and the limitation to file a complaint would expire on 9.12.2010. The validity of the cheques being six months would therefore expire in March, 2011.

11. It may, however, be noted that as contended by the applicants, the cheques were deposited for the first time, presented and dishonoured at Indore on 14.9.2010 and 24.9.2010. According to the applicants, a notice came to be given on 30.9.2010 by email at Annexure-B to the application. However, no complaint came to be filed. In light of these facts and contentions, the contention raised by the applicants that the impugned complaints are time barred needs to be examined.

12. The applicants have relied upon the judgment of the Hon'ble Apex Court in the case of Sadanandan Bhadran (supra) and has contended that the email dated 30.9.2010 is a notice given by the original complainant as contemplated under Section 138 of the Act and therefore, the limitation would start from the said date. As noted hereinabove, it is also contended that issuance of notice subsequently does not give jurisdiction and the time would start running from the date on which the first notice came to be issued. The applicants have also relied upon the judgment of the Hon'ble Apex Court in the case of SIL Import, USA (supra). The Hon'ble Apex Court in the case of Sadanandan Bhadran (supra) has held thus:-

7. Besides the language of Sections 138 and 142 which clearly postulates only one cause of action there are other formidable impediments which negates the concept of successive causes of action. One of them is that for dishonour of one cheque there can be only one offence and such offence is committed by the drawer immediately on his failure to make the payment within fifteen days of the receipt of the notice served in accordance with clause (b) of the proviso to Section 138.

That necessarily means that for similar failure after service of fresh notice on subsequent dishonour the drawer cannot be liable for any offence nor can the first offence be treated as non est so as to give the payee a right to file a complaint treating the second offence as the first one. At that stage it will not be a question of waiver of the right of the payee to prosecute the drawer but of absolution of the drawer of an offence, which stands already committed by him and which cannot be committed by him again.

9. Now, the question is how the apparently conflicting provisions of the Act, one enabling the payee to repeatedly present the cheque and the other giving him only one opportunity to file a complaint for its dishonour, and that too within one month from the date the cause of action arises, can be reconciled. Having given our anxious consideration to this question, we are of the opinion that the above two provisions can be harmonised, with the interpretation that on each presentation of the cheque and its dishonour a fresh right - and not cause of action - accrues in his favour. He may, therefore, without taking preemptory action in exercise of his such right under clause (b) of Section 138, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But, once he gives a notice under clause (b) of Section 138 he forfeits such right for in case of failure of the drawer to pay the money within the stipulated time he would be liable for the offence and the cause of action for filing the complaint will arise. Needless to say, the period of one month for filing the com-plaint will be reckoned from the day immediately following the day on which the period of fifteen days from the date of the receipt of the notice by the drawer, expires.

13. Similarly, the Hon'ble Apex Court in the case of SIL Import, USA (supra) observed as under:-

12 The requirement for sending a notice after the cheque is returned by the Bank unpaid is set out in clauses (b) and (c) of the proviso to Section 138 of the Act. The read thus :

"Provided that nothing contained in this section shall apply unless :-

(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 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."

24 The upshot of the discussion is, on the date when the notice sent by Fax reached the drawer of the cheque the period of 15 days (within which he has to make the payment) has started running and on the expiry of that period the offence is completed unless the amount has been paid in the meanwhile. If no complaint was filed within one month therefrom the payee would stand forbidden from launching a prosecution thereafter, due to the clear interdict contained in Section 142 of the Act.

25 In this case the complainant has admitted the fact that written notice was sent by Fax. Appellant has admitted its receipt on the same date. (It must be remembered that respondent has no case that Fax has not reached the appellant on the same date). The last day when the respondent could have filed the complaint was 26.7.1996. But the complaint was filed only on 8.8.1996. So the Court has no jurisdiction to take cognizance of the offence on the said complaint.

14. The email dated 30.9.2010 given by one Mr. Jitendra Patel, the same reads as under:-

LKG J-PATEL from jitendra patel [email protected] to love garg <[email protected]> cc Rakesh Shrivastav <[email protected]> date Thu, Sep 30, 2010 at 12:51 PM subject RE: lettar for pending claims mailed-by nirma.co.in hide details 9/30/10 DEAR LOVE GARG, YOU ARE REQUESTED TO CLEAR ALL O/S DUE AND PAYABLE BY YOU TO NIRMA LTD. AS SOON AS POSSIBLE AGAINST YOUR PURCHES MADE BY YOU WHICH CHEQUES HAS BEEN DISHONOURED BY YOU. WE SHALL RESOLVE ALL PENDING ISSUES AFTER RECEIVING OF PAYMENT AGAINST DISHONOURED CHEQUES.

REGARDS, J. PATEL From:

love garg [mailto: [email protected]] sent:

Thursday, September 30, 2010 12:18 PM To:

[email protected] Subject:

lettar for pending claims

15. The said email only speaks of request to clear all outstanding dues and resolving of all pending issues after receiving the payment against dishonoured cheques. The email does not speak of any demand, but it is in form of a request. The Hon'ble Apex Court in the case of Suman Sethi (supra), in Para 8 observed thus:-

8.

It is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" i.e. cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement. Where in addition to "said amount" there is also a claim by way of interest cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving up break up of the claim the cheque amount, interest damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice. If, however, in the notice anomnibus demand is made without specifying what was due under the dishonoured cheque, notice might well fail to meet the legal requirement and may be regarded as bad.

