JUDGMENT Mukundakam Sharma, C.J.
CM No. 114/2008(Exemption) Exemption granted subject to all just exceptions.
Application stands disposed of.
FAO(OS) 2/2008
1. This appeal is directed against the order dated 24.10.2007 passed by the learned Single Judge in the suit filed by the appellants-plaintiffs holding that this Court has no jurisdiction to try and decide the suit. The suit in question was filed by the appellants-plaintiffs under Order 37 of the Code of Civil Procedure 1908 for recovery of a sum of Rs. 1,25,55,000/- along with pendente lite and future interest. The said suit was founded upon a cheque dated 11.09.2002 allegedly issued by the respondent in favor of the appellant No. 1 for a sum of Rs. 93 lacs which was drawn on the Oriental Bank of Commerce, Ootacamund, Tamil Nadu. The aforesaid cheque was, however, dishonoured when presented by the banker with the remarks of the drawee bank "Payment stopped by drawer".
2. In the aforesaid suit a leave to defend application was filed by the defendant in which an objection was taken that the Delhi Court will have no territorial jurisdiction to entertain the suit. In paragraph 18 of the plaint, it was stated that the cause of action in the present suit partly arose at New Delhi as the cheque issued by the defendant was presented for clearance by the appellant No. 1 through its bankers at New Delhi and the same was dishonoured at New Delhi. It was also stated that the appellant No. 1 has its administrative office at New Delhi and accordingly, maintains a bank account at New Delhi through which the said cheque was presented for clearance. On the basis of the aforesaid averments, the appellants/plaintiffs sought to invoke the territorial jurisdiction of this Court which was opposed by the defendant in the aforesaid application seeking for leave to defend. In view of the aforesaid position, it became imperative on the learned Single Judge to decide the aforesaid issue as a preliminary issue in the suit.
3. While discharging the aforesaid responsibility cast upon him, the learned Single Judge considered the pleadings of the parties and also the various facets which are related to territorial jurisdiction, and on going through and referring to the various decisions relied upon by the counsel appearing for the parties, the learned Single Judge held that this Court has no territorial jurisdiction to entertain the suit and the suit was consequently dismissed for want of territorial jurisdiction by making it clear that no opinion is expressed on the merits of the suit. The aforesaid findings which are recorded by the learned Single Judge holding that the Delhi Court shall have no territorial jurisdiction to entertain the suit are challenged by filing the present appeal on which we have heard the learned Counsel appearing for the appellant.
4. The learned Counsel appearing for the appellant has also relied upon the same judgments which were placed before the learned Single Judge and on the basis thereof it is submitted that it could not have been said that the Delhi Court will have no jurisdiction. It is stated by the respondent-defendant that the plaintiff as well as the defendant reside at Ootacamund and that the contract between the parties, that is, between the appellant No. 1 and the respondent herein was signed at Ootacamund. The properties for which the aforesaid contract was entered into is also located at Ootacamund, and the cheque in question which was issued by the respondent was also drawn on the Oriental Bank of Commerce, Ootacamund and the said cheque was also handed over by the defendant to the plaintiffs at Ootacamund. It is, therefore, contended on behalf of the defendant that the entire cause of action has arisen at Ootacamund and nothing has happened at New Delhi, therefore, the jurisdiction of this Court could not be invoked.
5. The respondent, during the course of arguments before the learned Single Judge, pointed out that the appellant No. 1 is a private limited company having its registered office at Coonoor, Nilgiris and not in New Delhi and that the appellant No. 2 who is one of the Directors of the appellant company also resides at Ootacamund and his address has mischievously been given as New Delhi. It is contended that the address of the appellant No. 2 which is given is a "care of address" so as to make out a cause of action at New Delhi and as a matter of fact the aforesaid Delhi address of the appellant No. 2 is that of the father of the appellant No. 2.
6. Counsel appearing for the appellant has however contended before us that the cheque was presented by the appellant at New Delhi and it was dishonoured at New Delhi and consequently the cause of action has partly arisen in New Delhi and, therefore, the suit should have been held to be maintainable.
7. In support of the said contention the counsel appearing for the appellant has specifically drawn our attention to the decision of the Supreme Court in I.T. Commr. v. Ogale Glass Works Ltd. and Gouri Shankar v. Ram Banka . In fact the Patna decision referred to by the counsel appearing for the appellant is relied upon and based on the decision of the Supreme Court in the decision of Ogale Glass Works Ltd. (supra).
