Negotiable Instruments Act - Criminal Procedure Code- Section 177 -If a cheque payable at all branches,
the drawer of the cheque had given an option to the banker of payee to get the
cheque cleared from the nearest available branch of bank of the drawer. It,
therefore, follows that the cheque has been dishonoured within the
territorial jurisdiction of Court of Metropolitan Magistrate, that court has jurisdiction to entertain and decide the complaint in question
Bombay High Court
WRIT PETITION NO. 2362 OF 2014
Hon'ble Judge(s): M. L. Tahaliyani,
Date of Judgment: 25 /08/2014
Mr.Ramanbhai Mathurbhai Patel V State of Maharashtra & Anr. .
J U D G M E N T
M. L. Tahaliyani, J.
03. The petitioner is facing trial for the offence
punishable u/s. 138 of N.I.Act vide Summary Criminal Case No. 3684 of 2013 in
the Court of Metropolitan Magistrate, 59th Court at Kurla. The complaint was
originally filed in 61th Court at Kurla and now it has been transferred to 59th
Court at Kurla by the Chief Metropolitan Magistrate. The petitioner is
aggrieved by the order passed by the learned Metropolitan Magistrate issuing
process against the petitioner to answer the charge for the offence punishable
u/s 138 of Negotiable Instruments Act. He wants that the complaint be returned
to the respondent No. 2 (original complainant) for being presented before the
Court having territorial jurisdiction to entertain and try the case.
04. The two cheques in question were admittedly issued by
the petitioner in favour of the respondent No.2. The first cheque of Rs.
9,90,000/- was drawn on State Bank of India, Gandhinagar Branch, Ahmedabad,
Gujarat. The other cheque was drawn on Bank of Maharashtra, Gandhinagar Branch,
Ahmadabad, Gujarat. Both the cheques were payable at par at all branches of the
respective banks. The issue raised before me by the learned counsel for the
petitioner, during the course of argument, is that both the cheques were
dishonoured at Ahmadabad and that, therefore, in view of the judgment of the
Honourable Supreme Court in the matter of Dashrath v. State of Maharashtra
(Criminal Appeal No. 2287 of 2009), Mumbai Court will have no jurisdiction to
entertain and try the complaint.
05. The learned counsel for the respondent No.2 has
submitted that since both the cheques were payable at all branches of
respective banks and since both the cheques were dishoured by the Mumbai
branches of State Bank of India and Bank of Maharashtra situated within the
jurisdiction of Metropolitan Magistrate, Kurla, the respondent No.2 was right
in filing the complaint in the court of Metropolitan Magistrate at Kurla.
06. The issue which needs determination is as to whether
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. In
this regard, one may refer to the judgment of Hon'ble Supreme Court in the
matter of Dashrath v. State of Maharashtra cited (supra). While summing up the
judgment, the Hon'ble Supreme Court has said at para 31 as under:
“31.To sum up:
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
general rule stipulated under Section 177 of Cr.P.C. 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
also refer to para 17 of the said judgment where the Hon'ble supreme Court has
said as under:
“17. ..... In our discernment, it is also now manifest that
traders and businessmen have become reckless and incautious in extending credit
where they would heretofore have been extremely hesitant, solely because of the
availability of redress by way of criminal proceedings. It is always open to
the creditor to insist that the cheques in question be made payable at a place
of the creditor's convenience (emphasis supplied)”.
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. In view
of judgment of Hon'ble Supreme Court in the matter of Dashrath v. State of
Maharashtra cited (supra), the learned Metropolitan Magistrate of Kurla Court
has jurisdiction to entertain and decide the complaint in question.
9.I do not
find any substance in the petition.The
petition stands dismissed.
stay of this Order for two weeks is rejected.
Negotiable Instruments Act - Criminal Procedure Code- Section 177 -A complaint about a bounced cheque must only be filed at the place where the bank dishonoured it. The
general rule stipulated under Section 177 of
Cr.P.C 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
Supreme Court of India
Criminal Appeal No.2287
W I T H
CRIMINAL APPEAL NO. 1593
[Arising out of S.L.P.(Crl.)No.2077 of 2009];
CRIMINAL APPEAL NO. 1594
[Arising out of S.L.P.(Crl.)No.2112 of 2009];
CRIMINAL APPEAL NO. 1595
[Arising out of S.L.P.(Crl.)No.2117 of 2009];
CRIMINAL APPEAL NOS. 1596-1600 OF 2014
[Arising out of S.L.P.(Crl.)Nos.1308-1312 of 2009];
CRIMINAL APPEAL NO.1601
[Arising out of S.L.P.(Crl.)No.3762 of 2012];
CRIMINAL APPEAL NO. 1602
[Arising out of S.L.P.(Crl.)No.3943 of 2012];
CRIMINAL APPEAL NO.1603
[Arising out of S.L.P.(Crl.)No.3944 of 2012]; AND
CRIMINAL APPEAL NO. 1604
[Arising out of
S.L.P.(Crl.)No.59 of 2013]
Hon'ble Judge(s): T.S.
THAKUR, VIKRAMAJIT SEN & C. NAGAPPAN
Date of Judgment: 1/08/2014
Rupsingh Rathod Vs. State
of Maharashtra & Anr.
J U D G M E N T
VIKRAMAJIT SEN, J.
Leave granted in Special Leave Petitions. These Appeals raise a legalnodus of substantial public importance pertaining to Court’s territorial jurisdiction concerning criminal complaints filed under Chapter XVII of the Negotiable Instruments Act, 1881 (for short, ‘the NI Act’). This is amply adumbrated by the Orders dated 3.11.2009 in I.A.No.1 in CC 15974/2009 of the three-Judge Bench presided over by the then Hon’ble the Chief Justice of India, Hon’ble Mr. Justice V.S. Sirpurkar and Hon’ble Mr. Justice P.Sathasivam which SLP is also concerned with the interpretation of Section 138 of the NI Act, and wherein the Bench after issuing notice on the petition directed that it be posted before the three-Judge Bench.
The earliest and the most often quoted decision of this Court relevant tote present conundrum is K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7SCC 510 wherein a two-Judge Bench has, inter alia, interpreted Section 138 of the NI Act to indicate that, “the offence under Section 138 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.”The provisions of Sections 177 to 179 of the Code of Criminal Procedure,1973 (for short, ‘CrPC’) have also been dealt with in detail. Furthermore, Bhaskaran in terms draws a distinction between ‘giving of notice’ and ‘receiving of notice’. This is for the reason that clause (b) of proviso to Section 138 of the NI Act postulates a demand being made by the payee or the holder in due course of the dishonoured cheque by giving a notice in writing to the drawer thereof. While doing so, the question of the receipt of the notice has also been cogitated upon. The issuance and the receipt of the notice is significant because in a subsequent judgment of a Coordinate Bench, namely, Harman Electronics Pvt.Ltd. v. National Panasonic India Pvt. Ltd. (2009) 1 SCC 720 emphasis has been laid on the receipt of the notice, inter alia, holding that the cause of action cannot arise by any act of omission or commission on the part of the ‘accused’, which on a holistic reading has to be read as ‘complainant’. It appears that Harman transacted business out of Chandigarh only, where the Complainant also maintained an office, although its Head Office was in Delhi. Harman issued the cheque to the Complainant at Chandigarh; Harmanhad its bank account in Chandigarh alone. It is unclear where the Complainant presented the cheque for encashment but it issued the Section 138 notice from Delhi. In those circumstances, this Court had observed that the only question for consideration was “whether sending of notice from Delhi itself would give rise to a cause of action for taking cognizance under the NI Act.” It then went on to opine that the proviso to this Section “imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken.” We respectfully agree with this statement of law and underscore that in criminal jurisprudence there is a discernibly demarcated difference between the commission of an offence and its cognizance leading to prosecution. The Harman approach is significant and sounds a discordant note to the Bhaskaran ratio. Harman also highlights the reality that Section 138 of the NI Act is being rampantly misused so far as territorial jurisdiction for trial of the Complaint is concerned. With the passage of time equities have therefore transferred from one end of the pendulum to the other. It is now not uncommon for the Courts to encounter the issuance of a notice incompliance with clause (b) of the proviso to Section 138 of the NI Act from a situs which bears no connection with the Accused or with any facet of the transaction between the parties, leave aside the place where the dishonour of the cheque has taken place. This is also the position as regards the presentation of the cheque, dishonour of which is then pleaded as the territorial platform of the Complaint under Section 138 of the NI Act. Harman, in fact, duly heeds the absurd and stressful situation, fast becoming common-place where several cheques signed by the same drawer are presented for encashment and requisite notices of demand are also despatched from different places. It appears to us that justifiably so at that time, the conclusion in Bhaskaran was influenced in large measure by curial compassion towards the unpaid payee/holder, whereas with the passage of two decades the manipulative abuse of territorial jurisdiction has become a recurring and piquant factor. The liberal approach preferred in Bhaskaran now calls for a stricter interpretation of the statute, precisely because of its misemployment so far as choice of place of suing is concerned. These are the circumstances which have propelled us to minutely consider the decisions rendered by two-Judge Benches of this Court. It is noteworthy that the interpretation to be imparted to Section 138 of the NI Act also arose before a three-Judge Bench in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001) 3 SCC 609 close on the heels of Bhaskaran. So far as the factual matrix is concerned, the dishonoured cheque had been presented for encashment by the Complainant/holder in his bank within the statutory period of six months but by the time it reached the drawer’s bank the aforementioned period of limitation had expired. The question before the Court was whether the bank within the postulation of Section 138 read with Sections 3 and 72 of the NI Act was the drawee bank or the collecting bank and this Court held that it was the former. It was observed that “non-presentation of the cheque to the drawee bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the NI Act, who otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 3, 72 and 138 of the NI 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.” Clearly, and in our considered opinion rightly, the Section had been rendered 'accused-centric’. This decision clarifies that the place where a complainant may present the cheque for encashment would not confer or create territorial jurisdiction, and in this respect runs counter to the essence of Bhaskaran which paradoxically, in our opinion, makes actions of the Complainant an integral nay nuclear constituent of the crime itself. The principle of precedence should promptly and precisely be paraphrased.
