M/S Mahika Enterprises & Anr. vs State (Nct Of Delhi) & Anr.
2010 Latest Caselaw 4631 Del

*          IN THE HIGH COURT OF DELHI AT NEW DELHI

+      CRL. M.C. 1988/2010
+      CRL. M.C. 1989/2010
+      CRL. M.C. 2373/2010

%                               Decided on: 1st October, 2010

M/S MAHIKA ENTERPRISES & ANR.                ..... Petitioner
                   Through:  Mr. Ranjit Khatri, Adv.

                         Versus

STATE (NCT OF DELHI) & ANR.                         ..... Respondents

                         Through:     Mr. M.P. Singh, APP for the
                                      State
                                      Mr. I. Ghosh, Adv. for
                                      respondent No. 2.


CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK

1.     Whether the Reporters of local papers
       may be allowed to see the judgment?             Not necessary

2.     To be referred to Reporter or not?              Not necessary

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


A.K. PATHAK, J. (ORAL)

1. The above petitions are being disposed of together as not only

these are similar in facts, but the questions of law canvassed before

this Court, are also same.

2. Petitioners seek quashing of complaints under Section 138 of

the Negotiable Instruments Act, 1881 (for short hereinafter referred

to as "the Act") filed by respondent no.2, pending in the court of

Metropolitan Magistrate, New Delhi. It was alleged in the complaint

that the petitioner no. 1 was appointed as dealer by respondent no.2

for the sale and purchase of electrical goods manufactured by it.

From time to time, goods were supplied by the respondent no. 2 to

petitioner no.1. Respondent no.2 was maintaining an account in

his books regarding the supplies made and the payments received.

Petitioner no. 2 was proprietor/partner of petitioner no.1. In order

to discharge its liability, petitioner no.1 had issued cheques bearing

nos. 916032 dated 2nd October, 2008 for Rs.71,337/-, 916033 dated

22nd October, 2008 for Rs.10,000/- and the third cheque bearing

no. 916034 dated 13th March, 2009 for Rs.71,337/- all drawn on

State Bank of Mysore, J.C. Road Branch, Bangalore, favouring the

respondent No. 2. On presentation, aforesaid cheques were

returned unpaid by the banker of respondent no.2 with the remarks

"payment stopped by the drawer" on 13th October, 2008, 28th

October, 2008 and 24th March, 2009 respectively. Despite service of

statutory notices of demand dated 21st October, 2008, 17th

November, 2008 and 30th March, 2009 in respect of the above

cheques, petitioners failed to pay the amount of these cheques

within fifteen days of the service of said notices. Thus, petitioners

had committed an offence under Section 138 of the Act.

3. With regard to territorial jurisdiction of Delhi courts, it was

alleged that cause of action to file the complaints had arisen within

the jurisdiction of Delhi as respondent no.2 had presented the

cheques in its account in Corporation Bank, Connaught Place

Branch, New Delhi as also the notices were issued from Delhi.

4. From the averments made in the complaint it is clear that,

according to the respondent no.2, Delhi courts were having

jurisdiction since the cheques were presented for encashment by

respondent no.2 with its banker at New Delhi as also because the

notice of demand had been issued from Delhi. Thus, the question

which needs to be answered in this case is as to whether the Delhi

courts have jurisdiction to entertain and try the complaint under

Section 138 of the Act (i) because the cheques had been deposited

by the complainant/respondent no.2 with its bank for collection at

Delhi; (ii) since the legal demand notices were issued from Delhi;

even though no other cause of action had arisen within the

territorial jurisdiction of Delhi courts.

5. Letter head of respondent no. 2 shows that its registered office

is at Kolkata with its head office at Delhi. Invoices show that

respondent no.2 has its works at Faridabad. From the photocopy of

e-mail placed on record (Annexure R-5), it appears that respondent

No. 2 also has a regional office at Bangalore. Be that as it may, in

the complaint, as per the complainant, jurisdiction of Delhi courts

has been invoked only on the ground that cheques had been

presented at Delhi as also the statutory notices were issued from

Delhi.

6. In the facts of this case, in my view, merely because the

cheques had been deposited by the respondent no. 2 with its bank

at Delhi for collection would not attract the jurisdiction of this court.

Similarly, issuance of statutory demand notice from Delhi will also

not vest the jurisdiction in Delhi courts.

