Mohammed Haneef vs Shankarraj

G.M. Akbar Ali, J.—The petitions are filed seeking a direction to call for the records in C.C. Nos. 437, 438, 439 and 440 of 2009 on the

file of the learned Judicial Magistrate, Ambattur.

The Respondent has initiated proceedings u/s 138 and 142 of Negotiable Instruments before the learned Judicial Magistrate Court, Ambattur

against the Petitioner. In the complaint, it is alleged that the Petitioner has taken a sum of Rs. 35,00,000/- assuring an admission for a post graduate

course in M.S. Ortho for the Respondent''s son Dr. S. Manivannan. Since he did not obtain any admission, he is liable to pay the amount.

It is further submitted that the Petitioner executed promissory notes dated 8.3.2009 and also issued four cheques dated 26.3.2009 each for Rs.

7,50,000/-. He also assured the complainant that he will pay the amount within sixty days. Since the amount was not paid, the cheques were

presented by the complainant in his bank on 5.9.2009 and the cheques were dishonoured by the Petitioner''s banker on 7.9.2009. The

complainant issued a statutory notice on 23.9.2009 demanding repayment within fifteen days which was received by the Petitioner who also sent a

reply on 30.9.2009. Since the demand made in the notice was not complied with, the Respondent has initiated the above said proceedings. The

learned Magistrate had also taken cognizance of the offence.

Challenging taking cognizance of the offence by the learned Judicial Magistrate, Ambattur, the Petitioner is before this Court on the sole ground

that the learned Judicial Magistrate has No. jurisdiction to take cognizance.

Mr. Abudu Kumar Rajarathinam, learned Counsel for the Petitioner would submit that the entire transaction took place only at Bangalore and

the cheque was drawn on Central Bank of India, Indira Nagar Branch, Bangalore and the same has been returned dishonoured only by the drawee

bank, the notice has been received by the Petitioner only at Bangalore and therefore, the learned Judicial Magistrate, Ambattur had No.

jurisdiction.

The learned Counsel relied on the judgment reported Harman Electronics (P) Ltd. and Another Vs. National Panasonic India Ltd., .

The learned Counsel also relied on an order of this Court dated 1.2.2011 in Crl.O.P. No. 23732 and 23733 of 2010.

In the case of Harman Electronics (P) Ltd. and Another Vs. National Panasonic India Ltd., , the Hon''ble Supreme Court held as follows:

It is one thing to say that sending of a notice is one of the ingredients maintaining the complaint but it is another thing to say that dishonour of a

cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence u/s 138 of the Negotiable

Instruments Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso

appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If

the ingredients for constitution of the offence laid down in provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act are

intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action

for filing a complaint. As it is only on receipt of the notice that the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the

proviso to Section 138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of

the notice would.

Following the above said decisions, this Court has also held in Crl.O.P. No. 23732 and 23733 of 2010 that place of issuance of notice will not

give rise to jurisdiction.

On the contrary, Mr. Laxmi Rajarathinam, learned Counsel for the Respondent would submit that the cause of action arose only within the

jurisdiction of the learned Judicial Magistarte, Ambattur, where the cheque was received, presented for encashment, returned dishonoured and the

statutory notice was issued.

The learned Counsel also relied on a decision reported in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, , wherein the Apex Court

has held

The offence u/s 138 of the Act can be completed only with the concatenation of a number of acts. The following are the acts which are

components of the said offence:(1) (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 five different localities. But a 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:

178 (a)-(c)

(d) where the offence consists of several acts done in different local areas

It may be enquired 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

He also relied on the following unreported judgment of High Court of Bombay in Criminal Writ Petition No. 615 of 2008 and also an order

passed by this Court in Crl.O.P. No. 8673 of 2010 dated 1.2.2011

According to the learned Counsel, the court has jurisdiction where any one of the transaction takes place viz., issuance of cheque, presentation

of the cheque, return of the cheque by drawee bank or place of issuing of statutory notice.

Heard and perused the materials available on record.

