Pritish Tewari vs Vista Security Technics Private Limited, Chennai

G.M. Akbar Ali, J.—The above petitions have been filed seeking for a direction to call for the records in C.C. Nos. 522 and 521 of 2010

pending on the file of the learned Judicial Magistrate, Alandur and quash the same.

The Respondent in both the petitions viz., Vista Security Technics Private Limited issued notices dated 4.12.2009 u/s 138(b) of the Negotiable

instrument Act (here-in-after referred to as ""Act"") to one. Pyroguard Engineering Pvt. Ltd, New Delhi, (2) Mr. K.K. Tiwari Director, and to the

Petitioner. It is seen that the company had placed orders for supply of materials and on the same being supplied by the Respondent, two cheques

for Rs. 15,00,000/- and Rs. 14,51,959/- dated 8.8.2009 and 24.6.2009 respectively, drawn on HDFC Bank, New Delhi have been issued and

the same was presented for collection by the Respondent with the bankers at Chennai. Since the said cheques returned with endorsement

payment, stopped by drawer"", the Respondent demanded payment of the amounts due on the cheques, by issuing the aforesaid notices. Since the

payment was not made, the Respondent has initiated proceedings by filing complaint u/s 138 of the Act before the learned Judicial Magistrate at

Alandur, who took the cases on file as C.C. Nos. 521 and 522 of 2010 in which the Petitioner is arrayed as A.2.

Challenging the territorial jurisdiction of the learned Judicial Magistrate Court, at Alandur, Chennai, the second accused has filed the above

petitions to call for the records in both the cases and quash the same. 1

The common point that arises for consideration is whether the territorial jurisdiction lies at New Delhi or at the Judicial Magistrate Court,

Alandur, Chennai.

Mr. V.P. Raman, the Learned Counsel for the Petitioner would submit that the cheque was issued at New Delhi, the drawer''s bank is situated

at New Delhi and further the cheque was returned by the drawer''s bank only at New Delhi and that being so issuance of notice from Chennai

alone will not confer territorial jurisdiction and the consequential proceedings are invalid in the eye of law.

It is further submitted that the Respondent has now been merged with Siemens Limited and thus the complaint by the present Respondent, a

non- existing entity, is not maintainable.

To fortify the submissions made, the Learned Counsel relied on the following decisions:

Shri Ishar Alloy Steels Ltd v. Jayaswala Neco Ltd. 2001(1) R.C.R. (Criminal) 834 : AIR 2001 SC 1161 : 2001 SCC (Cr) 582

Ahuja Nandakishore Dongra v. State of Maharashtra (2001) Cri.L.J 115

Smt. Nutan Damodar Prabhu and Shri Damodar S. Prabhu Vs. Ravindra Vassant Kenkre also known as Ravindra Kenkre and State Represented

by the Public Prosecutor,

Dipti Kumar Mohanty, (Proprietor - Monisha Agency) Vs. Videocon Industries Ltd.,

Per contra, Mr. R. Subramanian, Learned Counsel for the Respondent at the outset, submitted that after the merger with Siemens Limited

Respondent has filed necessary application to amend the cause title Therefore, when the so called lacuna is a curable defect, and the Respondent

has taken diligent steps to implead the merger company, the Petitioner is not justified in raising a faint plea to wriggle out of the legal implication.

The Learned Counsel for the Respondent would further submit that the argument of the counsel for the Petitioner baaed on the territorial

jurisdiction will fall to ground as the Respondent was right and justified in filing the complaint before the learned Judicial Magistrate, Alandur on the

following cause of actions:

i) The registered office of the Respondent is within the jurisdiction of the Alandur Court

ii) the transaction involving placing of order, supply of material and the amount due and payable lie within the jurisdiction of the Alandur Court

ii) The cheque was received, and was presented in the bank of the Respondent which returned dishonoured within the jurisdiction of the Court at

Alandur.

iv) the statutory notice has been sent only from Chennai within the jurisdiction of the Court at Alandur.

