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Factual and Procedural Background

This is a common judgment deciding together a writ petition (Cr. W.P. No. 497/2008) and two criminal revision applications because the issues of law and fact were identical.

Factual summary (from the writ petition context): The petitioner (proprietor of M/s Monisha Agency) transacted with respondent M/s Videocon Industries Ltd. The petitioner allegedly issued a cheque dated 5-6-2006 for Rs. 3,00,000 drawn on UCO Bank (branch at Tangi/Khurda, Orissa) in favour of Videocon International Ltd. The cheque was presented by the respondent at State Bank of India, Ahmednagar, and sent to the drawee bank (UCO Bank, Tangi/Khurda) for realization, where it was dishonoured with the remark "funds insufficient." The respondent issued a demand notice dated 22-11-2006 by registered post; payment was not made within 15 days, and the respondent instituted a private complaint (S.T.C No. 8704/2006) for an offence under section 138 of the Negotiable Instruments Act.

Procedural history (writ and revisions): The petitioner applied to dismiss the complaint for want of jurisdiction before the learned Judicial Magistrate, contending that the place of business, cheque issuance and related transactions were in Orissa, but the complaint was instituted at Ahmednagar. The learned Magistrate rejected that application for the writ matter, holding that part of the cause of action arose within Ahmednagar (because payment was demanded at Ahmednagar). In two separate revision matters (relating to complaints based on cheques issued by Smt. Manisha of M/s Kalyani Agency), the learned Magistrate held that no cause of action arose within Ahmednagar and directed the return of those complaints under section 201 CrPC for presentation at the appropriate court.

The writ petition (filed by the original accused in S.T.C No. 8704/2006) challenged the Magistrate's order rejecting the dismissal application. The two criminal revision applications (filed by the original complainant(s)) challenged the Magistrate's return orders directing that the complaints be presented before the appropriate court with territorial jurisdiction.

Legal Issues Presented

  1. Whether the Court of Judicial Magistrate at Ahmednagar has territorial jurisdiction to entertain complaints under section 138 of the Negotiable Instruments Act where the cheque was drawn on a bank branch situated in Orissa, presented at Ahmednagar for collection, and the demand notice was issued from Ahmednagar.
  2. Whether mere presentation of the cheque at a bank in Ahmednagar (the payee's bank) or issuance of a demand notice from Ahmednagar is sufficient to create a cause of action within the territorial jurisdiction of the Ahmednagar Court for offences under section 138.
  3. How established principles and precedents interpreting the place(s) where parts of the offence under section 138 are completed (drawing, presentation, return, notice, failure to pay) apply to the facts of these cases.

Arguments of the Parties

Arguments advanced on behalf of the complainant(s) (counsel Mr. Pallod and Senior Advocate Mr. Dixit)

  • The payment was to be received at Ahmednagar because the cheque was presented there for encashment.
  • The notice of demand was issued from Ahmednagar and the drawer was called upon to pay at Ahmednagar, so the dishonour as communicated at Ahmednagar gives rise to a cause of action within the territorial jurisdiction of the Ahmednagar Court.
  • They relied on authorities including K. Bhaskaran v. Sankaran Vaidhyan Balan, Rakesh Nemkumar Porwal v. Narayan Dhondu Joglekar and Shamshad Begum v. B. Mohammed to support their position (as referenced in the opinion).

Arguments advanced on behalf of the accused/respondent(s) (counsel Mr. Jadhavar)

