NIA 138 jurisdiction

Suresh Ahuja (Querist) 03 February 2011 This query is : Resolved
Sir,

I would like to ask one question about the jurisdiction of NIA 138.

I am writing the series of events and please guide me

1. I am living in one state say A. and dealing with someone in state B.
2. My bank account is in some other state B
3. My Cheque issued in favour of someone duly signed but without date is lost and the bank is informed about it and the confirmation received.
4. I do not keep the balance in my account for the sake of safety.
5 After some days the other party presents the cheque in his bank in the state B and his banker issues a insufficient fund memo( both the bank is common but branch is different).
6. I do not have any liabilty towards the other party.The other party artificially tries to create the liability

Please suggest me what is the jurisdiction courts (state A or satte B)of the NIA 138. and whether the NIA 138 is applicable on a lost cheque.

Please provide any judgement is support of your answer for help.

Thanks.

Suresh Ahuja.

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Devajyoti Barman (Expert) 04 February 2011
The court in state B has got the jurisdiction.

Advocate Bhartesh goyal (Expert) 04 February 2011
Yes,The jurisdiction lies at place B .Go through the reported case Harman Electronics V/S National Panasonic.

Basavaraj (Expert) 04 February 2011
Dear Suresh, N.I. casemay maby be initiated at 5 places as stated by Hon'ble Supreme Court in the below judgment. and It is not only in state B, as stated by our members.

It is contended that inview of the Judgment of the
Supreme Court in in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC
510
After having considered the different provisions of
Cr.P.C., in K. Bhaskaran (Supra), the Supreme Court observed as follows :-
"14. The offence under section 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.
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15. 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 under section 138 of the
Act. 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 indifferent local areas, it may be inquired
into or tried by a Court having jurisdiction over
any of such local areas."
16. Thus it is clear, if the five different acts were
done in five different localities by one of the Courts exercising
jurisdiction in one of the five local areas can become the place
of trial for the offence under section 138 of the Act. In other
words, 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 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 under section 138 of the Act."

