Delhi District Court
E.P. Parameshwarn vs N. Pradeep Rao Cc No. 6020/2011 on 10 August, 2011
IN THE COURT OF SH. RAKESH KUMAR SINGH:
METROPOLITAN MEGISTRATE (NI ACT)-1, CENTRAL:
ROOM NO.-42, TIS HAZARI COURT COMPLEX, DELHI
10.08.2011
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011
ORDER
Arguments on the point of territorial jurisdiction have been heard at great length.
Ld. counsel has claimed jurisdiction on the following grounds:-
1. The complainant is residing in Delhi.
2. The complainant has presented the cheque in Delhi.
3. The cheque has been dishonoured by local clearing house situated in Delhi with dishonour memo.
Letter has also been issued by the banker of the complainant to this effect.
4. Payment in respect of liability was to be made in Delhi and entire substantial transaction was held in Delhi.
5. Intimation in respect of dishonoure has been received in Delhi.
6. Acknowledgment in respect of legal demand notice duly served upon the accused has been received in Delhi by the complainant.
7. The cheque is payable at CBS Branch which was presented in Delhi. In this respect Internet generated guidelines of RBI has been placed on record.
8. Letter in respect of admission of liability was also received in Delhi.
Ld. counsel for complainant relied upon the following judgments:- K. Bhaskaran Vs Sankaran Vaidhyan Balan & Anr. decided on 29.09.1999, Ishar Alloy Steels Ltd. Vs Jayaswals NECO Ltd. decided on 22.02.2001, Arinits Sales (P) Ltd. Vs Rockwell Plastic (P) Ltd. & Ors. decided on 18.01.2008, Union of India & Ors. Vs Dhanwanti Devi & Ors. decided on 21.08.1996, Patiala Casting (P) Ltd. & Ors. Vs Bhushan Steel Ltd. decided on 11.08.2010, M/s Religare Finvest Ltd. Vs State & Anr. decided on 23.09.2010 & K. O. Issac & Anr. Vs Technology decided on 21.10.2009 E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 1 He further submits that the judgment of Hon'ble Supreme Court in Ishar (supra) is not applicable to the territorial jurisdiction since it has only considered the provisio (a) to section 138 NI Act and also the judgment of Division Bench of Hon'ble High Court of Delhi in Arinit (Supra) will not apply since it has only considered the territorial jurisdiction in respect of civil cases under section 20 of CPC. He further submits that section 146 NI Act which provides that bank memo of the drawee bank will be sufficient to presume the factum of dishonour and the same does not use the word "the" which was dealt with in the judgment Ishar (supra). He further submits that neither in Ishar (supra) nor in Arinit (supra), judgment of Hon'ble Supreme Court of India in Bhaskaran (supra) was considered. On the basis of above, Ld. counsel claims that this court is having territorial jurisdiction to try the case. He also submit that at the initial stage only averments made in the complaint should be considered and court has only come to the prima facie view about cause of action and the question of territorial jurisdiction can be decided later on.
I have considered the submission and gone through the record. Arguments of the ld. Counsel though attractive do not hold much water. A close scrutiny goes to show the opposite.
I have had an opportunity to discuss the present controversy at great length. In TBSL vs Jitesh Sharma (CC No.-1552/2010 decided on 12.10.2010 available on the website of District Court), I had discussed the controversy as under:
"A criminal prosecution is neither for recovery of money nor for enforcement of any security etc. Section 138 of the NI Act is a penal provision the commission of which offence entails a conviction and sentence on proof of the guilt in a duly conducted criminal proceedings. Once the offence under Section 138 is completed the prosecution proceedings can be initiated not for recovery of the amount covered by the cheque but for bringing the offender to the penal liability. And as they say, it has always to be kept in mind that the law relating to the penal provisions has to be interpreted strictly so that no one can ingeniously or insidiously or guilefully or strategically be prosecuted.
