jurisdiction in case of cheque bouncing

   CRIMINAL APPELLATE JURISDICTION



             CRIMINAL APPEAL NO. 2021                OF 2008

             [arising out of SLP (Criminal) No. 1712 of 2004]

M/S. HARMAN ELECTRONICS (P) LTD.

& ANR.                                                ... APPELLANTS



                                 VERSUS



M/S. NATIONAL PANASONIC INDIA LTD.                    ... RESPONDENT









                             JUDGMENT









S.B. SINHA, J.









1.    Leave granted.





2.    Territorial jurisdiction of a court to try an offence under Section 138



of the Negotiable Instruments Act, 1881 (for short, "the Act") is in question



in this appeal.



                                                                         1

      The said question arose in the following circumstances.





      Appellants and respondent entered into a business transaction.



Appellant is a resident of Chandigarh. He carries on business in



Chandigarh. The cheque in question admittedly was issued at Chandigarh.



Complainant also has a branch office at Chandigarh although his Head



Office is said to be at Delhi. It is stated that the cheque was presented at



Chandigarh. However, it is in dispute as to whether the said cheque was



sent for collection to Delhi.       The cheque was dishonoured also at



Chandigarh. However, the complainant - respondent issued a notice upon



the appellant asking him to pay the amount from New Delhi. Admittedly,



the said notice was served upon the respondent at Chandigarh. On failure on



the part of the appellant to pay the amount within a period of 15 days from



the date of communication of the said letter, a complaint petition was filed



at Delhi. In the complaint petition, it was stated:





             "10. That the complainant presented aforesaid

             cheque for encashment through its banker Citi

             Bank NA. The Punjab & Sind Bank, the banker of

             the accused returned the said cheque unpaid with

             an endorsement "Payment stopped by drawer"

             vide their memo dated 30.12.2000. The aforesaid

             memo dated 30.12.2000 was received by the

             complainant on 3.1.2001.

             11. Upon dishonour of the above mentioned

             cheque, the complainant sent notice dt. 11.1.2001





                                                                        2

in terms of section 138 of Negotiable Instruments

Act to the accused persons demanding payment of

aforesaid cheque amount at Delhi. The accused

persons were served with said notice by registered

A/D.

12. By the said notice the accused persons were

called upon to pay to the complainant the sum of

Rs.5,00,000/- within 15 days of the receipt of said

notice.

13. Despite the service of notice dt. 11.1.2001

the accused persons have failed and/or neglected

to pay amount of aforesaid cheque within the

stipulated period of 15 days after the service of the

notice.

14. Accused persons clandestinely/deliberately

and with malafide intention and by failing to make

the payment of the said dishonoured cheque within

the stipulated period have committed the offence

under Section 138 read with Section 141 of the

Negotiable Instruments Act, 1881.

15. The complainant further submit that the

complaint is being filed within 1 month from the

date of expiring of the 15 days grace time given

under the notice for payment of said amount.

16. This Hon'ble Court has jurisdiction to

entertain the present complaint as complainant

carries on its business at Delhi. The demand notice

dt. 11.1.2001 was issued from Delhi and the

amount of cheque was payable at Delhi and

because accused failed to make the payment of

amount of said cheque within statutory period of

15 days from receipt of notice."









                                                        3

3.    Cognizance of the offence was taken against the appellant by the



learned judge.





      Questioning the jurisdiction of the court of Additional Sessions



Judge, New Delhi, an application was filed which was disposed of by the



learned Additional Sessions Judge, New Delhi in terms of an order dated



3.2.2003 stating:





            "2. The main grievance of the accused is that

            the accused persons, as well as the complainant

            are carrying their business at Chandigarh. The

            cheque in question was given by the accused to the

            complainant in Chandigarh, and it was present to

            their banker at Chandigarh. Only notice was given

            by the complainant to the accused persons, from

            Delhi. That the same was served on the accused

            admittedly, at Chandigarh and that both the parties

            are carrying out their business also at Chandigarh.

            Therefore, it is contended that it would amount to

            absurdity if the complaint of the complainant is

            entertained, in Delhi, in view of the case law

            reported in AIR 1999 Supreme Court 3782, K.

            Bhaskaran Vs. Sankaran Vaidyyan Balan and

            Another.