ready this Judgment

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 615 OF 2008
M/S. RUCHI SOYA INDUSTRIES LTD. )
a Company incorporated under the )
provisions of Indian Companies Act 1956 )
having its Registered Office at: )
408, Tulsiani Chambers, Nariman Point, )
Mumbai 400 021. ).. Petitioner
(Orig. Complainant)
Versus
1. THE STATE OF MAHARAHTRA )
2. M/s. Madan Oil & Fat Pvt.Ltd. )
having its address at: E-172(B), )
M.I.A. Alwar, Rajasthan. )
3. Shri Nirbhay kumar Mahawar )
residing at: Deepali Society, )
Near Gate No.2, Kothi No.3, )
Pitampura, Delhi. )
4. Mrs. Urmila Mahawar, )
residing at: Deepali Society, Near )
Gate No.2, Kothi No.3, Pitampura, )
Delhi. ).. Respondents
Mr. S.V.Marwadi i/b.Mr.D'Souza,Advocate, for the petitioner.
CORAM: J.H.BHATIA, J.
DATE : 17th June, 2010.
JUDGMENT
1. Notice was issued to respondent Nos. 2 to 4, who are the original
2
accused clearly indicating that this Writ Petition may be disposed of at the stage of
admission. The notice was served as per the affidavit of service filed on behalf of
the petitioner along with the postal receipts. However, none appeared for the
respondent Nos. 2 to 4.
2. To state in brief, the writ petitioner is the original complainant. The
respondents Nos. 2 to 4 are the original accused Nos. 1, 2 and 3. Accused No.1 is
a company situated at Alwar in Rajasthan. Accused Nos. 2 and 3 were the
directors of accused No.1 and both of them were residing at Delhi. The
complainant used to purchase mustard oil and packing material and to hand over
the same to the accused at Alwar for the purpose of packing the same. The
accused company used to charge packing charges from the complainant and hand
over packed material to the complainant. However, some oil was not packed and
the oil and packing material were not returned to the complainant. Therefore, the
accused were liable to pay the price of the remaining oil and packing material. To
discharge that liability, the accused persons issued a cheque No.712059 dated
27.1.2004 for Rs.15,63,381/- drawn on State Bank of Bikaner & Jaipur,Lawrence
Road, Delhi Branch in favour of the complainant company. The cheque was
signed by accused No.2. The complainant deposited the said cheque with its Bank
at Mumbai for presentation to State Bank of Bikaner & Jaipur, Delhi Branch, for
3
encashment. However, the drawee Bank returned the cheque on 11.5.2004 with
the endorsement "funds insufficient". After getting an intimation of the same, on
27.5.2007, the complainant issued a notice to the accused and asked to make
payment of the amount of the cheque. However, they failed to make payment.
Therefore, the complainant filed a complaint under Section 138 of the Negotiable
Instruments Act against all the three accused in the Court of Metropolitan
Magistrate, Mumbai. It was registered as Criminal Case No.2575/SS/2005.
Process was issued. Plea was recorded and the matter proceeded for trial. After
the prosecution evidence was over and even the defence evidence was led by the
accused persons, on the date when the case was fixed for arguments, the accused
persons filed an application Exhibit 57 before the trial Court contending that the
Metropolitan Magistrate in Mumbai had no jurisdiction to take cognizance of the
complaint because no part of transaction had taken place in Mumbai and merely
because the notice was issued from Mumbai and that cheque was deposited with
the complainant's banker at Mumbai is not sufficient to give jurisdiction to the
Metropolitan Magistrate at Mumbai. That application was opposed. After
hearing the parties, the learned Special Metropolitan Magistrate, Mumbai, by
impugned order dated 8.2.2008 allowed that application holding that the
Metropolitan Magistrate, Mumbai had no jurisdiction. He directed the complaint
to be returned to the complainant for presentation to the proper Court. That order
4
is challenged in the present Writ Petition.
3. Mr. Marwadi, the learned Counsel for the complainant/petitioner
vehemently contended that the trial Court had committed error in holding that it
had no jurisdiction to entertain the complaint. According to him, consistent view
had been taken by this Court that the payee can issue notice for payment of the
cheque amount after the cheque is dishonoured from the place where the payee is
living or carrying on business for gain and in case it is a company from the place
where its registered office is situated. It is contended that the registered office of
the complainant company is situated at Mumbai. The cheque was presented at
Mumbai and after it was dishonoured, notice was issued from Mumbai for
payment and it was expected that the accused would make payment of the amount
to the complainant at Mumbai. It is contended that inview of the Judgment of the
Supreme Court in in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC
510, the Court within whose jurisdiction the notice in writing to the drawer of the
cheque demanding payment of the cheque amount is given has also jurisdiction to
entertain the complaint. The learned Counsel contended that in view of the
authority in K. Bhaskaran, the Bombay High Court has held in number of cases
that such a Court had jurisdiction.
5
4. Under Section 177 Cr.P.C. every offence shall be ordinarily tried by a
Court within whose jurisdiction it was committed. However, there are exceptions
to the same. Under Section 178, if there is an uncertainty as to where, among
different localities, the offence would have been committed, the trial can be held
in a Court having jurisdiction in any of those localities. Under Section 179 Cr.P.C.
when an act is an offence by reason of anything which has been done and of a
consequence which has been ensued, the offence may be inquired into or tried by
a Court within whose local jurisdiction such thing has been done or such
consequence ha ensued. After having considered the different provisions of
Cr.P.C., in K. Bhaskaran (Supra), the Supreme Court observed as follows :-
"14. The offence under section 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.
6
15. 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 under section 138 of the
Act. 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 indifferent local areas, it may be inquired
into or tried by a Court having jurisdiction over
any of such local areas."
16. Thus it is clear, if the five different acts were
done in five different localities by one of the Courts exercising
jurisdiction in one of the five local areas can become the place
of trial for the offence under section 138 of the Act. In other
words, 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 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 under section 138 of the Act."