***
4. A further contention has been raised by some of the complainant that such issues should be dealt with at the stage of the trial and the Court should not start a roving inquiry at the pre-summoning stage. Reliance has been placed primarily upon two authorities: In Trisuns Chemical Industry vs. Rajesh Agarwal and Ors. (1999) 8 SCC 686 "14. The jurisdictional aspect becomes relevant only when the question of enquiry or trial arises. It is therefore a fallacious thinking that only a Magistrate having jurisdiction to try the case has the power to take cognizance of the offence. If he is a Magistrate of the First Class his power to take cognizance of the offence is not impaired by territorial restrictions. After taking cognizance he may have to decide as to the court which has jurisdiction to enquire into or try the offence and that situation would reach only during the post-cognizance stage and not earlier." (emphasis added) In Rajiv Modi vs. Sanjay Jain V (2009) SLT 725: "22) It is evident from the above decisions, that, to constitute the territorial jurisdiction, the whole or a part of "cause of action" must have arisen within the territorial jurisdiction of the court and the same must be decided on the basis of the averments made in the complaint without embarking upon an enquiry as to the correctness or otherwise of the said facts. 29) In E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 2 view of the above principles, the Court on basis of the averments made in the complaint, if it is prima facie of the opinion that the whole or a part of cause of action has arisen in its jurisdiction, it can certainly take cognizance of the complaint. There is no need to ascertain that the allegations made are true in fact." (emphasis added)
5. I do not find the contention acceptable. Above highlighted part in Trisuns(supra) clearly stipulates that jurisdictional aspect becomes relevant only when the question of enquiry or trial arises. Amended section-202 Cr.PC. provides for a mandatory requirement of enquiry when the accused resides outside the local limit of jurisdiction.
Hence, the decision relied upon by the complainant far from advancing his case goes to show otherwise. Above highlighted portion in Rajiv Modi (supra) imposes a restriction to the effect that there is no need to ascertain that the allegations made are true in fact. Again, this decision does not help. There is no depute about the facts stated in the complaint.
There is no ascertainment the correctness or otherwise of the said facts. The issue turns out to be an issue of law instead of fact. Even otherwise, leaving the issue to be decided at the stage of trial will be a futile exercise since scenario remains the same considering the scope of Section-143 & 145 NI Act read with Section-263 Cr.PC.
6. The position may be seen from another angle. Is there any provision which helps the Court when at the stage of trial it comes to a conclusion that it has no jurisdiction to try the offence.
Section-322 Cr.PC. Reads as under:
"322. Procedure in cases, which Magistrate cannot dispose of. (1) If, in the course of any inquiry into an offence or a trial before a Magistrate in any district, the evidence appears to him to warrant a presumption- (a) That he has no jurisdiction to try the case or commit it for trial, or (b) That the case is one which should be tried or committed for trial by some other Magistrate in the district, or (c) That the case should be tried by the Chief Judicial Magistrate, he shall stay the proceedings and submit the case, with a brief report explaining its nature to the Chief Judicial Magistrate or to Such other Magistrate, having Jurisdiction, as the Chief Judicial Magistrate directs.
(2) The Magistrate to whom the case is submitted may, if so empowered, either try the case himself, or refer it to any Magistrate subordinate to him having jurisdiction, or commit the accused for trial.
A bare perusal of this section shows that it can not be made applicable to a jurisdictional question arising between two courts situated in two different states. A Chief Judicial/Metropolitan Magistrate does not exercise jurisdiction over any Court situated in another state. The only option in such circumstances lies in Section-406 Cr.PC. Which vest the power in the Hon'ble Supreme Court to transfer cases from one state to another.
Clearly, a Magistrate will be helpless in such circumstances. Even section-462 Cr.PC. does restrict a reversal of a judgment passed in a trial held at wrong place.
7. It has to be further pointed out that when the facts are not in dispute it is not necessary that the question that arise for consideration should be left to be decided at the stage of trial. Only if the issue that arises for consideration is decided at the earliest and a disposal is given it will enable the complainant to seek the alternative remedy of filing a suit to recover the amount covered by the cheque as otherwise such a remedy will also become time barred. Clearly, both the issues have to be decided forthwith. Accordingly, I proceed to do so.
***
41. The next issue pertains to territorial jurisdiction in the offences U/s 138 NI Act, the E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 3 NI Act. In all the complaints, the cheque were drawn at the bank situated outside Delhi and the accused persons were residing at the places situated outside Delhi. However, complainants are claiming jurisdiction of Delhi Court mainly on the following grounds:
A. That the business dealings and business transactions had taken place in Delhi, B. That the complainant presented the cheque to his bank situated in Delhi, C. That ratio of Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. does not apply to the jurisdictional aspect;
D. That the complainant received intimation about dishonour of the cheque in Delhi; E. That the complainant issued the Demand Notice from Delhi; F. That the pronouncement of Hon'ble Supreme Court in Harman Electronics Private Limited is per incuriam; and G. That the registered office of complainant is situated in Delhi and/or complainants reside in Delhi.