The question of jurisdiction in compliance u/s 138 of Negotiable Instruments Act came up for consideration before the Apex Court in

Bhaskaran''s case. The Apex Court referred five components which constitute an offence u/s 138 of Negotiable Instruments Act. The Apex Court

further held that if these five different acts were done in five different localities, any of the courts exercising jurisdiction in one of the five local areas

can become the place for trial for offence u/s 138 of Negotiable Instruments Act and the complainant can choose any one of those Courts having

jurisdiction over any one of those local areas where any of these five acts were done.

(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.

However, in the case of Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., , the following questions were raised.

2.(a) what is meant by ""the bank"" as mentioned in clause(a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881?

(b) Does such bank mean the bank of the drawer of the cheque or covers within its ambit any bank including the collecting bank of the payee of

the cheque?

(c) To which bank the cheque is to be presented for the purposes of attracting the penal provisions of Section 138 of the Act?

The three Judges Bench of the Hon''ble Supreme Court held that the Bank referred to in proviso (a) to Section 138 of the Act would mean the

drawee bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee in

whose favour the cheque is issued.

By this judgment the five different acts were reduced to four local areas which can become the place for trial. The place where the bank of the

payee is situated is excluded from having jurisdiction.

Further, in the case of Harman''s Electronics, the Apex Court categorically held that issuance of notice would not by itself give rise to cause of

action but communication of notice would. Therefore, five different acts referred by the Apex court in Bhaskaran''s case have been reduced into

three different acts viz., a) where the cheque has been issued b) where the cheque has been returned by the drawee bank and (c ) where the notice

has been served or communicated to the accused. The place of presentation of cheque of the holder''s bank and the place of issuance of notice by

the complainant would No. more have jurisdiction.

In similar circumstances, referring to all the above case laws, this Court in Crl.O.P.(MD) No. 14835 of 2010 has held that the courts which

has jurisdiction to the offence u/s 138 of the Act shall be

1) the place where the cheque has been drawn;

2) the place where the cheque returned unpaid by the drawee bank;

3) the place where the statutory notice demanding payment of the cheque was served on the drawer.

However, Mr. Abudu Kumar Rajarathinam, learned Counsel for the Petitioner would submit that the jurisdiction lies only in the place where

the statutory notice demanding payment of the cheque was served on the accused.

The learned Counsel pointed out that on the part of the payee he has to make a demand by giving a notice in writing and that was the only

requirement to complete the offence. According to the learned Counsel, the offence is said to have been committed only on the failure of the

drawer to pay the cheque amount within fifteen days from the date of receiving of such statutory notice. In other words, the learned Counsel

restricted the place of jurisdiction where a statutory notice was served or received and failure to make such payment.

On the contrary, Mr. A. Laxmi Raj Rathnam, learned Counsel for the Respondent relied on an unreported judgment of Bombay High Court in

Criminal Writ Petition No. 615 of 2008, wherein, it has been observed as follows:

In fact, it would appear that in Harman Electronics, whole of the transaction had taken place at Chandigarh and the complainant had also its branch

office at Chandigarh but only to cause harassment to the accused, the notice was issued from Delhi and complaint was filed in Delhi. In these

circumstances, the Supreme Court held that merely issuance of notice from Delhi would not give jurisdiction to the Delhi Court. Therefore, on

facts, the authority in Harman Electronics would not be applicable to the facts of the present case.

The learned Counsel also relied on the judgment reported in 2008 (1) MHLJ 889, wherein, the High Court of Bombay had also discussed

about the issuance of notice and the practice of presenting a cheque to the payee''s or holder''s own banker. The court ultimately held that

In other words, the accused after having received the statutory demand notice, having failed to make the payment to the Complainant''s at his

address where he permanently resides, within the jurisdiction of JMFC, Panaji, committed the offence within the jurisdiction of JMFC, Panaji and

it is the JMFC, Panaji, who has to try the same. To reiterate, the money due on the cheques which were dishonoured we required to be paid by

the accused to the Complainant at his residence and that is within the jurisdiction of learned JMFC, Panaji.