16. In view of the aforesaid observations of the Hon'ble Apex Court, this Court is of the opinion that the email dated 30.9.2010 can by no stretch of imagination be construed as a notice as provided under Section 138 of the Act. The reply given by the applicants on the same day which is also on record as part of Annexure-B to the application clearly speaks of some business dispute between the parties.

17. The Hon'ble Apex Court in the case of Msr Leathers (supra) has observed thus:-

In Sadanandan Bhadran v. Madhavan Sunil Kumar (1998) 6 SCC 514, this Court was dealing with a case under Section 138 of the Negotiable Instrument Act, 1881 (hereinafter referred to as the Act) in which the complainant had, after dishonour of a cheque issued in his favour, taken steps to serve upon the accused-drawer of the cheque a notice under clause (b) of proviso to Section 138 of the Act. No complaint was, however, filed by the complainant despite failure of the accused to arrange the payment of the amount covered by the cheque. Instead, the complainant-payee of the cheque had presented the cheque for collection once again, which was dishonoured a second time for want of sufficient funds. Another notice was served on the drawer of the cheque to arrange payment within fifteen days of receipt of said notice. Only after failure of drawer to do so did the payee file a complaint against the former under Section 138 of the Act.

After entering appearance, the drawer filed an application seeking discharge on the ground that the payee could not create more than one cause of action in respect of a single cheque and the complaint in question having been filed on the basis of the second presentation and resultant second cause of action was not maintainable. The Magistrate accepted that contention relying upon a Division Bench decision of Kerala High Court in Kumaresan v. Ameerappa (1991) 1 Ker L.T. 893 and dismissed the complaint.

3 The order passed by the Magistrate was then questioned before the High Court of Kerala who relying upon Kumaresans case (supra) upheld the order passed by the Magistrate. The matter was eventually brought up to this Court by special leave. This Court formulated the following question for determination:

Whether payee or holder of cheque can initiate proceeding of prosecution under Section 138 of Negotiable Instrument Act, 1881 for the second time if he has not initiated any action on earlier cause of action?

Answering the question in the negative this Court held that a combined reading of Sections 138 and 142 of the Act left no room for doubt that cause of action under Section 142(b) can arise only once. The conclusion observed by the court is supported not only by Sections 138 and 142 but also by the fact that the dishonour of cheque gives rise to the commission of offence only on the failure to pay money when a notice is served upon the drawer in accordance with clause (b) of the proviso to Section 138.

4 The Court in Sadanandan case further held that if the concept of successive causes of action were to be accepted the same would make the limitation under Section 142(b) otiose. The Court observed:

7.

Besides the language of Sections 138 and 142 which clearly postulates only one cause of action, there are other formidable impediments which negate the concept of successive causes of action. One of them is that for dishonour of one cheque, there can be only one offence and such offence is committed by the drawer immediately on his failure to make the payment within fifteen days of the receipt of the notice served in accordance with clause (b) of the proviso to Section

138. That necessarily means that for similar failure after service of fresh notice on subsequent dishonour, the drawer cannot be liable for any offence nor can the first offence be treated as non est so as to give the payee a right to file a complaint treating the second offence as the first one. At that stage, it will not be a question of waiver of the right of the payee to prosecute the drawer but of absolution of the drawer of an offence, which stands already committed by him and which cannot be committed by him again.

8. The other impediment to the acceptance of the concept of successive causes of action is that it will make the period of limitation under clause (c) of Section 142 otiose, for, a payee who failed to file his complaint within one month and thereby forfeited his right to prosecute the drawer, can circumvent the above limitative clause by filing a complaint on the basis of a fresh presentation of the cheque and its dishonour. Since in the interpretation of statutes, the court always presumes that the legislature inserted every part thereof for a purpose and the legislative intention is that every part should have effect, the above conclusion cannot be drawn for that will make the provision for limiting the period of making the complaint nugatory.

The Court in Sadanandan Case then tried to reconcile the apparently conflicting provisions of the Act - one enabling the payee to present the cheque and the other giving him opportunity to file a complaint within one month and observed:

9. ...Having given our anxious consideration to this question, we are of the opinion that the above two provisions can be harmonised, with the interpretation that on each presentation of the cheque and its dishonour, a fresh right - and not cause of action - accrues in his favour. He may, therefore, without taking pre-emptory action in exercise of his such right under clause (b) of Section 138, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once he gives a notice under clause (b) of Section 138, he forfeits such right for in case of failure of the drawer to pay the money within the stipulated time, he would be liable for offence and the cause of action for filing the complaint will arise. Needless to say, the period of one month for filing the complaint will be reckoned from the day immediately following the day on which the period of fifteen days from the date of the receipt of the notice by the drawer expires.

The Court accordingly dismissed the appeal while affirming the decision of the Kerala High Court in Kumaresans case (supra), no matter the same had been in the meantime overruled by a decision of the Full Bench of that Court in S.K.D. Lakshmanan Fireworks Industries v. K.V. Sivarama Krishnan (1995) Cri L J 1384 (Ker).

Before adverting to the submissions that were urged at the Bar we may briefly summarise the facts in the backdrop of which the issue arises for our determination. Four cheques for a total sum of rupees ten lakhs were issued by the respondent-company on 14th August, 1996 in favour of the appellant which were presented to the bank for collection on 21st November, 1996. The cheques were dishonoured in terms of memo dated 22nd November, 1996 for insufficiency of funds. A notice under clause (b) of proviso to Section 138 was then issued by the appellant to the respondent on 8th January, 1997 demanding payment of the amount covered by the cheques. Despite receipt of the notice by the respondent the payment was not arranged.