42. On the basis of the above submissions and contentions, counsels for the complainant claims jurisdiction and relied upon judgments of the Hon 'ble High Court of Delhi and the Hon'ble Supreme Court of India. Heavy reliance is placed upon the following decisions rendered by the Hon'ble High Court of Delhi:
A. Harjat Singh Vs. Godrej Agrovet Ltd. dated 31.05.2010;
B. M/s Religare Finvest Ltd. Vs. Sambath Kumar A dated 02.07.2010; C. M/s Patiala Casting P. Ltd. & Ors. Vs. Bhushan Steel Ltd. dated 11.08.2010; D. M/s Religare Finvest Ltd. Vs. State, dated 23.09.2010.
43. I have given my considerable thoughts to the contentions raised by ld. Counsel for the complainants and gone through all the authorities placed and referred to by the counsel.
44. Ingredients constituting the offence There is no necessity to look any further to consider the scope of territorial jurisdiction in respect of cheque dishonour cases U/s 138 NIs Act. The Hon 'ble Supreme Court of India in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another AIR 1999 SC 3762 (Supra) has considered the scope of Section 177 Cr.P.C. With respect to 138 NI Act and held that:
From K. Bhaskaran vs Sankaran Vaidhyan Balan And Another AIR 1999 SC 3762:
"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."
I consider that all the above ingredients described in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another AIR 1999 SC 3762 (Supra) should be dealt with one by one.
45. Drawing of cheque Dictum in Bhaskaran(supra) is only that an essential ingredient of the offence is "drawing of cheque". It does no where elaborate the concept of drawing of the cheque.
Section-6 provides:
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 4 "A cheque is a bill of exchange drwan on a specified banker........."
Clearly, drawing of cheque is an effect and not a process.
This may be seen from another angle. When a post-dated cheque is written or drawn, it is only a bill of exchange. The post dated cheque become a cheque under the Act on the date which is written on the said cheque.
Section-138 uses the expression "cheque drawn". This is the third form of the verb.
Section-6 and section-138 go to show that section-138 will come into picture only when the cheque does have an existence.
Clearly, nothing which is anterior to the existence of the cheque can be considered for the commission of the offence. Place of delivery of the cheque is immaterial for the purpose of Section-177 of Cr.PC. For example, if a leaf duly filled in but post dated is delivered at any place to any one from the cheque book, the place would be immaterial since at that point of time the cheque would have no existence. Place of business dealings or business negotiations is also immaterial for the purpose of Section-177 of Cr.PC. for the same reason, i.e. this activity is anterior to the existence of the cheque. Business dealings may attract civil liability and may create jurisdiction for the purposes of Contract Act, Specific Relief Act, Recovery Suits etc. Even in K. Bhaskaran (supra), place of business of complainant has not been identified as the place vesting the court with necessary jurisdiction.
At this juncture, a recent decision of a 3 judges bench of the Hon'ble Supreme Court in CRIMINAL APPEAL NO. 1020 OF 2010 (07.05.2010) is worth mentioning. The Hon'ble Supreme Court has held that:
"In light of these extracts, we are in agreement with the respondent-claimant that the presumption mandated by Section 139 of the Act does indeed include the existence of a legally enforceable debt or liability..........."
Means the complainant is not required to show the existence of a legally enforceable debt or liability. It is for the accused to rebut the same. The whole concept of business dealings is related with the existence of a legally enforceable debt or liability.
46. Presentation of the cheque to the bank Section-72: Presentment of cheque to charge drawer.- " Subject to the provisions of section-84, a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer. "
The second place enumerated in the Bhaskaran refers to "the bank". Meaning of "the bank" has been explained by a larger bench of the Hon'ble Supreme Court in the following terms:
** From Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd, (2001) 3 SCC 609:
"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 prefixed by the definite article "the". The same Section permits a person to issue a cheuqe 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 E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 5 before nouns, with a specifying of particularizing effect opposed to the indefinite or generalizing 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 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."
"The expression `bank' used in Section 138 of the Negotiable Instruments Act would always mean the bank of the drawer and not the bank of the payee. The payee may have multiple accounts and may deposit the cheque in any of the accounts maintained by it. In fact, if the payee is a large company or organization, it is likely to have multiple accounts in different places."
