M. Aggarwal Creation Private Limited and another vs India bulls Financial Services Limited

Nawab Singh, J.—By filing this petition u/s 482 of the Code of Criminal Procedure, the petitioners - accused seek quashing of (i) the complaint u/s 138 of the Negotiable Instrument Act (for short ''the Act'') titled India bulls. Financial Services Limited v. M/s M. Aggarwal Creation Private Limited and another and;(ii) order dated March 31st, 2011 passed by Judicial Magistrate First Class, Gurgaon whereby his application for transfer of case to the court at Surat, was declined. The petitioner also seeks transfer of the case from Gurgaon to Surat (Gujarat). India bulls Financial Services Limited (hereinafter referred to as "the complainant") filed complaint against M. Aggarwal Creation Private Limited (hereinafter referred to as "the accused") u/s 138 of the Act before the Court of Judicial Magistrate First Class, Gurgaon. It was alleged that the complainant is a company as per the provisions of the Companies Act, 1956. It deals in providing loans. Govind Motilal Aggarwal - respondent No. 2 is Director of accused No. 1. He approached the complainant to provide him a loan of rupees twenty five lacs under the scheme of business loan. Vide loan account No. LSMESRT00005528, loan of rupees twenty five lacs was sanctioned and paid to the accused. The accused was to pay the loan amount in monthly installments. On October 15th, 2009 in partial discharge of the liability, the accused issued a cheque of Rs. 73, 437/- drawn on Standard Chartered Bank, C.K. Tower, 1st Floor, Near Sargam Shopping Centre, Parle Point, Surat in favour of the complainant. The complainant presented the cheque before IMG Vysya Bank Limited, Gurgaon but the same was returned dis-honoured with the remarks "Account closed". On November 25th, 2009, the complainant served legal notice upon the accused calling upon him to make payment within a period of 15 days but despite that the accused did not make the payment. Hence, the complaint.

The solitary contention of learned counsel for the accused is that the Court at Gurgaon has no jurisdiction to try the case because the cheque was drawn at Surat and the accused holds his account in Bank at Surat. While developing his argument, learned counsel for the petitioners urged that the word ''the banker'' occurring in Section 138 of the Act refers to the bank of the accused. To make the accused liable for the offence, the cheque must be presented in the bank of the accused either by the complainant personally or through his agent, that is his own bank.

In support of the contention, reliance has been placed on: (i) Shri Ishar Alloys Steels Limited v. Jayaswals NECO Limited 2001 (1) R.C.R. (Criminal) 834 :AIR 2001 SC 1161; (ii) Harman Electronics (P) Ltd. and Another Vs. National Panasonic India Ltd., ; (iii) Threessiamma v. State of Kerala, 1(2011) BC 655 (DB); (iv) M/s. Grandlay Electricals (India) v. Ess Ess Enterprises & others (Criminal Revision No. P - 313/2011 decided on July 18th, 2011) (Delhi); (v) Rishi Kumar and another v. Parle Biscuits Private Limited, 2010 Crl. L.J. P&H 3701.

In Shri Ishar Alloys Steels Limited''s case (supra), question before the Hon''ble Supreme Court was as to whether a cheque must be presented to the Bank on which it is drawn within six months from the date of issue of the cheque and in case of non-presentation of the cheque to the drawee Bank within the period specified in the Section, that is 6 months, would it absolve the person issuing the cheque of his criminal liability u/s 138 of the Act. It was held that it is mandatory to present the cheque to the drawee 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. In case of non-presentation of the cheque to the drawee bank within six months would absolve the person issuing the cheque of his criminal liability u/s 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law.

In Harman Electronics Private Limited (supra), drawer was the resident of Chandigarh. He carried on his business at Chandigarh. The cheque was issued by him at Chandigarh. Drawee has also branch office at Chandigarh although his head office was stated to be at Delhi. The cheque was presented by drawee at Chandigarh for collection. The cheque was dishonored at Chandigarh. However, drawee issued notice upon the drawer asking him to pay the amount from New Delhi. In view of this, factual position, Hon''ble Supreme Court held that issuance of notice would not by itself give rise to cause of action but communication of notice would. Hence, the Court at New Delhi had no jurisdiction. While exercising jurisdiction under Article 142 of the Constitution of India, Hon''ble Supreme Court transferred the complaint to the Court at Chandigarh.

In Thressiamma''s case (supra), drawer was residing at Thiruvananthapuram. The cheque was presented for collection which was dishonored for insufficiency of funds. The drawee through a lawyer at Pathanamthitta caused a notice demanding discharge of the liability but the liability was not discharged. Since drawee had caused the lawyer''s notice from Pathanamthitta within the territorial jurisdiction of Pathanamthitta, complaint u/s 138 of the Act was preferred before the Chief Judicial Magistrate, Pathanamthitta. A Division Bench of the Kerala High Court held that CJM Pathanamthitta had no jurisdiction to try the complaint.