8 The appellant s case is that the respondent assured the appellant that the funds necessary for the encashment of the cheques shall be made available by the respondent, for which purpose the cheques could be presented again to the bank concerned. The cheques were accordingly presented for the second time to the bank on 21st January, 1997 and were dishonoured for a second time in terms of a memo dated 22nd January, 1997 once again on the ground of insufficiency of funds. A statutory notice issued by the appellant under clause (b) of proviso to Section 138 of the Act on 28th January, 1997 called upon the respondent-drawer of the cheques to arrange payment of the amount within 15 days. Despite receipt of the said notice on 3rd February, 1997, no payment was arranged which led to the filing of Complaint Case No.1556-1557/1997 by the appellant before the II Metropolitan Magistrate, Madras for the offence punishable under Section 138 read with Section 142 of the Act.

9 The Magistrate took cognizance and issued summons to the respondents in response whereto the respondents entered appearance and sought discharge primarily on the ground that the complaint had not been filed within 30 days of the expiry of the notice based on the first dishonour of the cheque. It was also alleged that the statutory notice which formed the basis of the complaint had not been served upon the accused persons. The Magistrate upon consideration dismissed the applications for discharge which order was then assailed by the respondents before the High Court of Madras in Criminal Appeal Nos. 618, 624, 664, 665/2000.

The High Court has, by the order impugned in this appeal, allowed the revision and quashed the orders passed by the Magistrate relying upon the decision of this Court in Sadanandan Bhadran s case (supra) according to which a complaint based on a second or successive dishonour of the cheque was not maintainable if no complaint based on an earlier dishonour, followed by the statutory notice issued on the basis thereof, had been filed.

Presentation of the cheque and dishonour thereof within the period of its validity or a period of six months is just one of the three requirements that constitutes cause of action within the meaning of Sections 138 and 142(b) of the Act, an expression that is more commonly used in civil law than in penal statutes. For a dishonour to culminate into the commission of an offence of which a court may take cognizance, there are two other requirements, namely,

(a) service of a notice upon the drawer of the cheque to make payment of the amount covered by the cheque and (b) failure of the drawer to make any such payment within the stipulated period of 15 days of the receipt of such a notice. It is only when the said two conditions are superadded to the dishonour of the cheque that the holder/payee of the cheque acquires the right to institute proceedings for prosecution under Section 138 of the Act, which right remains legally enforceable for a period of 30 days counted from the date on which the cause of action accrued to him. There is, however, nothing in the proviso to Section 138 or Section 142 for that matter, to oblige the holder/payee of a dishonoured cheque to necessarily file a complaint even when he has acquired an indefeasible right to do so. The fact that an offence is complete need not necessarily lead to launch of prosecution especially when the offence is not a cognizable one. It follows that the complainant may, even when he has the immediate right to institute criminal proceedings against the drawer of the cheque, either at the request of the holder/payee of the cheque or on his own volition, refrain from instituting the proceedings based on the cause of action that has accrued to him. Such a decision to defer prosecution may be impelled by several considerations but more importantly it may be induced by an assurance which the drawer extends to the holder of the cheque that given some time the payment covered by the cheques would be arranged, in the process rendering a time consuming and generally expensive legal recourse unnecessary. It may also be induced by a belief that a fresh presentation of the cheque may result in encashment for a variety of reasons including the vicissitudes of trade and business dealings where financial accommodation given by the parties to each other is not an unknown phenomenon. Suffice it to say that there is nothing in the provisions of the Act that forbids the holder/payee of the cheque to demand by service of a fresh notice under clause (b) of proviso to Section 138 of the Act, the amount covered by the cheque, should there be a second or a successive dishonour of the cheque on its presentation.

With utmost respect to the Judges who decided Sadanandan Bhadran s case (supra) we regret our inability to fall in line with the above line of reasoning to hold that while a cheque is presented afresh the right to prosecute the drawer, if the cheque is dishonoured, is forfeited only because the previous dishonour had not resulted in immediate prosecution of the offender even when a notice under clause (b) of proviso to Section 138 had been served upon the drawer. We are conscious of the fact that Sadanandan Bhadran s case (supra) has been followed in several subsequent decisions of this Court such as in Sil Import, USA v. Exim Aides Silk Exporters, Bangalore, (1999) 4 SCC 567, Uniplas India Ltd. and Ors. v. State (Govt. of NCT Delhi) and Anr., (2001) 6 SCC 8, Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. and Anr., (2001) 6 SCC 463, Prem Chand Vijay Kumar v. Yashpal Singh and Anr., (2005) 4 SCC 417, S.L. Constructions and Anr. v. Alapati Srinivasa Rao and Anr., (2009) 1 SCC 500, Tameshwar Vaishnav v. Ramvishal Gupta, (2010) 2 SCC

329. 19 All these decisions have without disturbing or making any addition to the rationale behind the decision in Sadanandan Bhadrans case (supra) followed the conclusion drawn in the same. We, therefore, propose to deal with the three dimensions that have been highlighted in that case while holding that successive causes of action are not within the comprehension of Sections 138 and 142 of the Act.

The expression cause of action appearing in Section 142 (b) of the Act cannot therefore be understood to be limited to any given requirement out of the three requirements that are mandatory for launching a prosecution on the basis of a dishonoured cheque. Having said that, every time a cheque is presented in the manner and within the time stipulated under the proviso to Section 138 followed by a notice within the meaning of clause (b) of proviso to Section 138 and the drawer fails to make the payment of the amount within the stipulated period of fifteen days after the date of receipt of such notice, a cause of action accrues to the holder of the cheque to institute proceedings for prosecution of the drawer.