"A combined reading of Sections 3, 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..................."
** From Hon 'ble Delhi High Court's Division Bench judgment in Arinits Sales Pvt. Ltd. vs Rockwell Plastic Pvt. Ltd. And Ors.149 (2008) DLT 123:
"Specific reference was made to Clause 2 of the terms and conditions of sale which states that all disputes are subject to Delhi Jurisdiction only. Our attention was also drawn to Clause 4 thereof, which provides as follows: " All cheque/drafts are to be drawn in the name of the Company Arinits Sales Corporation marked "A/C PAYEE"
payable at Delhi only unless otherwise specified to be made through our Branch Office." It was also submitted by the counsel appearing for the appellant that since the cheque was presented in the bank account of the appellant in Delhi, therefore, Delhi Court will have jurisdiction. The plea of the counsel appearing for the appellant that the cheques were presented for encashment at Delhi and, therefore, in view of the said position and the clauses in the invoices, i.e., Clause 4 and Clause 2, the appellant would be entitled to file, institute and continue the suit at Delhi is also considered by us. In this connection, we may refer to a similar contention which was urged before us in the case of Mountain Mist Agro India (Pvt.) Ltd. and Anr. v. S. Subramaniyam disposed of on 14.01.2008. In the said case also, the territorial jurisdiction of Delhi Court was sought to be invoked on the ground that the cheque was deposited in a bank at Delhi, where the branch office of the company was located and, therefore, it was urged that cause of action arose partly in Delhi. The said contention was negated both by the Single Bench and also by the Division Bench. In the aforesaid decision, the Division Bench of this Court referred to the decision delivered by the Hon'ble Supreme Court in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd."
The ratio of the above referred judgment of the Hon'ble Supreme Court and the Division Bench of Hon'ble High Court of Delhi is that a cheque is deemed to have been presented to the banker of the drawer irrespective of the fact whether it is deposited by the payee in his own bank.
I consider that if it is held that the expression `bank' in Section 138 of the Negotiable Instruments Act mean the bank of the payee, it will be possible for the complainant to institute the complaint in any city where he may be having a bank account and, thereby harass the drawer of the cheque by filing complaints at the place where the cheque is deposited by him. 30. On the other hand, if the expression `bank' is taken to mean the bank on which the cheque is drawn, the place of presentation of the cheque would always be a fixed place and will not change depending upon the place at which the cheque is presented by the payee to its bank.
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 6 I also consider that even if two interpretations of the expression `bank' are possible, the Court would take the interpretation which is favourable to the accused, the provisions of the Negotiable Instruments Act being penal provisions requiring strict interpretation of law.
Therefore, it cannot be said that the cheque issued by the petitioner was presented in Delhi. Despite the fact that the bank in which the complainant have an account was in Delhi, the cheque shall be deemed to have been presented only to the bank where it was drawn.
In view of the authoritative pronouncement of the Hon'ble Supreme Court in the case of Shri Ishar Alloy Steels Ltd. (supra), it is not possible for this Court to say that the cheque even if deposited with the bank of the complainant situated in Delhi was presented to the bank in Delhi. ` Therefore, deposit of cheque in Delhi would not confer jurisdiction on this court to try this complaint.
47. Returning the cheque unpaid by the drawee bank The third place enumerated in the Bhaskaran directly refers to "the drawee bank".
It needs no further explanations.
Section-7 defines drawee as ".......the person thereby directed to pay....".