8. In the aforesaid background facts the issue that arise for our consideration is whether or not the cause of action has arisen within the territorial jurisdiction of this Court so as to enable the appellant to file the aforesaid suit in this Court. In Ogale Glass Works Ltd. (supra) the question which came for consideration was the liability to pay income tax in respect of payments made through cheques. In paragraph 7 of the impugned judgment, the learned Single Judge has discussed at length as to why the facts of the case are distinguishable from the facts of the present case. In the said case the Supreme Court generally examined the question of dishonour of cheques. The Supreme Court in the facts of the said case observed that when it is said that the payment by a negotiable instrument is a conditional payment, what is meant is that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand. The Supreme Court ultimately held that the posting of the cheques at Delhi, in law, amounted to payment in Delhi and, therefore, the income, profits and gains in respect of the sales made to the Government of India were received in Delhi, which was part of British India and were, therefore, taxable.
9. Facts of the said case, therefore, are distinguishable from the facts of the present case. This is also held to be so by the learned Single Judge. In Ogale Glass Works Ltd. (supra) the Supreme Court observed thus:
There can be no doubt that as between the sender and the addressee it is the request of the addressee that the cheque be sent by post that makes the post office the agent of the addressee.
The said observations were made in the light of the facts that Ogale Glass Works Ltd. had expressly requested the Government of India to remit the amounts of the bills by cheque. The Supreme Court observed that this clearly amounted, in effect, to an express request by the said company to send the cheques by post and, therefore, the posting of the cheques at Delhi, at law, amounted to payment in Delhi, therefore, the Delhi Court would have jurisdiction.
10. The position, however, in the present case is different. The cheque was not required to be posted. The said cheque was accepted by the appellant from the Respondent at Ootacamund and the cheque was also drawn on a bank at Ootacamund.
11. The case of Gouri Shankar (supra) which was decided by the Patna High Court was a decision where the law laid down in Ogale Glass Works (supra) was relied upon and referred to. The Patna High Court after extracting the facts and ratio of the aforesaid decision held that in the said case the cheques were drawn at Giridih by the respondent on a Bombay Bank and they were encashed by the appellant through the Giridih branch of United Commercial Bank who got the cheques encashed from the Bombay Bank. A suit had been filed in respect of the cheques at the Bombay Civil Court. One of the issues which arose before the Patna High Court was whether the Court at Bombay had any jurisdiction in the matter and as to whether the decree passed by the Bombay Court was without jurisdiction. It was observed that insofar as the cash payments were concerned, the cause of action wholly arose at Giridih. But, the three cheques which were in question, though issued at Giridih, were drawn on a Bombay Bank. After placing reliance on the Supreme Court decision in the case of Oagale Glass Works (supra), the learned Judge observed that a payment by a negotiable instrument is a conditional payment in the sense that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand. It was also held in the said decision that a cheque, unless dishonoured is payment, subject to the condition that it should be duly honoured on the proper date, in other words, the cheque should operate as payment unless defeated by dishonour. The Court ultimately observed as follows:
In the instant case, therefore, the cause of action arose partly at Giridih where the cheques were delivered and partly at Bombay where the cheques were honoured by the Bank; and it must be held that the Bombay Court had jurisdiction to entertain the suit.
12. In the background facts of the said case it is clearly established that the facts of the said case are different and have no resemblance to the facts of the present case. On the other hand, the learned Single Judge referred to the decision of the Supreme court in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. . In the said case one of the main issues was what is meant by "the bank" as mentioned in Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881. The facts of the said case relied upon by the respondent was considered by the learned Single Judge. In the said case, i.e., Shri Ishar Alloy Steels Ltd. (supra) , the Supreme Court held that "the bank" referred to in Clause (a) of the proviso to said Section 138 had reference to 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 favor the cheque is issued. In the said decision, the Supreme Court in paragraph 9 and 10 held as follows:
9. 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 indirect(sic indefinite) article and the latter is pre-fixed by a direct 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 pre-fixed by the indefinite article "a" and the word "bank" where the cheque is intended to be presented under Section 138 is pre-fixed 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 of 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 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 favor the cheque is issued.
10. 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 favor 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 under Section 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 Section 32, 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.
13. Considering the facts of the case, we find no reason to take a different view than what was taken by the learned Single Judge who has given very cogent reasons for coming to the conclusion that the Delhi Court will have no territorial jurisdiction to decide the matter. In that view of the matter, we find no merit in this appeal and the same is dismissed. However, it will naturally flow that once it is held that Delhi Court will have no jurisdiction the consequences would be to return the plaint to the appellant and the legal consequences would flow.