A co-ordinate Bench is bound to follow the previously published view; it is certainly competent to add to the precedent to make it logically and dialectically compelling. However, once a decision of a larger Bench has been delivered it is that decision which mandatorily has to be applied; whereas a Co-ordinate Bench, in the event that it finds itself unable to agree with an existing ratio, is competent to recommend the precedent for reconsideration by referring the case to the Chief Justice for constitution of a larger Bench. Indubitably, there are a number of decisions by two-Judge Benches on Section 138 of the NI Act, the majority of which apply Bhaskaran without noting or distinguishing on facts Ishar Alloy. In our opinion, it is imperative for the Court to diligently distill and then apply the ratio of a decision; and the view of a larger Bench ought not to be disregarded. Inasmuch as the three-Judge Bench in Ishar Alloy has categorically stated that for criminal liability to be attracted, the subject cheque has to be presented to the bank on which it is drawn within the prescribed period, Bhaskaran has been significantly whittled down if not overruled. Bhaskaran has also been drastically diluted by Harman inasmuch as it has given primacy to the service of a notice on the Accused instead of its mere issuance by the Complainant.
In Prem Chand Vijay Kumar v. Yashpal Singh (2005) 4 SCC 417, another two-Judge Bench held that upon a notice under Section 138 of the NI Act being issued, a subsequent presentation of a cheque and its dishonour would not create another ‘cause of action’ which could set the Section 138 machinery in motion. In that view, if the period of limitation had run out, a fresh notice of demand was bereft of any legal efficacy. SIL Import, USA v. Exim Aides Silk Exporters (1999) 4 SCC 567 was applied in which the determination was that since the requisite notice had been despatched by FAX on 26.6.1996 the limitation for filing the Section 138 Complaint expired on 26.7.1996. What is interesting is the observation that “four constituents of Section 138 are required to be proved to successfully prosecute the drawer of an offence under Section 138 of the NI Act”(emphasis supplied). It is also noteworthy that instead of the five Bhaskaran concomitants, only four have been spelt out in the subsequent judgment in Prem Chand. The commission of a crime was distinguished from its prosecution which, in our considered opinion, is the correct interpretation of the law. In other words, the four or five concomitants of the Section have to be in existence for the initiation as well as the successful prosecution of the offence, which offence however comes into existence as soon as subject cheque is dishonoured by the drawee bank. Another two-Judge Bench in Shamshad Begum v. B. Mohammed (2008) 13 SCC 77 speaking through Pasayat J this time around applied Bhaskaran and concluded that since the Section 138 notice was issued from and replied to Mangalore, Courts in that city possessed territorial jurisdiction. As already noted above, this view is not reconcilable with the later decision of Harman. The two-Judge Bench decision in Mosaraf Hossain Khan v. Bhagheeratha Engg.Ltd. (2006) 3 SCC 658 requires to be discussed in some detail. A Complaint under Section 138 of the NI Act was filed and cognizance was taken by the Chief Judicial Magistrate, Birbhum at Suri, West Bengal for the dishonour of a number of cheques issued by the accused-company which had its headquarters in Ernakulam, Kerala where significantly the accused-company's bank on whom the dishonoured cheques had been drawn was located. Several judgments were referred to, but not Bhaskaran. The third ingredient in Bhaskaran, i.e. the returning of the cheque unpaid by the drawee bank, was not reflected upon. Inasmuch as Mosaraf Hossain refers copiously to the cause of action having arisen in West Bengal without adverting at all to Bhaskaran, leave aside the three-Judge Bench decision in Ishar Alloy, the decision may be seen as per incuriam. Moreover, the concept of forum non conveniens has no role to play under Section 138 of the NI Act, and furthermore that it can certainly be contended by the accused-company that it was justifiable/convenient for it to initiate litigation in Ernakulam. If Bhaskaran was followed, Courts in Ernakulam unquestionably possessed territorial jurisdiction. It is, however, important to italicize that there was an unequivocal endorsement of the Bench of a previously expressed view that, “where the territorial jurisdiction is concerned the main factor to be considered is the place where the alleged offence was committed”. In similar vein, this Court has opined in Om Hemrajani v. State of U.P. (2005)1 SCC 617, in the context of Sections 177 to 180 CrPC that “for jurisdiction emphasis is on the place where the offence is committed.”The territorial jurisdiction conundrum which, candidly is currently in the cauldron owing to varying if not conflicting ratios, has been cogitated upon very recently by a two-Judge Bench in Criminal Appeal No.808 of 2013 titled Nishant Aggarwal v. Kailash Kumar Sharma decided on 1.7.2013 and again by the same Bench in Criminal Appeal No.1457 of 2013 titled Escorts Limited v. Rama Mukherjee decided on 17.09.2013. Bhaskaran was followed and Ishar Alloy and Harman were explained. In Nishant the Appellant issued post-dated cheque drawn on Standard Chartered Bank, Guwahati in favour of complainant-respondent. It appears that the Appellant had endeavored to create a case or rather a defence by reporting to his bank in Guwahati as well as to the local police station that ‘one cheque (corresponding to the cheque in question) was missing and hence payment should be stopped.’ The Respondent-drawer was a resident of District Bhiwani, Haryana; he presented the cheque for encashment at Canara Bank, Bhiwani but it was returned unpaid. The holder then issued a legal notice which failed to elicit the demanded sum of money corresponding to the cheque value, and thereupon followed it by the filing of a criminal complaint under Sections 138 and141 of the NI Act at Bhiwani. The Judicial Magistrate, Bhiwani, vide order dated 5.3.2011, concluded that the court in Bhiwani did not possess territorial jurisdiction and he accordingly returned the complaint for presentation before the proper Court. The five concomitants of Section 138 extracted in Bhaskaran, were reiterated and various paragraphs from it were reproduced by this Court. Nishant also did not follow Ishar Alloy which, as already analysed, has concluded that the second Bhaskaran concomitant, namely, presentation of cheque to the bank refers to the drawee bank and not the holder’s bank, is not primarily relevant for the determination of territorial jurisdiction. Nishant distinguished Ishar Alloy on the predication that the question of territorial jurisdiction had not been raised in that case. It is axiomatic that when a Court interprets any statutory provision, its opinion must apply to and be determinate in all factual and legal permutations and situations. We think that the dictum inIshar Alloy is very relevant and conclusive to the discussion in hand. It also justifies emphasis that Ishar Alloy is the only case before us which was decided by a three-Judge Bench and, therefore, was binding on all smaller Benches. We ingeminate that it is the drawee Bank and not the Complainant's Bank which is postulated in the so-called second constituent of Section 138 of the NI Act, and it is this postulate that spurs us towards the conclusion that we have arrived at in the present Appeals. There is also a discussion of Harman to reiterate that the offence under Section 138 is complete only when the five factors are present. It is our considered view, which we shall expound upon, that the offence in the contemplation of Section 138 of the NI Act is the dishonour of the cheque alone, and it is the concatenation of the five concomitants of that Section that enable the prosecution of the offence in contradistinction to the completion/commission of the offence.
We have also painstakingly perused Escorts Limited which was also decided by the Nishant two-Judge Bench. Previous decisions were considered, eventually leading to the conclusion that since the concerned cheque had been presented for encashment at New Delhi, its Metropolitan Magistrate possessed territorial jurisdiction to entertain and decide the subject Complaint under Section 138 of the NI Act. Importantly, in a subsequent order, in FIL Industries Ltd. v. Imtiyaz Ahmed Bhat passed on 12th August2013, it was decided that the place from where the statutory notice had emanated would not of its own have the consequence of vesting jurisdiction upon that place. Accordingly, it bears repetition that the ratio in Bhaskaran has been drastically diluted in that the situs of the notice, one of the so-called five ingredients of Section 138, has now been held not to clothe that Court with territorial competency. The conflicting or incongruent opinions need to be resolved.
JUDICIAL APPROACH ON JURISDICTION
We shall take a short digression in terms of brief discussion of the approach preferred by this Court in the context of Section 20 of the Code of Civil Procedure, 1908 (hereinafter referred to as, ‘CPC’), which interalia, enjoins that a suit must be instituted in a court within the local limits of whose jurisdiction the Defendant actually and voluntarily resides, or carries on business, or personally works for gain, or where the cause of action wholly or in part arises. The Explanation to that Sections important; it prescribes that a corporation shall be deemed to carry on business at its sole or principal office, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Since this provision primarily keeps the Defendant in perspective, the corporation spoken of in the Explanation, obviously refers to the Defendant. A plain reading of Section 20 of the CPC arguably allows the Plaintiff a multitude of choices in regard to where it may institute its lis, suit or action. Corporations and partnership firms, and even sole proprietorship concerns, could well be transacting business simultaneously in several cities. If sub-sections (a) and (b) of Section 20 are to be interpreted disjunctively from sub-section (c), as the use of the word ‘or' appears to permit the Plaintiff to file the suit at any of the places where the cause of action may have arisen regardless of whether the Defendant has even a subordinate office at that place. However, if the Defendants' location is to form the fulcrum of jurisdiction, and it has an office also at the place where the cause of action has occurred, it has been held that the Plaintiff is precluded from instituting the suit anywhere else. Obviously, this is also because every other place would constitute a forum on convenient. This Court has harmonised the various hues of the conundrum of the place of suing in several cases and has gone to the extent of laying down that it should be courts endeavour to locate the place where the cause of action has substantially arisen and reject others where it may have incidentally arisen. Patel Roadways Limited, Bombay v. Prasad Trading Company, AIR 1992 SC 1514 = (1991) 4 SCC 270 prescribes that if the Defendant-corporation has a subordinate office in the place where the cause of action arises, litigation must be instituted at that place alone, regardless of the amplitude of options postulated in Section 20 of the CPC. We need not dilate on this point beyond making a reference to ONGC v.Utpal Kumar Basu (1994) 4 SCC 711 and South East Asia Shipping Co. Ltd. v.Nav Bharat Enterprises Pvt. Ltd. (1996) 3 SCC 443.