Clearly it will include the bank on which the cheque is drawn and other banks which are specifically directed to pay the amount like the cheques payable at par in all the branches, but will not include the bank of the complainant informing him about the dishonour. The dishonour will occur only at "the drawee bank". The question which will arise in accepting this interpretation is this: " If presentation of cheque to the drawee bank alone is reckoned as presentation, return of the cheque by the drawee bank and presentation will invariably always be at the same venue. There will hence be only 4 possible venues and not 5 as contemplated in Bhaskaran v. Balan . I note the said point. No possible instance of the two events - presentation as held in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. and dishonour, being at different venues occurs to my mind now. But in the light of the decision of the larger Bench in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. no other explanation or interpretation appears to be possible. Even if the number of possible venues may get reduced to 4 in effect, the conclusion cannot be different. "
Courts are bound by the dictum in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. under Article 141 of the Constitution of India and it cannot therefore be held that the bank referred to as venue 2 in Bhaskaran v. Balan refers to the collecting bank and not the drawee bank. That subsequent pronouncement of the larger Bench must influence and bind the Courts while subsequently understanding and interpreting the law whether statutory or precedential. In principle also, no other stand appears to be possible as the collecting bank under law can be reckoned only as the agent of the complainant to present the cheque before the drawee bank. Handing over of the cheque by the complainant to the agent of the complainant, the "collecting bank"
cannot in law be reckoned as presentation of the cheque for encashment as to confer jurisdiction on the court at that venue to try the drawer of the cheque. It can in law be reckoned as only the conduct of the principal entrusting the cheque to his agent to present the same before the drawee bank. By such handing over of the cheque to his agent at whatever place it pleases the complainant, law cannot oblige the drawer of the cheque to go to distant places to defend the indictment against him. If venue No.2 mentioned in Bhaskaran v. Balan were given such a wide and expansive meaning, it will certainly amount to denial of the inalienable right of an indictee guaranteed under Article 21 of the Constitution to reasonable opportunity to defend himself. At this juncture, it is necessary to deal with one of the contentions raised by the Ld. Counsel. He argued that since the complainant received the intimation about the dishonour of the cheque in Delhi, this Court therefore has jurisdiction.
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 7 The argument though attractive is clearly fallacious. It is clear that the complainant will receive the intimation where he deposited the cheque with his banker. It has already been held by the Hon 'ble Division Bench of High Court of Delhi applying the ratio of Shri Ishar Alloy(supra) that the place where the complainant deposited the cheque with his banker can not give jurisdiction. It may well be argued that in some exceptional cases the complainant residence may be at some different place than the place where his bank is situated. And in such cases, complainant will receive the intimation at his residence giving rise to jurisdiction since the receipt of intimation is a necessary ingredient under proviso-(b) to Section-138.
I consider that this argument proceeds on a misconception that every act or omission should be considered for jurisdiction. If mere sending is not sufficient to create jurisdiction, a fortiori mere receipt of intimation of dishonour can not create jurisdiction. This may be seen from another angle. If this argument is accepted, it would virtually mean that the place where the complainant resides will create jurisdiction. But it is not so. Hon 'ble Supreme Court in Mosaraf Hossain Khan vs. Bhagheeratha Engineering Ltd and Hon'ble Division Bench of High Court of Delhi in Arinit Sales(supra) have held that the place where the complainant resides does not create jurisdiction. If the argument of the Ld. Counsel is accepted, it would amount to a direct violation of Article-141 of the Constitution of India.
48. Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount The fourth place enumerated in the Bhaskaran has been dealt with by the Hon'ble Supreme Court in M/s Harman Electronics Private Limited vs M/s National Panasonic India Ltd as:
"......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."
"..........While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an completes. Giving of notice, therefore, cannot have any precedent over the service."
The place of communication is material and not the place of dispatch of notice. And according to decision in M/s Harman Electronics (supra), notice will be deemed to be communicated at the place where it is received. Here it is important to note and decide one of the contentions of the Ld. Counsel in respect of Harman Electronics(supra). He has argued that Harman(supra) is per incuriam and this Court has to held that the place from where notice is issued does create jurisdiction. The point that decision of Hon'ble Supreme Court in Harman Electronics Private Limited is contrary to the statutory provisions of NI Act is noted merely to be summarily rejected. This court is not the appropriate forum for such contentions to be raised. Issuance of legal notice from Delhi can not confer jurisdiction on this court.
49. Failure of the drawer to make payment within 15 days of the receipt of the notice The fifth place enumerated in the Bhaskaran relates to the place of failure. The E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 8 contention that since the accused was required to pay the amount in Delhi and thereafter his failure has to be treated as occurred in Delhi can not be sustained for the similar reasons. Complainant can not create jurisdiction by choosing a place where he wanted the money to be repaid. It is well settled law that a Court derives a jurisdiction only when the cause of action arose within his jurisdiction. The same cannot be conferred by any act or omission or commission on the part of the any party.
From Mosaraf Hossain Khan vs. Bhagheeratha Engineering Ltd., and others (2006 (3) SCC 658):
"Sending of cheques from Ernakulam or the respondents having an office at that place did not form an integral part of 'cause of action' for which the complaint petition was filed by the appellant..."