5. In the present case, admittedly, the cheque was drawn on
State Bank of Bikaner & Jaipur, Delhi Branch and it was admitted
during the evidence that the cheque was handed over by the accused
7
No.2 to the complainant at Delhi. The payment was to be made in
respect of the transaction which had taken place at Jaipur. The cheque
was to be presented to the drawee Bank at Delhi and the cheque was
dishonoured by the drawee Bank at Delhi and it was returned to the
complainant. However, the cheque was deposited by the complainant
with its banker at Mumbai for presentation to the drawee Bank at Delhi
for encashment. Admittedly, after the cheque was dishnoured, the
complainant gave a notice from its registered office at Mumbai
demanding the payment of the cheque amount.
6. In Ahuja Nandkishore Dongre v. State of Maharashtra & anr.
2007(1) Bom. C.R. (Cri.) 1031, the complainant was a resident of village
Soyjana, taluka Manora, Dist. Wasim. He was working at Bhandara. The accused
was also resident of Bhandara and the complainant had given a hand loan to the
accused at Bhandara. The accused had issued a cheque drawn on Bank of India,
Bhandara Branch, which was dishonoured. The complainant presented the cheque
at Digras Branch of Yavatmal Urban Co-operative Bank and the cheque was
returned as dishnoured a account was closed with the drawee Bank. After that,
Advocate of the complainant issued a notice to the accused from Digras and the
complaint was filed at Digras. In such circumstances, it was held that merely
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issuance of notice by the lawyer from Digras would not give jurisdiction to the
Court at Digras. The learned Judge held that mere presentation of cheque at some
other place where the complainant does not reside and issuance of notice from the
said place would not give jurisdiction. The learned Judge observed that the
payment is expected to be made at the place where the complainant ordinarily
resides or if the complainant is a company or a firm where its registered office is
situated. In Jinraj Paper Udyog v. Dinesh Associates & Anr. 2009 (2)
Bom.C.R.81, the learned Judge of this Court observed as follows in para 6:
"6. Since "the payee" is required to issue a
notice demanding payment, such place of giving notice would
be where, if payee is a company (or other registered
establishment) it has a registered office, and in other cases,
normally, where the payee ordinarily resides or work for gain,
and not any place from where the payee may choose to
despatch a notice."
The same view was taken in number of cases,including a recent
Judgment in Criminal Application No. 2674 of 2008 (Hemlata
Raghunath Pendharkar vs. Jaswantsingh Rajaram Sonawane &
Anr.
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7. In Mrs. Preetha S.Babu vs. Voltas Ltd. & Anr. 2010 AlL
MR (Cri) 1025, a contract for supply of air-conditioners had taken
place between the accused company situated at Ernakulam in Kerala.
Towards payment and discharge of their liability, the accused had issued
a cheque on Syndicate Bank, Angamaly Branch, Ernakulam, Kerala.
The head office of the complainant was siuated in Mumbai. The cheque
was deposited with Citibank, Fort Branch, Mumbai, which was duly
presented to the drawee Bank and was dishonoured. The complainant
issued a notice to the accused from Mumbai demanding payment.
Inspite of notice, payment was not made and the complaint was filed in
the Court of Metropolitan magistrate at Mumbai. After referring to
several authorities, the Division Bench of this Court dismissed the writ
petition filed by the accused challenging the jurisdiction of the
Metropolitan Magistrate. Holding that admittedly the complainant's
registered office is situated at Mumbaiand the notice was issued from
Mumbai and accused was called upon to make payment in Mumbai and
therefore Metropolitan Magistrate Mumbai has jurisdiction. In the
present case, the registered office of the complainant is at Mumbai and
after the cheque was dishonoured, the notice was issued from Mumbai
for making payment. Naturally, the payment was expected to be made
10
to the complaiant at Mumbai. In view of these two facts which took
place at Mumbai, the Metropolitan Magistrate, Mumbai would get
jurisdiction to entertain the complaint in view of the law settled in
above referred authorities which are based on K.Bhaskaran.
8. In M/s. Harman Electronics (P) Ltd. v. National
panasonic India Ltd. 2009 (1) ALL MR (Cri) 280 (S.C.), the cheque
was issued at Chandigarh. The complainant also had a branch office at
Chandigarh, though its head office was at Delhi. The cheque was
presented at Chandigarh and was also dishonoured at Chandigarh.
However, the complainant issued a notice upon the accused asking to
make payment from New Delhi. The notice was served upon the
accused at Chandigarh. Thereafter, the complaint was filed at Delhi.
The trial Court held that it had jurisdiction since the payment was to be
made to the complainant at Delhi and the accused had failed to make
payment. The Supreme Court held that mere issuance of notice from
Delhi would not by itself give rise to the cause of action but
communication of the notice would. The Supreme Court observed in
para 25 thus :-
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"25. We cannot, as things stand today, be
oblivious of the fact that a banking institution holding several
cheques signed by the same borrower can not only present the
cheque for its encashment at four different places but also may
serve notices from four different places so as to enable it to file
four complaint cases at four different places. This only causes
grave harassment to the accused. It is,therefore, necessary in a
case of this nature to strike a balance between the right of the
complainant and the right of an accused vis-a-vis the
provisions of the Code of Criminal Procedure."
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.
9. In view of the above facts and the legal position, I find that
the Metropolitan Magistrate at Mumbai has jurisdiction to entertain the
complaint under Section 138 of the Negotiable Instruments Act.
12
Therefore, the impugned order passed by the trial Court at the stage of
final arguments of the case to return the complaint to the complainant
was not correct and needs to be set aside.
10. For the aforesaid reasons, the Writ Petition is allowed. The
impugned order is set aside and the Criminal Case No. 2575/SS/05 is
remanded back to the Special Metropolitan Magistrate, Mumbai, for
proceeding with the trial from the stage where it was discontinued and
to dispose of the same on its own merits, as early as possible.
(J.H.BHATIA,J.)