Jammu & Kashmir High Court
Sumoson Exports Pvt. Ltd. & Ors. vs Radico Khaitan Limited on 3 November, 2018
Equivalent citations: AIRONLINE 2018 J AND K 353
Author: Sanjay Kumar Gupta
Bench: Sanjay Kumar Gupta
1
HIGH COURT OF JAMMU AND KASHMIR
AT JAMMU
CRMC No.273/2011 & IA No.302/2011
Date of order:-03.11.2018
Sumoson Exports Pvt. Ltd. and ors. Vs. Radico Khaitan Limited
Coram:
Hon'ble Mr. Justice Sanjay Kumar Gupta, Judge
Appearing counsel:
For the Petitioner(s) : Mr. Ajay Kr. Gandotra, Advocate.
For the Respondents(s) :
i/ Whether to be reported in : Yes/No
Press/Media
ii/ Whether to be reported in : Yes/No
Digest/Journal
1. In the instant petition filed under Section 561-A Cr. P.C, the petitioners seek quashing of the Criminal Complaint titled, "Radico Khaitan Limited Vs. Sumoson Exports Pvt. Ltd. and ors.", instituted by the respondent u/s 138 of Negotiable Instruments Act against the petitioners, pending before the Court of learned Judicial Magistrate, 1st Class (Sub-Registrar), Srinagar and summoning order dated 23rd June, 2011.
2. The material facts of the case are that the petitioner Nos. 2 and 3 were the Directors of the petitioner No.1 having its registered office at 33-A, Manohar Pukar Road, Kolkatta and Branch Office at Plot No. J-1, Block B-I, Mohan Cooperative Industrial Area, Madhura Road, New Delhi. The respondent-company through authorized representative, namely, Ajay Kumar Dadwal instituted a Complaint titled, "Radico Khaitan Limited Vs. Sumoson Exports Pvt. Ltd. and ors" under Section 138 of Negotiable Instruments Act against the petitioners on 23rd June, 2011, which is pending trial in the Court of learned Judicial Magistrate, 1 st Class, Sub Registrar, Srinagar and the Hon'ble Court was pleased to take cognizance on the CRMC No. 273/2011 a/w IA No. 302/2011 Page 1 of 11 2 aforesaid complaint and issued summons pursuant to order dated 23rd June, 2011 for appearance of the petitioner Nos. 2 and 3. Before submitting the facts in precise, as contained in the Complaint and the grounds of the present petition, it would be necessary to submit that winding up application bearing CP No. 363 of 2009 and the application, seeking appointment of provisional Liquidator being CA No. 850/2010 came to be filed by the petitioner No.1 before the Hon'ble High Court at Calcutta and the Calcutta High Court vide order 27th June, 2011, appointed Provisional Liquidator of the company for a period of two months thereby directing the company not to sell or transfer or encumber or part with any of its immovable assets. It was further directed that the statement of affairs of the company together with accounts will be furnished to Provisional Liquidator on weekly basis and the Provisional Liquidator was empowered to ascertain the debts of the company, which may be collected by him through its creditors. The company was directed not to operate its Bank account without the leave of the Provisional Liquidator. Subsequently, vide order dated 30th August, 2011, the company was wound up.
3. It is stated in the instant petition that on the basis of a Resolution purported to have been adopted in the Meeting of the Board of Directors of the respondent/complainant, company on 18th May 2011 at New Delhi Mr. Ajay Kumar Dadwal, Junior Manager (Sales) of the respondent company was authorized to commence, prosecute, institute suit, writ petitions and applications etc. in relation to the affairs of the respondent company in the State of J&K and, thus, a Criminal Complaint u/s 138 of the Negotiable Instrument Act came to be filed before the Court of Chief Judicial Magistrate, Srinagar on 23rd June, 2011 by the said representative against the petitioners. The said Complaint was transferred to the Court of Judicial Magistrate, 1st Class, Srinagar.