Clearly, the fact that complainant has an office in Delhi or he resides in Delhi will have no bearing on the question of jurisdiction so far as the commission of offence under section-138 of Negotiable Instruments Act is concerned. Even further, in M/s Harman Electronics Private Limited vs. M/s National Panasonic India Ltd:
"26. Learned counsel for the respondent contends that the principle that the debtor must seek the creditor should be applied in a case of this nature. 27. We regret that such a principle cannot be applied in a criminal case. Jurisdiction of the Court to try a criminal case is governed by the provisions of the Criminal Procedure Code and not on common law principle."
It is clear that the failure as required in the proviso-(c) to section-138 can not be held to be occurred at the place from where the payment was demanded.
50. Concept of Core Banking System Much emphasis has be laid on the point that since in a core banking system branch of a bank in Delhi can also clear the outside cheques and further that cheque need not be sent to the drawee bank, it must be held that the presentation and dishonour have occurred in Delhi.
I am unable to accept this submission.
The core banking system is not a very new concept. It was definitely in existence in 2008 when the Hon'ble Division Bench of Delhi High Court was applying the ratio of the Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. Even otherwise the submission can not be accepted. Purpose of the introduction of truncated cheque is provided in Explanation-I(b) to Section-6: "..........substituting the further physical movement of the cheque in writing."
There is nothing to suggest that there will be no movement at all. Further, to a specific quarry of the court as to whether the branch at Delhi can alter the nomenclature, information etc. of the account at the request of the person having an account in the Mumbai branch, the answer given was in negative. It was replied that the account may be debited or credited by the branch at Delhi but the administrative and procedural work has to be done by the branch where the account exists. One more thing may be added here. When the branch at Delhi by using CBS decides about insufficiency of funds, a deduction of some processing fee has to be made in the account of the accused.
To attract the applicability of section- 138, some activity should be shown to have been occurred in the drawee bank. Even the branch at Delhi has to access certain data to decide about the sufficiency of amount in the bank account. The data will be available at the branch where the account of the accused exists or in the main server located at a place somewhere else in the world. It is clear that the core banking system has not diluted the essence of the drawee bank. The distinction between "a bank" and E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 9 "the bank" is steel in existence. Statute has not been amended to provide something different. The decision of the Hon'ble Supreme Court in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. has not been overruled by any subsequent judgment.
51. Contentions in respect of combined effect Counsels for the complainant vehemently argued that if all the activities are considered cumulatively, the same will give jurisdiction to Delhi courts. However, I am unable to accept such submissions. Negative things if separately cannot result in a positive thing, they cannot produce a positive result cumulatively. The question of territorial jurisdiction is not a mathematical equation wherein negatives can produce a positive result. The question has to be considered in the light of personal liberty of persons. The Hon 'ble Supreme Court of India has already decided in Adalat Prasad Vs. Roopal Jindal (2004) that once a person is summoned he has to face the trial. It is clear that issuance of summons will definitely curtail or restrict liberty of a person, since the proceeding once initiated cannot be dropped in view of the judgment in Adalat Prasad Vs. Roopal Jindal (2004).
I consider that strict interpretation to Section 138 NI Act is necessary. The contention of the ld. Counsels for the complainant in respect of combined effect cannot be sustained.
52. Conclusion:
Sending of notice from Delhi and receipt of intimation of dishonour at complainant residence do not confer jurisdiction on Delhi Court in view of the decision of the Hon'ble Supreme Court in the case of Harman Electronics Private Limited (supra) and Mosaraf Hossain Khan(supra) and;
The deposit of cheque with the banker of complainant does not confer jurisdiction of Delhi court when the cheque has to be presented to a bank outside Delhi in view of the decision of the Hon'ble Supreme Court in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. and further that;
Principal of common law "the debtor must seek the creditor" can not be made applicable to the criminal case in view of Mosaraf Hossain Khan and Harman Electronics Private Limited. Demand shall be deemed to have been made at the place where the notice is served upon the drawer and not at the place from where it is dispatched to him,as per Harman Electronics Private Limited, meaning thereby that the failure in making the payment shall be deemed to have occurred at the place where the accused had received the demand; and further that;
The places of business dealings or business negotiations are not material being an event anterior to the existence of the cheque which is not covered by the section-138 of the NI Act, and the places of registered office of the complainant or the residence of the complainant are not material in view of Mosaraf Hossain Khan and Harman Electronics Private Limited. Even K. Bhasakran(supra) does not identify the place of business dealings.
