M/S Swastik Sales Corporation & ... vs M/S Advanced Medical Optics (I) ...
2010 Latest Caselaw 1185 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+         Crl.M.C.No. 842/2009 & Crl.M.C.No. 843/2009

%                      Date of Order: 03rd March, 2010

#    M/s Swastik Sales Corporation & Ors.  .....Petitioners
!                  Through: Mr. Chirag M. Shroff, Adv.
                   versus
$    M/s Advanced Medical Optics (I) Pvt. Ltd. ..... Respondent
^                 Through: Mr. Mohit Mathur &
                            Mr.Maneesh, Advs.
*    CORAM:
     HON'BLE MR. JUSTICE V.K. JAIN
     1.   Whether the Reporters of local papers
          may be allowed to see the judgment?             No
     2.   To be referred to the Reporter or not?          No
     3.   Whether the judgment should be
          reported in the Digest?                         No

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

1. These are two petitions under Section 482 of the Code of

Criminal Procedure seeking quashing of the criminal complaint

filed against the petitioners, by the respondent, under Section

138 of Negotiable Instruments Act. The quashing has been

sought primarily on the ground that Delhi Court has no

jurisdiction to hear and try these complaints.

2. This is not the case of the complainant that cheque in

question was issued and delivered to it in Delhi. There is no

such allegation to this effect in the complaint and during the

course of arguments also no such stand was taken by the

learned counsel for the complainant. It is an admitted case

that the petitioners are the resident of Mumbai and do not

have either a residence or a place of work in Delhi. It is an

admitted case that cheques in question were drawn on a bank

in Mumbai and were dishonoured by that bank at Mumbai. It

is also an admitted position that the notice of demand, though

issued from Delhi, was sent to the petitioners at Mumbai. This

is nowhere the case of the complainant that the notice of

demand was served upon the petitioners in Delhi.

3. The averments made in the complaint show that

according to the complainant, the cheques issued by the

petitioners was deposited by it with Bank of America, New

Delhi and the Notice of Demand was also issued from Delhi.

4. The question whether issue of Notice of Demand from

Delhi to a person who resides and works for gain outside Delhi

came up for consideration before the Hon‟ble Supreme Court

in „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.

5. 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.

6. 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.

7. 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."

8. This issue has been examined by me in a number of

cases, including the WP.(Crl.).861/09, 884/09, 885/09

decided on 8th February, 2010, Crl.M.C.1841/2009 decided

on 17th February, 2010, Crl.M.C.3309/2009 &

Crl.M.C.3334/2009 decided on 24th February, 2010. After

referring to the decision of the Hon‟ble Supreme Court in the

case of Herman Electronics (supra), this Court, inter alia,

held as under:

"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."

9. 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."

10. 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.

11. Relying upon the decision of the Hon‟ble Supreme Court

in K. Bhaskaran Vs. Sankaran Vaidhyan Balan and Another

1999 (7) SCC 510 and Shamshad Begum Vs. B. Mohammed

2008 (13) SCC 77, it is contended by the learned counsel for

the respondent that if the place where the drawee bank, is

situated, is taken as the place of presentation of cheque, that

would mean that the place of presentation as well as the place

of return of the cheque will be one and the same and in that

case, it will not be possible for each Court in whose area any of

the five essentials of the offence under Section 138 of

Negotiable Instruments Act is committed, to have jurisdiction

to entertain and try the complaint.

12. In my view, the contention cannot be accepted,

considering the authoritative pronouncement of the Hon‟ble

Supreme Court in Shri Ishar Alloy Steels Ltd. (supra).

Neither in the case of K. Bhaskaran (supra) nor in the case of

Shamshad Begum (supra), the Hon‟ble Supreme Court was

concerned with the interpretation of the expression "the bank"

in clause (a) to the proviso to Section 138 of Negotiable

Instruments Act, whereas in the case of Shri Ishar Alloy

Steels Ltd. (supra), the Hon‟ble Supreme Court directly dealt

with this issue and made an authoritative pronouncement that

the place where drawee bank is situated will be the place

where the cheque is presented for encashment.

13. For the reasons given in the preceding paragraphs, I am

of the view that Delhi Court has no jurisdiction to entertain

and try this complaint. It is, therefore, directed that the

complaint filed by respondent be returned to it within four

weeks for presenting it before a competent court having

jurisdiction in the matter.

(V.K.JAIN) JUDGE MARCH 03, 2010 bg