We are alive to the possible incongruities that are fraught in extrapolating decisions relating to civil law onto criminal law, which includes importing the civil law concept of “cause of action” to criminal law which essentially envisages the place where a crime has been committed empowers the Court at that place with jurisdiction. In Navinchandra N.Majithia v. State of Maharashtra (2000) 7 SCC 640 this Court had toconsider the powers of High Courts under Article 226(2) of the Constitutionof India. Noting the presence of the phrase “cause of action” therein it was clarified that since some events central to the investigation of the alleged crime asseverated in the Complaint had taken place in Mumbai and especially because the fundamental grievance was the falsity of the Complaint filed in Shillong, the writ jurisdiction of the Bombay High Court was unquestionably available. The infusion of the concept of ‘cause of action’ into the criminal dispensation has led to subsequent confusion countenanced in High Courts. It seems to us that Bhaskaran allows multiple venues to the Complainant which runs counter to this Court’s preference for simplifying the law. Courts are enjoined to interpret the law so as to eradicate ambiguity or nebulousness, and to ensure that legal proceedings are not used as a device for harassment, even of an apparent transgressor of the law. Law’s endeavour is to bring the culprit to book and to provide succour for the aggrieved party but not to harass the former through vexatious proceedings. Therefore, precision and exactitude are necessary especially where the location of a litigation is concerned.
The provisions which will have to be examined and analysed are reproduced for facility of reference :
1 Negotiable Instruments Act, 1881
“138. Dishonour of cheque for insufficiency, etc., of funds in the account.-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 a term which may be extended to two years, 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 in due 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, within thirty days of the receipt of information by him from the bank regarding the return of the cheque 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.
Explanation. For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.
142. Cognizance of offences.-Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)-
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138;
Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.”
Code of Criminal Procedure, 1973
“177. Ordinary place of inquiry and trial.- Every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed.
178. Place of inquiry or trial.- (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, it may be inquired into or tried by a Court having jurisdiction over any of such local areas.
179. Offence triable where act is done or consequence ensues.- When an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a Court within whose local jurisdiction such thing has been done or such consequence has ensued.”
The XVIIth fasciculus of the Negotiable Instruments Act containing Sections 138 to 142 was introduced into the statute in 1988. The avowed intendment of the amendment was to enhance the acceptability of cheques. It was based on the Report of the Committee on Banking Laws by Dr. Rajamannar, submitted in 1975, which suggested, inter alia, penalizing the issuance of cheque without sufficient funds. The Minister of Finance had assuaged apprehensions by arguing that safeguards for honest persons had been incorporated in the provisions, viz., (i) the cheque should have been issued in discharge of liability; (ii) the cheque should be presented within its validity period; (iii) a Notice had to be sent by the Payee demanding payment within 15 days of receiving notice of dishonour; (iv) the drawer was allowed to make payment within 15 days from the date of receipt of notice; (v) Complaint was to be made within one month of the cause of action arising; (vi) no Court inferior to that of MM or JMFC was to try the offence. The Finance Minister had also stated that the Court had discretion whether the Drawer would be imprisoned or/and fined. Detractors, however, pointed out that the IPC already envisioned criminal liability for cheque-bouncing where dishonest or fraudulent intention or mensrea on part of the Drawer was evident, namely, cheating, fraud, criminal breach of trust etc. Therefore, there was no justification to make the dishonour of cheques a criminal offence, ignoring factors like illiteracy, indispensable necessities, honest/innocent mistake, bank frauds, bona fide belief, and/or unexpected attachment or freezing of account in any judicial proceedings as it would bring even honest persons within the ambit of Section 138 NI Act. The possibility of abusing the provision as a tool of harassment could also not be ruled out. Critics also decried the punishment for being harsh; that civil liability can never be converted into criminal liability; that singling out cheques out of all other negotiable instruments would be violative of Article 14 of Constitution of India. Critics contended that there was insufficient empirical enquiry into statutes or legislation in foreign jurisdictions criminalizing the dishonour of cheques and statistics had not been made available bearing out that criminalization would increase the acceptability of cheque. The Minister of Finance was not entirely forthright when hestated in Parliament that the drawer was also allowed sufficient opportunity to say whether the dishonour was by mistake. It must be borne in mind that in the U.K. deception and dishonesty are key elements which require to be proved. In the USA, some States have their own laws, requiring fraudulent intent or knowledge of insufficient funds to be made good. France has criminalized and subsequently decriminalized the dishonour except in limited circumstances. Instead, it provides for disqualification from issuing cheques, a practice which had been adopted in Italy and Spain also. We have undertaken this succinct study mindful of the fact that Parliamentary debates have a limited part to play in interpretation of statutes, the presumption being that Legislators have the experience, expertise and language skills to draft laws which unambiguously convey their intentions and expectations for the enactments. What is palpably clear is that Parliament was aware that they were converting civil liability into criminal content inter alia by the deeming fiction of culpability in terms of the pandect comprising Section 138 and the succeeding Sections, which severely curtail defences to prosecution. Parliament was also aware that the offence of cheating etc., already envisaged in the IPC, continued to be available.
CIVIL LAW CONCEPTS NOT STRICTLY APPLICABLE
We have already cautioned against the extrapolation of civil law concepts such as “cause of action” onto criminal law. Section 177 of the CrPC unambiguously states that every offence shall ordinarily be inquired into and tried by a Court within whose local jurisdiction it was committed.“Offence”, by virtue of the definition ascribed to the word by Section 2(n)of the CrPC means any act or omission made punishable by any law. Halsbury states that the venue for the trial of a crime is confined to the place obits occurrence. Blackstone opines that crime is local and jurisdiction over it vests in the Court and Country where the crime is committed. This is obviously the raison d’etre for the CrPC making a departure from the CPC in not making the “cause of action” routinely relevant for the determination of territoriality of criminal courts. The word “action” has traditionally been understood to be synonymous to “suit”, or as ordinary proceedings in a Court of justice for enforcement or protection of the rights of the initiator of the proceedings. “Action, generally means alitigation in a civil Court for the recovery of individual right or redress of individual wrong, inclusive, in its proper legal sense, of suits by the Crown” - [Bradlaugh v. Clarke 8 Appeal Cases 354 p.361]. Unlike civil actions, where the Plaintiff has the burden of filing and proving its case, the responsibility of investigating a crime, marshalling evidence and witnesses, rests with the State. Therefore, while the convenience of the Defendant in a civil action may be relevant, the convenience of the socalled complainant/victim has little or no role to play in criminalprosecution. Keeping in perspective the presence of the word “ordinarily”in Section 177 of CrPC, we hasten to adumbrate that the exceptions to itare contained in the CrPC itself, that is, in the contents of thesucceeding Section 178. The CrPC also contains an explication of“complaint” as any allegation to a Magistrate with a view to his takingaction in respect of the commission of an offence; not being a policereport. Prosecution ensues from a Complaint or police report for thepurpose of determining the culpability of a person accused of thecommission of a crime; and unlike a civil action or suit is carried out (or‘prosecuted’) by the State or its nominated agency. The principaldefinition of “prosecution” imparted by Black’s Law Dictionary 5th Editionis “a criminal action; the proceeding instituted and carried on by dueprocess of law, before a competent Tribunal, for the purpose of determiningthe guilt or innocence of a person charged with crime.” These reflectionsare necessary because Section 142(b) of the NI Act contains the words, “thecause of action arises under the proviso to Section 138”, resultingarguably, but in our opinion irrelevantly, to the blind borrowing ofessentially civil law attributes onto criminal proceedings. We reiteratethat Section 178 admits of no debate that in criminal prosecution, theconcept of “cause of action”, being the bundle of facts required to beproved in a suit and accordingly also being relevant for the place ofsuing, is not pertinent or germane for determining territorial jurisdictionof criminal Trials. Section 178, CrPC explicitly states that every offenceshall ordinarily be inquired into and tried by a Court within whose localjurisdiction it was committed. Section 179 is of similar tenor. We arealso unable to locate any provision of the NI Act which indicates orenumerates the extraordinary circumstances which would justify a departurefrom the stipulation that the place where the offence is committed is wherethe prosecution has to be conducted. In fact, since cognizance of theoffence is subject to the five Bhaskaran components or concomitants theconcatenation of which ripens the already committed offence under Section138 NI Act into a prosecutable offence, the employment of the phrase “causeof action” in Section 142 of the NI Act is apposite for taking cognizance,but inappropriate and irrelevant for determining commission of the subjectoffence. There are myriad examples of the commission of a crime theprosecution of which is dependent on extraneous contingencies such asobtainment of sanction for prosecution under Section 19 of the Preventionof Corruption Act 1988. Similar situation is statutorily created bySection 19 of the Environmental Protection Act 1986, Section 11 of theCentral Sales Tax Act 1956, Section 279 of the Income Tax Act, Sections 132and 308, CrPC, Section 137 of the Customs Act etc. It would be idle tocontend that the offence comes into existence only on the grant ofpermission for prosecution, or that this permission constitutes an integralpart of the offence itself. It would also be futile to argue that theplace where the permission is granted would provide the venue for thetrial. If sanction is not granted the offence does not vanish. Equally,if sanction is granted from a place other than where the crime iscommitted, it is the latter which will remain the place for itsprosecution.