7. In K. Bhaskaran vs. Sankaran Vaidhyan Balan and

Another (1999) 7 SCC 510, it had been held that the offence under

Section 138 of the Act can be completed only with the concatenation

of number of acts, that is (i) drawing of the cheque (ii) presentation

of the cheque to the bank (iii) returning the cheque unpaid by the

drawee bank (iv) giving notice in writing to the drawer of the cheque

demanding payment of the cheque amount (v) failure of the drawer

to make payment within 15 days of the receipt of the notice. In case

the 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. In other words, the complainant can chose any of those courts

having jurisdiction over any one of the local areas within the

territorial limits of which any one of those five acts was done.

8. It may be noted that in this case respondent no.2 has invoked

the jurisdiction of Delhi courts on the grounds of (i) presentation of

the cheque by the respondent No. 2 in its bank at Delhi (ii) giving

notice in writing to the drawer of the cheque demanding payment of

cheque amount.

9. In Harman Electronics (P) Ltd. & Anr. vs. M/s National

Panasonic India Ltd. AIR 2009 SC 1168, Supreme Court had

held that mere issuance of notice would not attract territorial

jurisdiction of that court. In V.S. Thakur vs. State of NCT of

Delhi & Anr. (Delhi) 2010 (1) JCC (NI) 40, a Single Judge of this

Court has held that sending of notice from Delhi by itself would not

confer jurisdiction on Delhi courts. Similar view has been taken in

Som Sugandh Industries Ltd. & Anr. II (2010) DLT (CRL.) 475.

In this judgment also, it was held that mere sending of notices from

Delhi to outside does not confer jurisdiction on Delhi courts. In

Online IT Shoppe India Pvt. Ltd. & Ors. vs. State & Anr. 2010

(1) JCC (NI) 27, also it was held that sending notice from Delhi need

not confer jurisdiction on Delhi courts.

10. Section 138 of the NI Act reads as under :-

"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 2["a term which may extend to two year"], 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 induce 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, 3["within thirty days"] of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(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."

11. Bare perusal of Section 138 of the N.I. Act clearly indicates

that the cheque has to be presented on the drawer's bank where

account has been maintained. It is only the banker of the drawer

which will be in position to say that the cheque amount exceeds the

arrangement. Only drawer's bank can return the cheque unpaid on

account of "insufficient funds" in the account of drawer or for any

other reason. The payee of the cheque has no option but to present

the cheque for encashment to the drawer's bank on which the

cheque had been drawn either personally or through a bank. 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 that too within a period of

six months. This makes it clear that merely because the payee had

deposited the cheque in his bank at Delhi by itself would not be

sufficient to show that he had "presented the cheque" at Delhi.

12. In Shroff publisher and Distributors Pvt. Ltd. vs. Springer

India Pvt. Ltd. 2008 Criminal Law Journal 1217, it has been

held that the payee has an 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 drawer's

bank, on which cheque is drawn. In Ishar Alloy Steel Ltd. vs.

Jayaswals NECO Ltd. 2001 II AD (S.C.) 330, Supreme Court held

that "the bank" referred to in Clause (a) to the proviso to Section

138 of the Act means 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 favour the

cheque is issued. In ICICI Bank Ltd. vs. Subhash Chand Bansal

& Ors. 160 (2009) Delhi Law Times 379, this Court held that the

court in whose territorial jurisdiction drawee bank is situated would

have territorial jurisdiction to entertain the complaint in question.

Similar view has been taken in Online IT Shopee India Pvt. Ltd.,

and V.S. Thakur (reports cited supra).

13. Counsel for the respondent has placed reliance on Din Dayal

Kayan vs. SMC Global Securities Ltd. 171 (2010) Delhi Law

Times 447 and an unreported judgment dated 21st July, 2010 of a

Single Judge of this Court in Crl. M.C. 555/2010. In my view, these

judgments do not advance the case of respondent no.2 in any

manner being in different facts, in as much as, the catena of

judgments cited supra have not been considered therein. In K.

Bhaskaran (supra), place of business of complainant has not been

identified as the place vesting the court with necessary jurisdiction.

14. For the foregoing reasons, it is ordered that the complaints

filed by the respondent no.2 be returned to it within four weeks for

presenting the same before a competent court having jurisdiction

over the matter.

15. All the above petitions are disposed of in the above terms.

A.K. PATHAK, J.

October 01, 2010/ga