JUDGMENT G.S. Chahal, J.

1. This order will dispose of the present criminal miscellaneous and two others (i.e., Cr. M Nos. 11347-M and 11345-M of 1990) brought under Section 482 of the Code of Criminal Procedure, for quashing the complaint, annexure P-4 (in each case), and the proceedings pending in the Court of the Judicial Magistrate First Class, Kurukshetra. As common questions of law and fact are involved in all of them, I will refer to the facts in the instant case.

2. According to Prem Kumar Goyal, complainant No. 1, Haryana Milk Foods Ltd., Pehowa, complainant No. 2, is a company and he is its adviser duly authorised to initiate proceedings. Accused No. 5, Dany Dairy and Food Engineers Ltd., Saharanpur (the supplier), is a limited company, and accused Nos. 1 to 3 are its directors and accused No. 4 is its manager (accounts).

3. Vide work order dated April 15, 1988, complainant No. 2 entered into a contract with the supplier-company for the supply of evaporator and dryer against payment of Rs. 1,40,00,000. Subsequently, on account of modification in design and supply of these goods, the scope of the order was reduced to Rs. 1,24,00,000. Against the said work order, complainant No. 2 advanced ,Rs. 1,47,43,383.05 for facilitating the manufacture of the goods and their installation and commission according to the committed parameters certified by the Engineers of Damro (USA) and Evapo Dry (U. K.). The contract was to be completed and the plant was to be commissioned by November 15, 1988. The supplier-company, in order to diminish their liability regarding repayment of excess amount received by it, issued cheque No. 300538, dated August 13, 1989, for Rs. 50,000 in favour of complainant No. 2 payable by the Punjab and Sind Bank, Civil Lines, Saharanpur (the bankers of the supplier-company). Complainant No. 2, through its banker, State Bank of Patiala, Saharanpur, presented the said cheque, but it was received back on August 17, 1989, with the remark "refer to drawer" which means non-availability of sufficient funds in the account. This information was supplied by the bankers to complainant No. 2 and, on receipt of that intimation, complainant No. 1, through a registered letter dated August 26, 1989, issued a notice under Section 138(b) of the Negotiable Instruments Act ("the Act" in brief), making a demand for payment of the said amount. This notice was received by accused No. 1, but no payment was made. The accused had, thus, committed an offence under Section 138 of the Act.

4. The challenge is mainly made to the territorial jurisdiction of the court at Kurukshetra, pleading that only the court at Delhi and Saharanpur had the jurisdiction to try the offence. It is also alleged that since M. M. Malik had signed the cheque, only he could be tried for the offence, if any. To appreciate the argument of learned counsel, the following provisions of the Act may be noted :

"30. Liability of drawer.--The drawer of a bill of exchange or cheque is bound, in case of dishonour by the drawee or acceptor thereof, to compensate the holder, provided due notice of dishonour has been given to, or received by, the drawer as hereinafter provided.

138. Dishonour of cheques for insufficiency, etc., of funds in the accounts.--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 the amount of money standing to the credit of that account is insufficient to honour the cheque or 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 provision of this Act, be punished with imprisonment for a term which may extend to one year or with fine which may e'xtend to twice the amout of the cheque, or with both :

Provided that nothing contained in this hall 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 fifteen 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 ;

(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."

5. Under the provisions of section 30, whenever a cheque is dishonoured, the drawer has to compensate the holder of the cheque. This is in the form of a civil liability. Under Section 138, however, an offence is deemed to have been committed if the conditions laid down therein are met.

