Dua Agro Teck vs Fil Industries Ltd.

Mansoor Ahmad Mir, J.—Petitioners, by the medium of instant petitions, have invoked the jurisdiction of this court in terms of Section

561A of the Code of Criminal Procedure, hereinafter for short as Code for quashment of orders, hereinafter for short as impugned orders, by

virtue of which the courts, before whom the complaints in terms of Section 138 of the Negotiable Instruments Act, hereinafter for short as Act,

have been presented, have taken cognizance and issued process against the petitioners/accused therein. Since all the petitions raise similar point for

consideration, therefore are dealt with and decided together by virtue of a common judgment.

Petitioners challenge the impugned orders on the count of jurisdiction, as, in their belief, the cognizance taken in the matter was unwarranted

because the courts lacked territorial jurisdiction to try the complaints.

Respondents have resisted the petition by filing reply.

Heard learned counsel for the parties and considered the matter.

The petitioners' contention in support of their petitions primarily and solely is that in terms of the mandate of the Act, the courts within whose

jurisdiction the cheques have been presented for collection do not have jurisdiction to try the matter. In support of such contention, learned counsel

for petitioners' would forcefully lay emphasis on the provisions of the Act in light of the ratio laid down in the judgments of this court reported in;

Rohit Motors and Others Vs. Punjab Tractors Ltd. and Others, . and judgment dated 2nd June, 2012 passed in case titled Imtiyaz Ahmad Bhat v.

FIL Industries Ltd. bearing 561-A No. 179/2012 : 2012 (4) JKJ 311 [HC].

Meeting the arguments of learned counsel for petitioners, respondents' learned counsel would submit that the courts within whose jurisdiction the

cheque in dispute has been presented for collection also have the jurisdiction to try the matter. In support of such contention, they have placed

reliance on the judgments of this court reported in Sunil Somnath Ghumare Vs. FIL Industries and Another, ; Apex Court judgment titled Nishant

Aggarwal Vs. Kailash Kumar Sharma, .

At the very outset let us take a look at Section 138 of the Act, herein so that controversy is appreciated in a right perspective, thus:-

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 committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for (a term

which may be extended to two years), 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 thirty 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.

The contents of the above referred provision of law leads one to an inescapable conclusion that five ingredients are constituting offence viz. i)

drawing of cheque; ii) presentation of cheque; iii) dishonour of cheque; iv) issuance of demand notice; and failure of the drawer to pay within

stipulated period.

It also makes one thing very clear that it is not the condition precedent that all the above acts should be committed within one location. The five

above referred acts can be done at five different places and it is exclusively the choice of the complainant to choose any of the five places to lodge

complaint at. My view is fortified by the Apex Court judgment titled K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, . It is apt to

reproduce paragraphs 14, 15, 16 and 18, herein, thus:

The offence u/s 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 u/s 138 of the Code. In

this context a reference to Section 178(d) of the Code is useful. It is extracted below:

(a)-(c)

(d) 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 u/s 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 u/s 138 of the Act.

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 in the correct address.

Apex Court in another case titled Smt. Shamshad Begum Vs. B. Mohammed, , has also laid down the same proposition and in paragraph 7 of

it, the components of the offence, punishable u/s 138 of the Act, have been discussed. It would, therefore, be appropriate to extract herein

paragraphs 7 and 8 of the said judgment, thus:-

As was noted in K. Bhaskar'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.

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 u/s 138 of the Act.

The details, in the instant petitions, of the cheques, places of the withdrawal, name of the collecting banks, and places from where the cheques

are issued are given in the tabulated form below:

Admittedly in all the said cases, the cheques were returned unpaid by the collecting banks to the complainants, constraining them to file

complaints before the courts within whose jurisdiction the said collecting banks are situated.

Two co-ordinate benches of this court have held that courts within whose jurisdiction the collecting banks are situated do not have the

jurisdiction to draw cognizance, therefore, quashed the proceedings initiated before such courts. But two other coordinate benches have held

otherwise.

In the circumstances, it is of great interest to see as to which of the two views is in accordance with the mandate of Section 138 to 147 of the

Act and whether these verdicts are in tune with the Bhaskaran judgment or Shamshad Begum supra?

In my view the opinion expressed by the two co-ordinate benches to the effect that courts within whose jurisdiction collecting banks are

situated do not have the jurisdiction, is incorrect. The Apex Court in a latest ruling delivered in case titled Nishant Agarwal v. Kailash Kumar

Sharma, supra, has held that the courts within whose jurisdiction collecting banks are situated are also having the jurisdiction to take cognizance of

the offence. It is apt to reproduce paragraphs 9, 10 and 11:

9) Para 11 of K. Bhaskaran (supra), as quoted above, clarified the place in the context of territorial jurisdiction as per the fifth component, namely,

failure of the drawer to make payment within 15 days of the receipt."" As rightly pointed out by learned senior counsel for the respondent, the

place of failure to pay the amount has been clearly qualified by this Court as the place where the drawer resides or the place where the payee

resides. In view of the same and in the light of the law laid down by this Court in K. Bhaskaran (supra), we are of the view that the learned

Magistrate at Bhiwani has territorial jurisdiction to try the complaint filed by the respondent as the respondent is undisputedly a resident of Bhiwani.