CRMC No. 273/2011 a/w IA No. 302/2011 Page 2 of 11 34. It is also contended in para 10 of the complaint that the accused pesons issued the cheques drawn on Axis Bank Ltd., Rashbehari, Avenue, Kolkatta in favour of complainant and the said cheques were duly signed by accused No.2(petitioner No.2) on behalf of accused No.1. In para 11 of the complaint it is contended that the respondent complainant presented and deposited the said cheques with Axis Bank Ltd., Gandhi Nagar, Jammu. The said cheques were returned dishonoured vide Return Memo dated 18.04.2011 for the reason "insufficient funds". The respondent contended that the cause of action for filing the complaint arose when the cheques were dishonoured and when the accused failed to make the payment of the cheques within 15 days from the date of receipt of the legal notice.
5. The petitioners are aggrieved of the order of taking cognizance dated 23rd June, 2011 and as such, seek quashing of the Complaint and summoning order on the following, amongst others, legal grounds:-
(i) That the Trial Court vide order impugned dated 23rd June, 2011 did not assume satisfaction as to its jurisdiction before issuing process and erred in not appreciating the law as settled by the Apex Court in case titled, "M/S Harnam Electronics Pvt. Ltd.
and Anr. Vs. M/S National Panasonic India Ltd.", reported in AIR 2009 SC 1168", which law stands followed by various High Courts and that of the Hon'ble High Court of J&K in its judgment rendered in case titled, "Srikant Jadhav and Anr. Vs. Punjab Tractors Limited and Anr., reported as JKJ 2011 (2) page 116, wherein it is held that issuance of notice would not by itself give right to cause of action to determine the territorial jurisdiction of the Court and the Court, from where the notice was given has no jurisdiction to try the complaint. Since the Apex Court by delivering the judgment in above referred Harnam Electronics' case referred the law as was settled in case titled, "K. Baskaran Vs. Sanakaran Vaidhyan Balan and Anr."
(ii) That the learned Magistrate has further failed to appreciate that it has no jurisdiction to issue the process for the reason that in the legal notice of demand dated 09th May, 2011, the respondent/complainant nowhere mentioned that the respondent/complainant had its office at Car Bazar Motors, Zero Bridge, Srinagar and having shown the Branch Office at Car Bazar Motors, Zero Bridge, Srinagar in the complaint for the first time, the Magistrate ought not to have exercised the jurisdiction, which is not vested it in it more so when it is the CRMC No. 273/2011 a/w IA No. 302/2011 Page 3 of 11 4 admitted position that either in the complaint or in the notice of demand, it is not pleaded that the cheques were paid to Srinagar by the petitioner No. 3 to the respondent representative of the complainant company when admittedly the cheques were presented for encashment before Axis Bank, Branch Gandhi Nagar, Jammu, which Bank issued the memo dated 18th April, 2011 at Jammu. The Court below, therefore, further failed to appreciate before taking the cognizance as to its jurisdiction for doing so in view of the law settled by the Apex Court and reported in AIR 1999 SC 3792 that the place where the collecting Bank is situated will have the jurisdiction to try the Complaint u/s 138 of N.I. Act. The collecting Bank in the instant case was at Jammu.
(iii) That no cause accrued to the complainant respondent to institute the complaint at Srinagar against the petitioners and mere issuance of notice from Srinagar would not confer jurisdiction upon the Sub-Registrar to take cognizance and for issuance of process more so when neither in the complaint nor in the statement of the complainant and the witness, it is said that the representative of the respondent-complainant was the holder of the cheques and received the same at Srinagar on behalf of respondent-complainant and even at the Branch Office at Srinagar. Therefore, there was no reason for the Ld. Magistrate to have assumed satisfaction before issuing process even without having said anything about the facts of the complaint and the averments of the annexures appended therewith the contents of the statements recorded before taking cognizance of the matter. Therefore, there was no sufficient ground against the petitioners, as the same is manifestly attended with the malafidies and the proceedings have been maliciously instituted to cause grave harassment to the petitioners. The summoning order u/s 138 of Negotiable Instrument Act is, therefore, illegal, unwarranted and uncalled and is bad in the eyes of law.