            6.     I have considered the arguments advanced

            at the bar, and I am of the considered opinion that

            this court has jurisdiction to entertain this

            complaint, as admittedly the notice was sent by the

            complainant to the accused persons from Delhi,

            and the complainant is having its registered office

            at Delhi, and that they are carrying out the

            business at Delhi. Admittedly, it is also evident

            from the record that accused allegedly failed to

            make the payment at Delhi, as the demand was





                                                                   4

             made from Delhi and the payment was to be made

             to the complainant at Delhi."









4.    By reason of the impugned judgment, Criminal Miscellaneous



Petition filed by the appellant has been dismissed.





5.    Mr. Ashok Grover, learned Senior Counsel appearing on behalf of the



appellant would submit that as the entire cause of action arose within the



jurisdiction of the courts at Chandigarh, the learned Additional Sessions



Judge, New Delhi had no jurisdiction to take cognizance of the offence.





6.    Mr. Sakesh Kumar, learned counsel appearing on behalf of the



respondent, on the other hand, would contend:





      i.     The cheque although was deposited at Chandigarh, the same



             having been sent by Citi Bank NA for collection at Delhi, the



             amount became payable at Delhi.





      ii.    Giving of a notice being a condition precedent for filing a



             complaint petition under Section 138 of the Negotiable



             Instruments Act, a notice having been issued from Delhi, the



             Delhi Court had the requisite jurisdiction, particularly when









                                                                          5

           demand was made upon the appellant to pay the complainant at



           Delhi.





7.   Section 138 of the Negotiable Instruments Act reads as under:



           "138. Dishonour of cheque for insufficiency,

           etc., of funds in the account. - Where any cheque

           drawn by a person on an account maintained by

           him with a banker for payment of any amount of

           money to another person from out of that account

           for the discharge, in whole or in part, of any debt

           or other liability, is returned by the bank unpaid,

           either because of the amount of money standing to

           the credit of that account is insufficient to honour

           the cheque or that it exceeds the amount arranged

           to be paid from that account by an agreement

           made with that bank, such person shall be deemed

           to have committed an offence and shall, without

           prejudice to any other provisions of this Act, be

           punished with imprisonment for a term which may

           be extended to two years, or with fine which may

           extend to twice the amount of the cheque, or with

           both:

                  Provided that nothing contained in this

           section shall apply unless--



                  (a) the cheque has been presented to the

           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;





                  (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 thirty days of the receipt of

           information by him from the bank regarding the

           return of the cheque as unpaid; and



                                                                     6

                  (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.





            Explanation.-- For the purposes of this section,

            "debt or other liability" means a legally

            enforceable debt or other liability."









8.    The proviso appended thereto imposes certain conditions before a



complaint petition can be entertained.





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 and Anr. [(1999) 7 SCC 510]. 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 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





                                                                        7

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. "









10.   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.'

             (vide page 621) "A person notifies or gives notice





                                                                         8

            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 Court should not adopt in interpretation which

            helps a dishonest evader and clips an honest payee

            as that would defeat the very legislative measure."









11.   For the said purpose, a presumption was drawn as regards refusal to



accept a notice. We may, before proceeding to advert to the contentions



raised by the parties hereto, refer to another decision of this Court in M/s



Dalmia Cement (Bharat) Ltd. vs. M/s Galaxy Traders & Agencies Ltd. &



ors. [AIR 2001 SC 676], wherein this Court categorically held:





            "6. 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 rebuttable

            one, he has two options before him. One is to

            concede to the stand of the sendee that as a matter



                                                                        9

      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 despatcher 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."





                                     (Underlying is mine)



It was furthermore held:

      "The payee or holder of the cheque may, therefore,

      without taking peremptory 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'.