  • The cheque was issued within the territorial jurisdiction of the Courts at Khurda and was payable to the office of the drawer at Bhubneshwar; thus the appropriate venue for the complaint is in Orissa, not Ahmednagar.
  • Mere presentation of the cheque at Ahmednagar (the payee's bank) does not give rise to a cause of action there; presentation must be at the drawee bank where the drawer's account is maintained.
  • The place from which the demand notice was sent does not determine the place where cause of action arises; reliance was placed on Ahuja Nandkishore Dongre v. State of Maharashtra, Nutan Damodar Prabhu v. Ravindra Vassant Kenkre and Harman Electronics (P) Ltd. v. National Panasonic India Ltd. (as referenced in the opinion).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510 (AIR 1999 SC 3762) The opinion (together with Kusum Ingots) is cited for the proposition that an offence under section 138 is completed after several interconnected acts (drawing, presentation, return, notice and failure to pay). The Court relied on this authority to describe the five acts that together constitute the offence and to explain that the cause of action is a "bundle of facts" which may arise at more than one place; this supports the view that territorial jurisdiction must consider where those constituent acts occurred.
Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745 (AIR 2000 SC 954) Used with K. Bhaskaran to set out the components of the offence under section 138 and to support that the five acts need not occur at the same place. The Court quoted and applied the list of five acts from these authorities and relied on the principle that causes of action may arise at multiple places (invoking section 177 CrPC conceptually).
Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., (2001) 3 SCC 609 (AIR 2001 SC 1161) Interpreted the expression "the bank" (in the proviso to section 138 context) to mean the drawee bank on which the cheque is drawn, not any bank. The Court used this authority to hold that presentation of the cheque at the payee's bank in Ahmednagar could not by itself confer jurisdiction on the Ahmednagar Court; the drawee bank (where the drawer's account is) is the relevant bank for purposes of presentation/realisation.
Shamshad Begum (Smt) v. B. Mohammed, Criminal Appeal No. 1715/2008 (S.C.) The opinion records facts from that case showing a different factual matrix (the complainant had shifted residence and issued notice from Mangalore), which affected the jurisdictional analysis there. The Court distinguished that case on facts — because in the present matters the complainants' branch offices and the place of delivery remained at Bhubneshwar and there was no comparable change of residence or fact that would make issuance from Ahmednagar determinative.
Harman Electronics (P) Ltd. v. National Panasonic India Ltd., 2009 (1) ALL MR 479 (S.C.) Held that issuance of notice alone does not give rise to cause of action; service (communication) of the notice and subsequent failure to pay are the operative events; place of issuance is not determinative of jurisdiction. The Court cited this authority to support the proposition that the place where the notice was issued does not by itself determine jurisdiction and that communication/service of the notice is the critical event.
Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd., (2001) 6 SCC 463 Cited for emphasis that service of notice is imperative in the completion of the offence under section 138. The Court quoted this authority (as discussed in Harman Electronics) to reinforce that service of notice and failure to pay within 15 days is necessary to complete the offence; issuance, without service, does not have precedence.
Ahuja Nandkishore Dongre v. State of Maharashtra, (2007 Cri.L.J 115) The Single Bench had held that jurisdiction is to be gathered from the place where the money was intended to be paid; mere presentation at a bank located in a court's jurisdiction is not enough. The Court relied on this decision to conclude that Ahmednagar could not assume jurisdiction simply because the cheque was presented there or a notice was issued from there where there was no written agreement to pay at Ahmednagar.
Nutan Damodar Prabhu v. Ravindra Vassant Kenkre, 2008 (1) Mh.L.J 889 This precedent was cited by one of the parties and the Court states it has gone through the judgment of the Single Judge in this matter. This opinion refers to having considered the judgment; the provided opinion does not state a concise rule from this case or how it was applied beyond noting consideration.
Rakesh Nemkumar Porwal v. Narayan Dhondu Joglekar, 1993 (1) Mh.L.J 630 : 1993 Cri.L.J 680 Listed among authorities relied upon by counsel for the complainant(s) (as referenced in the opinion). The provided opinion records reliance on this authority by counsel but does not state the specific rule or any detailed application by the Court from this authority.

Court's Reasoning and Analysis

The Court proceeded by examining whether presentation of the cheque at Ahmednagar or issuing the notice from Ahmednagar would create a cause of action within the territorial jurisdiction of the Ahmednagar Court. The analysis followed established authorities and the statutory elements of the offence under section 138 (as explained in the cited Supreme Court precedents).