There is, in our view, nothing either in Section 138 or Section 142 to curtail the said right of the payee, leave alone a forfeiture of the said right for no better reason than the failure of the holder of the cheque to institute prosecution against the drawer when the cause of action to do so had first arisen. Simply because the prosecution for an offence under Section 138 must on the language of Section 142 be instituted within one month from the date of the failure of the drawer to make the payment does not in our view militate against the accrual of multiple causes of action to the holder of the cheque upon failure of the drawer to make the payment of the cheque amount. In the absence of any juristic principle on which such failure to prosecute on the basis of the first default in payment should result in forfeiture, we find it difficult to hold that the payee would lose his right to institute such proceedings on a subsequent default that satisfies all the three requirements of Section 138.

Coming then to the question whether there is anything in Section 142(b) to suggest that prosecution based on subsequent or successive dishonour is impermissible, we need only mention that the limitation which Sadanandan Bhadran s case (supra) reads into that provision does not appear to us to arise. We say so because while a complaint based on a default and notice to pay must be filed within a period of one month from the date the cause of action accrues, which implies the date on which the period of 15 days granted to the drawer to arrange the payment expires, there is nothing in Section 142 to suggest that expiry of any such limitation would absolve him of his criminal liability should the cheque continue to get dishonoured by the bank on subsequent presentations. So long as the cheque is valid and so long as it is dishonoured upon presentation to the bank, the holders right to prosecute the drawer for the default committed by him remains valid and exercisable. The argument that the holder takes advantage by not filing a prosecution against the drawer has not impressed us. By reason of a fresh presentation of a cheque followed by a fresh notice in terms of Section 138, proviso (b), the drawer gets an extended period to make the payment and thereby benefits in terms of further opportunity to pay to avoid prosecution. Such fresh opportunity cannot help the defaulter on any juristic principle, to get a complete absolution from prosecution.

Applying the above rule of interpretation and the provisions of Section 138, we have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time.

The controversy, in our opinion, can be seen from another angle also. If the decision in Sadanandan Bhadrans case (supra) is correct, there is no option for the holder to defer institution of judicial proceedings even when he may like to do so for so simple and innocuous a reason as to extend certain accommodation to the drawer to arrange the payment of the amount. Apart from the fact that an interpretation which curtails the right of the parties to negotiate a possible settlement without prejudice to the right of holder to institute proceedings within the outer period of limitation stipulated by law should be avoided we see no reason why parties should, by a process of interpretation, be forced to launch complaints where they can or may like to defer such action for good and valid reasons. After all, neither the courts nor the parties stand to gain by institution of proceedings which may become unnecessary if cheque amount is paid by the drawer. The magistracy in this country is over-burdened by an avalanche of cases under Section 138 of Negotiable Instruments Act. If the first default itself must in terms of the decision in Sadanandan Bhadrans case (supra) result in filing of prosecution, avoidable litigation would become an inevitable bane of the legislation that was intended only to bring solemnity to cheques without forcing parties to resort to proceedings in the courts of law. While there is no empirical data to suggest that the problems of overburdened magistracy and judicial system at the district level is entirely because of the compulsions arising out of the decisions in Sadanandan Bhadrans case (supra), it is difficult to say that the law declared in that decision has not added to court congestion.

In the result, we overrule the decision in Sadanandan Bhadrans case (supra) and hold that prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act. The reference is answered accordingly. The appeals shall now be listed before the regular Bench for hearing and disposal in light of the observations made above.

18. The picture which emerges therefore is that the complaint based on second or successive dishonour of cheque is permissible so long as the same satisfies the requirements stipulated in proviso to Section 138 of the Act. In the instant case, the cheques were deposited for the second time during the validity period at Ahmedabad and the same were dishonoured by the bankers of the applicants on 4.10.2010 and the cheque return memo was returned to the complainant by its bankers on 6.10.2010. The complainant gave statutory notice on 21.10.2010. The same was served on 26.10.2010 and the complaints were filed on 24.11.2010. Considering the provisions of the proviso therefore, the complainant was competent to deposit the cheques for the second time during its validity period and from the facts arising out of the complaints, it transpires that the requirements stipulated in the proviso to Section 138 of the Act are fulfilled and therefore, it cannot be said that the present complaints are barred by limitation. Even considering the email dated 30.9.2010, the same cannot be termed as notice and the complaints have been filed after the cheques were presented before the drawer s Bank within the statutory period of six months. Therefore, even on that ground, it cannot be said that the limitation would start running from 30.9.2010 in the instant case. The argument based on the ratio laid down by the Hon'ble Apex Court on the basis of judgment in the case of Sadanandan Bhadran (supra) therefore fails in light of the judgment in the case of Msr Leathers (supra), wherein the decision in the case of Sadanandan Bhadran (supra) came to be overruled.