SECTION 138 NI ACT
The marginal note of Section 138 of the NI Act explicitly defines theoffence as being the dishonour of cheques for insufficiency, etc., of fundsin the account. Of course, the headings, captions or opening words of apiece of legislation are normally not strictly or comprehensivelydeterminative of the sweep of the actual Section itself, but it doespresage its intendment. See: Frick India Ltd. v. Union of India (1990) 1SCC 400 and Forage & Co. v. Municipal Corporation of Greater Bombay (1999)8 SCC 577. Accordingly, unless the provisions of the Section clearly pointto the contrary, the offence is concerned with the dishonour of a cheque;and in the conundrum before us the body of this provision speaks in thesame timbre since it refers to a cheque being “returned by the bankunpaid”. None of the provisions of the IPC have been rendered nugatory bySection 138 of the NI Act and both operate on their own. It is trite thatmens rea is the quintessential of every crime. The objective of Parliamentwas to strengthen the use of cheques, distinct from other negotiableinstruments, as mercantile tender and therefore it became essential for theSection 138 NI Act offence to be freed from the requirement of proving mensrea. This has been achieved by deeming the commission of an offence dehors mens rea not only under Section 138 but also by virtue of thesucceeding two Sections. Section 139 carves out the presumption that theholder of a cheque has received it for the discharge of any liability.Section 140 clarifies that it will not be available as a defence to thedrawer that he had no reason to believe, when he issued the cheque, that itwould be dishonoured. Section 138 unequivocally states that the offence iscommitted no sooner the drawee bank returns the cheque unpaid.Section 138 NI Act is structured in two parts – the primary and theprovisory. It must be kept in mind that the Legislature does not ordainwith one hand and immediately negate it with the other. The proviso oftencarves out a minor detraction or diminution of the main provision of whichit is an appendix or addendum or auxiliary. Black Law Dictionary states inthe context of a proviso that it is – “a limitation or exception to a grantmade or authority conferred, the effect of which is to declare that the oneshall not operate, or the other be exercised, unless in the case provided.…. A clause or part of a clause in a statute, the office of which is eitherto except something from the enacting clause, or to qualify or restrain itsgenerality, or to exclude some possible ground of misinterpretation of itsextent.” It should also be kept in perspective that a proviso or acondition are synonymous. In our perception in the case in hand thecontents of the proviso place conditions on the operation of the mainprovision, while it does form a constituent of the crime itself, itmodulates or regulates the crime in circumstances where, unless itsprovisions are complied with, the already committed crime remainsimpervious to prosecution. The proviso to Section 138 of the NI Actfeatures three factors which are additionally required for prosecution tobe successful. In this aspect Section 142 correctly employs the term“cause of action” as compliance with the three factors contained in theproviso are essential for the cognizance of the offence, even though theyare not part of the action constituting the crime. To this extent werespectfully concur with Bhaskaran in that the concatenation of all theseconcomitants, constituents or ingredients of Section 138 NI Act, isessential for the successful initiation or launch of the prosecution. We,however, are of the view that so far as the offence itself the proviso hasno role to play. Accordingly a reading of Section 138 NI Act inconjunction with Section 177, CrPC leaves no manner of doubt that thereturn of the cheque by the drawee bank alone constitutes the commission ofthe offence and indicates the place where the offence is committed.In this analysis we hold that the place, situs or venue of judicial inquiryand trial of the offence must logically be restricted to where the draweebank, is located. The law should not be warped for commercial exigencies.As it is Section 138 of the NI Act has introduced a deeming fiction ofculpability, even though, Section 420 is still available in case the payeefinds it advantageous or convenient to proceed under that provision. Aninterpretation should not be imparted to Section 138 which will render itas a device of harassment i.e. by sending notices from a place which has nocasual connection with the transaction itself, and/or by presenting thecheque(s) at any of the banks where the payee may have an account. In ourdiscernment, it is also now manifest that traders and businessmen havebecome reckless and incautious in extending credit where they wouldheretofore have been extremely hesitant, solely because of the availabilityof redress by way of criminal proceedings. It is always open to thecreditor to insist that the cheques in question be made payable at a placeof the creditor’s convenience. Today’s reality is that the everyMagistracy is inundated with prosecutions under Section 138 NI Act, so muchso that the burden is becoming unbearable and detrimental to the disposalof other equally pressing litigation. We think that Courts are notrequired to twist the law to give relief to incautious or impetuouspersons; beyond Section 138 of the NI Act.
We feel compelled to reiterate our empathy with a payee who has been dupedor deluded by a swindler into accepting a cheque as consideration fordelivery of any of his property; or because of the receipt of a cheque hasinduced the payee to omit to do anything resulting in some damage to thepayee. The relief introduced by Section 138 of the NI Act is in additionto the contemplations in the IPC. It is still open to such a payeerecipient of a dishonoured cheque to lodge a First Information Report withthe Police or file a Complaint directly before the concerned Magistrate.If the payee succeeds in establishing that the inducement for accepting acheque which subsequently bounced had occurred where he resides orordinarily transacts business, he will not have to suffer the travails ofjourneying to the place where the cheque has been dishonoured. Allremedies under the IPC and CrPC are available to such a payee if he choosesto pursue this course of action, rather than a Complaint under Section 138of the NI Act. And of course, he can always file a suit for recoverywherever the cause of action arises dependent on his choosing.
The interpretation of Section 138 of the NI Act which commends itself to usis that the offence contemplated therein stands committed on the dishonourof the cheque, and accordingly the JMFC at the place where this occurs isordinarily where the Complaint must be filed, entertained and tried. Thecognizance of the crime by the JMFC at that place however, can be takenonly when the concomitants or constituents contemplated by the Sectionconcatenate with each other. We clarify that the place of the issuance ordelivery of the statutory notice or where the Complainant chooses topresent the cheque for encashment by his bank are not relevant for purposesof territorial jurisdiction of the Complaints even though non-compliancethereof will inexorably lead to the dismissal of the complaint. It cannotbe contested that considerable confusion prevails on the interpretation ofSection 138 in particular and Chapter XVII in general of the NI Act. Thevindication of this view is duly manifested by the decisions and conclusionarrived at by the High Courts even in the few cases that we shall decide bythis Judgment. We clarify that the Complainant is statutorily bound tocomply with Section 177 etc. of the CrPC and therefore the place or situswhere the Section 138 Complaint is to be filed is not of his choosing. Theterritorial jurisdiction is restricted to the Court within whose localjurisdiction the offence was committed, which in the present context iswhere the cheque is dishonoured by the bank on which it is drawn.
We are quite alive to the magnitude of the impact that the present decisionshall have to possibly lakhs of cases pending in various Courts spanningacross the country. One approach could be to declare that this judgmentwill have only prospective pertinence, i.e. applicability to Complaintsthat may be filed after this pronouncement. However, keeping inperspective the hardship that this will continue to bear on allegedaccused/respondents who may have to travel long distances in conductingtheir defence, and also mindful of the legal implications of proceedingsbeing permitted to continue in a Court devoid of jurisdiction, thisrecourse in entirety does not commend itself to us. Consequent onconsiderable consideration we think it expedient to direct that only thosecases where, post the summoning and appearance of the alleged Accused, therecording of evidence has commenced as envisaged in Section 145(2) of theNegotiable Instruments Act, 1881, will proceeding continue at that place.To clarify, regardless of whether evidence has been led before theMagistrate at the pre-summoning stage, either by affidavit or by oralstatement, the Complaint will be maintainable only at the place where thecheque stands dishonoured. To obviate and eradicate any legalcomplications, the category of Complaint cases where proceedings have goneto the stage of Section 145(2) or beyond shall be deemed to have beentransferred by us from the Court ordinarily possessing territorialjurisdiction, as now clarified, to the Court where it is presently pending. All other Complaints (obviously including those where theaccused/respondent has not been properly served) shall be returned to theComplainant for filing in the proper Court, in consonance with ourexposition of the law. If such Complaints are filed/refiled within thirtydays of their return, they shall be deemed to have been filed within thetime prescribed by law, unless the initial or prior filing was itself timebarred.
DISPOSAL OF PRESENT APPEALS
21. A learned Single Judge of the High Court of Judicature at Bombay,Nagpur Bench has, pursuant to a threadbare discussion of Bhaskaran concluded that since the concerned cheque was drawn on the Bank of India, Bhandara Branch, Maharashtra where it was dishonoured, the Judicial Magistrate First Class, Digras, District Yavatmal had no jurisdiction to entertain the Complaint. It is pertinent to note that the subject cheque was presented at Digras, District Yavatmal where the Complainant had a bank account although he was a resident of District Washim, Maharashtra. The learned Single Judge, in the impugned judgment, had rightly rejected the argument that the Complaint itself should be dismissed; instead he ordered that it be returned to the complainant for filing in the appropriate Court.
