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Case Number

Crl. R.P No. 55 of 1999 & Crl. M. 1051/99

Advocates

Mr. K. Sukumaran, Sr. Advocate with Mr. Jitender Kumar, for the Petitioners.
Mr. Bhupender Pratap Singh, Advocate for the Respondent.

Judges

R.S Sodhi, J.

Acts

SECTION 20 CIVIL PROCEDURE CODE 1908
Section 178(d) of the Code
Section 179 of the Code
Section 138;(c)

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Smart Summary

Judicial Opinion Summary — R.S. Sodhi, J.

Factual and Procedural Background

This matter is a revision petition impugning the order dated 16.1.1999 of the Metropolitan Magistrate, by which the Magistrate rejected the petitioner's application seeking withdrawal (recall) of non-bailable warrants. The revision petition additionally raises a challenge on the question of territorial jurisdiction of the courts to entertain the complaint under Section 138 of the Negotiable Instruments Act (as discussed in the opinion). Counsel for the petitioner argued that the courts below lacked jurisdiction because, on their reading, the cause of action arose at the place where the notice was served and where the amount was not released. The petitioner sought remedial interference with the Magistrate's order and a ruling on jurisdiction.

Legal Issues Presented

Whether the courts below (specifically the courts at the place where the notice was not served or money not released) had territorial jurisdiction to entertain the complaint under Section 138, given the contention that the cause of action is confined to the place where the notice was served and the amount not paid.
Whether the Metropolitan Magistrate erred in rejecting the petitioner's application for withdrawal (recall) of non-bailable warrants without first disposing of that application (the procedural propriety of requiring the accused's presence prior to deciding the application).

Arguments of the Parties

Petitioner's Arguments

The courts below lacked territorial jurisdiction to entertain the Section 138 complaint because, the petitioner contended, the cause of action arises on the failure to make payment within 15 days of receipt of the notice and therefore jurisdiction is restricted to the place where the notice was served and the amount was not released.
In support of the jurisdiction point, learned senior counsel for the petitioner relied upon Sadanandan Bhadran v. Madhavan Sunil Kumar, 1988 (6) SCC 514, and specific observations therein about the restrictive meaning of "cause of action" under Section 142.
As to the Magistrate's order dated 16.1.1999, petitioner's counsel argued that the Magistrate should have first disposed of the application for cancellation/recall of non-bailable warrants and should not have required the physical presence of the accused before deciding that application; having required presence and passed an order without deciding the application, the court failed to apply its mind and committed procedural error.

The opinion does not contain a detailed account of any opposing party's specific arguments in response.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sadanandan Bhadran v. Madhavan Sunil Kumar, 1988 (6) SCC 514	Interpreted "cause of action" for the purposes of Section 142 as restricted to the single fact that gives rise to the cause of action — namely, the drawer's failure to make payment within 15 days of receipt of the notice (restrictive meaning rather than the generic meaning of "cause of action").	The petitioner relied on this decision to argue that jurisdiction should be confined to the place where the cause of action (failure to pay within 15 days) arose. The court in the present opinion noted Sadanandan's treatment of "cause of action" as temporal in nature (focused on when the failure to pay occurred).
K. Bhaskaran v. Sankaran Vaidhyan Balan and Another, JT 1999 (7) SC 558	Addressed territorial jurisdiction under the Criminal Procedure Code for offences under Section 138: emphasised that the place where the offence is committed may be several localities (drawing, presentation, dishonour, notice, failure to pay) and that Sections 177–179 of the Code permit trial in any of the localities where components of the offence occurred; jurisdiction is therefore wide and not restricted solely to the place of dishonour or notice.	The court in the present opinion relied on the principles articulated in K. Bhaskaran to reject the submission that jurisdiction is confined solely to the place indicated by Sadanandan's analysis; the opinion treated K. Bhaskaran as dealing with situs (territorial jurisdiction) and applied its reasoning to conclude that the Delhi courts had jurisdiction because the cheque was presented at Delhi and the notice was issued from Delhi.