The learned Counsel for the Respondent also relied on an unreported judgment of this Court Crl.O.P. No. 8673 of 2010 dated 1.2.2011,

wherein this Court has held

Now it is very clear that the place of issuance of notice would not by itself give rise to cause of action, but the above referred five acts which

constitute an offence in any one area alone confers jurisdiction.

The learned Counsel also relied on an unreported judgment of Bombay High Court in Crl.Appln. No. 2674 of 2008 wherein it is held as

follows:

It thus appears to be a consistent view that in order to avoid unnecessary harassment to an accused, if the complaint is filed at a place where

the complainant does not ordinarily reside or carries on his business and the cheque is presented at some other place and a notice is given to such

place only in order to file a complaint at such place, the complaint would not be tenable in the Court of such a place. However, if the cheque is

presented at a place where the complainant ordinarily resides or carries on business or if it is a company where its registered office is situated and if

a notice demanding payment is issued from such a place, then the Court at such a place will have jurisdiction to entertain the complaint.

As stated earlier, in Bhaskaran''s case, the Apex Court has referred five local areas which can become the place for trial for an offence u/s 138

of Negotiable Instruments Act. However, the three judges Bench of the Apex Court in Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., has

clarified the bank referred to in proviso a to Section 138 of the Act would mean that the drawee bank on which the cheque is drawn and not all

banks where the cheque is presented for collection including the bank of the payee or holder.

In Harman''s case it is held that the issuance of notice would not by itself give rise to a cause of action but the communication of the notice

would.

However, I am unable to agree with the contentions of the learned Counsel for the Petitioner, who would insist that the place where the

statutory notice demanding payment of cheque was received or served on the accused alone can have jurisdiction.

Issuing of cheque per-se is not an offence. Presentation of the cheque and the dishonor of the cheque by the drawee bank may be referred to

as commencement of the offence, which is followed by issuing of a statutory notice demanding payment and giving an opportunity to the drawee to

avoid criminal prosecution.

On receipt of such notice and on failure to make payment, the offence is completed and therefore, the cumulative effect of all the above acts

has to be taken into consideration to decide the jurisdiction of the Court.

Therefore, this Court has already held that the jurisdiction for a trial of the offence shall be the place where a) the cheque has been issued b)

the place where the cheque has been returned unpaid by the drawee bank and c) the place where the statutory notice demanding payment of the

cheque was served or received.

In the present case, though the cheque was issued at Bangalore and the notice was also served at Bangalore, the place where the cheque has

been returned unpaid by the drawee bank is only at Chennai.

In the additional common set of typed set of papers filed by the Respondent, the return memo of Central Bank of India having office at

Montieth Road, Chennai has been furnished. The Respondent has presented the cheque to his bank viz., Indian Bank, Padi Branch, Chennai and

the same has been forwarded to Central Bank of India, Montieth Road, Chennai where it is returned with an endorsement stating ""exceeds

arrangement"". Though the cheque was drawn on the Central Bank of India, Indira Nagar, Bangalore Branch, it has been returned by the Central

Bank of India, Montieth Road, Egmore Branch, Chennai.

Therefore, the court which has jurisdiction is neither the Magistrate''s court at Bangalure nor the Judicial Magistrate court, Ambattur, Chennai,

but the Metropolitan Magistrate''s Court at Egmore, Chennai.

Therefore, initiation of proceedings and taking cognizance by the learned Judicial Magistrate, Ambattur, Chennai is not proper but it is only a

curable defect which can be rectified by giving an opportunity to the Respondent to withdraw the complaint and present the same before the

jurisdiction court at Egmore, Chennai.

In the result, the criminal original petition is disposed of with a direction to the Respondent to withdraw the complaint pending before the

Judicial Magistrate, Ambattur and present the same before the jurisdictional Metropolitan Magistrate Court at Egmore, Chennai within a period of

four weeks from the date of receipt of copy of this order.