22. In this Appeal the Respondent-accused, having purchased electronic items from the Appellant-company, issued the cheque in question drawn on UCO Bank, Tangi, Orissa which was presented by the Complainant-company at State Bank of India, Ahmednagar Branch, Maharashtra as its branch office was located at Ahmednagar. The cheque was dishonoured by UCO Bank, Tangi,Orissa. A Complaint was filed before JMFC, Ahmednagar. An application wasfiled by the Respondent-accused under Section 177 CrPC questioning the jurisdiction of the JMFC Ahmednagar, who held that since the demand notice was issued from and the payment was claimed at Ahmednagar, he possesse djurisdiction to try the Complaint. The High Court disagreed with the conclusion of the JMFC, Ahmednagar that the receipt of notice and non-payment of the demanded amount are factors which will have prominence over the place where from the notice of demand was issued and held that JMFC,Ahmednagar did not have the territorial jurisdiction to entertain the Complaint. In view of the foregoing discussion on the issue above, the place where the concerned cheque had been dishonoured, which in the case in hand was Tangi, Orissa, the Appeal is allowed with the direction that the Complaint be returned to the Complainant for further action in accordance with law.
23. The facts being identical to Criminal Appeal arising out of S.L.P.(Crl.)No.2077 of 2009, these Appeals stand dismissed.
24. The Appellant-complainant herein has its Registered Office in Delhi from where the Respondents-accused are also carrying on their business.The cheques in question were issued by the Respondent No.2-accused drawn on Indian Overseas Bank, Connaught Place, New Delhi. However, the same were presented and dishonoured at Nagpur, Maharashtra where the Complainant states it also has an office. There is no clarification why the cheques had not been presented in Delhi where the Complainant had its Registered Office, a choice which we think is capricious and perfidious, intended to cause harassment. Upon cheques having been dishonoured by the concerned bank at Delhi, five Complaints were filed before Judicial Magistrate FirstClass, Nagpur who heard the Complaints, and also recorded the evidence led by both the parties. However, the JMFC, Nagpur acquitted the RespondentNo.2-accused on the ground of not having territorial jurisdiction. On appeals being filed before the High Court of Bombay, the judgment of theJMFC, Nagpur was partly set aside so far as the acquittal of the RespondentNo.2-accused was concerned and it was ordered that the Complaints be returned for filing before the proper Court. In view of the conclusion arrived at by us above, these Appeals are also dismissed.
25. The cheque in question was drawn by the Respondent-accused on State Bank of Travancore, Delhi. However, it was presented by the Appellant-complainant at Aurangabad. A Complaint was filed before JMFC, Aurangabadwho issued process. Respondent-accused filed an application under Section 203 of CrPC seeking dismissal of the Complaint. The application was dismissed on the predication that once process had been initiated, the Complaint could not be dismissed. On a writ petition being filed beforethe High Court of Bombay, Aurangabad Bench, the order of issuance of process was set aside and the Complaint was ordered to be returned for being presented before a competent court having jurisdiction to entertainthe same. The High Court had correctly noted that the objection pertained to the territorial jurisdiction of the JMFC, Aurangabad, a feature which had not been comprehensively grasped by the latter. The High Court noted that the Registered Office of the Complainant was at Chitegaon, Tehsil Paithan, District Aurangabad whereas the Accused was transacting businessfrom Delhi. The High Court pithily underscored that in paragraph 4 of the Complaint it had been specifically contended that credit facility was givento the Accused in Delhi, where the Complainant-company also had its branch office. The statutory notice had also emanated from Aurangabad, and it had been demanded that payment should be made in that city within the specified time. It was also the Complainant’s case that the Invoice, in case of disputes, restricted jurisdiction to Aurangabad courts; that intimation of the bouncing of the cheques was received at Aurangabad. It is how ever necessary to underscore that the Accused had clarified that the subject transaction took place at Delhi where the goods were supplied and the offending cheque was handed over to the Complainant. It appears that a Civil Suit in respect of the recovery of the cheque amount has already been filed in Delhi. We may immediately reiterate that the principles pertaining to the cause of action as perceived in civil law are not relevant in criminal prosecution. Whilst the clause restrict ingjurisdiction to courts at Aurangabad may have efficacy for civil proceedings, provided any part of the cause of action had arisen in Aurangabad, it has no bearing on the situs in criminal prosecutions. Sincea Civil Suit is pending, we hasten to clarify that we are not expressingany opinion on the question of whether the courts at Delhi enjoy jurisdiction to try the Suit for recovery. In the impugned judgment, the High Court duly noted Bhaskaran and Harman. However, it committed an error in analyzing the cause of action as well as the covenant restricting jurisdiction to Aurangabad as these are relevant only for civil disputes. However, the impugned judgment is beyond interference inasmuch as it concludes that the JMFC, Aurangabad has no jurisdiction over the offence described in the Complaint. The Appeal is accordingly dismissed.
J U D G M E N T
T.S. Thakur, J.
1. I have had the advantage of going through the draft order proposed by my esteemed brother Vikramajit Sen, J. I entirely agree with the conclusions which my erudite brother has drawn based on a remarkably articulate process of reasoning that illumines the draft judgment authored by him. I would all the same like to add a few lines of my own not because the order as proposed leaves any rough edges to be ironed out but only because the question of law that arises for determination is not only substantial but of considerable interest and importance for the commercial world. The fact that the view being taken by us strikes a discordant note on certain aspects which have for long been considered settled by earlier decisions of this Court being only an additional reason for the modest addition that I propose to make. Of these decisions Bhaskaran’s case stands out as the earliest in which this Court examined the vexed question of territorial jurisdiction of the Courts to try offences punishable under Section 138 of the Negotiable InstrumentsAct, 1881 (hereinafter called “NI Act”). Bhaskaran’s case was heard by a two-judge Bench of this Court who took the view that the jurisdiction to try an offence under Section 138 could not be determined only by reference to the place where the cheque was dishonoured. That is because dishonour of the cheque was not by itself an offence under Section 138 of The NegotiableInstruments Act, 1881, observed the Court. The offence is complete only when the drawer fails to pay the cheque amount within the period of fifteen days stipulated under clause (c) of the proviso to Section 138 of the Act.Having said that the Court recognised the difficulty in fixing a place where such failure could be said to have taken place. It could, said the Court, be the place where the drawer resides or the place where the payee resides or the place where either of them carries on business. To resolve this uncertainty the Court turned to Sections 178 and 179 of the Cr.P.C. to hold that since an offence under Section 138 can be completed only with the concatenation of five acts that constituted the components of the offenceany Court within whose jurisdiction any one of those acts was committed would have the jurisdiction to try the offence. The Court held:
“The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. The 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 paymentwithin 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 five different localities. But a concatenation of all the above five is a sine qua non for the completion of the offence underSection 138 of the Code. In this context a reference to Section 178(d) ofthe Code is useful. It is extracted below:
“178. (a)-(c) * * *
(d) where the offence consists of several acts done in different local areas, it may be enquired 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. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act.”
2. Bhaskaran held the field for two years. The first blow to the view taken by this Court in Bhaskaran’s case was dealt by a three-Judge Bench decision in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001) 3SCC 609. The question that arose in that case was whether the limitation of six months for presentation of a cheque for encashment was applicable viz-a- viz presentation to the bank of the payee or that of the drawer. High Courts in this country had expressed conflicting opinions on the subject.
This Court resolved the cleavage in those pronouncements by holding that the cheque ought to be presented to the drawee bank for its dishonour to provide a basis for prosecution under Section 138. The Court observed:
“The use of the words “a bank” and “the bank” in the section are an indicator of the intention of the legislature. “The bank” referred to in proviso (a) to the proviso to Section 138 of the Act would mean 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.
It, however, does not mean that the cheque is always to be presented to the drawer’s bank on which the cheque is issued. However, a combined reading of Sections 3, 72 and 138 of the Act would clearly show 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. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee.”
3. Ishar Alloy’s case (supra) did not deal with the question of jurisdiction of the Courts nor was Bhaskaran noticed by the Court while holding that the presentation of the cheque ought to be within six months to the drawee bank. But that does not, in our view, materially affect the logic underlying the pronouncement, which pronouncement coming as it is from a bench of coordinate jurisdiction binds us. When logically extended to the question of jurisdiction of the Court to take cognizance, we find it difficult to appreciate how a payee of the cheque can by presentation of the cheque to his own bank confer jurisdiction upon the Court where such bank is situate. If presentation referred to in Section 138 means presentation to the “drawee bank”, there is no gain saying that dishonour would be localised and confined to the place where such bank is situated. The question is not whether or not the payee can deposit his cheque in any bank of his choice at any place. The question is whether by such deposit can the payee confer jurisdiction on a Court of his choice? Our answer is in the negative. The payee may and indeed can present the cheque to any bank for collection from the drawee bank, but such presentation will be valid only if the drawee bank receives the cheque for payment within the period of six months from the date of issue. Dishonour of the cheque would be localised at the place where the drawee bank is situated. Presentation of the cheque at any place, we have no manner of doubt, cannot confer jurisdiction upon the Court within whose territorial limits such presentation may have taken place.
4. Then came Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. (2009) 1 SCC 720. That was a case where the complaint under Section 138 was filed in a Delhi Court, only because the statutory notice required to be issued under the proviso to Section 138 was issued from Delhi. If Bhaskaran was correctly decided, Harman should not have interfered with the exercise of jurisdiction by the Delhi Court for issue of a notice was in terms of Bhaskaran, one of the factors that clothed the Court in Delhi to take cognizance and try the case. Harman did not do so. In Harman’s case this Court, emphasized three distinct aspects. Firstly, it said that there was a world of difference between issue of a notice, on the one hand, and receipt, thereof, on the other. Issue of notice did not give rise to a cause of action while receipt did, declared the Court.