(iv) That the issue of summons against the petitioners without any cause of action having accrued at Srinagar is the abuse of the process of law, as from the face of the record, the Court at Srinagar does not have the jurisdiction. On the basis of the material produced by the respondent-complainant, it is apparent that the alleged commission of offence did not take place at Srinagar and the entire transactions happened other than Srinagar or at the most, at Jammu where the surety cheques were presented and were dishonoured. Even there is no specific averment in the criminal complaint filed by the respondent as to how the jurisdiction of the Hon'ble Court at Srinagar has made out. This fact also does not find mentioned in the order of summoning dated 23rd June, 2011 impugned herein.
(v) That the Supreme Court in the above cited judgment even cautioned that for determining the territorial jurisdiction to issue process u/s 138 of N.I. Act, the provisions of Sections 177, CRMC No. 273/2011 a/w IA No. 302/2011 Page 4 of 11 5 178 and 179 Cr. P.C must be borne in mind. The Ld. Magistrate while passing the order impugned did not take into consideration the provisions of the above Sections of the Code.
(vi) That the order dated 23rd June, 2011 impugned is further liable to be quashed, as the Ld. Magistrate failed to appreciate the preliminary statements whereby the story as projected in the complaint stands belied inasmuch as the witness-Sheikh Owais claimed to have presented the cheques at Jammu, which is contrary to what is said by the representative of the accused, who further claimed to have presented the cheques in question at Jammu and it is nowhere said that at which place, he or they received the cheques allegedly from the petitioner No. 2, as contended in the complaint. Therefore, there was no action for the Ld. Magistrate to have initiated the process of summoning to by entering the complaint, which otherwise on the basis of the material placed before it was liable to be dismissed on merits as well as on the question of jurisdiction.
(vii) That the representative of the respondent-company is not legally competent to commence the complaint more so when he was not authorized for filing the criminal complaint vide Resolution of respondent-company dated 18th May, 2011, which admittedly is later to the date of issuance of Legal Notice of Demand and in view of the contents made in para No. 2 of the complaint, wherein it is staid that Shri Satish Chandra Pandey is authorized vide Resolution dated 16th July, 2010 to prosecute the present complaint, therefore, the Magistrate below was not having the right in issuing the process.
(viii) That the cheques on the basis of which the complaint has been filed were not issued by petitioner No. 2 (accused No. 2), whereas the same are signed by petitioner No. 3 (accused No. 3) and were given as security to M/S Prashant Impex Pvt. Ltd., which company admittedly had no office in Srinagar as per the admission of the complainant/respondent, as admittedly the petitioner No. 1 was in business in transactions with M/S Prashant Impex Pvt. Ltd., which as per the complaint was raising invoices, as such the respondent-complainant having fabricated the cheques given, as the security by the petitioner No. 1 through petitioner No. 3 and this being the position, the Ld. Magistrate has committed grave irregularity and illegality by issuance of process by virtue of order dated 23rd June, 2011.
(ix) That a substantial questions of law are involved in the present petition, which require adjudication, as the balance between the rights of the complainant and the rights of the accused are required to be maintained and as the law does not permit for making the provisions of the Negotiable Instrument Act and instrumental for launch of criminal proceedings at the behest of the complainant anywhere he likes and it is the abundant duty of the Magistrate to decide by a speaking order as to its jurisdiction first before issuing the process and in the instant case, the Magistrate below has prima facie acted mechanically CRMC No. 273/2011 a/w IA No. 302/2011 Page 5 of 11 6 and casually while taking cognizance without disclosing the element of satisfaction for proceeding further.
(x) That all other grounds shall be urged at the time of hearing of the present petition.
6. I have considered the contentions of counsel for petitioners. The only question which is required to be decided as to whether, a court within whose territorial jurisdiction notice for demand was issued has jurisdiction to entertain the complaint under section 138 of N.I. Act or not .