Court's Reasoning and Analysis

The court examined the two competing Supreme Court decisions cited at the bar and analysed the legal concepts they addressed. The analysis proceeded along the following lines:

The court distinguished between "cause of action" and "jurisdiction" — holding that they are different concepts. It observed that "cause of action" is primarily a concept of time (i.e., when the actionable event occurs), whereas "jurisdiction" is a concept of situs (i.e., where the matter is to be tried).
It found that Sadanandan's case dealt with the meaning of "cause of action" under Section 142 (focusing on the temporal occurrence of the failure to pay within 15 days), while K. Bhaskaran's case addressed the question of territorial jurisdiction (situs) and how the Code allows trial in any of the localities where components of the offence under Section 138 took place.
Having identified that the two decisions addressed different legal inquiries (time vs. place), the court concluded there was no inconsistency or overlap that would prevent application of the territorial principles. On the facts before it — the cheque had been presented at Delhi and the notice had been issued from Delhi — the court held that the courts at Delhi had jurisdiction to entertain the complaint.
Turning to the procedural challenge to the Magistrate's order dated 16.1.1999, the court examined the petitioner's contention that the Magistrate should have first decided the application for recall of non-bailable warrants before insisting on the accused's presence. The court considered that the Magistrate had required presence first and had not decided the recall application before passing orders; the court found merit in the argument that the application should have been disposed of first and that the Magistrate had not applied its mind properly.
On this basis, the court held that the impugned order was flawed — not on the merits of the recall application, but on the procedural error in failing to decide the application prior to taking other steps — and remanded the matter to the Metropolitan Magistrate with specific instruction to first consider the applications for recall of the non-bailable warrants before passing any other order.

Holding and Implications

Holding: The revision petition is disposed of.

The court made two dispositive determinations explicitly reflected in the order:

On jurisdiction: The court held that "cause of action" (a temporal concept) is distinct from "jurisdiction" (a situs concept). Applying that distinction to the facts — presentation of the cheque at Delhi and issuance of the notice from Delhi — the court concluded that the courts at Delhi have territorial jurisdiction to entertain the complaint.
On the Magistrate's procedure and the challenged order dated 16.1.1999: The court concluded the Magistrate committed a procedural error by not first deciding the applications for recall of the non-bailable warrants before insisting upon and requiring the accused's presence and passing subsequent orders. The court remanded the matter to the Metropolitan Magistrate with the direction that the Magistrate must first consider the applications for recall of the non-bailable warrants before passing any other order.

Implications:

Direct effect on the parties: The Metropolitan Magistrate is required to reconsider and decide the applications for recall of non-bailable warrants before taking any further procedural steps; the matter returns to the Magistrate for that limited purpose. The complaint may lawfully proceed in the Delhi courts on the territorial basis articulated by the court.
On precedent: The opinion applies and distinguishes the earlier Supreme Court decisions cited; it does not purport to lay down a new legal principle beyond applying the distinction between temporal "cause of action" and territorial "jurisdiction" to the facts of this case. The decision disposes of the revision petition and remands for reconsideration of the recall applications; the opinion does not state that it establishes a new, binding precedent beyond its application to these facts.

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Prem Cashew Industries & Ors v. Zen Pareo..

R.S Sodhi, J.— This is a revision petition challenging the order dated 16.1.1999 of the Metropolitan Magistrated where by the learned Magistrate has rejected the application of the petitioner praying for withdrawal of non-bailable warrants. The revision petition before me, besides challenging the order dated 16.1.1999, also raises question of jurisdiction.

It has been argued before me by learned counsel for the petitioner that the Courts below have no jurisdiction to entertain the complaint inasmuch as the cause of action which arose on the failure to make payment within fifteen days from the date of receipt of the notice, necessarily restricts the jurisdiction to the place where notice has been served and from where the amount has not been released. In support of this contention learned senior counsel has drawn my attention to the judgment of the Supreme Court in Sadanandan Bhadran v. Madhavan Sunil Kumar, 1988 (6) SCC 514. Learned counsel relies upon that following observations in the judgment:

“5. The next question that falls for our determination is whether dishonour of the cheque on each occasion of its presentation gives rise to a fresh cause for action within the meaning for Section 142(b) of he Act. Section 142 reads as under:

“142. 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 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;

(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.”

From a plain reading of the above Section, it is manifest that a competent court can take cognizance of a written complaint of an offence under Section 138 if it is made within one month of the date on which the case of action arises under clause (c) of the proviso to Section 138.

6. In a generic and wide sense (as in Section 20 of the Civil Procedure Code, 1908) “cause of action” means every fact which it is necessary to establish to support a right or obtain a judgment. Viewed in that context, the following facts are required to be proved to successfully prosecutes the drawer for an offence under Section 138 of the Act:

(a) that the cheque was drawn for payment of an amount of money for discharge of a debt/liability and, the cheque was dishonoured;

(b) that the cheque was presented within the prescribed period;

(c) that the payee made a demand for payment of the money by giving a notice in writing to the drawer within the stipulated period; and

(d) that the drawer failed to make the payment within 15 days of the receipt of the notice.

