Precedents Cited

The High Court extensively referred to several landmark cases to substantiate its decision:

• K. Bhaskaran v. Sankaran V. Balan (1999): The Supreme Court of India set a precedent by outlining the five essential acts constituting the offense under Section 138 and clarified that jurisdiction can lie in any locality where one of these acts occurred.
• Ahuja N. Dongre v. State of Maharashtra (2007): This case reaffirmed that the term "the Bank" in Section 138 refers specifically to the drawee bank where the cheque is drawn, not merely any bank where the cheque is presented for encashment.
• Preetha S. Babu v. Voltas Ltd (2010): A Division Bench endorsed the interpretation from Ahuja N. Dongre but noted reservations regarding secondary jurisdiction aspects, indicating the need for further clarification by larger benches.
• Harman Electronics (P) Ltd. v. National Panasonic India Ltd. (2009): The Supreme Court emphasized that jurisdiction should align with where the transaction, presentation, and dishonor of the cheque occurred to prevent multiple filings and undue harassment.
• Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd. (2001): Reinforced the necessity of aligning the complaint's jurisdiction with the transactional locality.

Legal Reasoning

The court analyzed Section 138 of the Negotiable Instruments Act, which outlines the components constituting the offense of a dishonored cheque. The key provision examined was the jurisdictional clause, which determines where a complaint under this section can be filed.

Applying the precedent from K. Bhaskaran, the court identified that the offense consists of multiple acts (drawing, presentation, dishonor, notice, and failure to pay) which may occur in different localities. Hence, any court within the jurisdiction of one of these acts could potentially handle the case.

However, in the present case, all critical transactional steps—issuing, presenting, and dishonoring the cheque—occurred in Jaipur. The cheque was drawn and presented to the drawee bank in Jaipur, leading to its dishonor there. The notice issued from Mumbai did not alter the locus of jurisdiction since the key transactional activities did not occur in Mumbai.

The court also considered the role of the payee's banker, clarifying that depositing a cheque with a bank other than the drawee bank does not transfer agency or jurisdiction rights to that other bank's locality.

Consequently, following the principles laid down in the cited precedents, particularly ensuring that jurisdiction aligns with the transactional locality to prevent multiple filings and harassment, the court determined that the correct jurisdiction lay in Jaipur.

Impact

This judgment reinforces the importance of aligning the jurisdiction of Section 138 complaints with the actual location of key transactional activities, specifically where the cheque is presented and dishonored. By emphasizing adherence to transactional locality:

• It curbs the ability of complainants to file multiple complaints in different jurisdictions based on the presence of branch offices.
• It ensures that defendants are not subjected to undue harassment through multiple filings in unrelated jurisdictions.
• It clarifies the role of different banking entities involved in the cheque presentation process, preventing ambiguity in jurisdictional claims.

Future cases involving Section 138 will likely reference this judgment to determine appropriate jurisdiction, thereby promoting legal consistency and fairness in the handling of cheque dishonor offenses.