7. In present case, three cheques in dispute of 5 lakh each dated 31.03.2011 bearing numbers 081412-081414 of Axis Bank Ltd., Rashbehari Avenue, Kolkata, were issued by petitioners herein, in favour of respondent. As per complaint respondent has registered office at Bareily Road, Rampur, UP and branch offices at 20 D/C, Gandhi Nagar, Jammu and Car Bazar Motors, Zero Bridge, Srinagar. The respondent company is dealing with business of manufacturing, marketing and promoting of alcoholic beverages and have expertise in manufacturing process, formulation, quality control, etc to launch and marked IMPL products. Petitioners were supplied various brands of IMPL from time to time. That during business transaction, amount became due and accordingly in order to clear liability, cheques mentioned above were issued to complainant. These cheques were deposited in Axis Bank Gandhi Nagar, Jammu in A/c of complainant and all cheques were dishonored vide memo 18/4/2011; on 09.05.2011 counsel Arfan Andleeb for respondent having office at Srinagar, issued notice to the petitioners herein; then despite notice, money was not paid and complainant accordingly filed complaint u/s 138 of N.I Act before Sub Registrar Srinagar, who after recording the statement, issued process on 23.6.2011.
8. Hon'ble Supreme Court in its judgment dated August 1, 2014 in the case of Dashrath Rupsingh Rathod vs. State of Maharashtra and another (Criminal Appeal No. 2287 of 2009), inter alia, held that the CRMC No. 273/2011 a/w IA No. 302/2011 Page 6 of 11 7 territorial jurisdiction for dishonour of cheques is restricted to the Court within whose local jurisdiction the offense was committed i.e. where the cheque is dishonoured by the Bank on which it is drawn. Relevant paras as under:-
"31. To sum up:
(i) An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank.
(ii) Cognizance of any such offence is however forbidden under Section 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause (c) of proviso to Section 138.
(iii) The cause of action to file a complaint accrues to a complainant/payee/holder of a cheque in due course if
(a) the dishonoured cheque is presented to the drawee bank within a period of six months from the date of its issue.
(b) If the complainant has demanded payment of cheque amount within thirty days of receipt of information by him from the bank regarding the dishonour of the cheque and
(c) If the drawer has failed to pay the cheque amount within fifteen days of receipt of such notice.
(iv) The facts constituting cause of action do not constitute the ingredients of the offence under Section 138 of the Act.
(v) The proviso to Section 138 simply postpones/defers institution of criminal proceedings and taking of cognizance by the Court till such time cause of action in terms of clause (c) of proviso accrues to the complainant.
(vi) Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured.
(vii) The general rule stipulated under Section 177 of Cr.P.C applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before the Court within whose jurisdiction the dishonour takes place except in situations where the offence of dishonour of the cheque punishable CRMC No. 273/2011 a/w IA No. 302/2011 Page 7 of 11 8 under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof."
9. Pursuant to the said judgment of the Supreme Court, number of pending proceedings under Section 138 of the NI Act, were transferred to the Courts having jurisdiction as per the said judgment. Further, various representations were made to the Government, inter alia, by industry associations and financial institutions expressing their concerns about the wide impact of the said judgment on the business interest since the same would offer undue protection to defaulters at the expense of the Complainants. Accordingly Act was amended and sections 142 of Act was amended and section 142-A was introduced, which reads as under:-
"Section 142. Cognizance of offences.--[(1)] Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),-- (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138:
[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period;] (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.].
(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,-- (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or (b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation.--For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.] CRMC No. 273/2011 a/w IA No. 302/2011 Page 8 of 11 9 Section 142A. Validation for transfer of pending cases.--(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub- section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section had been in force at all material times. (2) Notwithstanding anything contained in sub- section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub- section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court. (3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act, 2015 (26 of 2015), more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under subsection (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.]"
