Cheque bounce
jayalaxmi
(Querist) 22 June 2013
This query is : Resolved
Dear Sir,
A Person by name A staying in Karnataka issued a cheque to Mr. B who is staying in Andhra Pradesh and it is bounced. Mr. B has filed a case in Andhra Pradesh. can Mr. A challenge the case in Karnataka which is filed by Mr. B in Andhra Pradesh
thanking you
Advocate M.Bhadra
(Expert) 22 June 2013
Bombay High Court’s Aurangabad bench ruled that serving notice from a particular place in cheque bounce cases shouldn’t mean that the dispute would come under the jurisdiction of the court of that place. “Only because the cheque was presented at the bank from Aurangabad by the complainant, the place for ‘presentation of the cheque to the bank’ and ‘returning it unpaid by the drawee bank’ cannot become Aurangabad,” Justice TV Nalawade ruled, while allowing a petition by a Delhi based businessman against Videocon Industries Limited.
Videocon pleaded that since the notice regarding bouncing of cheque was served from Aurangabad, the case should be put on trial under the court’s jurisdiction in the same city. However, high court made it clear that place of transactions and other criteria point towards Delhi, hence Aurangabad court doesn’t have the required jurisdiction.
Madan Gupta had given a cheque of Rs5.09 lakh drawn from a Delhi based bank to Videocon’s registered office in Aurangabad. However, it bounced, so notice was served to him from Aurangabad and he was directed to make the payment in the same city. This is because, in the agreement, i.e. the tax invoice, it had been clearly mentioned that all disputes would be come under Aurangabad court’s jurisdiction. The respondent company filed a case under Section 138 of Negotiable Instruments Act, 1938 against the petitioner in Aurangabad. Gupta challenged this decision in Aurangabad JMFC stating that the cheque had been given to the company as security and it was misused by Videocon. The court rejected his application.
Gupta then moved the HC contending that since all the transactions had taken place in Delhi, the case comes under the courts there.
Citing an apex court verdict, Justice Nalawade laid down the test to determine where the jurisdiction will lie for such cases. Generally, the place of offence is used for determining the jurisdiction. “The SC verdict laid down five components for a cheque bounce case to test the required jurisdiction,” he observed. First is the place of drawing the cheque, second the place of presentation to the bank, third the place of returning of cheque unpaid by the drawee bank, fourth the place from where notice is served in writing to the drawer demanding payment, and the fifth is the place where the drawer had to make payment within 15 days of the notice being served.
ajay sethi
(Expert) 22 June 2013
if at all case has to be challenged A has to move the court in AP wherein the case is filed .he has to show that no part of cause of action has arisen in AP . without knowing detailed facts of the case it would not be possible to advise .
DEFENSE ADVOCATE.-firmaction@g
(Expert) 22 June 2013
Mumbai bench of HC has given many good judgement s on JURISDICTION, but this law is on its leg in statue books and it will be replaced by ARBITRATION.
So you can pass time till than by raising objection on jurisdiction at the court which issued the summons.
J K Agrawal
(Expert) 22 June 2013
Sir
Respectfully I find no error if case is going in AP and it can not be challenged in Karnataka.
Nadeem Qureshi
(Expert) 22 June 2013
Dear Querist
read the below judgement
Delhi High Court
Shri Ramaswamy S. Iyengar vs The State (Nct Of Delhi) & Anr. on 16 March, 2011
Author: Ajit Bharihoke
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: March 16, 2011
+ CRL.M.C. NO.4140/2009
SH.RAMASWAMY S. IYENGAR .... PETITIONER Through:Mr.Vinod Kumar Singh, Advocate
Versus
THE STATE(NCT OF DELHI) & ANR. .....RESPONDENTS Through: Ms. Santosh Kohli, APP
for the State/respondent No.1.
Mr.K.P.Gupta with Mr. Ankit Kalra, Advocates
for the respondent No. 2.