19. The second point which is raised by the applicants pertains to territorial jurisdiction of the Magistrate Court at Ahmedabad. As noted hereinabove, it is contended that the cheques were dishonoured at Gwalior and only because the cheques were deposited at Ahmedabad by the complainant with their banker, the same would not give jurisdiction to the Court at Ahmedabad, as the cheques were never dishonoured at Ahmedabad. It is contended that only because the notice is sent from Ahmedabad, the Court at Ahmedabad will not have any jurisdiction in light of the judgment of the Hon'ble Apex Court in the case of Harman Electronics Private Limited (supra). Relying upon the judgment of the Hon'ble Apex Court in the case of Shri Ishar Alloy Steels Ltd. (supra) as well as the judgment of Hon ble Kerala High Court in the case of Santhoshkumar, M.S. (supra), the applicants have contended that the cheques presented for collection cannot earn the status of the Bank as envisaged under the provisions of Section 138 of the Act and has therefore contended that the Court at Ahmedabad has no territorial jurisdiction. It is specifically contended by the applicants that the judgment of the Hon'ble Apex Court in the case of K. Bhaskaran (supra) has been specifically dealt with in the case of Shri Ishar Alloy Steels Ltd. (supra) and has therefore contended that the Court at Ahmedabad has no jurisdiction. It is also contended that the unreported judgment of this Court in the case of Shree Laxmi Agency (supra) would not be applicable in the present case and that the said judgment is subject matter of Special Leave to Appeal (Criminal) No.4764 of 2011 and the same is pending before the Hon'ble Apex Court and therefore, the same cannot be relied upon. Respondent No.2 original complainant has contended that as laid down by the Hon'ble Apex Court in the case of K. Bhaskaran (supra), the substantial part of the cause of action arises within Ahmedabad and therefore, the Court at Ahmedabad has territorial jurisdiction.

20. From the facts arising out of these applications, it transpires that the complaints are filed by the authorized officer of Nirma Limited, having its registered office at Ahmedabad. The cheques were drawn by the applicants upon its banker having its branch at Gwalior. The cheques were presented by respondent No.2 original complainant with its banker at Ahmedabad and the statutory notice came to be issued by the complainant from Ahmedabad. The Hon'ble Apex Court in the case of K. Bhaskaran (supra) has observed thus:-

Before dealing with the two main points on which the counsel argued in this Court we may set out the facts in brief. The respondent (who will hereinafter be referred to as the 'complainant') presented a cheque which bears the signature of the appellant (hereinafter referred to as the 'accused') before the Syndicate Bank's branch office at Kayamkulam (Kerala) on 29.1.1993 for encashment. The cheque was for an amount of rupees one lakh. The bank bounced the cheque due to insufficiency of funds in the account of the accused. Complainant then issued a notice by registered post in the address of the accused on 2.2.1993. The notice was returned to the complainant on 15.2.1993 with the following endorsements inscribed thereon :

3.2.1993 Addressee absent 4.2.1993 Addressee absent 5.2.1993 Addressee absent 6.2.1993 Intimation served on addressee's house As the postal article remained unclaimed till 15.2.1993 it was returned to the sender with a further endorsement "unclaimed."

We fail to comprehend as to how the trial Court could have round so regarding the jurisdictional question. Under Section 177 of the Code "every offence shall ordinarily be inquired into and tried in a Court within whose jurisdiction it was committed." The locality where the bank (which dishonoured the cheque) is situated cannot be regarded as the sole criteria to determine the place of offence. It must be remembered that offence under Section 138 would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque amount within the expiry of 15 days mentioned in Clause

(c) of the proviso to Section 138 of the Act. It is normally difficult to fix up a particular locality as the place of failure to pay the amount covered by the cheque. A place, for that purpose, would depend upon a variety of factors. It can either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business. Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence under Section 138 of the Act.

Even otherwise the rule that every offence shall be tried by a Court within whose jurisdiction it was committed is not an unexceptional or unchangeable principle. Section 177 itself has been framed by the legislature thoughtfully by using the precautionary word "ordinarily" to indicate that the rule is not invariable in all cases. Section 178 of the Code suggests that if there is uncertainty as to where, among different localities, the offence would have been committed the trial can be had in a Court having jurisdiction over any of those localities. The provision has further widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area the Court in either of the localities can exercise jurisdiction to try the case. Further again, Section 179 of the Code stretches its scope to a still wider horizon. It reads thus :

"179.

Offence triable where act is done or consequence ensues.- 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 consequence has ensued."

The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence : (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 the receipt of the notice.

It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at 5 different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Act. In this context a reference to Section 178(d) of the Code is useful. It is extracted below :

"178. (a)-(c) Where the offence consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas."

Thus it is clear, if the five different acts were done in five different localities any one of the Courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those Courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act.

The more important point to be decided in this case is whether the cause of action has arisen at all as the notice sent by the complainant to the accused was returned as "unclaimed." The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in Clauses (b) and (c) of the proviso to Section 138(1) of the Act. The said clauses are extracted below :

"(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 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."

21. The Hon'ble Apex Court in the case of Shri Ishar Alloy Steels Ltd. (supra) observed as under:-

It has further to be noticed that to make an offence under Section 138 of the Act, it is mandatory that the cheque is 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. It is the cheque drawn which has to be presented to "the bank" within the period specified therein. When a post-dated cheque is written or drawn, it is only a bill of exchange. The postdated cheque becomes a cheque under the Act on the date which is written on the said cheque and the six months period has to be reckoned, for the purposes of Section 138 of the Act, from the said date.

Section 138 provides that where any cheque drawn by a person on an account 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 punishable with imprisonment as prescribed therein subject to the conditions mentioned in Clauses (a), (b) and

(c) of the proviso. Section 3 of the Act defines the "banker"

to include any person acting as a banker and any post office saving bank. Section 72 of the Act provides that a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relations between the drawer and his banker has been altered to the prejudice of the drawer.