So advancing the submission, the Learned Counsel would advert to the case of K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, ,

wherein, the Hon''ble Supreme Court has held that if any of the acts comes within the jurisdiction of any one of the Courts the said Court will have

the territorial jurisdiction.

11 Heard and perused the materials available on record.

The proceedings initiated u/s 138 of the Act is challenged in these two petitions on the ground that the Judicial Magistrate Court at Alandur has

no territorial jurisdiction. According to the Petitioner, the cheque was issued at New Delhi and the same was returned by the payee bank only at

New Delhi; the notice was received by the drawer only at New Delhi and therefore, the learned Judicial Magistrate, Alandur Court has no

territorial jurisdiction.

At this juncture, it would be of much relevance to quote paragraph Nos. 10 and 11 of the complaint, which read as follows:

The complainant submits that the first accused as a company who had issued the cheque and the second and third accused herein as the

Directors of the first accused herein who are involved in the day-today affairs of the first accused herein are jointly and severally liable for the

dishonour of the aforesaid cheque.

The complainant submits that the complainants bank is situate at Nungambakkam High Road, Chennai which is under the controlling limits of...

Police Station and this Court has jurisdiction to register this complaint.

The legal issue involved in these petitions is whether the learned Judicial Magistrate Court, Alandur, Chennai has territorial jurisdiction to

entertain the complaint u/s 135 of Act.

It would be of much relevance to quote the latest judgment of the Delhi High Court delivered on 2.7.2010 in Crl. M.C. No. 872 of 2010,

Indian Kanoon, online reporter, wherein the Delhi High Court has held as follows:

The question of jurisdiction in complaints u/s 138 of the Negotiable Instruments Act came up for consideration before the Hon''ble Supreme

Court in the matter of K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another, , and the Hon''ble Supreme Court referring to the above referred

five components which constitute offence u/s 138 of the Negotiable Instruments Act has 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 of trial for offence u/s 138 of the

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.

In Smt. Shamshad Begum Vs. B. Mohammed, , the Respondent filed a complaint against the Appellant at Man-gal ore u/s 138 of the

Negotiable Instruments Act. Before filing complaint, the Respondent had issued a notice to the Appellant from Mangalore and a reply was sent by

her at his Mangalore address. The Appellant filed a Crl. M.C. No. 872, 1148 and 1235 of 2010 Page 6 of 12 petition in Karnataka High Court

u/s 482 of the Code of Criminal Procedure, 1973, seeking quashing of the complaint on the ground that since the agreements between the parties

were entered into at Bangalore and the cheques were returned from the banks at Bangalore, therefore, only Bangalore Court had jurisdiction to try

the case. The High Court having dismissed the petition, the Appellant came to the Hon''ble Supreme Court by applying the special leave. Relying

on its decision in K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra), and referring to the five components enumerated in that decision, it

was held that it is not necessary that all the five acts should have been perpetrated in the same locality and it was possible that each of these acts,

would have been done at five different localities though in concatenation of all these five acts is a sine qua non for completion of the offence u/s 138

of the Negotiable Instruments Act. The appeal was dismissed there by upholding the decision of the High Court.

In Prem Chanel Vijay Kumar v. Yashpal Singh 2005(2) R.C.R. (Criminal) 876 : 2005(2) Apex Criminal 120 : 2005 SCC (Cr) 1153 :

(2005)1 MLJ (Crl) 681 held by the Hon''ble Apex Court that for securing prosecution under. Section 138 of the Negotiable Instruments Act, the

following facts are required to be proved.

(a) That the cheque was drawn for payment of an amount of money for discharge of a debt/liability and the cheque was dishonoured;

(b) That the cheque was presented within the prescribed period.

(c) That the payee made a demand for payment of the money by giving a notice in writing to the drawer within a stipulated period and

(d) That the drawer failed to make the payment within fifteen days of the notice.

The issue of territorial jurisdiction again came up for consideration before the Hon''ble Supreme Court in a recent decision in the matter of

Harman Electronics (P) Ltd. and Another Vs. National Panasonic India Ltd., . In that case the Appellant was carrying on'' business at Chandigarh.

