Bombay High Court
Yashomala Engineering Pvt. Ltd. And ... vs Tata Ssl Ltd. And Anr. on 24 August, 1998
Equivalent citations: 1998CRILJ4350
JUDGMENT N.J. Pandya, J.
1. The petitioner No. 1 Company is accused No. 1 in Criminal Case No. 1/S of 1997 instituted in the Court of Additional Chief Metropolitan Magistrate 26th Court. Borivali, Mumbai. The said complaint has been filed under Section 138 of the Negotiable Instruments Act as amended in 1988. It relates to a cheque worth Rs. 15.54,370/- drawn on Indian Bank, Kirkee Branch, Pune.
2. The dispute between the parties qua the said complaint relates to the jurisdiction of the Court of Mumbai. The arguments advanced on behalf of the petitioner-company is that the entire sale transactions with the complainant-respondent No. 1-Company had taken place in Pune where the petitioner-Company is situated and respondent No. 1 -Company has its sale office. Developing further the case on the footing of delivery having been effected at Pune, cheque having been issued at Pune by the petitioner-Company and it having been deposited for realisation in the accounts of the complainant-Company at Pune, it is very strenuously urged on behalf of the petitioner-Company that only the Court at Pune will have jurisdiction.
3. In other words based on the aforesaid factual position, the argument is to the effect that no part of cause of action has arisen anywhere else except Pune. The learned Advocate appearing for the petitioner-Company had formulated the points to the effect that when in a criminal case jurisdiction is determined by the place where offence takes place, can the Court of the place where notice is issued get jurisdiction?
4. Needless to say, the aforesaid point is formulated on the basis of Section 177, Cr. P.C. The said Section reads as under :
Every offence shall ordinarily be enquired into and tried by a Court within whose local jurisdiction it was committed.
The very wording suggests that this will ordinarily be the situation and in the situation other than this there are provisions in the Code which may be kept in mind and in particular Section 178 thereof. It would be referred to hereinafter.
5. In order to understand the controversy, first it has to be seen what constituted the offence. It is not an offence under Indian Penal Code. It is offence created for the first time by way of amendment to the Negotiable Instruments Act, 1881. By an amendment in the year 1988, Chapter XII came to be added to the said Act. The section constituting the offence reads as under:
138. Dishonour of cheque for insufficiency, etc. of funds in the account-
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have commited an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both :
Provided that nothing contained in this section shall apply unless-
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in duecourse of the cheque, within fifteen days of the receipt of the said notice.
Explanation-For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability.
6. Apart from the fact that there is proviso to the main Clauseof Section 138 of the Negotiable Instruments Act it is obvious that the main part of Section 138 itself is a composite one. On one hand it contains the definition of the offence and on the other it also contains within it rule of evidence in form of presumption.
7. In this background if the proviso is read, the wording "nothing contained in this section shall apply unless" in my opinion creates a situation in the nature of suspended animation. The requirement of the definition as contained in Section 138 first part having been fulfilled the person responsible for the act will not be answerable unless the requirements of the proviso are fulfilled. The moment the requirements are fulfilled the provision of the first part of Section 138 comes into force with full vigour and therefore the person responsible will be answerable for his act amounting to the offence under Section 138 and he will have to answer the same keeping in mind the provision which is nothing else but rule of evidence.
8. To constitute an offence, the person sought to be held responsible has to have a bank account, he issues a cheque drawn on that account for discharge of any debt or other liability and the cheque is returned by the bank because funds are insufficient or it exceeds the arrangement made for the purpose. In the event of occurrence of these three different sets of facts, the rule of evidence will come into play namely the person responsible shall be deemed to have commited the offence as defined.
9. The proviso clearly states that nothing contained in the foregoing provision shall apply unless the cheque has been presented within a period of six months or within a period of its validity whichever is earlier and on return for the aforesaid reason makes a demand upon the drawer and gives time to the drawer to meet with the liability within 15 days of the receipt of the said notice. If he fails, the first part of Section 138 will come into play.
10. Keeping these various provisions of Section 138, it was strenuously urged on behalf of the petitioners that the offence is completed the moment the cheque is returned and the proviso is mere a procedural formality, without completion of which, no complaint could be lodged. In my opinion this is not correct reading of the provision. The serving of a notice or written intimation of the return of the cheque to the drawer and opportunity thus being given to the drawer to meet with his liability within 15 days of receipt of intimation or notice is an integral part of the commission of offence. It is failure on the part of the drawer to avail of this opportunity which will bring into play the first part of Section 138. If he meets with his liability, nothing in the foregoing provision shall apply to him which would mean that there is nothing which could be deemed to have been committed by way of an offence by the drawer in relation to the cheque which is returned unpaid for the reasons stated above.
11. However, if he does not pay, the provision will come into play with full force and that is when it can be said that the offence is constituted. As suggested by the petitioner, if the proviso is read it would amount to an opportunity being given to an offender at penitence, the act of payment in response to the notice of demand would thus amount to condonation of the offence which is already committed. If no demand notice is served, obviously no action could be taken against the offender. Going by the logic of the petitioner's submission, if we create a situation where an offence is constituted under an Act but it will not attract any penalty, as no opportunity to get the offence condoned has been given.
12. This could never be the position under Criminal Law. The proviso, therefore, in my opinion would be more consistent with the matrix of crime as to be found in Section 138 and the serving of notice of demand is considered to be a necessary ingredient for commission of an act on the part of the defaulter which would amount to an offence.
13. The learned Advocate for the petitioner has strongly urged that if notice is held to be an integral part of offence it would give an unnecessary handle to the payee of the cheque to institute complaint in any part of the country where it happens to be an offence. Firstly, this is not possible because if one turns to that Section again and reads definition of the word "payee" as contained in Section 7 of the said Act, payment is to be made to the payee as defined. He is none else but the person named in the instrument to whom or to whose order, the money is by the instrument directed to be paid.