Further, in K. Bhaskaran (supra), while considering the territorial jurisdiction at great length, this Court has concluded that the amplitude of

territorial jurisdiction pertaining to a complaint under the N.I. Act is very wide and expansive and we are in entire agreement with the same.

10) Mr. Ahmadi, learned senior counsel for the appellant in support of his claim that the Court at Bhiwani has no jurisdiction heavily relied on the

decision of this Court in Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., . We were taken through the entire judgment. Though the case is

also related to N.I. Act, the issue of territorial jurisdiction was not the subject-matter thereof. In Ishar Alloy Steels (supra), a three-Judge Bench of

this Court defined the term ""the bank"" appearing in clause (a) of Section 138 of the N.I. Act as the drawer's bank. It was defined in the context of

the statutory period of six months as mentioned in clause (a), hence, this Court held that the date of presentation of the cheque for calculating the

statutory time period of six months will be the date of presentation of the cheque to the drawer's bank i.e. payee bank and not the drawee's bank

i.e. collecting bank. This Court has correctly applied the principle of strict interpretation appreciating that Section 138 of the N.I. Act creates an

offence as the drawer of the cheque cannot be expected or saddled with the liability to hold the cheque amount in his account beyond six months.

The reading of the entire decision in Isher Alloy Steel (supra) shows that jurisdiction of the Court to take cognizance arises only where cheque is

presented to the bank of drawer either by drawee's bank or the drawee/payee personally within six months. In other words, the analysis of the said

decision, the ratio of Isher Alloy Steel (supra) deals with such a situation where the cheque has been presented within six months to the drawer's

bank by the payee in any manner. Inasmuch as the interpretation relates to filing of complaint within the statutory time period of six months, we are

of the view that the reliance on the law laid down in Isher Alloy Steel (supra) has no relevance as far as the present case is concerned. In fact, that

is the reason that in Isher Alloy Steel (supra), the judgment in K. Bhaskaran (supra) was not discussed since territorial jurisdiction was not the issue

in that case. In view of the same, the definition of the term ""the bank"" envisaged in Isher Alloy Steel (supra) cannot be employed to decide the

jurisdictional aspect and dilute the ratio of the judgment in K. Bhaskaran (supra). Hence, we are of the view that on the strength of the judgment in

Isher Alloy Steel (supra) defining the term ""the bank"", it cannot be said that jurisdiction to file a complaint u/s 138 of the N.I. Act does not lie at the

place of drawee's bank. To put it clearly, the judgment in Isher Alloy Steel (supra) does not affect the ratio of the judgment in K. Bhaskaran

(supra) which provides for jurisdiction at the place of residence of the payer and the payee. In such circumstances, we are of the view that the

judgment in Isher Alloy Steel (supra) as well as judgments of various High Courts relied on by the appellant cannot be read against the respondent

to hold that the Magistrate at Bhiwani does not have the jurisdiction to try the complaint.

11) Though several decisions of various High Courts were cited before us, we deem it appropriate to refer only one Division Bench decision of the

Bombay High Court rendered in Criminal Writ Petition No. 3158 of 2009, Mrs. Preetha S. Babu Vs. Voltas Limited and State of Maharashtra, .

The Division Bench, after analyzing the factual position of both sides, correctly applied the ratio laid down in K. Bhaskaran (supra) finding that the

Mumbai Court has jurisdiction to entertain the complaint, dismissed the said writ petition.

In the said judgment, the Apex court has also distinguished the judgment titled Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., , which

has been relied upon by one co-ordinate Bench in case titled Rohit Motors and Others Vs. Punjab Tractors Ltd. and Others, .

The Apex Court in another case titled as FIL Industries Ltd. v. Imtiyaz Ahmad Bhat, in Criminal Appeal No. 1168 of 2013, arising out of SLP

(CRL) No. 8096 of 2012, has set-aside the judgment made by this Court in case titled Imtiyaz Ahmad Bhat v. FIL Industries Ltd., and it has been

held therein that the courts within whose jurisdiction collecting banks are situated are also having jurisdiction. It is apt to reproduce paragraph 5

and 6 of the said judgment herein, thus:

It will be clear from the aforesaid paragraphs of the judgment in K. Bhaskaran's case (supra) that five different acts compose the offence u/s

138 of the Negotiable Instruments Act and if any one of these five different acts was done in a particular locality the Court having territorial

jurisdiction on that locality can become the place of trial for the offence u/s 138 of the Negotiable Instruments Act and, therefore, the complainant

can choose any one of those courts having jurisdiction over any one of the local area within the territorial limits of which any one of the five acts

was done. In the facts of the present case, it is not disputed that the cheque was presented to the UCO Bank at Sopore in which the appellant had

an account and, therefore, the Court at Sopore had territorial jurisdiction to entertain and try the complaint.

Learned Counsel for the respondent, however, relied on the decision of this Court in Harman Electronics Private Limited and Another v.