The complainant had its Head Office at Delhi, and a Branch Office at Chandigarh. The cheque in question was issued, presented and dishonoured

at Chandigarh. The Respondent/complainant issued notice to the Appellant, from Delhi. The notice was served upon the Appellant at Chandigarh.

On failure of the Appellant to pay the amount of cheque, a complaint was filed at Delhi. The application filed by the Appellant questioning

jurisdiction of the Court at New Delhi was dismissed on the ground that since the notice was sent by the complainant from Delhi, the Appellant had

failed to make payment at Delhi. The Respondent was carrying on its business at Delhi, the Delhi Court has jurisdiction to entertain the complaint.

In the case of K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr., (supra) the Hon''ble Supreme Court has held as follows:

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) 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.

In the case of Shri Ishar Alloy Steels Ltd. v. Jayaswals Naco Ltd. AIR 2001 SC 1161 : 2001 SCC (Cr) 582 the Apex Court while defining

The bank"" referred to in Clause (a) to the proviso to Section 138 of the Act, has held as follows:

The use of the words ""a bank"" and ""the bank"" in the Section is an indicator of the intention of the legislature. The former is an indirect (sic

indefinite) article and the latter is prefixed by a direct (sic definite) article. If the legislature intended to have the same meanings for"" a bank"" and

the bank"", there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the

word ""banker"" in Section 3 of the Act is prefixed by the indefinite article ""a"" and the word ""bank"" where the cheque is intended to be presented u/s

138 is prefixed by the definite article ""the"". The same Section permits a person to issue a cheque on an account maintained by him with ""a bank

and makes him liable for criminal prosecution if it is returned by ""the bank"" unpaid. The payment of the cheque is contemplated by ""the bank

meaning thereby where the person issuing the cheque has an account. ""The"" is the word used before nouns, with a specifying or particularising

effect as opposed to the indefinite or generalising force of ""a"" or ""an"". It determines what particular thing is meant; that is, what particular thing we

are to assume to be meant. ""The"" is always mentioned to denote a particular thing or a person. ""The"" would, therefore, refer implicitly to a specified

bank and not any bank. ""The bank"" referred to in Clause (a) to the proviso 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.

It, however, does not mean that the cheque is always to be presented to the drawer''s bank on which the cheque is issued. The payee of the

cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of

the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within

the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a

bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period

of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents

the cheque for collection to (C) bank. The non-presentation of the cheque to the drawee bank within the period specified in the Section 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. A combined reading of Sections 3, 72 and 138 of the Act would leave no doubt in our mind that the

law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is

necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank,

namely, the collecting bank of the payee.

In the case of Ahuja Nandakishore Dongre v. State of Maharashtra (supra) the High Court of Bombay held thus:

Practice of presenting a cheque to payee''s or holder''s own banker does not make such banker the drawee"". Such a banker merely

undertakes to present the cheque on behalf of the holder to the drawee bank for clearance. Such a hanker acts as agent of holder and not agent of

the drawee bank. This can be clear from the fact that it is the holder who has to bear the expenses in clearing the cheque and not the drawee bank.

Even between different branches of the same bank, branch at which holder has an account does not become agent of the drawee branch for

accepting the cheque unless the cheque is one marked as payable ""at par"" at all branches of the bank.

Likewise if the High Court of Kerala has, relying on K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra), held that Court, within

whose jurisdiction the cheque was presented could entertain such a complaint, I respectfully disagree. As already stated, in my humble view, the

observations in K Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra) do not support such a conclusion. At the cost of repetition it has to be

pointed out that the wording of Section 138 of the Negotiable Instruments Act too does not support such a view. If, the Courts, within whose

jurisdiction the cheque was merely presented for realisation, were to be allowed to entertain complaints, the, result would be opening flood gates

for harassment to persons who issued cheques. A person who issues a cheque on his bank indicates by his act that he intends to make payment at

the drawee bank and not elsewhere. Therefore, for the reasons stated above, I am in respectful dis-agreement with the views taken by the Andhra

Pradesh, Delhi and Kerala High Courts, because in all these judgments significance of the word ""the"" in Clauses (2) and (3) in paragraph 14 of the

judgment in K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra) has been lost sight of.