5. Secondly, the Court held that the main provision of Section 138 stated what would constitute an offence. The proviso appended thereto simply imposed certain further conditions which must be fulfilled for taking cognizance of the offence. The following passage deals with both these aspects:
“It is one thing to say that sending of a notice is one of the ingredientsfor maintaining the complaint but it is another thing to say that dishonourof a cheque by itself constitutes an offence. For the purpose of provingits case that the accused had committed an offence under Section 138 of theNegotiable Instruments Act, the ingredients thereof are required to beproved. What would constitute an offence is stated in the main provision.The proviso appended thereto, however, imposes certain further conditionswhich are required to be fulfilled before cognizance of the offence can betaken. If the ingredients for constitution of the offence laid down inprovisos (a), (b) and (c) appended to Section 138 of the NegotiableInstruments Act are intended to be applied in favour of the accused, therecannot be any doubt that receipt [pic]of a notice would ultimately giverise to the cause of action for filing a complaint. As it is only onreceipt of the notice that the accused at his own peril may refuse to paythe amount. Clauses (b) and (c) of the proviso to Section 138 thereforemust be read together. Issuance of notice would not by itself give rise toa cause of action but communication of the notice would.”
6. Thirdly, the Court held that if presentation of the cheque or issue of notice was to constitute a good reason for vesting courts with jurisdiction to try offences under Section 138, it would lead to harassment of the drawer of the cheques thereby calling for the need to strike a balance between the rights of the parties to the transaction. The Court said:
“We cannot, as things stand today, be oblivious of the fact that a bankinginstitution holding several cheques signed by the same borrower can notonly present the cheque for its encashment at four different places butalso may serve notices from four different places so as to enable it tofile four complaint cases at four different places. This only causes graveharassment to the accused. It is, therefore, necessary in a case of thisnature to strike a balance between the right of the complainant and theright of an accused vis-à-vis the provisions of the Code of CriminalProcedure.”
7. Bhaskaran was, in the wake of the above, considerably diluted and thelogic behind vesting of jurisdiction based on the place from where thenotice was issued questioned. Even presentation of the cheque as a reasonfor assumption of jurisdiction to take cognizance was doubted for aunilateral act of the complainant/payee of the cheque could without anyfurther or supporting reason confer jurisdiction on a Court within whoseterritorial limits nothing except the presentation of the cheque had happened.
8. Three recent decisions need be mentioned at this stage which havefollowed Bhaskaran and attempted to reconcile the ratio of that case withthe subsequent decisions in Ishar Alloy Steels and Harman Electronics. InNishant Aggarwal v. Kailash Kumar Sharma (2013) 10 SCC 72 this Court wasonce again dealing with a case where the complaint had been filed in Courtat Bhiwani in Haryana within whose territorial jurisdiction the complainanthad presented the cheque for encashment, although the cheque was drawn on abank at Gauhati in Assam. Relying upon the view taken in Bhaskaran thisCourt held that the Bhiwani Court had jurisdiction to deal with the matter.While saying so, the Court tried to distinguish the three-Judge Benchdecision in Ishar Alloy Steels (supra) and that rendered in HarmanElectronics case (supra) to hold that the ratio of those decisions did notdilute the principle stated in Bhaskaran case. That exercise was repeatedby this Court in FIL Industries Ltd. v. Imtiyaz Ahmad Bhat (2014) 2 SCC 266and in Escorts Ltd. v. Rama Mukherjee (2014) 2 SCC 255 which too followedBhaskaran and held that complaint under Section 138 Negotiable InstrumentAct could be instituted at any one of the five places referred to inBhaskaran’s case.
9. We have, with utmost respect to the Judges comprising the Bench tha theard the above cases, found it difficult to follow suit and subscribe to the view stated in Bhasakaran. The reasons are not far too seek and may be stated right away.
10. Section 138 is a penal provision that prescribes imprisonment upto two years and fine upto twice the cheque amount. It must, therefore, be interpreted strictly, for it is one of the accepted rules of interpretation that in a penal statute, the Courts would hesitate to ascribe a meaning, broader than what the phrase would ordinarily bear. Section 138 is in two parts. The enacting part of the provision makes it abundantly clear that what constitutes an offence punishable with imprisonment and/or fine is the dishonour of a cheque for insufficiency of funds etc. in the accountmaintained by the drawer with a bank for discharge of a debt or other liability whether in full or part. The language used in the provision is unambiguous and the ingredients of the offence clearly discernible viz. (a)Cheque is drawn by the accused on an account maintained by him with abanker. (b) The cheque amount is in discharge of a debt or liability and(c) The cheque is returned unpaid for insufficiency of funds or that theamount exceeds the arrangement made with the bank. But for the proviso that comprises the second part of the provision, any dishonour falling withinthe four corners of the enacting provision would be punishable without mucha do. The proviso, however, draws an exception to the generality of the enacting part of the provision, by stipulating two steps that ought to be taken by the complainant holder of the cheque before the failure of the drawer gives to the former the cause of action to file a complaint and the competent Court to take cognizance of the offence. These steps are distinct from the ingredients of the offence which the enacting provision creates and makes punishable. It follows that an offence within the contemplationof Section 138 is complete with the dishonour of the cheque but takingcognizance of the same by any Court is forbidden so long as the complainantdoes not have the cause of action to file a complaint in terms of clause(c) of the proviso read with Section 142 which runs as under:
Cognizance of offences. —Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974)— (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138: [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.]
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.“
11. The following would constitute ‘cause of action’ referred to in sub clause (b) above:
The complainant has presented the cheque for payment within the period of six months from the date of the issue thereof. The complainant has demanded the payment of the cheque amount from the drawer by issuing a written notice within thirty days of receipt of information by him from the bank regarding the dishonour. The drawer has failed to pay the cheque amount within fifteen days of the receipt of the notice.
12. A proper understanding of the scheme underlying the provision wouldthus make it abundantly clear that while the offence is complete upondishonour, prosecution for such offence is deferred till the time the causeof action for such prosecution accrues to the complainant. The proviso inthat sense, simply postpones the actual prosecution of the offender tillsuch time he fails to pay the amount within the statutory period prescribedfor such payment. There is, in our opinion, a plausible reason why thiswas done. The Parliament in its wisdom considered it just and proper togive to the drawer of a dishonoured cheque an opportunity to pay up theamount, before permitting his prosecution no matter the offence iscomplete, the moment the cheque was dishonoured. The law has to that extentgranted a concession and prescribed a scheme under which dishonour need notnecessarily lead to penal consequence if the drawer makes amends by makingpayment within the time stipulated once the dishonour is notified to him.Payment of the cheque amount within the stipulated period will in suchcases diffuse the element of criminality that Section 138 attributes todishonour by way of a legal fiction implicit in the use of the words “shallbe deemed to have committed an offence”. The drawer would by such paymentstand absolved by the penal consequences of dishonour. This scheme may beunique to Section 138 NI Act, but there is hardly any doubt that theParliament is competent to legislate so to provide for situations where acheque is dishonoured even without any criminal intention on the part ofthe drawer.
13. The scheme of Section 138 thus not only saves the honest drawer but gives a chance to even the dishonest ones to make amends and escape prosecution. Compliance with the provision is, in that view, a mandatory requirement. (See C.C. Alavi Haji v. Palapetty Muhammed and Another (2007)6 SCC 555).
14. Harman in that view correctly held that “what would constitute an offence is stated in the main provision. The proviso appended there to however imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken.” If the Parliament intended to make the conditions stipulated in the proviso, also as ingredients of the offence, the provision would have read differently.It would then have specifically added the words “and the drawer has despite receipt of a notice demanding the payment of the amount, failed to pay thesame within a period of fifteen days from the date of such demand made inwriting by a notice”. That, however, is not how the enacting provision of Section 138 reads. The legislature has, it is obvious, made a clear distinction between what would constitute an offence and what would give to the complainant the cause of action to file a complaint for the court competent to take cognizance. That a proviso is an exception to the general rule is well settled. A proviso is added to an enactment to qualify or create an exception to what is contained in the enactment. It does not by itself state a general rule. It simply qualifies the generality of the main enactment, a portion which but for the proviso would fall within the main enactment.
15. The P. Ramanatha Aiyar, Law Lexicon, 2nd Edition, Wadhwa & Co. at page 1552 defines proviso as follows:
“The word “proviso” is used frequently to denote the clause the first words of which are “provided that” inserted in deeds and instruments generally. And containing a condition or stipulation on the performance or non-performance of which, as the case maybe. The effect of a proceeding clause or of the deed depends. A Clause inserted in a legal or formal document, making some condition, stipulation, exception or limitation or upon the observance of which the operation or validity of the instrument depends [ S. 105, Indian Evidence Act].
A proviso is generally intended to restrain the enacting clause and to except something which would have otherwise been within it or in some measure to modify the enacting clause...”
16. To quote “Craies on Statute Law”, 7th Edn., Sweet & Maxwell at page 220 “If the principal object of the Act can be accomplished and stand under the restriction of the saving clause or proviso, the same is not to be held void for repugnancy.”
