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In the background of the factual matrix detailed herein before, the short issue that arises for consideration is whether the Court at Gurgaon is competent to try the Complaint u/s 138 of the Act.

It is not in dispute that the cheque was presented for encashment at Gurgaon. The plea of the petitioner is that the entire business transaction including the taking of the loan and deposit of security cheques took place in Kolkata and hence, the respondent can not create jurisdiction of the Gurgaon Court simply because depositing the cheque (for encashment) at a place, other than the place of its issuance. In support of his plea, the Ld. Counsel for the Petitioner principally relies on M/s Harman Electronics (P) Ltd. And another Vs. M/s National Panasonic India Limited 2009 (1) RCR (Criminal) 458. His additional plea is that the cheque which was presented for encashment was actually a security cheque and hence no liability would arise by dishonour of such a cheque.

In order to make the aforesaid principle more comprehensible, let us take the help of an illustration. Supposing A and B are two companies which enter into a commercial contract. Company A is to supply some goods to Company B for which B is to make a wired transfer from its account to that of A i.e. Electronic transfer of funds from one bank account to another. However, as a matter of caution, A also seeks a cheque from B as security for the price of goods supplied presuming that there might arise a situation where the wired transfer is not made or is stopped for certain reasons by B. Further particulars of this transaction are as follows - both Company A and Company B have their registered /head offices at different places i.e. A at Delhi and B at / Chennai; both A and B have branch offices at Mumbai where the contract is entered into and security cheque drawn as well as handed over to the authorized representatives of Company A. Official Bankers of both A and B are different. In due course, A supplies contracted goods to B but B defaults in authorizing a wired transfer (reasons of which are not important, suffice to say that it makes a deliberate default). Authorized representative of A presents the cheque to its official Banker 'C' for encashment in Delhi where its head office is situate. Bank 'C' sends it for clearance but the same is also dishonored and consequently Bank 'C' returns the same to A at Delhi. The Legal Cell of Company A is in Gurgaon to which are forwarded all the documents of the said transaction for appropriate legal action. The Legal Cell of Company A at Gurgaon thereupon issued a Notice to Company B, as envisaged under the Negotiable instruments Act and addresses it to the Head office of Company B at Madras/ Chennai. Company B does not make the payment with in the prescribed period of 15 days.

Additional plea of the petitioner that dishonour of a security cheque can not fasten the liability on the drawer under the Negotiable Instruments Act is also not acceptable. There can be no doubt regarding the fact that the security cheque is an integral part of the commercial process entered into between the Petitioner and Respondent/ Complainant. The security cheque is not only a deterrent for the drawer against dishonoring his financial commitment but can also be legally and validly utilized towards the discharging of the liability of the Drawer. It cannot by any stretch be argued that a security cheque is not handed over or issued in pursuance of any undischarged liability. To hold so would defeat the whole purpose of a security cheque. In the considered opinion of the Court, a security cheque is an acknowledgment of liability on the part of the drawer that the cheque holder may use the security cheque as an alternate mode of discharging his/its liability. Thus the argument of the learned counsel for the petitioner that on dishonouring of a security cheque no offence punishable under section 138 of the Negotiable Instruments Act is made out.