                                                               10

12.   Indisputably, the parties had been carrying on business at Chandigarh.



The Head Office of the complainant - respondent may be at Delhi but it has



a branch office at Chandigarh. It is not in dispute that the transactions were



carried on only from Chandigarh. It is furthermore not in dispute that the



cheque was issued and presented at Chandigarh. The complaint petition is



totally silent as to whether the said cheque was presented at Delhi. As



indicated hereinbefore, the learned counsel appearing on behalf of the



complainant - respondent contended that in fact the cheque was put in a



drop box but as the payment was to be obtained from the Delhi Bank, it was



sent to Delhi. In support of the said contention, a purported certificate



issued by the Citi Bank NA has been enclosed with the counter affidavit,



which reads as under:





             "This is to confirm that M/s National Panasonic

             India Pvt. Ltd. (NPI) having registered office at

             AB- 11, Community Centre, Safdarjung Enclave,

             New Delhi - 110029 are maintaining a Current

             Account No. 2431009 with our Bank at Jeevan

             Bharti Building, 3, Parliament Street, New Delhi-

             110001 only and not at any other place in India

             including Chandigarh.

             Further confirmed that CITI bank has provided the

             facility for collection of Cheques/Demand Drafts

             from branches of NPI located at various

             places/cities in India. However, all amounts of

             cheques/Demand Drafts so collected on behalf of

             National Panasonic India Private Limited are

             forwarded and debited/credited to the aforesaid



                                                                          11

             Current Account No. 2431009 with our Bank at

             Jeeval Bharti Building, 3, Parliament Street, New

             Delhi - 110001."









13.   The complaint petition does not show that the cheque was presented



at Delhi. It is absolutely silent in that regard. The facility for collection of



the cheque admittedly was available at Chandigrh and the said facility was



availed of. The certificate dated 24.6.2003, which was not produced before



the learned court taking cognizance, even if taken into consideration does



not show that the cheque was presented at the Delhi Branch of the Citi



Bank. We, therefore, have no other option but to presume that the cheque



was presented at Chandigarh. Indisputably, the dishonour of the cheque



also took place at Chandigarh. The only question, therefore, which arises



for consideration is that as to whether sending of notice from Delhi itself



would give rise to a cause of action for taking cognizance under the



Negotiable Instruments Act.





14.   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





                                                                           12

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 the



provisos (a), (b) and (c) appended to Section 138 of the Negotiable



Instruments Act 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



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.





15.   It is in the aforementioned situation, the distinction noticed by the



Bench in M/s Dalmia Cement (Bharat) Ltd. (supra) and the meaning of



`giving of notice' and `receiving of notice' as contained in Black's Law



Dictionary assumes significant.



16.   What is meant by `communication' albeit in different context, has



been considered by a Constitution Bench of this Court in State of Punjab vs.



Amar Singh Harika [AIR 1966 SC 1313] stating:









                                                                          13

            "It is plain that the mere passing of an order of

            dismissal would not be effective unless it is

            published and communicated to the officer

            concerned."





17.   The distinction between passing of an order which is final and a



communication thereof is not necessary has been noticed by this Court



subsequently in State of Punjab vs. Khemi Ram [(1969) 3 SCC 28] stating:





            "In our view, once an order is issued and it is sent

            out to the concerned Government servant, it must

            be held to have been communicated to him, no

            matter when he actually received it. We find it

            difficult to persuade ourselves to accept the view

            that it is only from the date of the actual receipt by

            him that the order becomes effective. If that be the

            true meaning of communication, it would be

            possible for a Government servant to effectively

            thwart an order by avoiding receipt of it by one

            method or the other till after the date of his

            retirement even though such an order is passed

            and despatched to him before such date. An officer

            against whom action is sought to be taken, thus,

            may go away from the address given by him for

            service of such orders or may deliberately give a

            wrong address and thus prevent or delay its receipt

            and be able to defeat its service on him. Such a

            meaning of the word 'communication' ought not to

            be given unless the provision in question expressly

            so provides. Actual knowledge by him of an order

            where it is one of dismissal, may, perhaps, become

            necessary because of the consequences which the

            decision in The State of Punjab v. Amar Singh

            (AIR 1966 SC 1313) contemplates. But such

            consequences would not occur in the case of an

            officer who has proceeded on leave and against





                                                                     14

            whom an order of suspension is passed because in

            his case there is no question of his doing any act or

            passing any order and such act or order being

            challenged as invalid."









      For constitution of an offence under Section 138 of the Act, the



notice must be received by the accused. It may be deemed to have been



received in certain situations. The word `communicate' inter alia means `to



make known, inform, convey, etc.'