Step-by-step reasoning (as stated in the opinion):

  1. The Court noted established law (K. Bhaskaran and Kusum Ingots) that an offence under section 138 is completed after the commission of several interconnected acts: (a) drawing the cheque; (b) presentation to the bank; (c) return by drawee bank for insufficiency; (d) giving written notice to the drawer within 15 days of receiving information of return; and (e) failure of the drawer to make payment within 15 days of notice. These acts need not occur at the same place; the cause of action is a bundle of facts and may arise at different places (paragraphs 11–16).
  2. The Court examined whether mere presentation at Ahmednagar would give a cause of action there. Relying on Shri Ishar Alloy Steels, the Court held that the phrase "the bank" refers to the drawee bank (where the drawer has an account) and not any bank. Consequently, presentation at the payee's bank in Ahmednagar is immaterial if the cheque is drawn on and must be cleared by the drawee bank elsewhere (paragraphs 18–21).
  3. The Court distinguished Shamshad Begum because the facts there involved a complainant who had shifted residence and issued notice from the new residence, which made that case different from the present matters where branch offices and delivery points remained in Bhubneshwar (paragraph 21).
  4. The Court relied on the principle in Harman Electronics (and Dalmia) that issuance of a notice does not by itself create a cause of action — it is the communication (service) of the notice and subsequent failure to pay that complete the offence. Thus the mere place of issuance is not determinative of jurisdiction (paragraphs 22–23).
  5. The Court reiterated the holding in Ahuja Nandkishore Dongre that jurisdiction must be gathered from the place where money was intended to be paid; mere presentation at a bank in a court's territorial limits or issuing notice from there (without other connecting facts) cannot vest jurisdiction (paragraph 24).
  6. The Court observed the factual matrix: head offices were in Mumbai, branch offices (and deliveries) were at Bhubneshwar, the cheques were drawn on a branch at Tangi/Khurda (Orissa), and demand notices were served on the accused at places in Orissa. There was no written agreement to pay at Ahmednagar and no reason for complainants to issue notices through their advocate from Ahmednagar (paragraphs 21, 25).
  7. Considering these legal principles and the totality of circumstances, the Court concluded that Ahmednagar Court had no territorial jurisdiction to entertain the complaints; presentation at Ahmednagar and issuance of notices from there did not suffice to establish jurisdiction in the absence of service and other connecting facts (paragraphs 16–18, 25).

Holding and Implications

The Court held that the Court of Judicial Magistrate at Ahmednagar has no territorial jurisdiction to entertain the complaint cases under section 138 of the Negotiable Instruments Act in the factual matrix before it.

Direct consequences and orders given in the opinion:

  • Criminal Writ Petition No. 497/2008 is allowed and the impugned order (rejecting the dismissal application in S.T.C No. 8704/2006) is quashed.
  • The two criminal revision applications (Criminal Revision Applications No. 250/2007 and 251/2007) are dismissed.
  • The private complaint case bearing S.T.C No. 8704/2006 is directed to be returned to the respondent (M/s Videocon Industries Ltd.) for presentation before the appropriate Court having jurisdiction over the matter.
  • No costs were awarded.

The opinion applies existing precedent to the facts and does not purport to lay down a new legal principle beyond the application and reconciliation of cited authorities. The provided opinion does not state any broader or novel implications beyond the direct effect on the parties and the application of the cited precedents to the facts.

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    Dipti Kumar Mohanty v. Videocon Industries Ltd.

    1. By this common judgment, the writ petition and criminal revision applications noted above are being decided together inasmuch as questions of law and facts involved therein are of identical nature.

    2. A brief resume of background facts in the context of Writ Petition (Cri. W.P No. 497/2008) may be stated. The petitioner and the respondent - M/s Videocon Industries Ltd. were having transactions. The petitioner is proprietor of M/s Monisha Agency. The respondent is a multinational Company. One of its branch office is at Bhubneshwar. The petitioner used to purchase goods from the respondent's branch at Bhubneshwar. The petitioner allegedly issued a cheque dated 5-6-2006 for Rs. 3,00,000/- (rupees three lacs) in favour of Videocon International Ltd. The cheque was drawn on UCO Bank. The cheque was presented by the respondent in State Bank of India, Ahmednagar for encashment. It was sent by the said Bank to the drawee Bank i.e UCO Bank, branch at Tangi (Orissa) for realization. The cheque was dishonoured by the payee Bank with remark “funds insufficient”. The respondent issued demand notice dated 22-11-2006 to the petitioner by registered post. In spite of service of the notice, the payment was not made within 15 days. Consequently, the respondent instituted a private complaint case (S.T.C No. 8704/2006) against the petitioner for commission of offence under section 138 of the Negotiable Instruments Act.