10. In Bridgestone India Pvt. Ltd. Vs. Inderpal Singh [Criminal Appeal No.1562 of 2015 arising out of SLP (CRL.) No.9758 of 2011] [Criminal Appeal No.1563 of 2015 arising out of SLP (CRL.) No.10019 of 2011] [Criminal Appeal No.1564 of 2015 arising out of SLP (CRL.) No.10020 of 2011] [Criminal Appeal No.1557 of 2015 arising out of SLP (CRL.) No.7850 of 2011] Criminal Appeal No.1557 of 2015 (Arising out of SLP(Crl.) No.7850 of 2011), decided on 24.11.2015, it is held as under:-
"A perusal of the amended Section 142(2), extracted above, leaves no room for any doubt, specially in view of the explanation there under, that with reference to an offence under Section 138 of the Negotiable Instruments Act, 1881, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction.
11. It is, however, imperative for the present controversy, that the appellant overcomes the legal position declared by this Court, as well as, the provisions of the Code of Criminal Procedure. Insofar as the instant CRMC No. 273/2011 a/w IA No. 302/2011 Page 9 of 11 10 aspect of the matter is concerned, a reference may be made to Section 4 of the Negotiable Instruments (Amendment) Second Ordinance, 2015, whereby Section 142A was inserted into the Negotiable Instruments Act. A perusal of Sub-section (1) thereof leaves no room for any doubt, that insofar as the offence under Section 138 of the Negotiable Instruments Act is concerned, on the issue of jurisdiction, the provisions of the Code of Criminal Procedure, 1973, would have to give way to the provisions of the instant enactment on account of the non-obstante clause in sub- section (1) of Section 142A. Likewise, any judgment, decree, order or direction issued by a Court would have no effect insofar as the territorial jurisdiction for initiating proceedings under Section 138 of the Negotiable Instruments Act is concerned. In the above view of the matter, we are satisfied, that the judgment rendered by this Court in Dashrath Rupsingh Rathod's case would also not non-suit the appellant for the relief claimed.
12. We are in complete agreement with the contention advanced at the hands of the learned counsel for the appellant. We are satisfied, that Section 142(2)(a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015, vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction of the Court, where the cheque is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account). We are also satisfied, based on Section 142A(1) to the effect, that the judgment rendered by this Court in Dashrath Rupsingh Rathod's case, would not stand in the way of the appellant, insofar as the territorial jurisdiction for initiating proceedings emerging from the dishonor of the cheque in the present case arises.
13. Since cheque No.1950, in the sum of Rs.26,958/-, drawn on the Union Bank of India, Chandigarh, dated 02.05.2006, was presented for encashment at the IDBI Bank, Indore, which intimated its dishonor to the appellant on 04.08.2006, we are of the view that the Judicial Magistrate, First Class, Indore, would have the territorial jurisdiction to take cognizance of the proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881, after the promulgation of the Negotiable Instruments (Amendment) Second Ordinance, 2015. The words "...as if that sub-section had been in force at all material times..." used with reference to Section 142(2), in Section 142A(1) gives retrospectively to the provision.
14. In the above view of the matter, the instant appeal is allowed, and the impugned order passed by the High Court of Madhya Pradesh, by its Indore Bench, dated 05.05.2011, is set aside. The parties are directed to appear before the Judicial Magistrate, First Class, Indore, on 15.01.2016. In case the complaint filed by the appellant has been returned, it shall be re-presented before the Judicial Magistrate, First Class, Indore, Madhya Pradesh, on the date of appearance indicated hereinabove. Criminal Appeal No.1562 of 2015 (Arising out of SLP(Crl.)No.9758 of 2011), Criminal Appeal No.1563 of 2015 (Arising CRMC No. 273/2011 a/w IA No. 302/2011 Page 10 of 11 11 out of SLP(Crl.) No. 10019 of 2011) and Criminal Appeal No.1564 of 2015 (Arising out of SLP(Crl.)No.10020 of 2011)."
11. In view of above law, I am of the considered opinion that JMIC (Sub Registrar) Srinagar has no territorial jurisdiction to deal with the matter, so cognizance taken is quashed. Court below shall return the complaint to be presented before competent Court as per law.
( Sanjay Kumar Gupta ) Judge Jammu 03.11.2018 Narinder CRMC No. 273/2011 a/w IA No. 302/2011 Page 11 of 11