CORAM:
HON'BLE MR. JUSTICE AJIT BHARIHOKE
1. Whether Reporters of local papers
may be allowed to see the judgment?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be
reported in Digest ?
AJIT BHARIHOKE, J.(ORAL)
1. This is a petition under Section 482 Cr.P.C. seeking quashing of
Criminal Complaint being CC/32/1/2007 dated 07.02.2007 under
Section 138 Negotiable Instruments Act (N.I.Act) pending the court
of Metropolitan Magistrate, Rohini and setting aside the order dated
25th November, 2009 by which the petitioner and his co-accused
have been summoned to appear and undergo trial.
Crl.M.C.4140/2009 Page 1 of 10
2. Short issue involved in the instant case is whether or not, Delhi
Courts have jurisdiction to try the complaint under Section 138
N.I.Act.
3. Briefly stated, facts relevant for disposal of this petition are
that respondent No. 2 A.K.Mittal filed a complaint under Section 138
N.I.Act against the petitioner and others claiming that he is the
owner of Flat No.204, B-Wing, Mohana Building, Doordarshan
Employees Cooperative Housing Society Ltd., Gokuldham, Dindoshi,
Goregaon (East), Mumbai. The petitioner and his co-accused
persons, on behalf of self and the society, agreed to purchase
aforesaid flat from the complainant for a sum of Rs.31 lakhs.
Against the consideration amount, two cheques; one bearing
No.826206 for Rs.15 lakhs dated 3rd November, 2006 and other
bearing No.826209 dated 8th November, 2006 for Rs.16 lakhs were
drawn on M/s. The North Kanara G.S.B. Co-op. Bank Ltd., Branch
Dindoshi, Mumbai and delivered to the complainant. The cheques,
when presented for encashment, were dishonoured. Complainant
served notice of demand under Section 138 N.I.Act in respect of
cheque of Rs.16 lakhs on the petitioner and his co-accused persons
but they failed to pay demanded amount. This led to the filing of
the complaint.
Crl.M.C.4140/2009 Page 2 of 10
4. Learned M.M., on consideration of the complaint and the
affidavit evidence led by the complainant vide impugned order
dated 24th March, 2007 summoned the petitioner and his co-accused
for appearance and to undergo trial.
5. Learned counsel for the petitioner has submitted that aforesaid
order of learned M.M. is untenable for the reason that entire cause
of action pertaining to offence under Section 138 N.I.Act arose
within the territory of Mumbai, as such, Delhi Courts have no
jurisdiction to try the matter. In support of this contention, he has
submitted that it is undisputed that agreement of sale of the flat in
question, which is located in Mumbai was executed in Mumbai- the
cheque in question was also given to the complainant in Mumbai-
the cheque was drawn at a bank in Mumbai, even the petitioner is a
resident of Mumbai and he was served with the notice under Section
138 N.I.Act at Mumbai address. Learned counsel for the petitioner
submits that merely by issuing a notice from Delhi, the complainant
could not have conferred territorial jurisdiction upon the Delhi
Courts. In support of this contention, he has relied upon the
judgment of Supreme Court in the matter of M/s. Harman
Electronics (P) Ltd. & Anr. Vs. M/s. National Panasonic India
Ltd., 2009 (1) SCC 720.
Crl.M.C.4140/2009 Page 3 of 10
6. Learned counsel for the respondent, on the other hand, has
argued that Section 178 of the Code of Criminal Procedure provides
that if an offence consists of several acts done in different local
areas, then the offence can be tried by a court having jurisdiction of
any of such local areas. He argued that in the instant case, part of
cause of action has arisen in Delhi because the respondent is
located at Delhi and the payment of the cheque amount was
required to be made at Delhi. In support of this contention, learned
counsel for the respondent has relied upon the judgment of
Supreme Court in the matter of K.Bhaskaran Vs. Sankaran
Vaidhyan Balan, (1999) 7 SCC 510.