Though the Division Bench of Hon'ble Delhi High Court was considering a civil suit, it applied the ratio of Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. For jurisdictional purposes. It can be fairly said that jurisdiction in civil suit in respect of cheque dishonour is much wider than jurisdiction in criminal cases in respect of the same dishonour. Ratio of the division bench has to be given full effect. Concept of core banking system does not help the complainant;
Case laws heavily relied upon by the complainant would not help in view of the authoritative pronouncements of the Hon 'ble Supreme Court of India and Hon'ble Division Bench of Delhi High Court more so when several decisions rendered by Hon'ble Single Bench of the High Court of Delhi are available on both sides, the latest E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 10 being M/s Mehika Enterprises vs State decided on 01.10.2010 which goes against the contentions of the complainant;
Article-141 of the Constitution of India in the circumstances discussed above does not leave any further scope for this court to consider the pleas raised by the complainant; From the above discussion, this court is of the considered view that the complainant can not claim jurisdiction. However, the cases in which the cheques are payable at par will be on different footing in view of the definition of drawee as provided in section-7. Those complaints can be entertained."
Almost all the contentions raised by the ld. Counsel for the complainant have been dealt with in the above referred extract. However, keeping in view certain other contentions in respect of applicablity of Shri Ishar Alloy Sales Ltd. (supra) and Arinits Sales Pvt. Ltd.(supra) and keeping also the fact that ld. Counsel has cited Religare Finvest(supra) which was not noted in the above extract, a further discussion is being made on the controversy.
Ld. Counsel has place reliance upon Patiala Casting(supra), Religare Finvest(supra) and K.O.Issac(supa). He has also heavily made submissions in respect of core banking systems(CBS).
Hon'ble High Court of Delhi in M/S MAHIKA ENTERPRISES & ANR. vs STATE (NCT OF DELHI) & ANR. 01.10.2010 has taken note of Patiala Casting(supra):
"13. Counsel for the respondent has placed reliance on Din Dayal Kayan vs. SMC Global Securities Ltd. 171 (2010) Delhi Law Times 447 and an unreported judgment dated 21st July, 2010 of a Single Judge of this Court in Crl. M.C. 555/2010. In my view, these judgments do not advance the case of respondent no.2 in any manner being in different facts, in as much as, the catena of judgments cited supra have not been considered therein. In K. Bhaskaran (supra), place of business of complainant has not been identified as the place vesting the court with necessary jurisdiction."
Relying upon Religare Finvest(supra), ld. Counsel for the complainant has argued that Shri Ishar Alloy Sales Ltd. (supra) will not apply to a question of territorial jurisdiction. He has also contended that Section- NI Act does not difne the bank as "the bank" which makes the intention of legislature clear that expression has been used in different part in different sense.
I am not inclined to accept the contention. The division bench judgment in Arinits Sales Pvt. Ltd. (supra) was not noted in the Religare Finvest(supra).
(Ld. Counsel in this respect however contended that Arinits Sales Pvt. Ltd.(supra) being an authority on civil law can not be made applicable to the jurisdictional aspect of criminal matter. The contention in my considered view is misconceived. It may be noted that Arinits Sales Pvt. Ltd.(supra) has applied the ration of Shri Ishar Alloy Sales Ltd. (supra) which was decided in the field of criminal jurisprudence).
Apart from this, Hon'ble High Court of Delhi in several matters has applied Shri Ishar Alloy Sales Ltd. (supra) in respect if territorial jurisdiction. Latest in this field is a decision rendered on 18.07.2011 by the Hon'ble High Court of Delhi.
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 11 Hon'ble High Court of Delhi in M/S. GRANDLAY ELECTRICALS (INDIA) vs M/S. ESS ESS ENTERPRISES & ORS. 18.07.2011 has also taken note of Religare Finvest(supra):
"Thus, in view of the law laid down by the Supreme Court in the case of M/s Harman Electronics (P) Ltd. (supra) and Shri Ishar Alloy Sales Ltd. (supra), the entire cause of action for filing the complaint under Section 138 N.I. Act has arisen at Ludhiana. As such, I find no infirmity in the order of learned Metropolitan Magistrate holding that Delhi Courts have no jurisdiction to try the complaint filed under Section 138 N.I. Act. The judgment in the matter of Religare Finvest Ltd. Vs. State & Anr. (supra) is of no avail to petitioner in view of the law laid down by the supreme Court in the judgments discussed above."