14. In the event of payee being a company, when the money is to be paid to the person named in the instrument, payment to the company would be sufficient compliance of the proviso. This would necessarily mean that the institution of complaint will be restricted to the place where the registered office of the company is situated. If this be the consequence of the provision of Section 138 read with its proviso, it could well be and that could not be a ground for interpreting the Section and to restrict the jurisdiction of the Court only where the cheque was issued and where it was returned unpaid.
15. In this background if Section 178 of the Code of Criminal Procedure is read, Clause (b) thereof will make the position clear. If part of the offence has occurred at one place and part at the other, Courts at both the places will have jurisdiction.
16. The cheque was issued at Pune and credited at Pune and it having returned, that part of offence is taken place in Pune. However, when the notice has been served from Bombay, registered office of the company i.e. payee is at Bombay and when the amount was required to be paid to the payee, obviously Bombay Court does have jurisdiction as per Section 178, Clause (b).
17. In the course of argument on behalf of the respondent-Company, the payee, certain documents were placed on record indicating that as per contract between the parties, Court at Bombay has jurisdiction. I have not considered it for the simple reason that for the purpose of determining the jurisdiction of a Court, the complaint as filed in the trial Court along with its accompanying documents alone could be seen. The complaint is silent about this aspect. Hence, I have not considered the question from the point of view of the said agreed terms.
18. Kerala High Court had an occasion to consider the question as to what constitutes an offence under Section 138 of the Negotiable Instrument Act and other provisions of Indian Penal Code. So far as the said Act is concerned, the learned Judge in decision reported in Judgments on Dishonour of Cheques at 504, where refusal of payment of notice of demand is also held to be one of the ingredients of the offence. On the same line in my earlier judgment, reported in the same journal at page 507 another Kerala judgment of Division Bench reported in 1992 Criminal Law Journal 1965 also reiterates the view that place where the drawer is to make payment but fails to do so will get jurisdiction. Bombay judgment is also there on the subject as given by Division Bench of S. P. Kurdukar and M. F. Saldhana, JJ. reported in 1993 Criminal Law Journal 680. The relevant portion is in paragraph 15 along with paragraphs 16,17 and 18. The complaint came to be filed at Kolhapur while the accused was residing at Nagpur and the company has its place of business at Chandrapur. Seriously attacking the choice of Forum at Kolhapur to be the result of achieving maximum harassment for the accused, it was alleged to be the abuse of process of law. On the other hand it was pointed out that non-payment of money was at Kolhapur because the complainant resides there. It was further urged that under Section 177, Cr. P.C. there is right title for institution of complaint/However, the learned Judges were of the view that Section 138 which promises certain necessary components before the offence is said to be complete the last of them being the act of non-payment in spite of 15 days having elapsed after the receipt of the notice it has been held that Section 178, Cr. P.C. will govern the situation.
19. As indicated above, Clause (b) of Section 178 provides for the place of trial where part of cause of action has arisen at more than one place. No doubt, this judgment was attacked by the petitioner on the ground that the observations in paragraph 15 and conclusion further on recorded at paragraph 18 are all to be ignored as the point was never at issue before the learned Judges. This is not totally correct. At the bar, certain arguments were advanced and the learned Judges were required to be with the same. However, strictly speaking under the law of precedent when the question dealt with by the Court incidentally touches upon certain other aspects in case of the learned Judges, dealing with the arguments at bar, it may at best be considered to be an obiter. Nonetheless it is a view expressed by a Division Bench of this very Court. On the point of view of the petitioner, it may not form a precedent but the value opinion expressed by the learned Judges in my opinion cannot be ignored and I would go a step further and say that I find my self in agreement with it and I would certainly adopt that reasoning.
20. One more reason for me to do so is that Clause (b) of Section 142 of the said Act clearly provides that notwithstanding anything contained in the Code of Criminal Procedure, the complaint has to be made within one month of the date of which the cause of action arises under Clause (c) of the proviso to Section 138. It may be recalled that Clause (c) refers to the said opportunity of paying the amount of cheque within the period of 15 days of receipt of the notice. The legislative intent is thus clear. The legislature while incorporating this amendment by creating new offence has provided for all the requirements of procedure including when does the cause of action arise. With reference to Clause (c) of Section 138 when Clause (b) of Section 142 of the said Act is read a clear-cut statutory that emerges is that till the expiry of 15 days' period of service of notice, cause of action would not arise.
21. The service of notice as per Clause (b) and the period of 15 days as per Clause (c) both of Section 138 are, therefore, important components or ingredients of offence. In the instant case when the notice has been issued from Bombay demanding payment at Bombay and when the cause of action arose on expiry of 15 days of receipt of the notice by the petitioner, in my opinion, the Court at Bombay does has jurisdiction.
22. This will take me to the second alternative point as to the probable liability of the remaining two petitioners who are respectively the Chairman and Managing Director of the Company. The noticing question no doubt clearly says that petitioners Nos. 2 and 3 respectively are liable because they are Chairman and Managing Director.
23. In the course of arguments, it was not exactly conceded but the point relating to the petitioner No. 3, the Managing Director was not seriously pressed and carried further. In my opinion, this is the correct approach. The Managing Director will be a person falling into the category of one who is in charge of and responsible to the company for the conduct of the business.
24. The position of the Chairman if considered in the light of provisions of Section 141 of the said Act, in my opinion will not be very much different from that of the Managing Director. The Chairman of the Company can certainly be considered to be responsible to the company for the conduct of the business of the company. On that basis also, in my opinion, the petitioner has no case. The net result, therefore, is that the petition fails. It is rejected. Interim relief vacated. Rule discharged.