The use of the words "a bank" and "the bank"

in the section is indicator of the intention of the Legislature. The former is indirect article and the latter is pre-fixed by direct article. If the Legislature intended to have the same meanings for "a bank" and "the bank", there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the word "banker" in Section 3 of the Act is pre-fixed by the indefinite article "a"

and the word "bank" where the cheque is intended to be presented under Section 138 is pre-fixed by the definite article "the". The same section permits a person to issue a cheque on an account maintained by him with "a bank" and makes him liable for criminal prosecution if it is returned by "the bank"

unpaid. The payment of the cheque is contemplated by "the bank"

meaning thereby where the person issuing the cheque has an account.

"The" is the word used before nouns, with a specifying of particularising effect opposed to the indefinite or generalising force of "a" or "an". It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. "The" is always mentioned to denote particular thing or a person. "The" would, therefore, refer implicitly to a specified bank and not any bank. "The bank"

referred to in Clause (a) to the proviso to Section 138 of the Act would mean the drawee-bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued.

It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his 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 or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to the (C) bank. The non presentation of the cheque to the drawee-bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee.

As, admittedly, in this case the cheque was not presented before the drawer's bank within the statutory period of six months, the criminal Court had no jurisdiction to issue the process against the appellant. The impugned Judgement of the High Court being contrary to law is thus not sustainable. The appeal is accordingly allowed and the impugned Judgement is set side.

22. Similarly, the Hon ble Kerala High Court in the case of Santhoshkumar, M.S. (supra) observed thus:-

(14.) I am of the opinion that in the light of the subsequent decision in bhaskaran v. Balan which must be understood in the light of the later decision of the Larger Bench in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. it is impermissible to follow Ponnappan v. Sibi and hold that there shall be jurisdiction at the venue where the complainant handed over his cheque to his agent, the collecting bank for eventual presentation before the drawee bank. I need only hold that the complainant cannot confer jurisdiction on any Court by merely choosing to entrust the cheque to the agent of his choice within the jurisdiction of such court. That is certainly not the venue of presentation contemplated as venue No.2 in bhaskaran v. Balan in the light of Shri Ishar Alloy Steels Ltd. v. Jayaswals neco Ltd.

23. The Hon'ble Apex Court in the case of Harman Electronics Private Limited (supra) observed as under:-

9. Reliance has been placed by both the learned Additional Sessions Judge as also the High Court on a decision of this Court in K. Bhaskaran v.

Sankaran Vaidhyan Balan and Anr. [(1999) 7 SCC 510]. This Court opined that the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts, namely, (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 the receipt of the notice. It was opined that if five different acts were done in five different localities, any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act and the complainant would be at liberty to file a complaint petition at any of those places. As regards the requirements of giving a notice as also receipt thereof by the accused, it was stated (SCC pp.518-19, para 18) "18.

On the part of the payee he has to make a demand by "giving a notice" in writing. If that was the only requirement to complete the offence on the failure of the drawer to pay the cheque amount within 15 days from the date of such "giving", the travails of the prosecution would have been very much lessened. But the legislature says that failure on the part of the drawer to pay the amount should be within 15 days "of the receipt" of the said notice. It is, therefore, clear that "giving notice"

in the context is not the same as receipt of notice. Giving is a process of which receipt is the accomplishment. It is for the payee to perform the former process by sending the notice to the drawer at the correct address."

The court, however, refused to give a strict interpretation to the said provisions despite noticing Black's Law Dictionary in regard to the meaning of the terms `giving of notice' and `receiving of the notice' in the following terms: (K. Bhaskaran case, SCC p.519, paras 19-20) "19.

In Black's Law Dictionary, giving of notice' is distinguished from 'receiving of the notice.' (vide page 621) "A person notifies or gives notice to another by taking such steps as may be reasonably required to inform the other in the ordinary course, whether or not such other actually comes to know of it." A person receives' a notice when it is duly delivered to him or at the place of his business.

20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that Court should not adopt in interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure."

For the said purpose, a presumption was drawn as regards refusal to accept a notice.

11. Indisputably, the parties had been carrying on business at Chandigarh. The Head Office of the complainant-respondent may be at Delhi but it has a branch office at Chandigarh . It is not in dispute that the transactions were carried on only from Chandigarh . It is furthermore not in dispute that the cheque was issued and presented at Chandigarh . The complaint petition is totally silent as to whether the said cheque was presented at Delhi . As indicated hereinbefore, the learned counsel appearing on behalf of the complainant-respondent contended that in fact the cheque was put in a drop box but as the payment was to be obtained from the Delhi Bank, it was sent to Delhi . In support of the said contention, a purported certificate issued by the Citi Bank NA has been enclosed with the counter-affidavit, which reads as under :

"This is to confirm that M/s. National Panasonic India Pvt. Ltd. (NPI) having registered office at AB-11. Community Centre, Safdarjung Enclave, New Delhi - 110029 are maintaining a Current Account No. 2431009 with our Bank at Jeevan Bharti Building, 3, Parliament Street, New Delhi-110001 only and not at any other place in India including Chandigarh.

Further confirmed that CITI Bank has provided the facility for collection of Cheques/Demand Drafts from branches of NPI located at various places/cities in India . However, all amounts of Cheques/Demand Drafts so collected on behalf of National Panasonic India Private Limited are forwarded and debited/credited to the aforesaid Current Account No. 2431009 with our Bank at Jeevan Bharti Building, 3, Parliament Street , New Delhi - 110001."

12. The complaint petition does not show that the cheque was presented at Delhi . It is absolutely silent in that regard. The facility for collection of the cheque admittedly was available at Chandigarh and the said facility was availed of. The certificate dated 24.6.2003, which was not produced before the learned court taking cognizance, even if taken into consideration does not show that the cheque was presented at the Delhi Branch of the Citi Bank. We, therefore, have no other option but to presume that the cheque was presented at Chandigarh . Indisputably, the dishonour of the cheque also took place at Chandigarh . The only question, therefore, which arises for consideration is that as to whether sending of notice from Delhi itself would give rise to a cause of action for taking cognizance under the Negotiable Instruments Act.