    3. The petitioner filed an application (Exh-20) to dismiss the complaint for want of jurisdiction. The petitioner contended before the learned Magistrate that his place of business is at Chandpur (Orissa). The transactions were with branch of the respondent (complainant) at Bhubneshwar (Orissa). The cheque was issued at Chandpur (Orissa) and was dishonoured within the territorial jurisdiction of the Criminal Court at Khurda (Orissa) or Bhubneshwar, but on basis of fake cause of action, the criminal complaint was instituted in the Court at Ahmednagar.

    4. The learned Judicial Magistrate held that part of cause of action arose within jurisdiction of Ahmednagar Court. The learned Judicial Magistrate noticed that the payment was demanded under the demand notice from the petitioner at the branch office situated at Ahmednagar and, therefore, the complaint was maintainable within the jurisdiction of Ahmednagar. The application was accordingly rejected.

    5. In the context of the two (2) revision applications, noted above, it may be stated that two (2) different cheques were issued by the respondent Smt. Manisha, who is proprietor of M/s Kalyani Agency, Bhubneshwar. The original complainant M/s Kitchen Appliances (India) Ltd. is the revision applicant of both the revision applications. The cheques were drawn on United Bank of India, branch at Khurda (Orissa). They were presented by the complainant at State Bank of India, Ahmednagar branch. They were sent to the payee Bank. Both the cheques were dishonoured due to insufficiency of funds in the account of the respondent. Then, demand notices were issued on 27-6-2007 through an advocate from Ahmednagar. The respondent gave reply dated 17-7-2007. The nonpayment of the demanded amount at Ahmednagar, according to the complainant, gave cause of action to file the criminal complaints (S.T.C No. 3824/2007 and S.T.C No. 3825/2007).

    6. In both the criminal complaint cases, similar applications were submitted by the respondent - Smt. Manisha for dismissal of the complaint cases on the ground of lack of territorial jurisdiction. The learned Judicial Magistrate held that no cause of action arose within the jurisdiction of the Court at Ahmednagar and, therefore, directed return of the complaint cases under section 201 of the Criminal Procedure Code to the complainant for presentation of the same at the appropriate Court having jurisdiction to entertain the complaints.

    7. By filing criminal writ petition, the original accused in the criminal complaint case bearing S.T.C No. 8704/2006 challenges the order dated 31st July, 2008 whereby the learned Judicial Magistrate rejected his application for dismissal of the complaint.

    8. By filing the criminal revision applications, the original complainant challenges the orders dated 8th October, 2007 rendered by the learned Judicial Magistrate (F.C) whereby return of the complaints to him is directed, holding that the Court at Ahmednagar has no territorial jurisdiction to deal with the same.

    9. Heard learned counsel for the parties.

    10. Common thread of arguments advanced by Mr. Pallod, advocate and Mr. Dixit, Senior Advocate is that the payment was to be received at Ahmednagar where the cheque was presented, the notice of demand was issued from Ahmednagar and the drawer of the cheque was called upon to make the payment at Ahmednagar and the dishonour was communicated there which give rise to cause of action within the territorial jurisdiction of the: Court at Ahmednagar. They rely on observations in K. Bhaskaran v. Sankaran Vaidhyan Balan, 2000 (1) Mh.L.J (SC) 193 : (1999) 7 SCC 510 : AIR 1999 SC 3762, Rakesh Nemkumar Porwal v. Narayan Dhondu Joglekar, 1993 (1) Mh.L.J 630 : 1993 Cri.L.J 680 and Shamshad Begum (Smt) v. B. Mohammed, Cri. Appeal No. 1715 of 2008 (S.C)

