Som Sugandh Industries Ltd. & Anr. vs Uoi & Anr.
2010 Latest Caselaw 677 Del

    *      IN THE HIGH COURT OF DELHI AT NEW DELHI

    +                      W.P.(Crl.) No. 861, 884 & 885 of 2009

                                             Date of Order: 8th February 2010

    #      SOM SUGANDH INDUSTRIES LTD. & ANR. ..... Petitioners
!                     Through: Mr. Sandeep Bhalla, Adv.


                                   versus


    $      UOI & ANR.                                   ..... Respondents
^                                   Through: Mr. G.S. Kanojia, Adv. for R-1.
                                             Mr. Mukesh Anand, Mr. R.C.
                                             Bhadoria and Mr. Shailesh
                                             Tiwari, Advs. for R-2.

    *      CORAM:
           HON'BLE MR. JUSTICE V.K. JAIN

           1.      Whether the Reporters of local papers
                   may be allowed to see the judgment?                Yes

           2.      To be referred to the Reporter or not?             Yes

           3.      Whether the judgment should be
                   reported in the Digest?                            Yes


    : V.K. JAIN, J. (Oral)

1. The petitioners in these petitions under Article 226 of the

Constitution are challenging the order passed by the learned

Metropolitan Magistrate taking cognizance of the complaint filed

by the respondents against them under Section 138 of

Negotiable Instruments Act, on the ground that Delhi Courts do

not have jurisdiction to entertain and try these complaints.

According to the petitioners, they are carrying business in

Kundli, in District Sonepat, Haryana, cheques in question were

issued in Haryana, cheques were drawn at Punjab National

Bank, HSIDC Complex, Kundli (Haryana) and the notice of

demand is alleged to have been sent to the petitioners in

Haryana, though it was not received by them.

2. The respondents have contested the petition and have

claimed that Delhi Court does have jurisdiction in the matter as

Commissionerate, Central Excise falls under the jurisdiction of

Chief Commissioner of Central Excise having office in Delhi and

notice demanding the amount of the cheque was also issued

from Delhi.

3. It is not in dispute that Som Sugandh Industries Ltd., the

company which issued the cheques in question and is the

primary accused in the complaint filed by the respondents, is

having its office works in Village Nathupur, Kundli, District

Sonepat of Haryana. This is not the case of the respondent that

the company also has office, factory or other place of business in

Delhi. There is no allegation to this effect in the complaint filed

by the respondent.

4. According to the petitioners, cheques in question were

issued to Superintendent, Central Excise (Anti Evasion) Rohtak.

This factual assertion has not been disputed by the respondent.

Even otherwise, this fact is evident from the cheques issued by

the company, which have been issued in favour of Pay &

Accounts Officer, Central Excise, Commissionerate, Rohtak.

5. It is also not in dispute that the cheques in question were

drawn on Punjab National Bank, HSIDC Complex, Kundli,

Sonepat (Haryana). This is also evident from a perusal of the

cheques, copies of which have been filed with the petitions, and

has otherwise not been disputed by the respondents.

6. A perusal of the notices sent by the respondents to the

petitioners, copy of which is annexed to the petition and has not

been disputed by the respondents, would show that the notice to

all the accused persons was sent at the address of Village

Nathupur, Kundli, Sonepat (Haryana).

7. The issue involved in these petitions came up for

consideration before the Hon‟ble Supreme Court in a recent

decision - „Harman Electronics Private Limited and Anr. v.

National Panasonic India Private Limited', (2009) 1 SCC

720. In that case, the appellant was carrying 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 the cheque, a

complaint was filed at Delhi. An 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 and the respondent was carrying out business

at Delhi, the Delhi court had jurisdiction to entertain the

complaint.

8. As regard, issue of notice from Delhi, Hon‟ble Supreme

Court held that issuance of notice would not by itself give rise to

a cause of action but communication of notice would give. The

Hon‟ble Court was of the view that for constituting offence u/s

138 of Negotiable Instruments Act, the notice must be received

by the accused, though it may be deemed to have been received

in certain situations. The Hon‟ble Supreme Court also referred

to its own decision in „Mosaraf Hossain Khan v.

Bhagheeratha Engg. Ltd.' (2006) 3 SCC 658. In that case

respondent No.1 issued certain cheques to the appellant from

Ernakulam, which were deposited by him with Suri Branch of

the Bank. The respondent was also having an office at

Ernakulam. On return of the cheques, demand notice was sent

by the appellant to the respondents. On non-payment, criminal

complaint was filed by the appellant in the court of the Chief

Judicial Magistrate, Bir Bhum at Suri. It was observed that

sending of cheques from the Ernakulam or the respondent

having an offence at that place did not form an integral part of

the cause of action for which a complaint petition was filed by

the appellant and cognizance of the offence u/s 138 of

Negotiable Instruments Act was taken by the Chief Judicial

Magistrate, Suri. It was noted that while issuance of notice by

the holder of Negotiable Instrument is necessary, service thereof

is also imperative and only after service of such notice and

failure on the part of the accused to pay the demanded amount,

within a period of 15 days thereafter, the commission of an

offence completes and, therefore, giving of notice cannot have

precedence over the service. The Hon‟ble Court declined to

apply the civil law Principle that the debtor must seek the

creditor, to a criminal case. Holding that jurisdiction in a

criminal case is governed by the provisions of Criminal

Procedure Code and not on common law principle, it was held

that Delhi Court had no jurisdiction to try the case.