In M/s. Grandlay Electricals (India)''s case (supra), complainant - petitioner firm supplied some material to the respondent - accused - a firm. The accused firm accordingly issued cheque drawn on the State Bank of Patiala, Ludhiana against the payment of goods supplied. The cheque was presented by the petitioner - complainant to its banker Punjab and Sind Bank, Jangpura Extension, New Delhi. The cheque however, was returned dishonored on the ground of ''insufficiency of funds''. The complainant was informed about the said cheque by its bank. The complainant then issued demand notice as envisaged u/s 138 of the Act to the accused - firm but the accused - firm failed to pay the demanded amount of the cheque. In view of the fact that cheque was presented and notice was also sent form Delhi, the complainant filed complaint before the Area Magistrate at Delhi. Inview of this, it was held that Metropolitan Magistrate at Delhi had no jurisdiction to try the complaint because respondent - firm was located at Ludhiana. The cheque which was subject matter of the com plaint was also drawn at State Bank of Patiala, Ludhiana where the respondent firm was maintaining its bank account. The cheque was sent for collection to the drawee bank at Ludhiana.

In Rishi Kumar''s (supra), complainant company was carrying on its business of manufacturing and marketing of its products, that is biscuits etc. at Bahadurgarh. An agreement; between the parties, that is the complainant and the accused was executed at Bombay. Accused was carrying on his business at Kanpur. The cheques were issued as security drawn on the branch of State Bank of India Karvi, District Banda, Uttra Pradesh. Having failed to make the payment, complainant filed complaint at Bahadurgarh. Accused challenged the filing of the complaint at Bahadurgarh because no cause of action had arisen there. Justice Sabina of this Court quashed the complaint as well as all subsequent proceedings arising there from on the ground that no transaction between the parties had taken place at Bahadurgarh.

It is an admitted case of the parties that the complainant has its corporate office at India bulls House, 448-51, Udyog Vihar, Phase - V, Gurgaon. It has its branch office at Surat also. The accused obtained loan of rupees twenty five lacs from the branch office but, of course, with the approval of the corporate office at Gurgaon. The cheque in question was issued in favour of the complainant payable at Sural and the same was deposited by the complainant in its bank at Gurgaon. Notice as envisaged u/s 138 of the Act was also issued from Gurgaon. It is not in dispute that the cheque was presented to the drawee bank within the period specified in the Section, that is 6 months.

The only argument advanced by learned counsel for the accused was that since the loan was obtained at Surat and the cheque was also drawn at Surat so, the Court at Gurgaon has no jurisdiction to try the offence u/s 138 of the Act.

In all the authorities referred to above, the facts were distinguishable from the facts of the case in hand. Herein, the head office of the complainant is at Gurgaon. The branch office at Surat is also being run by the corporate office at Gurgaon. The cheque issued by the accused was also presented at Gurgaon. Notice in writing to the drawer of the cheque demanding payment of the cheque amount was also sent from Gurgaon. In this view of the matter, Court at Gurgaon had jurisdiction to try the case. To arrive at this opinion, this Court relies upon (i) K. Bhaskaran v. Sankaran Vaidhyan Baton, 1999(4) RCR (Criminal) 309 and (ii Smt. Shamshad Begum Vs. B. Mohammed,

In Shamshad Begum''s case (supra), Hon''ble Supreme Court reiterated the earlier judgment rendered on the issue of jurisdiction by the Supreme Court in K. Bhaskaran''s case (supra).

In K. Bhaskaran''s case (supra), it was, inter-alia, observed as follows:

"14. 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:

"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 idle exercise to raise jurisdictional question regarding the offence u/s 138 of the Act.

The more important point to be decided in this case is whether the cause of action has arisen at all as the notice sent by the complainant to the caused was returned as "unclaimed." The conditions pertaining to the notice to be given to the drawer, have been formulated and incorporated in clauses (b) and (c) of the proviso to Section 138(1) of the Act. The said clauses are extracted below:

"(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 due course of the cheque within fifteen days of the receipt of the said notice."

After referring to K. Bhaskaran''s case (supra) it was held in Shamshad Begums''s case (supra), as under:-

"7. As was noted in K. Bhaskars 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."

In Rakesh Kumar Jaiswal and another v. India bulls Financial Service Limited, 2011 (5) R.C.R. (Criminal) 799: (Criminal Misc. No. M-22897 of 2010 decided on September 27th, 2010) accused obtain a loan of Rs. 13, 33,000/- from Kanpur Branch of India bulls Financial Service Limited to be paid in monthly installments. A cheque was given by the accused drawn on Allahabad Bank Chakri, Kanpur. The cheque was presented for collection in the Bank at Gurgaon. The said cheque was returned unpaid to the complainant with the remarks "insufficient funds". The complainant filed complaint before Judicial Magistrate First Class, Gurgaon. It was alleged by the accused that the Gurgaon Court has no jurisdiction to try the case because cheque was issued at Kanpur and was handed over to the branch of the complainant at Kanpur. This Court while relying upon K. Bhaskaran''s case (supra), held that Court at Gurgaon has jurisdiction because the corporate office of the India bulls office is at Gurgaon and the Cheuqe in question was presented for collection at Gurgaon. Above being the factual and legal position, it is unhesitatingly held that Court at Gurgaon has jurisdiction to try the aforesaid complaint. Thus, the order March 31st, 2011 of Judicial Magistrate First Class, Gurgaon is perfectly justified and warrants no interference. Resultantly, the petition is dismissed.