Full Judgment Text
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Reserved on: 10 December, 2014
% Date of Decision: 19thDecember, 2014
+ CRL. M.C. 4380/2014
M/S BOSTON BEVERAGES PVT. LTD. ..... Petitioner
Through: Mr. Rajat Wadhwa, Advocate
versus
M/S KINGSTON BEVERAGES & ORS. .....Respondents
Through: Mr.V. Sridhar Reddy, Advocate
+ CRL. M.C. 4381/2014
M/S BOSTON BEVERAGES PVT.LTD. ..... Petitioner
Through: Mr. Rajat Wadhwa, Advocate
versus
RAMESH BABU SADHU .....Respondent
Through: Mr. V. Sridhar Reddy, Advocate
CORAM:
HON'BLE MR. JUSTICE VED PRAKASH VAISH
JUDGMENT
1. By was of these petitions filed under Section 482 of Code of
Criminal Procedure, 1973 (hereinafter referred to as „Cr.P.C.‟), the
petitioner assails orders dated 06.09.2014 passed by learned
Metropolitan Magistrate (NI Act), Central-01, Tis Hazari Courts, Delhi
Crl. M.C. No.4380/2014 & connected matter Page 1 of 15
(in Crl. M.C. No.4380/2014) and order dated 08.09.2014 passed by
learned Metropolitan Magistrate-03, Central, Tis Hazari Courts, Delhi
(in Crl. M.C. No.4381/2014), whereby the complaint(s) have been
returned to the petitioner/ complainant for filing the same in the
Court(s) having proper jurisdiction.
2. Since both these petitions involve an identical question of law
and, therefore, these petitions are being disposed of by this common
order.
3. Briefly stating the facts giving rise to filing the present petitions
are that the petitioner/ complainant filed complaint(s) under Section
138 of Negotiable Instruments Act, 1881 („NI Act‟, for short) against
respondents for the offence under Section 138 of NI Act. Crl. M.C.
No.4380/2014 pertains to cheque Nos.034059 dated 15.04.2014 &
034060 dated 15.05.2014 for a sum of Rs.10,00,000/- (Rupees Ten
lakhs) each, and Crl. M.C. No.4381/2014 pertains to cheque No.
034064 dated 10.04.2014 for Rs.1,50,000/- (Rupees One lakh fifty
thousand), all drawn on IDBI Bank Ltd., H.No. 3-3-54/A, Kachiguda
Station Road, Hyderabad – 500027.
4. In order to have better understanding of facts of the cases, it
would be appropriate to refer to facts of one case. The facts are being
extracted from Crl. M.C. No.4380/2014. The complainant is a
company incorporated under the Indian Companies Act, 1956 having
its registered office at B-2B/302, Janakpuri, New Delhi-110058. The
respondent No.1 herein (accused No.1 firm in the original complaint)
is a Partnership Firm and respondent No.2 to 4 are its Partners who
Crl. M.C. No.4380/2014 & connected matter Page 2 of 15
carry out day to day work of the respondent No. 1 Firm. The
complainant company and the accused firm entered into an agreement
dated 12.05.2012. In terms of the said agreement the complainant
company advanced certain sums of money towards the accused firm
who in payment of the said amount issued four postdated cheques
bearing nos. 034059 dated 15.04.2014, 034060 dated 15.05.2014,
034061 dated 15.06.2014 and 034063 dated 15.07.2014 all drawn on
IDBI Bank Ltd., H.No. 3-3-54/A, Kachiguda Station Road, Hyderabad
– 500027, for Rs. 10,00,000/- (Rupees Ten lakhs) each. On
presentation, the cheques no. 034059, 034060 and 034063 were
dishonoured with the remarks „funds insufficient‟ and cheque No.
034061 has been dishonoured for the reason „alteration requires drawer
authentication‟. However, the complainant filed the complaint in
respect of cheques No. 034059 and 034060 and retained its right to
exercise other legal remedies for the other two cheques No. 034061
th
and 034063. Despite service of statutory notice dated 15 July 2014,
the respondents failed to make payment of amount of the said cheques.
5. Vide the said impugned orders, learned trial courts returned the
complaint(s) to the petitioner/ complainant for filing the same before
the Court of competent jurisdiction, in view of the judgment in
„ Dashrath Rupsingh Rathod vs. State of Maharashtra & Anr. ‟
(Criminal Appeal No.2287 of 2009 decided on 01.08.2014).