13. It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonour of a cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence under Section 138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If the ingredients for constitution of the offence laid down in the provisos (a), (b) and

(c) appended to Section 138 of the Negotiable Instruments Act intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As it is only on receipt of the notice the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of the notice would.

24. Examining the facts of the present case in light of the aforesaid decisions and more particularly having considered the observations made by the Hon'ble Apex Court in the case of K. Bhaskaran (supra), the concatenation of the brief facts as envisaged under Section 138 of the Act in the instant cases has taken place at different places:-

(a) The cheques came to be drawn at Gwalior.

(b) The cheques came to be presented at Ahmedabad.

The cheques were returned unpaid by the drawee Bank at Ahmedabad.

The notice in writing to the drawer of the cheques demanding payment of the cheque amount has taken place at Ahmedabad, and

(e) failure of drawer to make payment within 15 days of the receipt of notice has taken place at Gwalior.

25. Examining the factual scenario of the instant case, in light of those 5 components therefore, it transpires that the cheques came to be deposited at Ahmedabad and notice was also addressed from Ahmedabad. Considering the facts which were for consideration before the Hon'ble Apex Court in the case of Harman Electronics Private Limited (supra) and more particularly, as observed in Paragraphs 11 and 12 of the said judgment, as none of the aforesaid 5 components had taken place in New Delhi, except the fact that the Head Office of the Company was at Delhi, the Hon'ble Apex Court has held that the Court at Delhi has no jurisdiction. Therefore, with respect, the ratio laid down by the Hon'ble Apex Court has been decided in light of the facts arising in the said judgment, whereas in the instant case, considering the ratio laid down by the Hon'ble Apex Court in the case of K. Bhaskaran (supra), part of the cause of action has arisen in Ahmedabad as it transpires from the record of the applications that the cheques were presented with the banker of the complainant at Ahmedabad. The Hon'ble Apex Court in the case of Shri Ishar Alloy Steels Ltd. (supra) has also considered the facts of the said case, wherein the cheque was presented after the statutory period of six months as observed by the Hon'ble Apex Court more particularly in Paragraphs 10 and 12 thereof and with respect, therefore the ratio laid down by the Hon'ble Apex Court in the case of K. Bhaskaran (supra) holds the field. The Hon'ble Apex Court in the case of Shamshad Begum Vs. B. Mohammed, reported in (2008) 13 SCC 77 has observed thus:-

The challenge in this appeal is to the judgment of a learned Single Judge of the Karnataka High Court dismissing the petition filed u/s. 482 of the Code of Criminal Procedure, 1973 (in short the 'Code'). The prayer in the petition was to quash all proceedings in CC No. 1042 of 2004 on the file of learned Vth JMF Court Mangalore.

3 The appellant is the accused in the aforesaid case in relation to an offence punishable u/s. 138 of the Negotiable Instruments Act, 1881 (in short the 'Act'). The petition was filed before the High Court on the ground that the Mangalore Court has no jurisdiction to try the case. It was stated that the agreement between the parties was entered into Bangalore and the parties live in Mangalore and the cheque were returned from the banks at Bangalore and therefore the Bangalore Court has jurisdiction to try the case.

4 In response, the respondent had submitted that before issuing notice to the appellant he had shifted his residence to Mangalore and therefore he had issued the notice from Mangalore which was received by the appellant and the reply was sent by her to the complainant to the Mangalore address. Therefore, as one of the components of the said offence i.e. notice in writing to the drawer of the cheque demanding payment of cheque amount was sent from Mangalore, Court at Mangalore had jurisdiction to try the case. The High Court noted that one of the components of the offence was giving notice in writing to the drawer of the cheque demanding payment of the cheque amount. The said action took place within Mangalore jurisdiction and, therefore, the petition was without merit. It was however stated that if the presence of the appellant was not very necessary for continuation of the proceeding, on appropriate application being filed, the court can grant exemption from appearance.

8 As was noted in K. Bhaskaran's case (supra) the offence u/s. 138 of the Act can be completed only with the concatenation of a number of acts. The acts which are components are as follows:

(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 the receipt of the notice.

9 It is not necessary that the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But concatenation of all the above five is sine qua non for the completion of the offence under Section 138 of the Act.

26. The Division Bench of Hon ble Mumbai High Court in the case of Mrs. Preetha S. Babu (supra), while considering the similar set of facts and contentions observed thus:-

30.

Having observed that the bank referred to in clause (b) would mean the drawee bank, in paragraph 9 the Supreme Court clarified that the above conclusion does not lead to a further conclusion that the cheque is always to be presented to the drawer's bank on which the cheque is issued. We must quote paragraph 9. It reads thus:

9.

It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his 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 or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words, a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to the (C) bank. The non presentation of the cheque to the drawee-bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee.

31. Therefore, the cheque can be presented at the collecting bank of the payee. The collecting bank has to then send it to the drawee bank. That must be done within six months. If the cheque is dishonoured and money is not paid within 15 days of the notice, complaint can be filed at the place where the collecting bank is situated. The idea is that the cheque should reach the drawee bank within six months. It can be directly presented to it or it can be presented through the collecting bank.