If we were to proceed on the basis of the generic meaning of the term “cause of action”, certainly each of the above facts would constitute a part of the cause of action but then it is significant to note that clause (b) of Section 142 gives it a restrictive meaning, in that, it refers to only one fact which will give rise to the cause of action and that is the failure to make the payment within 15 days from the date of the receipt of the notice. The reason behind giving such a restrictive meaning is not far to seek. Consequent upon the failure of the drawer to pay the money within the period 15 days as envisaged under clause (c) of the proviso to Section 138, the liability for the drawer for being prosecuted for the offence he has committed arises, and the period of one month for filing the complaint under Section 142 is to be reckoned accordingly. The combined reading of the above two Sections of the Act leaves no room for doubt that cause of action within the meaning of Section 142(c) arises—and can arise—only once.

From the learned counsel wants me to deduce that the cause of action and jurisdiction are one and the same thing, namely, the cause of action is a concept in time and place while jurisdiction is situs, but, however, the same amalgamate into one and that is what is termed as ‘cause of action’. On the other hand, my attention has been drawn to the judgment of the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and Another, JT 1999 (7) SC 558 where the question of jurisdiction has been adverted to and answered by the Supreme Court as follows:

“11. We fail to comprehend as to how the trial court could have round so regarding the jurisdiction question. Under section 177 of the code “every offence shall ordinarily be inquired into and tried in a court within whose jurisdiction it was committed.” The locality where the bank (which dishonoured the cheque) is situated cannot be regarded as the sole criteria to determine the place of offence. It must be remembered that offence under Section 138 would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque amount within the expiry of 15 days mentioned in Clause (c) of the proviso to Section 138 of the Act. It is normally difficult to fix up a particular locality as the place of failure to pay the amount covered by the cheque. A place, for that purpose, would depend upon a variety of factors. It can either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business. Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence under Section 138 of the Act.

12. Even otherwise the rule that every offence shall be tried by a court within whose jurisdiction it was committed is not an unexceptional or unchangeable principle. Section 177 itself has been framed by the legislature thoughtfully by using the precautionary word “ordinarily” to indicate that the rule is not invariable in all cases. section 178 of the code suggests that if there is uncertainty as to where, among different localities, the offence would have been committed the trail can be had in a court have jurisdiction over any of those localities. The provision has further widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area the court in either of the localities can exercise jurisdiction to try the case. Further again, Section 179 of the Code stretches its scope to a still wider horizon. It reads thus:

“179. Offence triable where act is done of 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.”

13. The above provisions in the Code should have been borne in mind when the question regarding territorial jurisdiction of the courts to try the offence was sought to be determined.

14. The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence: (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice.

15. It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at 5 different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under section 138 of the code. In this context a reference to Section 178(d) of the Code is useful. It is extracted below:

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

16. 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.”

Faced with these two different judgments, learned counsel for the petitioner wants me to notice that the judgment in K. Bhaskaran's case (supra) did notice the earlier judgment of the Supreme Court in Sadanandan's case (supra) and, therefore, according to him, this is an observation but not the ratio of the judgment.

Having heard learned counsel for the parties. I have carefully gone through the judgments cited at the bar. I am of the opinion that cause of action is something quite different from jurisdiction. Cause of action must restrict itself to time whereas jurisdiction is a situs. Cause of action has been dealt with in Sadanandan's case while situs has been dealt with in K. Bhaskaran's case. There is no question of each overlapping the other. There is no ambiguity whatsoever, to may mind, and, therefore, I hold that in the facts and circumstances of this case since the cheque had been presented at Delhi and also notice issued from Delhi, the courts at Delhi have jurisdiction to enteratin the complaint. However, now coming to the challenge to the order dated 16.1.99, learned counsel submits that the court below ought 10 have, in the first instance, disposed of the application and only thereafter required the presence of the accused if the need did them arise. The court ought not to have, according to him, first required the presence of the accused before dealing with the application for cancellation of non-bailable warrants and that court having not decided the application insisting upon the accused to be present, has passed an order without applying its mind to the contentions raised in the application for cancellation of non-bailable warrants. There appears to be a great deal of force in this argument. It is also contended that the application that has been moved must first be decided before the consequences thereon can visit the accused. In this view of the matter, 1 hold that the order dated 16.1.1999 is bad and remand the matter to the Metropolitan Magistrate to first consider the applications for recall of the non-bailable warrants before passing any other order.

In view of what has been stated above, the revision petition is disposed of.

Prem Cashew Industries & Ors v. Zen Pareo..

Judicial Opinion Summary — R.S. Sodhi, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Prem Cashew Industries & Ors v. Zen Pareo..

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