6. Feeling aggrieved by the said orders, the petitioner has filed the
present petitions.
7. Learned counsel for the petitioner contended that now a days,
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almost all the branches of the bank are covered under Core Banking
Solutions (CBS) and in terms of guidelines issued by Reserve Bank of
India vide circular No.RBI/2012-13/163 DPSS.CO.CHD.
No.271/03.01.02/2012-13 dated 10.08.2012, all CBS enabled banks
have been asked to issue only „ payable at par ‟/ „ multi-city ‟ CTS 2010
standard cheques to all eligible customers. It has been argued on
behalf of the petitioner that one of the essential features of multi-city/
cheques payable at par is that the holder of cheque can present the
same at any CBS enabled branch of the drawee bank in order to encash
the said cheque. That being so, the complainant is well within its right
to initiate prosecution for the offence under Section 138 of the NI Act
at the place where the branch in which the cheque in question was
presented for its encashment irrespective of the fact that such branch
was not the home branch of the drawee bank where the accused was
having a bank account. In other words, the main thrust of argument
raised on behalf of the petitioner/ complainant is that the complaint
under Section 138 of NI Act can be instituted even at that branch of a
bank wherein the cheques in question were deposited and got
dishonoured, in addition to the home branch of the drawee bank
wherein the accused has bank account. When the accused issued such
a cheque „ payable at par ‟ there was an express authority to the
complainant under the aforesaid condition to present the cheque in any
branch of the concerned Bank.
8. Per contra , learned counsel for respondents/ accused urged that
territorial jurisdiction to entertain and try cases filed under Section 138
of NI Act, would lie with Courts within whose jurisdiction the home
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branch of the drawee bank in which the accused has a bank account
from which cheques in question have been issued, is situated and at no
other place. In support of their submission, they have placed heavy
reliance upon the judgment of „ Dashrath Rupsingh Rathod vs. State
of Maharashtra and Another ‟, 2014 (9) Supreme Court Cases 129 .
9. I have bestowed my thoughtful consideration to the submissions
made by learned counsel for both the parties and have also perused the
material on record.
10. As is evident from the above discussion, the moot question
involved in all these petitions is as to whether Delhi Courts would have
territorial jurisdiction to try the cases instituted under Section 138 of
NI Act merely because the cheques in question are „ payable at par ‟ at
all branches of drawee bank being „ multi-city cheques ‟ and one of the
branches of drawee bank is situated at Delhi.
11. In order to appreciate the rival submissions made on behalf of
both the parties, it would be appropriate to refer to the relevant
provisions contained in NI Act. The relevant provisions are as under:
“ 6. "Cheque". - A "cheque" is a bill of exchange drawn
on a specified banker and not expressed to be payable
otherwise than on demand and it includes the electronic
image of a truncated cheque and a cheque in the
electronic form.
Explanation I. – For the purposes of this section, the
expressions –
(a) “a cheque in the electronic form” means a
cheque which contains the exact mirror image of a
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paper cheque, and is generated, written and signed
in a secure system ensuring the minimum safety
standards with the use of digital signature (with or
without biometrics signature) and asymmetric
crypto system;
(b) “a truncated cheque” means a cheque which is
truncated during the course of a clearing cycle, either by
the clearing house or by the bank whether paying or
receiving payment, immediately on generation of an
electronic image for transmission, substituting the further
physical movement of the cheque in writing.
Explanation II. – For the purpose of this section, the
expression “clearing house” means the clearing house
managed by the Reserve Bank of India or a clearing
house recognized as such by the Reserve Bank of India.
68. Presentment for payment of instrument payable at
specified place and not elsewhere. – A promissory note,
bill of exchange or cheque made, drawn or accepted
payable at a specified place and not elsewhere must, in
order to charge any party thereto, be presented for
payment at that place.
69. Instrument payable at specified place. – A
promissory note or bill of exchange made, drawn or
accepted payable at a specified place must, in order to
charge the maker or drawer thereof, be presented for
payment at that place.
70. Presentment where no exclusive place specified.
– A promissory note or bill of exchange, not made
payable as mentioned in sections 68 and 69, must be
presented for payment at the place of business (if any), or
at the usual residence, of the maker, drawee or acceptor
thereof, as the case may be.”