    11. Mr. Jadhavar, advocate, however, would submit that the cheque was issued within territorial jurisdiction of the Courts at Khurd, it was payable to the office of the drawer at Bhubneshwar (Orissa) and the goods were delivered from said office which is the appropriate place where the complaint could have been filed. He would submit that mere presentation of the cheque at Ahmednagar Bank of the drawee will not give cause of action to file the complaint at Ahmednagar. He would further submit that place of sending the notice is also not the place where cause of action could arise. He seeks to rely on view taken in Ahuja Nandkishore Dongre v. State of Maharashtra, 2007 Cri.L.J 115, Nutan Damodar Prabhu v. Ravindra Vassant Kenkre, 2008 (1) Mh.L.J 889 and Harman Electronics (P) Ltd. v. National Panasonic India Ltd., 2009 (3) Mh.L.J (SC) 792 : 2009 (1) ALL MR 479 (S.C).

    12. There is no dispute about the fact that the transactions pertaining to delivery of goods did not take place within the territorial jurisdiction of the Court at Ahmednagar. As has been laid down in case of AT. Bhaskaran (supra) and Kusum Ingots and Alloys Ltd. v. Pennar Peterson Securities Ltd., 2000 (2) Mh.L.J (SC) 842 : (2000) 2 SCC 745 : AIR 2000 SC 954, the offence under section 138 is completed after commission of several interconnected acts as stated below:

    (a) Drawing of the cheque by a person on an account maintained by him with a banker, for payment to another person from out of that account for the discharge in whole or in part of any debt or liability;

    (b) Presentation of the cheque by the payee or the holder in due course to the bank;

    (c) Returning of the cheque unpaid by the drawee bank for want of sufficient funds to the credit of the drawer or any arrangement with the banker to pay the sum covered by the cheque.

    (d) Giving of notice in writing to the drawer of the cheque within 15 days of the receipt of information by the payee from the bank regarding the return of the cheque as unpaid demanding payment of the cheque amount; and

    (e) Failure of the drawer to make payment to the payee or the holder in due course of the cheque, of the amount covered by the cheque within 15 days of the receipt of the notice.

    The five (5) acts stated above need not, of course, take place at the same place. The cause of action is a bundle of facts. It is well settled that cause of action may arise at two (2) different places having regard to commission of any particular act by the offender. The scope of section 177 of the Criminal Procedure Code would encompass within its fold, such several places where parts of the cause of actions may arise.

    13. To begin with, I shall proceed to examine whether mere presentation of the cheque in question at Ahmednagar would give cause of action to the Court there. The cheque was admittedly issued on the Bank having branch at Tangi/Khurda (Orissa). Thus, the payment was to be cleared by the said Bank. The presentation of cheque cannot be at the whim of the holder of the cheque. In this context, I may usefully refer to observations in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.., 2001 (3) Mh.L.J (SC) 1 : (2001) 3 SCC 609 : AIR 2001 SC 1161. It is a case decided by three (3) Judges' Bench of the Apex Court. The Apex Court observed:

    “…. The payment of the cheque is contemplated by “the bank” meaning thereby where the person issuing the cheque has an account. “The” is the word used before nouns, with a specifying of particularising effect opposed to the indefinite or generalising force of “a” or “an”. It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. “The” is always mentioned to denote particular thing or a person. “The” would, therefore, refer implicitly to a specified bank and not any bank.”

    The above observations would make it manifest that the expression “the bank” referred to in clause (a) to the Proviso to section 138 of the Negotiable Instruments Act would mean the drawee Bank on which the cheque is drawn and not any other Bank. Obviously, mere presentation of the cheque in question in the Bank of the payee at Ahmednagar is of no consequence. The argument of the learned advocate Mr. Pallod and learned senior advocate Mr. Dixit, on this score, is, therefore, unacceptable. The presentation of the cheques in question at Ahmednagar by itself cannot be a cause of action available within the territorial jurisdiction of that Court.