7. The question of territorial jurisdiction of a court to try an
offence under Section 138, N.I.Act came up for the consideration of
the Supreme Court in M/s Harman Electronics(supra). In the
said matter, Supreme Court considered the earlier judgment in
K.Bhaskaran‟s case (supra) and held that Delhi Courts have no
jurisdiction to try the case, inter alia, observing thus:
"9. Reliance has been placed by both the learned Additional Sessions Judge as also the High Court on a decision of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan. This Court opined that the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts, namely, (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 was
Crl.M.C.4140/2009 Page 4 of 10 opined that if 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 under Section 138 of the Act and the complainant would be at liberty to file a complaint petition at any of those places. As regards the requirements of giving a notice as also receipt thereof by the accused, it was stated:
"18. 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 at the correct address."
The Court, however, refused to give a strict interpretation to the said provisions despite noticing Black's Law Dictionary in regard to the meaning of the terms "giving of notice" and "receiving of the notice" in the following terms: "19. In Black's Law Dictionary „giving of notice‟ is distinguished from „receiving of the notice‟: „A person notifies or gives notice to another by taking such steps as may be reasonably required to inform the other in the ordinary course, whether or not such other actually comes to know of it‟. A person „receives‟ a notice when it is duly delivered to him or at the place of his business.
20. If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure." For the said purpose, a presumption was drawn as regards refusal to accept a notice.
10. We may, before proceeding to advert to the contentions raised by the parties hereto, refer to another decision of this
Crl.M.C.4140/2009 Page 5 of 10 Court in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. wherein this Court categorically held:
"7. Section 27 of the General Clauses Act deals with the presumption of service of a letter sent by post. The dispatcher of a notice has, therefore, a right to insist upon and claim the benefit of such a presumption. But as the presumption is a rebuttable one, he has two options before him. One is to concede to the stand of the sendee that as a matter of fact he did not receive the notice, and the other is to contest the sendee‟s stand and take the risk for proving that he, in fact, received the notice. It is open to the dispatcher to adopt either of the options. If he opts the former, he can afford to take appropriate steps for the effective service of notice upon the addressee. Such a course appears to have been adopted by the appellant Company in this case and the complaint filed, admittedly, within limitation from the date of the notice of service conceded to have been served upon the respondents."
It was furthermore held:
"8. ... The payee or holder of the cheque may, therefore, without taking pre-emptory action in exercise of his right under clause (b) of Section 138 of the Act, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once a notice under clause (b) of Section 138 of the Act is „received‟ by the drawer of the cheque, the payee or the holder of the cheque forfeits his right to again present the cheque as cause of action has accrued when there was failure to pay the amount within the prescribed period and the period of limitation starts to run which cannot be stopped on any account. This Court emphasised that „needless to say the period of one month from filing the complaint will be reckoned from the date immediately falling the day on which the period of 15 days from the date of the receipt of the notice by the drawer expires‟."
13. It is one thing to say that sending of a notice is one of the ingredients for 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 under Section 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
Crl.M.C.4140/2009 Page 6 of 10 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.
21. 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-à-vis the provisions of the Code of Criminal Procedure."
20. Therefore, the place where an offence has been committed plays an important role. It is one thing to say that a presumption is raised that notice is served but it is another thing to say that service of notice may not be held to be of any significance or may be held to be wholly unnecessary.
21. In Mosaraf Hossain Khan Vs. Bhagheeratha Engg. Ltd. [(2006) 3 SCC 658], this court held:
"30. In terms of Section 177 of the Code of Criminal Procedure every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. 178 provides for place of inquiry or trial in the following terms:
„178. (a) When it is uncertain in which of several local areas an offence was committed, or
(b) where an offence is committed partly in one local area and partly in another, or
(c) where an offence is a continuing one, and continues to be committed in more local areas than one, or
(d) Where it consists of several acts done in different local areas.