12. The issue of territorial jurisdiction of Court to try the offence
Crl. M.C. No.4380/2014 & connected matter Page 6 of 15
under Section 138 of NI Act has been set at rest by the decision of
three Judges Bench of the Hon‟ble Supreme Court of India in the
celebrated case Dashrath Rupsingh Rathod (supra) wherein the Apex
Court observed as under: -
“21. The interpretation of Section 138 of the NI Act
which commends itself to us is that the offence
contemplated therein stands committed on the dishonour of
the cheque, and accordingly JMFC at the place where this
occurs is ordinarily where the complaint must be filed,
entertained and tried. The cognizance of the crime by
JMFC at that place however, can be taken only when the
concomitants or constituents contemplated by the section
concatenate with each other. We clarify that the place of
the issuance or delivery of the statutory notice or where the
complainant chooses to present the cheque for
encashment by his bank are not relevant for purposes of
territorial jurisdiction of the complaints even though non-
compliance therewith will inexorably lead to the dismissal
of the complaint. It cannot be contested that considerable
confusion prevails on the interpretation of Section 138 in
particular and Chapter XVII in general of the NI Act. The
vindication of this view is duly manifested by the decisions
and conclusion arrived at by the High Courts even in the
few cases that we shall decide by this judgment. We clarify
that the complainant is statutorily bound to comply with
Section 177, etc. of CrPC and therefore the place or situs
where the Section 138 complaint is to be filed is not of his
choosing. The territorial jurisdiction is restricted to the
court within whose local jurisdiction the offence was
committed, which in the present context is where the
cheque is dishonoured by the bank on which it is drawn.
(emphasis supplied)
22. We are quite alive to the magnitude of the impact
that the present decision shall have to possibly lakhs of
cases pending in various courts spanning across the
country. One approach could be to declare that this
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judgment will have only prospective pertinence i.e.
applicability to complaints that may be filed after this
pronouncement. However, keeping in perspective the
hardship that this will continue to bear on alleged
respondent-accused who may have to travel long
distances in conducting their defence, and also mindful of
the legal implications of proceedings being permitted to
continue in a court devoid of jurisdiction, this recourse in
entirety does not commend itself to us. Consequent on
considerable consideration we think it expedient to direct
that only those cases where, post the summoning and
appearance of the alleged accused, the recording of
evidence has commenced as envisaged in Section 145(2)
of the Negotiable Instruments Act, 1881, will proceeding
continue at that place. To clarify, regardless of whether
evidence has been led before the Magistrate at the pre-
summoning stage, either by affidavit or by oral
statement, the complaint will be maintainable only at
the place where the cheque stands dishonoured . To
obviate and eradicate any legal complications, the
category of complaint cases where proceedings have
gone to the stage of Section 145(2) or beyond shall be
deemed to have been transferred by us from the court
ordinarily possessing territorial jurisdiction, as now
clarified, to the court where it is presently pending. All
other complaints (obviously including those where the
respondent-accused has not been properly served) shall
be returned to the complainant for filing in the proper
court, in consonance with our exposition of the law. If
such complaints are filed/refiled within thirty days of
their return, they shall be deemed to have been filed
within the time prescribed by law, unless the initial or
prior filing was itself time-barred.”
(emphasis supplied)
13. While agreeing with the view taken by Hon‟ble Mr. Justice
Vikramjit Sen, it has been further held by Hon‟ble Mr. Justice T.S.
Crl. M.C. No.4380/2014 & connected matter Page 8 of 15
Thakur in the aforesaid judgment as under: -
“58. To sum up:
58.1. An offence under Section 138 of the Negotiable
Instruments Act, 1881 is committed no sooner a cheque
drawn by the accused on an account being maintained by
him in a bank for discharge of debt/liability is returned
unpaid for insufficiency of funds or for the reason that
the amount exceeds the arrangement made with the bank.
58.2. Cognizance of any such offence is however
forbidden under Section 142 of the Act except upon a
complaint in writing made by the payee or holder of the
cheque in due course within a period of one month from
the date the cause of action accrues to such payee or
holder under clause ( c ) of proviso to Section 138.