The contention on the basis of Section-146 NI Act is also misconceaved. Section-146 NI Act deals with the presumption in respect of the dishonour of cheque and it stops at that and nothing more than that can be deduced therefrom.
Reliance placed upon K.O.Issac & Anr vs State & Anr 21.10.2009 can also not help the complainant. This judgment has not taken not of Shri Ishar Alloy Sales Ltd. (supra) and Arinits Sales Pvt. Ltd.(supra).
So far as place of business is concerned, apart from M/S MAHIKA ENTERPRISES (supra), the Hon'ble High Court of Delhi in M/S. MAHALAXMI EMBROIDERY vs M/s. SHIVAM DEVANSH FAB. PVT. LTD. & ORS. 24.02.2011 has held that:
"8. In Criminal Jurisprudence, place of residence or business of complainant or for that matter of accused would not attract the jurisdiction of that court, it is the place where offence or part offence had been committed, which would vest the jurisdiction with that court. In Harman‟s case (supra) Supreme Court has held that jurisdiction of the court to try a criminal case is governed by the provisions of the Criminal Procedure Code and not on common law principle. Thus, merely because petitioner has its head office at Delhi or that respondent has its registered office at Delhi would not make much difference. In this case, both petitioner as well as respondent were having its works at Faridabad; whole business transactions took place at Faridabad; cheque was drawn by drawer bank at Faridabad; cheque is deemed to have been presented by the drawer bank at Faridabad, notice, though was dispatched from Delhi, but was addressed to the respondent at Faridabad office and is deemed served at Faridabad. Whole cause of action had arisen at Faridabad in terms of K. Bhaskaran‟s case."
It has however been the settled position that where the cheque was issued and handed over to the complainant in Delhi, the Courts in Delhi will have jurisdiction. See DEVENDRA GUPTA vs SHREE RATHI STEELS LTD. 25.01.2011 and YOGESH KUMAR MALHOTRA vs M/s PARAMOUND SURGIMED LTD. & ANR. 04.05.2011.
(On a specific quarry put to the ld. Counsel, he failed to point out any avement in the complaint which shows that cheque was issued and handed over to the complainant at Delhi).
Concept of core banking system (CBS) can also not help the complainant. Hon'ble High Court of Delhi in GVPR ENGINEERS LIMITED & ORS. Vs A.K.TIWARI 31.01.2011 has taken note of the core banking system:
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 12 "15. Learned counsel for the respondent has drawn my attention to the photocopy of the cheque in question, wherein it is typed at left side bottom "payable at par at all branches of ICICI Bank Limited in India". From this, learned counsel has urged this court to infer that the cheque was payable at Delhi branch of ICICI Bank and, therefore, Delhi courts have territorial jurisdiction in this matter.
16. I am not convinced with the above argument. Undisputedly, the cheque in question was drawn at ICICI Bank Limited, Hyderabad Branch and the cheque amount was supposed to be paid from the account of the petitioner company maintained at Hyderabad Branch. If ICICI Bank, as a result of computerization, adopted a policy to provide a facility of encashment of cheques at par at any branch of ICICI Bank irrespective of the account holder not having bank account in the said branch, it is only for the convenience of the customer but the encashing branch, by no means, becomes the drawee bank for the reason that before encashing the cheque at par, the branch in question is expected to verify from the drawee branch whether or not there was any impediment in encashment of the cheque drawn at the said branch. Since in the event of encashment, the amount of cheque was to be debited in the account of the petitioner maintained at ICICI Bank, Hyderabad Branch, the amount was only payable by the drawee branch i.e. Hyderabad Branch. Thus, the aforesaid printed words "payable at par at all branches of ICICI Bank Limited in India" will not change the character of drawee bank and will not confer territorial jurisdiction on Delhi Courts."
Result Above discussion clearly shows that complainant can not claim jurisdiction of this Court. The complaint has to be returned for the presentation before appropriate court. It is ordered accordingly.
A copy of this order be placed on the official website of the District Court.
(Rakesh Kumar Singh)
MM(NI Act)-01, Central/10.08.2011
E.P. Parameshwarn vs N. Pradeep Rao CC No. 6020/2011 13