32. Paragraph 14 of K. Bhaskaran will have to be read against the above background. When in paragraph 14, the Supreme Court says that presentation of the cheque to the bank is a component of the offence under Section 138 of the NI Act, it is possible to hold that it conveys presentation of the cheque at the drawee bank or the collecting bank of the payee. It is pertinent to note that in item (2) of paragraph 14, the Supreme Court has used the words the bank and in item (3) thereof the Supreme Court has used the words drawee bank . Nothing prevented the Supreme Court from using the words drawee bank in item (2) instead of the words the bank . It is possible to hold that the fact that it has not done so indicates that in the opinion of the Supreme Court, presentation of the cheque can be done either at the drawee bank or the collecting bank of the payee. The corollary may perhaps be that if the cheque is presented at the collecting bank of the payee and the collecting bank presents it to the drawee bank within the period of six months and if it is returned to the collecting bank unpaid and the cheque is dishonoured and the money is not paid within 15 days of the notice, the place where the collecting bank is situated will have jurisdiction to try the complaint under Section 138 of the NI Act. Such interpretation may be in consonance with law laid down in K. Bhaskaran.

At the cost of repetition, we must note that in K. Bhaskaran, the Supreme Court has held that Section 178 of the Code has widened the scope of jurisdiction of a criminal court and Section 179 of the Code has stretched it to still a wider horizon. After considering Section 138 of the NI Act, the Supreme Court observed that the amplitude of the court trying cases under Section 138 of the NI Act is so wide and expansive that it is an idle exercise to raise jurisdictional question regarding offence under Section 138 of the NI Act. These observations may not permit the court to place restrictive meaning in the context of ascertaining jurisdiction of the court on the components of Section 138 of the NI Act which have been noted by the Supreme Court in K. Bhaskaran.

27. Similarly, the Hon ble Delhi High Court in the case of M/s. Religare Finvest Limited (supra), while considering the aspect of territorial jurisdiction has observed thus:-

23. In the present case, the Negotiable Instruments Act is the substantive statute and the procedural aspect of filing of the complaint, and dealing with the procedures to be followed by the trial court thereafter are all governed under the procedural law, i.e. the Code of Criminal Procedure. Hence, reference to Chapter XIII of the Code of Criminal Procedure, which deals with jurisdiction of criminal courts, is but natural. Section 177 relates to ordinary place of inquiry and trial, Section 178 relates to place of inquiry or trial and Section 179 relates to offence triable where act is done or consequence ensues. All the aforesaid three provisions have been particularly explained by the Supreme Court in the case of K. Bhaskaran (supra), as noted above. Therefore, reading of the Negotiable Instruments Act in isolation, dehors the procedure prescribed in the Cr.P.C. for dealing with the filing of the complaint and the manner of proceeding with the complaint, is neither possible, nor permissible.

As discussed above, the Magistrate taking cognizance of an offence must not necessarily have the territorial jurisdiction to try the case as well. Only when an enquiry or trial begins, does the jurisdictional aspect become relevant. In fact, after taking cognizance of the offence, the Magistrate may have to decide as to which court would have the jurisdiction to enquire into the case and such a situation can arise only during the post-cognizance stage. At the post-cognizance stage, the Magistrate has only to examine the averments, as set out in the complaint and not more, for prima facie arriving at a decision as to whether some of the acts essential for completing an offence under Section 138 of the Act were done in the territorial jurisdiction of that Court. In the present case, having perused the complained filed by the petitioner/complainant without ascertaining the correctness of the allegations made therein, prima facie it has to be held that a part of the cause of action has arisen in Delhi and the same is not based solely on the issuance of a legal notice by the petitioner/complainant to the respondent/accused from Delhi, but some other acts done prior thereto, as set out in para (3) hereinabove.

25. From the aforesaid facts and circumstances, there appears no ambiguity on the aspect of the right of the petitioner/complainant to file a complaint in a Court having jurisdiction in the context of the five acts mentioned in the case of K. Bhaskaran (supra). In the present case, as noted above, a substantial part of the cause of action for filing of the complaint by the petitioner/Company against the respondent/accused under Section 138 of the Act, prima facie appears to have arisen within the jurisdiction of the courts in Delhi. However, it is clarified that if after taking cognizance, the respondent/accused is able to place such material facts on the record which demonstrate that the Courts in Delhi do not have territorial jurisdiction to entertain the complaint, the learned Metropolitan Magistrate shall still have a free hand to ascertain the truth of the allegations made by the petitioner/complainant and arrive at a different conclusion.

28. Considering the ratio laid down in the aforesaid judgments of the Hon'ble Apex Court, Hon ble Delhi High Court as well as Hon ble Mumbai High Court, in facts of these cases, the present applications are filed immediately after the process came to be issued by the Court of Magistrate and in light of the above discussion therefore, it cannot be said that none of the aforesaid 5 components as laid down by the Hon'ble Apex Court in the case of K. Bhaskaran (supra) has not arisen prima facie within the jurisdiction of the Magistrate at Ahmedabad.

29. In light of the above discussion therefore, on both the counts, the applications fail and the same are hereby dismissed. Parties to bear their own costs.

Sd/-

(R.M.CHHAYA, J.) After the judgment was pronounced, Mr. Abhaykumar P. Shah, learned advocate for the applicants in both the matters requests for extension of 6 (six) weeks time, which was granted earlier, with a view to approach the Hon'ble Apex Court, to which Mr. Gaurav S. Mathur, learned advocate for respondent No.2 has no objection. Hence, the stay granted earlier is extended till 10.05.2013.

Sd/-

(R.M.CHHAYA, J.) mrp Page 59 of 59

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