58.3. The cause of action to file a complaint accrues to a
complainant/ payee/ holder of a cheque in due course if:
( a ) the dishonoured cheque is presented to the drawee
bank within a period of six months from the date
of its issue,
( b ) if the complainant has demanded payment of
cheque amount within thirty days of receipt of
information by him from the bank regarding the
dishonour of the cheque, and
( c ) if the drawer has failed to pay the cheque amount
within fifteen days of receipt of such notice.
58.4. The facts constituting cause of action do not
constitute the ingredients of the offence under Section
138 of the Act.
Crl. M.C. No.4380/2014 & connected matter Page 9 of 15
58.5. The proviso to Section 138 simply
postpones/defers institution of criminal proceedings and
taking of cognizance by the court till such time cause of
action in terms of clause ( c ) of the proviso accrues to the
complainant.
58.6. Once the cause of action accrues to the
complainant, the jurisdiction of the court to try the case
will be determined by reference to the place where the
cheque is dishonoured.
58.7. The general rule stipulated under Section 177
CrPC applies to cases under Section 138 of the
Negotiable Instruments Act. Prosecution in such cases
can, therefore, be launched against the drawer of the
cheque only before the court within whose jurisdiction
the dishonour takes place except in situations where the
offence of dishonour of the cheque punishable under
Section 138 is committed along with other offences in a
single transaction within the meaning of Section 220(1)
read with Section 184 of the Code of Criminal Procedure
or is covered by the provisions of Section 182(1) read
with Sections 184 and 220 thereof.
59. Before parting with this aspect of the matter, we
need to remind ourselves that an avalanche of cases
involving dishonour of cheques has come upon the
Magistracy of this country. The number of such cases as
of October 2008 were estimated to be more than 38 lakhs
by the Law Commission of India in its 213th Report. The
result is that cases involving dishonour of cheque are in
all major cities choking the criminal justice system at the
Magistrate's level. Courts in the four metropolitan cities
and other commercially important centres are particularly
burdened as the filing of such cases is in very large
numbers. More than five lakh such cases were pending in
criminal courts in Delhi alone as of 1-6-2008. The
position is no different in other cities where large number
Crl. M.C. No.4380/2014 & connected matter Page 10 of 15
of complaints are filed under Section 138 not necessarily
because the offence is committed in such cities but
because multinational and other companies and
commercial entities and agencies choose these places for
filing the complaints for no better reason than the fact
that notices demanding payment of cheque amounts were
issued from such cities or the cheques were deposited for
collection in their banks in those cities. Reliance is often
placed on Bhaskaran case [ K. Bhaskaran v. Sankaran
Vaidhyan Balan , (1999) 7 SCC 510 : 1999 SCC (Cri)
1284] to justify institution of such cases far away from
where the transaction forming basis of the dishonoured
cheque had taken place. It is not uncommon to find
complaints filed in different jurisdiction for cheques
dishonoured in the same transaction and at the same
place. This procedure is more often than not intended to
use such oppressive litigation to achieve the collateral
purpose of extracting money from the accused by
denying him a fair opportunity to contest the claim by
dragging him to a distant place. Bhaskaran case [ K.
Bhaskaran v. Sankaran Vaidhyan Balan , (1999) 7 SCC
510 : 1999 SCC (Cri) 1284] could never have intended to
give to the complainant/payee of the cheque such an
advantage. Even so, experience has shown that the view
taken in Bhaskaran case [ K. Bhaskaran v. Sankaran
Vaidhyan Balan , (1999) 7 SCC 510 : 1999 SCC (Cri)
1284] permitting prosecution at any one of the five
different places indicated therein has failed not only to
meet the approval of other Benches dealing with the
question but also resulted in hardship, harassment and
inconvenience to the accused persons. While anyone
issuing a cheque is and ought to be made responsible if
the same is dishonoured despite compliance with the
provisions stipulated in the proviso, the court ought to
avoid an interpretation that can be used as an instrument
of oppression by one of the parties. The unilateral acts of
a complainant in presenting a cheque at a place of his
choice or issuing a notice for payment of the dishonoured
amount cannot in our view arm the complainant with the
Crl. M.C. No.4380/2014 & connected matter Page 11 of 15
power to choose the place of trial. Suffice it to say, that
not only on the principles of interpretation of statutes but
also the potential mischief which an erroneous
interpretation can cause in terms of injustice and
harassment to the accused the view taken in Bhaskaran
case [ K. Bhaskaran v. Sankaran Vaidhyan Balan , (1999)
7 SCC 510 : 1999 SCC (Cri) 1284] needs to be revisited
as we have done in foregoing paragraphs.”