9. The following observations made by the Hon‟ble Supreme

Court in this case are pertinent:

"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, the commission of an offence completes."

10. In view of the above referred authoritative

pronouncements of the Hon‟ble Supreme Court in the case of

Harman Electronics (supra) jurisdiction of Delhi Courts cannot

be claimed on the ground that notice of demand was dispatched

by the complainant from Delhi. The learned counsel for the

petitioner has relied upon the decision of the Hon‟ble Supreme

Court in „Shamshad Begum v. B. Mohammed.‟ AIR 2009 SC

1355. In that case, the respondent filed a complaint against the

appellant at Mangalore under Section 138 of Negotiable

Instruments Act. Before filing complaint, the respondent had

issued a notice to the appellant from Mangalore and a reply was

sent by her to the complainant at his Mangalore address. The

appellant filed a petition in Karnataka High Court under Section

482 of the Code of Criminal Procedure, seeking quashing of the

complaint on the ground that since the agreement between the

parties was entered into at Bangalore and the cheques were

returned from the banks at Bangalore, only Bangalore court had

jurisdiction to try the case. The High Court having dismissed

the petition, the appellant came to the Supreme Court by

obtaining Special Leave. Relying upon its earlier decision in K.

Bhaskaran's case (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 could have

been done at five different localities though in-concatenation of

all the above five is a sine qua non for completion of the offence

u/s 138 of the Act. The appeal was, dismissed, thereby

upholding the decision of the High Court. This judgment was

considered by me in Crl.M.C. 1580/2009 titled „K.O. ISSAC &

Anr. vs. State & Anr.‟ decided on 21st October 2010 alongwith

other judgment on the subject including the later decision of the

Hon‟ble Supreme Court in the case of Harman Electronics

(supra) and I took the view that mere sending of notice from

Delhi to the accused, who is outside the jurisdiction of Delhi

Court, does not confer jurisdiction of Delhi Court to entertain

and try a complaint under Section 138 of Negotiable

Instruments Act.

11. Proviso (b) to Section 138 of Negotiable Instruments Act

requires payee of the cheque or its holder in due course, as the

case may be, to make a demand of the amount of the cheque by

giving a written notice to the drawer of the cheque. The

question which arises for consideration is as to whether the

demand is made at the place where the drawer of the cheque

resides or works for gain or it is made at the place from where

the notice of demand is dispatched to the drawer of the cheque.

Since the requirement of the proviso will not be fulfilled without

service of notice upon the drawer and considering the decision

of the Hon‟ble Supreme Court in the case of Harman

Electronics (supra) holding therein that civil law principle that

the debtor must seek the creditor does not apply to a criminal

case, the demand shall be deemed to have been made at the

place where the notice is served upon the drawer and not at the

place from where it is dispatched to him. In fact in view of the

decision in the case of Harman Electronics (supra), the notice

shall be deemed to have been given at the place where it is

served upon the addressee and not at the place from where it

was dispatched.

12. In the present case, the respondents have not claimed

before me that cheques issued by the accused petitioner

company were deposited by them in Delhi. But, even if that be

the case, that also would not give jurisdiction to Delhi Court to

try these complaints.

13. In 'Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd,‟

(2001) 3 SCC 609, the Hon‟ble Supreme Court inter-alia, held

that "The bank" referred to in clause (a) to the proviso of Section

138 of the Act would mean the drawee bank on which the

cheque is drawn and not all the banks where the cheque is

presented for collection including the bank of the payee, in

whose favour the cheque is issued."

It was further observed that "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 para 10 of the judgment the Hon‟ble Supreme Court

further observed that "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."

14. The ratio of the above referred judgment of the Hon‟ble

Supreme Court is that a cheque is deemed to have been

presented to the banker of the drawer irrespective of the fact

whether it is deposited by the payee in his own bank. The

banker of the payee, after receiving the cheque from him, is

required to present it to the banker of the drawer and therefore

if the cheque issued from a bank outside Delhi is deposited in

Delhi, the bank in which it is deposited in Delhi, is required to

present it to the bank outside Delhi, for the purpose of

encashment.

15. For the reasons given in the preceding paragraphs, all the

three complaints, subject matter of these petitions, are liable to

be returned to the complainant, for filing them before a

competent court of jurisdiction. The learned counsel for the

respondents states that in case the complaints are directed to be

returned, they would present the same before Chief Judicial

Magistrate, Sonepat. Hence, the trial court is directed to return

the complaints, subject matter of these petitions, to the

complainant in order to enable it to institute them before Chief

Judicial Magistrate, Sonepat.

The parties are directed to appear before Chief Judicial

Magistrate at 10 AM on 22nd February 2010. If, there are other

accused appearing before the learned Metropolitan Magistrate,

he shall direct them as well to appear before Chief Judicial

Magistrate, Sonepat on the aforesaid date and time.

One copy of this order be sent to trial court, within three

days, for information and compliance.

V.K. JAIN (JUDGE) FEBRUARY 08, 2010 Ag