Monday, 15 September 2014

SUE WHERE IT BOUNCES

BHASKARAN

The legal position regarding jurisdiction of the courts for the purposes of Section 138 offences was laid down in the case of K. Bhaskaran vs Sankaran Vaidhyan Balan & Anr [1]. In this landmark judgement, the Hon'ble Supreme Court laid down five essential components as follows:

The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence : (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 is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at 5 different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful. It is extracted below:

Where the offence consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas.”

“Thus it is clear, if 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 choose any one 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…..”

DASHRATH RUPSINGH RATHOD

The Hon’ble Supreme Court, however, in a very recent judgement, Dashrath Rupsingh Rathod vs State of Maharashtra, overruled its earlier decision (Bhaskaran). In Dashrath Rupsingh Rathod vs State of Maharashtra[2], the Hon'ble Court stated that a reading of Section 138 NI Act in conjunction with Section 177, Code of Criminal Procedure leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed. The place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located. An interpretation should not be imparted to Section 138 which will render it as a device of harassment i.e. by sending notices from a place which has no casual connection with the transaction itself, and/or by presenting the cheque(s) at any of the banks where the payee may have an account…..……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.”


RAMANBHAI MATHURBHAI PATEL

The Bombay High Court further confirmed the decision of Dashrath Roopsingh in Ramanbhai Mathurbhia Patel. The issue that required adjudication in this case was “………which Court will have territorial jurisdiction to try the offence punishable u/s. 138 of Negotiable Instruments Act, when the cheque payable at all branches of the drawee bank has been dishonoured by one of the branches of the drawee bank."

“In the present case, the drawer had accounts at Gandhi Nagar branches of the two banks mentioned herein above and cheques have been dishonoured by the branches of the said two banks situated within the jurisdiction of Metropolitan Magistrate, Kurla. The question which arises for determination is as to whether the payee has to file complaint in the Court of Magistrate having jurisdiction over Gandhi Nagar branches or the branches which have dishonoured cheques…….”

The Hon’ble High Court of Bombay further held “……..It is thus clear that in the present case by issuing cheques payable at all branches, the drawer of the cheques had given an option to the banker of payee to get the cheques cleared from the nearest available branch of bank of the drawer. It, therefore, follows that the cheques have been dishonoured within the territorial jurisdiction of Court of Metropolitan Magistrate at Kurla……”

Therefore, in case of cheques which may be presented before any branch of the bank in which the payer has an account, the jurisdiction may be of the Court having jurisdiction over the branch of the bank where the cheque has been dishonoured.


[1] AIR1999SC3762
[2] 2014 (2) ALD(Crl.) 190 (SC)

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