31. A bare perusal of the complaint petition would clearly go to show that according to the complainant
Crl.M.C.4140/2009 Page 7 of 10 the entire cause of action arose within the jurisdiction of the district courts of Birbhum and in that view of the matter it is that court which will have jurisdiction to take cognizance of the offence. In fact the jurisdiction of the court of CJM, Suri, Birbhum is not in question. It is not contended that the complainant had suppressed material fact and which if not disclosed would have demonstrated that the offence was committed outside the jurisdiction of the said court. Even if Section 178 of the Code of Criminal Procedure is attracted, the court of the Chief Judicial Magistrate, Birbhum will alone have jurisdiction in the matter.
32. Sending of cheques from Ernakulam or the
respondents having an offence at that place did not form an integral part of „cause of action‟ for which the complaint petition was filed by the appellant and cognizance of the offence under Section 138 of the Negotiable Instruments Act, 1881 was taken by the Chief Judicial Magistrate, Suri."
8. In Shri Ishar Alloy Sales Ltd. V. Jayaswals Neco Ltd.,
(2001) 3 SCC 609, the Supreme Court held that the expression "the
bank" occurring in proviso (a) to Section 138 of the N.I.Act means the
drawee bank and not the collecting bank. Hence, in order to attract
the criminal liability under Section 138, N.I. Act, the cheque must be
presented to the drawee bank within the statutory period either
personally or through a collecting bank. That being the law, the place
of location of collecting bank through which cheque was sent to some
other branch jurisdiction would not confer jurisdiction on the courts
having territorial jurisdiction over that place.
Crl.M.C.4140/2009 Page 8 of 10
9. In the instant case, undisputedly the petitioner is located at
Mumbai. The cheques in question were issued at Mumbai, the
cheques were sent for collection to the drawee bank at Mumbai and
even the notice of demand under Section 138, N.I.Act was served
upon the petitioner at Mumbai address. Therefore, it is apparent
that the entire cause of action for filing a complaint under Section
138 N.I.Act has arisen at Mumbai.
10. Learned counsel for respondent No.2 further contended that
the judgment of Supreme Court in the case of M/s Harman
Electronics (supra) was pronounced on 12.12.2008 and prior to
that judgment, the law enunciated in the matter of K.Bhaskaran
Vs.Sankaran Vaidhyan Balan (1999) 7 SCC 510 was holding the
turf and at that time the position of law, as enunciated by Supreme
Court was that the complaint under Section 138 N.I. Act could be
tried by a court within whose territorial jurisdiction the payee's bank,
where the cheque was presented for collection, is located or at the
place from where the notice of demand under Section 138 N.I. Act
was issued.
11. Above contention of learned counsel for respondent No.2 is
misconceived. The judgments of Supreme Court in K.Bhaskaran's
case(supra) and M/s Harman Electronics case(supra) have only
interpreted the true import of Sections 177 and 178 of the Code of
Crl.M.C.4140/2009 Page 9 of 10 Criminal Procedure 1973 relating to territorial jurisdiction of the
criminal court to try an offence. The law, however, throughout
remained the same. Therefore, it cannot be said that prior to the
judgment in M/s Harman Electronics(supra), the claim relating to
territorial jurisdiction, as envisaged under Sections 177 and 178 of
the Code of Criminal Procedure, was different. Thus, I find no merit
in the submissions of learned counsel for respondent No.2.
12. In view of the discussion above, this Court is of the view that
the entire cause of action relating to offence under Section 138 N.I.
Act has arisen within the territorial jurisdiction of Bombay, as such
Delhi courts have no jurisdiction to try the complaint. Accordingly,
the petition is allowed and Criminal Complaint being CC/32/1/2007
dated 07.02.2007 under Section 138 N.I. Act titled `Shri Abhay
Kumar Mittal Vs. Doordarshan Employee's Co-op Housing Society &
Others' pending in the court of learned M.M. is set aside. Learned
Metropolitan Magistrate is directed to return the complaint to
respondent No. 2 for being filed in the court of appropriate
jurisdiction.
13. Petition stands disposed of.
(AJIT BHARIHOKE)
JUDGE
MARCH 16, 2011