National Panasonic India Private Limited to submit that the Court at Shopian would have the territorial jurisdiction. We have perused the aforesaid

decision of this Court in Harman Electronics Private Limited (Supra) and we find on a reading of paragraphs 11 and 12 of the judgment in the

aforesaid case that in that case the issue was as to whether sending of a notice from Delhi itself would give rise to a cause of action for taking

cognizance of a case u/s 138 of the Negotiable Instruments Act when the parties had been carrying on business at Chandigarh and all the

transactions were carried out only from Chandigarh, On these facts, this Court held that Delhi from where the notice u/s 138 of the Negotiable

Instruments Act was issued by the respondent would not have had jurisdiction to entertain the complaint u/s 138 of the Negotiable Instruments

Act. This question does not arise in the facts of the present case.

In the said case the cheque in dispute was drawn at J & K Bank Branch Imam Sahib Shopian, but the complainant presented the same for

collection before UCO Bank at Sopore; the cheque was received back as bounced and was returned to Imtiyaz Ahmad Bhat. Notice was issued

from Sopore and accused failed to make the payment within timeframe constraining the petitioner to file complaint before the court of learned Chief

Judicial Magistrate at Sopore. Feeling aggrieved Imtiyaz Ahmad Bhat sought quashment of the proceedings by the medium of petition u/s 561A,

was allowed vide judgment dated 2nd June, 2012. Complainant, FIL Industries Ltd., questioned the same before the Apex Court and the Apex

Court set-aside the judgment of this court vide judgment dated 12th August, 2013 and the Apex Court ruled that court at Sopore is having the

territorial jurisdiction to entertain the complaint.

In this view of the matter, the contentions raised, in support of the petition, by the learned counsel for petitioners is devoid of force.

This Court has also in case titled Srikant Jhadav and anr. v. Punjab Tractors Ltd. and anr. has held that courts within whose jurisdiction the

collecting banks are located also have the jurisdiction to entertain the complaint in terms of the Act. In the said case cheque was drawn in favour of

Union Bank of India Gujarat Branch and presented at J & K Bank Ltd. Air Cargo, Branch Srinagar for collection. Complaint on its presentation

was made, process was issued and cognizance was taken. Shrikant Jhadav invoked jurisdiction of this court by the medium of a 561-A petition

seeking quashment of the proceedings on the ground that location of a collecting bank does not give jurisdiction to the trial court.

Delivering judgment in the said case, this Court ruled that in view of judgments of the Apex Court, the Court at Srinagar had the jurisdiction to

try and entertain the complaint, therefore, dismissed the petition.

The said judgment was challenged before the Apex Court by the medium of SLP (Cr) No. 3195/2011. The Apex Court upheld the verdict

and dismissed the SLP vide judgment dated 29th April, 2011.

In one of the petitions titled Kiran Kumar S. Magadi v. Mrs. Sudha Gupta, another ground has been raised that the trial court has taken

cognizance on a statement which is not recorded on oath. The said issue has already been thrashed by this court in a case titled Sheikh

Mohammad Amin Vs. Mst. Rifat Farooq Reshi, , and it has been held that mere non-recordation of statement on oath cannot be a ground for

quashing the proceedings launched in pursuance to or in consideration of such statement. It would be profitable to reproduce relevant portion out

of paragraph 10 of the said judgment, herein, thus:

While going through the provision of Section 142, it becomes clear that it has overriding effect and provides how to take cognizance. It is

specifically provided therein that the court can take cognizance upon a complaint made in writing. Section 144 of the Act prescribes as to how the

summon is to be issued. The aforesaid provisions of the Act nowhere provide that recording of preliminary statement of the complainant or any

witness at the time of taking cognizance or, otherwise while drawing the process; statements have to be recorded on oath. It is nowhere provided

therein that preliminary statement of the complainant or witnesses has to be recorded. This Act is a special Act and has its purpose. The aim and

object of the Act is to prevent commission of commercial offences and put a check on bouncing of cheques. The technicalities, mystic maybes,

procedural wrangles and tangles have no role to play in dealing with complaints filed under the provisions of the Act....

Petitioners have also raised a ground that notice in the matter for an amount more than the cheque amount has been addressed to and issued

against the petitioners, thus, proceedings drawn and cognizance taken in pursuance to such notice are bad in law, therefore, are required to be

quashed.

This issue too has been dealt with and decided by this court in a case titled Vipan Paul Sharma v. Joginder Singh reported as 2009 (3) JKJ

[HC] 121. Taking the ratio laid down in the said judgment into account, it would be the trial court's prerogative to examine and decide the issue.

Having said so, it is held that trial Courts have rightly issued process against the accused and are just in taking cognizance as well, because they

do not lack the territorial jurisdiction to entertain and try the complaints even if only within their jurisdiction the cheque in dispute has been sent for

collection to a particular bank.

In the above backdrop, all these petitions are held to be without any merit, therefore, dismissed. Petitioners, however, are at liberty to seek

appropriate remedy before the Trial court about the defect of notice, if any.

Dismissed along with all Cr.M.Ps. Registry to place a copy of the judgment on each file and send one to respective trial court too.