18.   This Court in Sultan Sadik vs. Sanjay Raj Subba and Ors [(2004) 2



SCC 377], held:







            "33. The decision of this Court in Khemi Ram

            [(1969) 3 SCC 28] relied upon by Mr. Bachawat is

            not apposite as therein an order of suspension was

            in question. This Court in the said decision itself

            referred to its decision in State of Punjab v. Amar

            Singh Harika [AIR 1966 SC 1313], which stated

            that communication of an order dismissing an

            employee from service is imperative. If

            communication of an order for terminating the

            jural relationship is imperative, a fortiori it would

            also be imperative at the threshold."









                                                                       15

19.   Section 177 of the Code of Criminal Procedure determines the



jurisdiction of a court trying the matter. The court ordinarily will have the



jurisdiction only where the offence has been committed. The provisions of



Sections 178 and 179 of the Code of Criminal Procedure are exceptions to



Section 177. These provisions presuppose that all offences are local.





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









                                                                           16

                  (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 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 congnizance 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 office 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."









22.   In Y.A. Ajit. v. Sofana Ajit [AIR 2007 SC 3151), this Court held:







                                                                          17

             "The crucial question is whether any part of the

             cause of action arose within the jurisdiction of the

             concerned Court. In terms of Section 177 of the

             Code it is the place where the offence was

             committed. In essence it is the cause of action for

             initiation of the proceedings against the accused.





             While in civil cases, normally the expression

             "cause of action" is used, in criminal cases as

             stated in Section 177 of the Code, reference is to

             the local jurisdiction where the offence is

             committed. These variations in etymological

             expression do not really make the position

             different. The expression "cause of action" is

             therefore not a stranger to criminal cases."









23.   Presumption raised in support of service of notice would depend upon



the facts and circumstances of each case. Its application is on the question



of law or the fact obtaining. Presumption has to be raised not on the



hypothesis or surmises but if the foundational facts are laid down therefor.



Only because presumption of service of notice is possible to be raised at the



trial, the same by itself may not be a ground to hold that the distinction



between giving of notice and service of notice ceases to exist.







24.   Indisputably all statutes deserve their strict application, but while



doing so the cardinal principles therefor cannot be lost sight of. A Court



derives a jurisdiction only when the cause of action arose within his



                                                                         18

jurisdiction.   The same cannot be conferred by any act of omission or



commission on the part of the accused. A distinction must also be borne in



mind between the ingredient of an offence and commission of a part of the



offence. While issuance of a notice by the holder of a negotiable instrument



is necessary, service thereof is also imperative. Only on a service of such



notice and failure on the part of the accused to pay the demanded amount



within a period of 15 days thereafter, commission of an completes. Giving



of notice, therefore, cannot have any precedent over the service. It is only



from that view of the matter in Dalmia Cement (Bharat) Ltd. v. Galaxy



Traders & Agencies Ltd., [ (2001) 6 SCC 463 ] emphasis has been laid on



service of notice.







25.   We cannot, as things stand today, be oblivious of the fact that a



banking institution holding several cheques signed by the same borrower



cannot 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-`-vis the provisions of the Code of Criminal Procedure.







                                                                           19

26.   Learned counsel for the respondent contends that the principle that



the debtor must seek the creditor should be applied in a case of this nature.







27.   We regret that such a principle cannot be applied in a criminal case.



Jurisdiction of the Court to try a criminal case is governed by the provisions



of the Criminal Procedure Code and not on common law principle.







28.   For the views we have taken it must be held that Delhi High Court



has no jurisdiction to try the case. We, however, while exercising our



jurisdiction under Article 142 of the Constitution of India direct that



Complaint Case No.1549 pending in the Court of Shri N.K. Kaushik,



Additional Sessions Judge, New Delhi, be transferred to the Court of the



District and Sessions Judge, Chandigarh who shall assign the same to a



court of competent jurisdiction. The transferee court shall fix a specific date



of hearing and shall not grant any adjournment on the date on which the



complainant and its witnesses are present.          The transferee court is



furthermore directed to dispose of the matter within a period of six months



from the date of receipt of the records of the case on assignment by the



learned District and Sessions Judge, Chandigarh.









                                                                           20

29.   The appeal is allowed with the aforementioned observations and



directions. There shall, however, be no order as to costs.







                                                    New Delhi

December 12, 2008