17. One of the earliest judgments on the subject is a three Judge Bench decision in Kedarnath Jute Manufacturing Co. v. Commercial Tax Officer, Calcutta and Ors. AIR 1966 SC 12. The Court was in that case examining the effect of a proviso which imposed a condition on getting exemption from tax and observed:
“... The substantive clause gives the exemption and the proviso qualifiesthe substantive clause. In effect the proviso says that part of theturnover of the selling dealer covered by the terms of sub-cl. (ii) will beexempted provided a declaration in the from prescribed is furnished. To putit in other words, a dealer cannot get the exemption unless he furnishesthe declaration in the prescribed form. It is well settled that "the effectof an excepting or qualifying proviso, according to the ordinary rules ofconstruction, is to except out of the preceding portion of the enactment,or to qualify something enacted therein, which but for the proviso would bewithin it" : see "Craies on Statute Law", 6th Edn., p. 217.”
18. Also pertinent is a four-Judge Bench decision of this Court in DwarkaPrasad v. Dwarka Das Saraf (1976) 1 SCC 128 where this Court was examining whether a cinema theatre equipped with projectors and other fittings readyto be launched as entertainment house was covered under the definition of‘accommodation’ as defined in Section 2 (1) (d) of Uttar Pradesh(Temporary) Control of Rent and Eviction Act, 1947. The proviso providedfor some exception for factories and business carried in a building. It was held that sometimes draftsmen include proviso by way of over caution toremove any doubts and accommodation would include this cinema hall:
“18. A proviso must be limited to the subject-matter of the enactingclause. It is a settled rule of construction that a proviso must primafacie be read and considered in relation to the principal matter to whichit is a proviso. It is not a separate or independent enactment. 'Words are dependent on the principal enacting words, to which they are tacked as aproviso. They cannot be read as divorced from their context' 1912 A.C. 544.If the rule of construction is that prima facie a proviso should be limitedin its operation to the subject-matter of the enacting clause, the stand wehave taken is sound. To expand the enacting clause, inflated by the proviso, sins against the fundamental rule of construction that a provisomust be considered in relation to the principal matter to which it standsas a proviso. A proviso ordinarily is but a proviso, although the goldenrule is to read the whole section, inclusive of the proviso, in such mannerthat they mutually throw light on each other and result in a harmoniousconstruction.
The proper course is to apply the broad general rule of construction which is that a section or enactment must be construed as a whole, each portion throwing light if need be on the rest.
The true principle undoubtedly is, that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and proviso, taken and construed together is to prevail. (Maxwell on Interpretation of Statutes, 10th Edn. p. 162)”
19. In Sreenivasa General Traders & Ors. v. State of Andhra Pradesh &Ors. (1983) 4 SCC 353 another three- Judge bench of this Court examined therole of a proviso while interpreting Rule 74(1) of the Andhra Pradesh(Agricultural Produce & Livestock) Markets Rules, 1969.
“The normal function of a proviso is to except something out of the mainenacting part or to qualify something enacted therein which but for theproviso would be within the purview of the enactment. Proviso to Rule 74(1)is added to qualify or create an exception.”
20. Reference may also be made to Tribhovandas Haribhai Tamboli v.Gujarat Revenue Tribunal and others (1991) 3 SCC 442 wherein this Courtclearly held that when the language of the main enactment is clear, theproviso can have no effect on the interpretation of the main clause.”
7. It is a cardinal rule of interpretation that a proviso to a particularprovision of a statute only embraces the field, which is covered by themain provision. It carves out an exception to the main provision to whichit has been enacted by the proviso and to no other. The proper function ofa proviso is to except and deal with a case which would otherwise fallwithin the general language of the main enactment, and its effect is to confine to that case. Where the language of the main enactment is explicitand unambiguous, the proviso can have no repercussion on the interpretationof the main enactment, so as to exclude from it, by implication whatclearly falls within its express terms. The scope of the proviso,therefore, is to carve out an exception to the main enactment and itexcludes something which otherwise would have been within the rule. It has to operate in the same field and if the language of the main enactment isclear, the proviso cannot be torn apart from the main enactment nor can itbe used to nullify by implication what the enactment clearly says nor setat naught the real object of the main enactment, unless the words of theproviso are such that it is its necessary effect.”
21. The same line of reasoning was followed in A.N. Sehgal andOrs. v. Raje Ram Sheoram and Ors. 1992 Supp (1) SCC 304 while interpretinga proviso in the Haryana Service of Engineers Rules, 1960 where the Courtheld that the proviso to Rule 5(2)(a) cannot be applied to confer thebenefit of regular appointment on every promotee appointed in excess of 50%quota. This Court harmoniously read the main provision and the proviso andgave effect to the rule.
22. In Kerala State Housing Board and Ors. v. Ramapriya Hotels (P) Ltd.and Ors. 1994 (5) SCC 672 this Court was examining whether the period of 4years envisaged in proviso to Section 16(i) under Kerala Land AcquisitionAct, 1961 could be reckoned from date when agreement was executed or fromdate of publication of notification under Section 3(1) of the Act after theagreement was executed. After relying on Tribhovandas Haribhai Tamboli(supra) and A.N. Sehgal (supra) this Court held that the proviso should beharmoniously read with the section. To quote Tribhovandas (supra) asfollowed in this judgment:
“In Tribhovandas Haribhai Tamboli v. Gujarat Revenue Tribunal this Courtheld that the proper function of a proviso is to except and deal with acase which would otherwise fall within the general language of the mainenactment and its effect is to be confined to that case. Where the language of the main enactment is explicit and unambiguous, the proviso can have norepercussion on the interpretation of the main enactment, so as to exclude from it, by implication what clearly falls within its express terms. Thescope of the proviso, therefore, is to carve out an exception to the mainenactment and it excludes something which otherwise would have been withinthe rule. It has to operate in the same field and if the language of themain enactment is clear, the proviso cannot be torn apart from the mainenactment nor can it be used to nullify by implication what the enactmentclearly says, nor set at naught the real object of the main enactment,unless the words of the proviso are such that it is its necessary effect.In that case it was held that by reading the proviso consistent with theprovisions of Section 88 of the Bombay Tenancy and Agricultural Act, theobject of the main provision was sustained.”
23. In Kush Sahgal & Ors. v. M.C. Mitter & Ors. (2000) 4 SCC 526 alandlady made an application for eviction of the tenant on the basis thatshe wanted the place for business purposes which was not allowed as per theproviso to Section 21(2) U.P. Urban Buildings (Regulation of Letting, Rentand Eviction) Act, 1972. The Court examined the role and purport of theproviso and observed :
“This we say because the normal function of a proviso is to except something out of the enactment or to qualify something enacted therein which but for the proviso would be within the purview of the enactment.(See : Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Office3SCR626). Since the natural presumption is that but for the proviso,the enacting part of the section would have included the subject-matter of the proviso, the enacting part has to be given such a construction which would make the exceptions carved out by the proviso necessary and aconstruction which would make the exceptions unnecessary and redundantshould be avoided (See: Justice G. P. Singh's "Principles of StatutoryInterpretation" Seventh Edition 1999, p-163). This principle has beendeduced from the decision of the Privy Council in Govt. of the Province ofBombay v. Hormusji Manekji (AIR 1947 PC 200) as also the decision of thisCourt in Durga Dutt Sharma v.Navaratna Pharmaceutical Laboratories (AIR1965 SC 980).”
24. To the same effect are the decisions of this Court in Ali M.K. andOrs. v. State of Kerala and Ors. (2003) 11 SCC 632, Nagar Palika (supra)and in Steel Authority of India Ltd. v. S.U.T.N.I Sangam & Ors. (2009) 16SCC 1.
25. In conclusion, we may refer to Maxwell, “Interpretation of Statutes”Edn. 12, 1969, on P. 189-190 which states that it is a general finding andpractice “that inconsistencies can be avoided by applying the general rulethat the words of a proviso are not to be taken “absolutely in their strictliteral sense” [R v. Dimbdin (1910)] but that a proviso is “of necessity... limited in its operation to the ambit of the section which itqualifies” [Lloyds and Scottish Finance Ltd v. Modern Cars and Canavans(Kingston) Ltd.(1966)]. And, so far as that section itself is concerned,the proviso receives a restricted construction: where the section conferspowers, “it would be contrary to the ordinary operation of a proviso togive it an effect which would cut down those powers beyond what compliancewith the proviso renders necessary.” [Re Tabrisky v. Board of Trade(1947)]”
26. Bhaskaran, in our view, reads the proviso as prescribing thein gredients of the offence instead of treating it as an exception to the generality of the enacting part by stipulating further conditions before a competent Court may take cognizance of the same. Seen in the light of the provisions of Section 142 of the Act, the proviso simply defers prosecution of the offender till the conditions prescribed therein are satisfied. Bhaskaran does not view the matter in that perspective while Harman (supra)does. We find ourselves in respectful agreement with the view in Harman’scase on this aspect.
