Smt. Meenu Jain vs Shri Parasram Securities Pvt. ...
2011 Latest Caselaw 1435 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                      Judgment delivered on: March 11, 2011

+      CRIMINAL M.C. NO.3822/2010

       SMT. MEENU JAIN                              ....PETITIONER
               Through:       Mr.S.S.Jain, Advocate with
                              Mr.S.Sukhija, Advocate.

                        Versus

       SHRI PARASRAM SECURITIES PVT. LTD .....RESPONDENT

Through: Mr. R.K.Jain, Advocate.

CORAM:

HON'BLE MR. JUSTICE AJIT BHARIHOKE

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

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

AJIT BHARIHOKE, J.(ORAL)

1. Meenu Jain, the petitioner herein vide instant petition has

prayed for quashing of complaint case No. 1928/1/2006 under

Section 138 read with Section 142 of N.I.Act titled "Sh. Parasram

Securities Pvt. Ltd. Vs. Meenu Jain" on the ground the Delhi Court

lacks territorial jurisdiction to try said complaint.

2. Briefly stated, facts relevant for disposal of this petition are

that the petitioner and the respondent have business dealings in

relation to commodity trading transactions. The petitioner had a

Running Account with the respondent. On 28 th March, 2006, the

petitioner issued two cheques bearing Nos. 947422 & 947423 for Rs.

2 Lakhs each drawn at Punjab National Bank, Bombay Bazar, Meerut

(UP) in favour of the respondent against the discharge of purported

liability. The cheques, when presented for encashment, were

dishonoured and returned by the drawee bank with the remarks

"Funds Insufficient". Respondent thus issued a notice of demand

under Section138 N.I.Act to the petitioner but the petitioner failed to

pay the cheques amount. This led to filing of complaint against the

petitioner.

3. Learned M.M., on consideration of the complaint and the

affidavit evidence led by the complainant, issued process for

appearance against the petitioner.

4. Learned counsel for the petitioner submits that the impugned

order of learned M.M. is untenable for the reason that no part of

transaction constituting the offence under Section 138 Negotiable

Instruments Act took place within the territory of Delhi, as such, in

view of Section 177 of the Code of Criminal Procedure, 1973, Delhi

Court has no territorial jurisdiction to try the offence. Elaborating on

the argument, learned counsel submits that the offence under

Section 138, N.I.Act is complete only with the concatenation of a

number of acts namely, (1) drawing of the cheque, (2) presentation

of the cheque to the bank, (3) return of the cheque unpaid by the

drawee bank, (4) giving notice in writing to the drawer of the

cheque demanding payment of the cheque amount and (5) failure of

the drawer to make payment within 15 days of the receipt of the

notice. Learned counsel contended that neither of the above

constituting ingredients of Section 138, N.I.Act took place within the

territory of Delhi, as such, Delhi Court has no territorial jurisdiction

in the matter.

5. Learned counsel for the respondent, on the other hand, has

argued that Section 178 of the Code of Criminal Procedure provides

that if an offence consists of several acts done in different local

areas, then the offence can be tried by a court having jurisdiction of

any of such local areas. He argued that in the instant case, part of

cause of action has arisen in Delhi because the respondent company

is located at Delhi and the payment of the cheque amount was

required to be made at Delhi. In support of this contention, learned

counsel for the respondent has relied upon the judgment of

Supreme Court in the matter of K.Bhaskaran Vs. Sankaran

Vaidhyan Balan, (1999) 7 SCC 510.

6. The question of territorial jurisdiction of a court to try an

offence under Section 138, N.I.Act came up for the consideration of

the Supreme Court in Harman Electronics (P) Ltd. & Anr. Vs.

M/s. National Panasonic India Ltd., 2009 (1) SCC 720. In the

said matter, Supreme Court considered the earlier judgment in

K.Bhaskaran‟s case (supra) and held that Delhi Courts have no

jurisdiction to try the case, inter alia, observing thus:

"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. 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 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."

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‟: „A person notifies or gives notice 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 the court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure." For the said purpose, a presumption was drawn as regards refusal to accept a notice.

10. We may, before proceeding to advert to the contentions raised by the parties hereto, refer to another decision of this Court in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. wherein this Court categorically held:

"7. 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 a rebuttable one, he has two options before him. One is to concede to the stand of the sendee that as a matter 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 dispatcher 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."

It was furthermore held:

"8. ... The payee or holder of the cheque may, therefore, without taking pre-emptory 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‟."

13. 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 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 provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act are 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 that 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.

21. We cannot, as things stand today, be oblivious of the fact that a banking institution holding several cheques signed by the same borrower can not 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-à-vis the provisions of the Code of Criminal Procedure."

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

(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 cognizance 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 offence 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."

7. In Shri Ishar Alloy Sales Ltd. V. Jayaswals Neco Ltd., (2001)

3 SCC 609, the Supreme Court held that the expression "the bank"

occurring in proviso (a) to Section 138 of the N.I.Act means the drawee

bank and not the collecting bank. Hence, in order to attract the

criminal liability under Section 138, N.I. Act, the cheque must be

presented to the drawee bank within the statutory period either

personally or through a collecting bank. That being the law, the place

of location of collecting bank through which cheque was sent to some

other branch jurisdiction would not confer jurisdiction on the courts

having territorial jurisdiction over that place.

8. In the instant case, undisputedly the petitioner is located at

Meerut. The cheques in question were issued at Meerut, the

cheques were sent for collection to the drawee bank at Meerut and

even the notice of demand under Section 138, N.I.Act was served

upon the petitioner at Meerut address. Therefore, it is apparent that

the entire cause of action for filing a complaint under Section 138

N.I.Act has arisen at Meerut.

9. Otherwise also, on perusal of the complaint, it transpires that

besides the two cheques which are subject matter of instant

petition, the petitioner had allegedly issued other cheques in favour

of the respondent in relation to the Running Account. Those

cheques were also dishonoured and the respondent, after serving

the requisite notice of demand under Section 138 N.I.Act on the

petitioner and on failure of the petitioner to pay the amount of those

cheques, filed complaint pertaining to dishonour of those cheques in

the court at Meerut. Even otherwise, as per the complaint, the

cheques in question were admittedly presented for encashment by

the respondent through its banker, namely HDFC Bank Ltd., Western

Kuchery Road, Meerut, U.P. From this, it is evident that the cheques

which are subject matter of this petition were presented for

encashment by the respondent in his bank at Meerut. Merely by

sending the notice of demand under Section 138 N.I. Act, the

respondent cannot confer jurisdiction on Delhi court when all the

acts constituting ingredients of the offence took place at Meerut,

U.P. Thus, I find no merit in the contention of the complainant that

part of cause of action arose within the territory of Delhi.

10. In view of the discussion above, I am of the considered view

that entire cause of action relating to offence under Section 138 N.I.

Act has arisen within the territorial jurisdiction of U.P. Court, as such,

Delhi Courts have no jurisdiction to try the matter. Accordingly the

petition is allowed and the criminal proceedings in complaint case

No. 1928/1/2006 under Section 138 read with Section 142 of N.I.Act

titled "Sh. Parasram Securities Pvt. Ltd. Vs. Meenu Jain" pending in

the court of learned M.M. are set aside. The learned Metropolitan

Magistrate is directed to return the complaint to the respondent for

being filed in the court of appropriate jurisdiction at Meerut (UP).

11. Petition stands disposed of.

(AJIT BHARIHOKE) JUDGE MARCH 11, 2011/akb