14. On bare reading of provisions contained in Section 138 read
with Section 142 of NI Act and the view taken by the Apex Court in
Dashrath Rupsingh Rathod (supra), there is no scope of confusion
that complaint under Section 138 of NI Act will be maintainable only
at the place where the cheque stands dishonoured. In other words, the
prosecution for the offence under Section 138 of NI Act would only lie
at the place where the drawee bank is situated.
15. No doubt, a cheque which is made „ payable at par ‟/ „ multi-city ‟
cheque can be presented at any of the branches of bank, which has
been nominated as CBS branch of the drawee bank in terms of the
recent guidelines issued by Reserve Bank of India vide circular dated
10.08.2012. However, it is to be noticed that the said guidelines had
been issued by Reserve Bank of India with altogether different object.
The said object is to facilitate speedy encashment of amount against
cheques more particularly in cases of out stationed cheques. It is a
matter of common knowledge that in the past, there used to be
considerable delay in collection of out stationed cheques which led to
number of complaints from customers and members of public at large.
The average time consumed in the out stationed cheque used to be
Crl. M.C. No.4380/2014 & connected matter Page 12 of 15
somewhere between seven days to one month. In order to improve the
service with regard to collection of out stationed cheques, facility of
cheques which are „ payable at par ‟/ „ multi-city cheques ‟ was
introduced in the banking system. In order to regulate the same,
Reserve Bank of India also issued policy which is known as Policy on
Multi-city/payable at par CTS 2010 Standard Cheques. The perusal of
the said policy would reveal that certain limit has been prescribed on
payment of multi-city cheques at non-home branches as mentioned
therein.
16. According to the said policy, in case cheque account of multi-
city cheque to be presented at non-home branch in case of saving bank
account, is more than Rs.10,00,000/- (Rupees Ten lakhs) then same
would not be accepted by non-home branch of the drawee bank and
thus, it has to be presented at the home branch of the drawee bank for
its encashment. Same is the position with regard to other types of bank
accounts like current account, cash credits, etc.
17. There is another reason due to which the contention raised on
behalf of petitioner/ complainant cannot be sustained. The cheque
amount is supposed to be paid from the account of accused/
respondents maintained at home branch of drawee bank. It is merely
as a result of computerization of all the branches of bank, facility has
been provided for encashment of cheques payable at par at any branch
irrespective of the fact that account holder was not having bank
account in the branch where the cheque is presented. Merely because
the cheque has been presented at non-home of drawee bank, it does not
Crl. M.C. No.4380/2014 & connected matter Page 13 of 15
in any manner, become the drawee bank for the obvious reason that
before encashing the cheque payable at par, the non-home branch is
still required to verify from home branch of the drawee branch as to
whether or not there was any impediment in encashment of the cheque
drawn at home branch. Even otherwise, in the event of encashment,
the amount of cheque would be required to be debited in the account of
the accused maintained at home branch as the amount was only
payable by the home branch of drawee bank. Therefore, the
presentation of cheque at non-home branch of drawee bank being the
cheque which is payable at par/ multi-city cheque, will not change the
character of drawee bank and would not confer territorial jurisdiction
on Delhi Courts.
18. The sequitur of the above discussion is that Delhi Courts have
no territorial jurisdiction to entertain and try the complaint(s) which are
subject matter of the present petition. Accordingly, all the petitions are
hereby dismissed and the impugned orders dated 06.09.2014 and
08.09.2014 passed by learned trial court are hereby maintained.
19. The complaint(s) and original documents be returned to the
petitioner/complainant for filing the same in appropriate Court(s)
having territorial jurisdiction to entertain and try the same within a
period of 30 days.
20. A copy of this order be sent to the trial court for information and
necessary compliance.
Crl. M.C. No.4380/2014 & connected matter Page 14 of 15
Crl. M.A. No.15016/2014 in Crl. M.C. 4380/2014
Crl. M.A. No.15018/2014 in Crl. M.C. 4381/2014
The above applications are dismissed as infructuous.
(VED PRAKASH VAISH)
JUDGE
DECEMBER 19th , 2014
hs
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