27. In Bhaskaran, this Court resolved the confusion as to the placeof commission of the offence by relying upon Sections 177 to 179 of theCr.P.C. But the confusion arises only if one were to treat the proviso asstipulating the ingredients of the offence. Once it is held that theconditions precedent for taking cognizance are not the ingredientsconstituting the offence of dishonour of the cheque, there is no room forany such confusion or vagueness about the place where the offence iscommitted. Applying the general rule recognised under Section 177 of theCr.P.C. that all offences are local, the place where the dishonour occursis the place for commission of the offence vesting the Court exercisingterritorial jurisdiction over the area with the power to try the offences.Having said that we must hasten to add, that in cases where the offenceunder Section 138 is out of the offences committed in a single transactionwithin the meaning of Section 220 (1) of the Cr.P.C. then the offender maybe charged with and tried at one trial for every such offence and any suchinquiry or trial may be conducted by any Court competent to enquire into ortry any of the offences as provided by Section 184 of the Code. So also,if an offence punishable under Section 138 of the Act is committed as apart of single transaction with the offence of cheating and dishonestlyinducing delivery of property then in terms of Section 182 (1) read withSections 184 and 220 of the Cr.P.C. such offence may be tried either at theplace where the inducement took place or where the cheque forming part ofthe same transaction was dishonoured or at the place where the propertywhich the person cheated was dishonestly induced to deliver or at the placewhere the accused received such property. These provisions make it clearthat in the commercial world a party who is cheated and induced to deliverproperty on the basis of a cheque which is dishonoured has the remedy ofinstituting prosecution not only at the place where the cheque wasdishonoured which at times may be a place other than the place where theinducement or cheating takes place but also at the place where the offenceof cheating was committed. To that extent the provisions of Chapter XIII ofthe Code will bear relevance and help determine the place where theoffences can be tried.
28. We may at this stage refer to two other decisions of this Court whichbear some relevance to the question that falls for our determination. In Sadanandan Bhadran v. Madhavan Sunil Kumar (1998) 6 SCC 514 a two-judgebench of this Court held that clause (a) of proviso to Section 138 does notdisentitle the payee to successively present cheque for payment during theperiod of its validity. On each such presentation of the cheque and itsdishonour a fresh right - and not cause of action – accrues in his favour.He may, therefore, without taking pre-emptory action in exercise of suchright under clause (b) of Section 138 go on presenting the cheque so longas the cheque is valid for payment. But once he gives a notice under clause(b) of Section 138 he forfeits such right for in case of failure of thedrawer to pay the money within the stipulated time he would be liable forthe offence and the cause of action for prosecution will arise. Thecorrectness of this view was questioned in MSR Leathers v. S. Palaniappan &Anr. (2013) 1 SCC 177 before a bench comprising of Markandey Katju and B.Sudershan Reddy, J.J. who referred the issue to a larger bench. The largerbench in MSR Leathers’s case (supra) overruled Sadanandan Bhadran (supra)holding that there was no reason why a fresh cause of action within themeaning of Section 142 (b) read with section 138 should not be deemed tohave arisen to the complainant every time the cheque was presented butdishonoured and the drawer of cheque failed to pay the amount within thestipulated period in terms of proviso to 138. This Court said:
“In the result, we overrule the decision in Sadanandan Bhadran's case(supra) and hold that prosecution based upon second or successive dishonourof the cheque is also permissible so long as the same satisfies therequirements stipulated in the proviso to Section 138 of the NegotiableInstruments Act. The reference is answered accordingly. The appeals shallnow be listed before the regular Bench for hearing and disposal in light ofthe observations made above.”
29. What is important is that in Sadanandan Bhadran (supra) this Courthad, on a careful analysis of Section 138, held that an offence is createdwhen a cheque is returned by the bank unpaid for any reasons mentionedtherein, although the proviso to Section 138 stipulates three conditionsfor the applicability of the section. It is only upon satisfaction of thethree conditions that prosecution can be launched for an offence underSection 138. This Court observed:
“On a careful analysis of the above section, it is seen that its main partcreates an offence when a cheque is returned by the bank unpaid for any ofthe reasons mentioned therein. The significant fact, however, is that theproviso lays down three conditions precedent to the applicability of theabove section and, for that matter, creation of such offence and theconditions are: (i) the cheque should have been presented to the bankwithin six months of its issue or within the period of its validity,whichever is earlier; (ii) the payee should have made a demand for paymentby registered notice after the cheque is returned unpaid; and (iii) thatthe drawer should have failed to pay the amount within 15 days of thereceipt of the notice. It is only when all the [pic]above three conditionsare satisfied that a prosecution can be launched for the offence underSection 138. So far as the first condition is concerned, clause (a) of theproviso to Section 138 does not put any embargo upon the payee tosuccessively present a dishonoured cheque during the period of itsvalidity. This apart, in the course of business transactions it is notuncommon for a cheque being returned due to insufficient funds or similarsuch reasons and being presented again by the payee after sometime, on hisown volition or at the request of the drawer, in expectation that it wouldbe encashed. Needless to say, the primary interest of the payee is to gethis money and not prosecution of the drawer, recourse to which, normally,is taken out of compulsion and not choice. For the above reasons it must beheld that a cheque can be presented any number of times during the periodof its validity. Indeed that is also the consistent view of all the HighCourts except that of the Division Bench of the Kerala High Court inKumaresan1 which struck a discordant note with the observation that for thefirst dishonour of the cheque, only a prosecution can be launched for therecannot be more than one cause of action for prosecution.”
30. MSR Leathers (supra) also looked at Section 138 and held that a complaint could be filed under Section 138 after cause of action to do so had accrued in terms of clause (c) of the proviso to Section 138 which happens no sooner the drawer of the cheque fails to make the payment of the cheque amount to the payee within fifteen days in terms of clause (b) to proviso to Section 138. MSR Leathers was not so much concerned with the question whether the proviso stipulated ingredients of the offence orconditions precedent for filing a complaint. It was primarily concerned with the question whether the second or successive dishonour followed by statutory notices and failure of the drawer to make payment could be made abasis for launching prosecution against the drawer. That question, as noticed above, was answered in the affirmative holding that successive cause of action could arise if there were successive dishonours followed by statutory notices as required under the law and successive failure of the drawer to make the payment. MSR Leathers cannot, therefore, be taken as an authority for determining whether the proviso stipulates conditions precedent for launching a prosecution or ingredients of the offence punishable under Section 138. Sadanandan Bhadran may have been overruled to the extent it held that successive causes of action cannot be made a basis for prosecution, but the distinction between the ingredient of the offence, on the one hand, and conditions precedent for launching prosecution, on the other, drawn in the said judgement has not been faulted. That distinction permeates the pronouncements of this Court in Sadanandan Bhadran and MSR Leathers. High Court of Kerala has, in ourview, correctly interpreted Section 138 of the Act in Kairali Marketing &Processing Cooperative Society Ltd. V. Pullengadi Service Cooperative Ltd.(2007) 1 KLT 287 when it said:
“It is evident from the language of Section 138 of the N.I. Act that thedrawer is deemed to have committed the offence when a cheque issued by himof the variety contemplated under Section 138 is dishonoured for thereasons contemplated in the Section. The crucial words are "is returned bythe bank unpaid". When that happens, such person shall be deemed to havecommitted the offence. With the deeming in the body of Section 138, theoffence is already committed or deemed to have been committed. A carefulreading of the body of Section 138 cannot lead to any other conclusion.Proviso to Section138 according to me only insists on certain conditionsprecedent which have to be satisfied if the person who is deemed to havecommitted the offence were to be prosecuted successfully. The offence isalready committed when the cheque is returned by the bank. But the cause ofaction for prosecution will be available to the complainant not when theoffence is committed but only after the conditions precedent enumerated inthe proviso are satisfied. After the offence is committed, only if theoption given to avoid the prosecution under the proviso is not availed ofby the offender, can the aggrieved person get a right or course of actionto prosecute the offender. The offence is already deemed and declared butthe offender can be prosecuted only when the requirements of the provisoare satisfied. The cause of action for prosecution will arise only when theperiod stipulated in the proviso elapses without payment. Ingredients ofthe offence have got to be distinguished from the conditions precedent forvalid initiation of prosecution.”
The stipulations in the proviso must also be proved certainly before theoffender can be successfully prosecuted. But in the strict sense they arenot ingredients of the deemed offence under the body of Section 138 of theN.I. Act, though the said stipulations; must also be proved to ensure andclaim conviction. It is in this sense that it is said that the proviso doesnot make or unmake the offence under Section 138 of the N.I. Act. That isalready done by the body of the Sections. This dispute as to whether thestipulations of the proviso are conditions precedent oringredients/components of the offence under Section 138 of the N.I. Act mayonly be academic in most cases. Undoubtedly the ingredients stricto sensuas also the conditions precedent will have to be established satisfactorilyin all cases. Of course in an appropriate case it may have to be consideredwhether substantial compliance of the conditions precedent can be reckonedto be sufficient to justify a conviction. Be that as it may, thedistinction between the ingredients and conditions precedent is certainlyreal and existent. That distinction is certainly vital while ascertainingcomplicity of an indictee who faces indictment in a prosecution underSection 138 with the aid of Section 141 of the N.I. Act. That is how thequestion assumes such crucial significance here.”
31. To sum up:
(i) An offence under Section 138 of the Negotiable Instruments Act, 1881is 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.
(ii) 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 provisoto Section 138.
(iii) 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.
(iv) The facts constituting cause of action do not constitute the ingredients of the offence under Section 138 of the Act.
(v) 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 proviso accrues to the complainant.
(vi) 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.
(vii) The general rule stipulated under Section 177 of Cr.P.C 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.
32. 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 Commissionof India in its 213th Report. The result is that cases involving dishonourof cheque is in all major cities choking the criminal justice system at the Magistrate’s level. Courts in the four metropolitan cities and other ommercially 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 1st June 2008. The position is no different in other cities where large number of complaints are filed under S.138 not necessarily because the offence is committed insuch cities but because multinational and other companies and commercialentities 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’s case to justify institution of such cases far away from wherethe 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’s case 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’s case permitting prosecution at anyone 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 asan 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 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 the Bhaskaran’s case needs to be revisited as we have done in foregoing paragraphs.
33. With the above observations, I concur with the order proposed by my noble Brother, Vikramajit Sen, J.