    14. The fact situation in case of Shamshad Begum (Smt) v. B. Mohammed, Criminal Appeal No. 1715/2008 appears to be quite on different footings. A copy of the judgment rendered by Single Bench of the Karnataka High Court in Criminal Petition No. 939/2005 giving rise to above appeal is placed on record. The Court noticed that before issuing notice to the petitioner (accused) in that case, he (complainant) had shifted his residence to Mangalore and, therefore, had issued the notice from Mangalore and the same was received by the petitioner - accused. That is not the fact situation of the present case. The branch office of the Company of the respondent (complainant) in Criminal Writ Petition No. 497/2008 is still at Bhubneshwar and that of the petitioners in the above referred two (2) revision petitions is also at Bhubneshwar. Both the Companies deal in sale of electronic items through their branch offices. The head offices of both the Companies are at Mumbai. Obviously, there was no reason for the complainants to issue notices of demand through their advocate from Ahmednagar.

    15. The Apex Court in Harman Electronics (P) Ltd. v. National Panasonic India Ltd., 2009 (3) Mh.L.J (SC) 792 : 2009 (1) ALL MR 479, held that issuance of notice would not by itself give rise to a cause of action, but communication of notice would. The relevant observations would show that the place of issuance of notice by itself would not determine the jurisdictional issue. The relevant observations of the Apex Court may be usefully quoted:

    “A Court derives a jurisdiction only when the cause of action arose within his jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an offence completes. Giving of notice, therefore, cannot have any precedence over the service. It is only from that view of the matter in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd., (2001) 6 SCC 463 emphasis has been laid on service of notice.”

    16. A Single Bench of this Court in Ahuja Nandkishore Dongre v. State of Maharashtra, (supra), held that jurisdiction has to be gathered from place where the money was intended to be paid. So, the Court within whose jurisdiction the cheque was merely presented for realisation, cannot be said to have jurisdiction to try the offence. It is important to note that there is no written agreement between the parties to pay the amounts shown under the cheques in question at Ahmednagar. The cheques were not drawn on the Bans; office at Ahmednagar. The mere fact that notice was issued from Ahmednagar would not clothe the jurisdiction on the Court of Judicial Magistrate at Ahmednagar. As stated before, the receipt of the notice and non-payment of the demanded amounts are ingredients which will have precedence over the place wherefrom the notice of demand was issued. Therefore, the Court of Judicial Magistrate at Ahmednagar cannot have jurisdiction to entertain the complaints.

    17. The averments in the complaint that the Company carries on business at Ahmednagar is of no much relevance in the fact situation of the present case. It need not be emphasized that the head office of both the Companies is at Mumbai. The goods were delivered by the branch offices situated at Bhubneshwar. The cheques were issued and drawn on branch of the Bank at Tangi/Khurda (Orissa). The demand notice was served on the concerned accused at the places situated in Orissa State. In the absence of any written agreement to pay the amounts at Ahmednagar, the jurisdiction cannot be assumed to be with the said Court merely because it is stated in the demand notice that the payment shall be made there. The case of K. Bhaskaran (supra) is duly considered and discussed by the learned Single Judge (Chavan, J.) in Ahuja Nandkishore Dongre (supra). This Court held that the place of notice would not by itself determine the jurisdictional issue. I have gone through judgment of learned Single Judge in Nutan Damodar Prabhu (supra).

    18. Considering totality of the circumstances and the fact situation, discussed hereinabove, I have no hesitation in holding that the Court of Judicial Magistrate at Ahmednagar has no territorial jurisdiction to entertain the complaint cases. Hence, Criminal Writ Petition No. 497/2008 is allowed. The impugned order is quashed. The two revision applications (Criminal Revision Applications No. 250/2007 and 251/2007) are dismissed. The private complaint case bearing S.T.C No. 8704/2006 be returned to the respondent - M/s Videocon Industries Ltd. for presentation in the appropriate Court having jurisdiction over that matter. No costs.

    Order accordingly.
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    Comments

    Dipti Kumar Mohanty v. Videocon Industries Ltd.
    (Feb 17, 2009)