In the case of Nutan Damodar Prabhu v. Ravindra Vassant Kenkre (supra), the Goa Bench of Bombay High Court has held as follows:

Ratio Decidendi;

Under Section 130 of Negotiable Instruments Act, it is Court where money is in- tended to be paid by the accused which has territorial jurisdiction

to take cognizance of complaint and not the place where the Complainant deposited the cheque in his account.

In the case of Dipti Kumar Mohanty v. Videocon Industries (supra) the High Court of Bombay has held as follows:

The case of ""K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra)"" is duly considered and discussed by the learned single Judge

(CHAVAN, J.) in ""Ahuja Nandakishore Dongra v. State of Maharashtra (supra)."" This Court held that the place of notice would not by itself

determine the jurisdictional issue. I have gone through judgment of learned single Judge in ""Nutan Damodar Prabhu v. Ravindra Vassant Kenkre

(supra).

In the case of Shri Ishar Alloy Steels Ltd v. Jayaswals Naco Ltd. (supra), the following questions were raised:

(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 Supreme Court held that the Bank referred to in proviso (a) to Section 138 of the Act would mean, that

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.

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

895 of MLJ (Crl):

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, how- ever, 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.

Out of the five different acts settled by the Apex Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. (supra) the territorial

jurisdiction has now been resettled to (a) where the cheque has been issued (2) where the cheque has been returned by the drawee bank and (3)

where the notice has been received by the drawer. The place of presentation of the cheque to the holder''s bank and the place of issue of notice

will no more confer jurisdiction,

Therefore, the Courts which has jurisdiction, to the offence u/s 138 of the Act shall be

1) the place where the cheque has been dam;

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.

According to the complainant;

1) the complainant''s office is at Chennai?

2) the transaction viz., the order was placed at Chennai and supply was effected at Chennai;

3) cheques were issued and presented at Chennai;

4) dishonour of cheque took place at Chennai;

5) notice was issued at Chennai.

The complainant would aver in the complaint that they had supplied various materials to the Pyroguard Engineering Pvt. Ltd. having Office at

New Delhi in respect of which the said Company had issued cheques drawn on HDFC Bank, Greater Kailash, New Delhi. There is no averment

to show that the transaction was carried on at Channai and the cheques were issued at Chennai. Following the ratio laid down in K. Bhaskaran v.

Sankaran Vaidhyan Balan and Anr. (supra) and liar-man Electronics Private Limited and Anr. v. National Panasonic India Private limited (supra)

case, I am of the considered view that the Courts at New Delhi alone is having territorial jurisdiction for the trial of the alleged offence u/s 138 of

the Act as the cheques were drawn at New Delhi and they were returned unpaid by the drawee bank at New Delhi and the statutory notice was

served on the drawer demanding payment at New Delhi.

Though the petitions have been filed to quash the proceeding on the ground that the Judicial Magistrate Court at Alandur has no territorial

jurisdiction, I am also in the considered view that the complainant must be given a chance to withdraw the complaints and present the same before

the Courts at New Delhi which has jurisdiction to try the alleged offence u/s 138 of the Act. However, the presentation of the complaints before a

Court which has no territorial jurisdiction itself is not a ground to quash the entire proceedings. Therefore, I am also of the considered view that the

complainant must be given an opportunity to withdraw and present at before the appropriate Court which has territorial jurisdiction.

For the reasons stated above, all the criminal original petitions are disposed of directing the Respondent to withdraw the complaints from the

Court of the Judicial Magistrate, Alandur, within four weeks from the date of receipt of the order and present the same be- fore the Courts at New

Delhi which has territorial jurisdiction within a period of four weeks thereafter.