6. Chapter XVII, inserting Sections 138 and 142, was introduced by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988), with effect from April 1, 1989. The Statement of Objects and Reasons (Notes on Clauses) appended to the Bill, explaining the objects of the new chapter, reads as follows :

"This Clause (Clause 4 of the Bill) inserts a new Chapter XVII in the Negotiable Instruments Act, 1881. The provisions contained in the new Chapter provide that, where any cheque drawn by a person for the discharge of any liability is returned by the bank unpaid for the reason of the insufficiency of the amount of money standing to the credit of the account on which the cheque was drawn or for the reason that it exceeds the arrangements made by the drawer of the cheque with the bankers for that account, the drawer of such cheque shall be deemed to have committed an offence. In that case, the drawer, without prejudice to the other provisions of the said Act, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both. The provisions have also been made so that to constitute the said offence --

(a) such cheque should have been presented to the bank within a period of six months of the date of its drawal or within the period of its validity, whichever is earlier ;

(b) the payee or holder in due course of such cheque should have made a demand for the payment of the said amount of money by giving a notice, in writing, to drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque unpaid ; and

(c) the drawer of such cheque should have failed to make the payment of the said amount of money to the payee or the holder in due course of the cheque within fifteen days of the said notice.

7. If has also been provided that it shall be presumed, unless the contrary is proved, that the holder of such cheque received the cheque in discharge of a liability. Defences which may or may not be allowed in any prosecution for such offence have also been provided to make the provisions effective. Usual provision relating to offences by companies has also been included in the said new chapter. In order to ensure that genuine and honest bank customers are not harassed or put to inconvenience, sufficient safeguards have also been provided in the proposed new chapter. Such safeguards are-

(a) that no court shall take cognizance of such offence except on a complaint, in writing, made by the payee or the holder in due course of the cheque ;

(b) that such complaint is made within one month of the date on which the cause of action arises ; and

(c) that no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate or a Judicial Magistrate of the first class shall try any such offence."

8. Section 138 comes into play only when the three provisos to the section are also complied with. I am unable to endorse the argument of Shri H. L. Sibal, Senior Advocate, that the provisos give the defences and are not ingredients of the offence. In fact, all the three provisos must be complied with before dishonouring a cheque issued in order to discharge the liability and dishonouring for want of funds can create an offence (sic). Section 142(b) provides a clincher. The cause of action will be complete when the drawer of the cheque fails to make the payment within 15 days of the receipt of notice contemplated by proviso (b). The offence shall be deemed to have been committed only from the date when the notice period expired. I derive support for my observations from the following observations made by Thomas J. in Paramjit Singh v. N. C. Job [1989] HAP 461 ; [1990] 67 Comp Cas 570, 572 :

"When the main body of the section is read along with the provisos, it is clear that the offence will be deemed to have been committed only if the drawer of the cheque failed to make the payment within fifteen days of receipt of the notice. An 'offence' as defined in Section 2(n) of the Code includes not only the doing of a positive act but by omitting to do something as well. Here, the relevant provision says that the offence is the omission to make payment within fifteen days of receipt of notice. Drawing the cheque is not the act by which the offence is deemed to have been committed.

When the drawer fails to make the payment within the period specified in Clause (c) of the proviso, the offence is complete. This aspect is made further clear in Section 142(b) of the Act. Under the said clause, no court shall take cognizance of any offence punishable under Section 138 unless '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'. Normally, a cause of action does not arise until the commission of the offence. When Section 142(c) says that the cause of action is the one which arises under Clause (c) of the proviso, such cause of action is the omission to make payment within fifteen days of the receipt of the notice. . . "

9. Shri Sibal, learned counsel, then tried to argue that the term "refer to drawer" does not mean that the drawer did not have sufficient funds in hrs account or that the amount of the cheque exceeded the amount of arrangement. He is, however, unable to show that, in fact, the petitioner-company had to its credit in the account sufficient funds to honour the cheque. The term "refer to drawer" is only a courteous way, normally adopted by a banker, to show its inability to honour the cheque for want of funds. If, in fact, the petitioner-company had an arrangement or credit in its account with the bank, he can show this fact to the trial court.

10. The offence is only described to be deemed a notional matter and the same can happen only after all the conditions in the proviso are also met.

11. Dishonouring of the cheque was only a part of the cause of action and the offence was complete only when the petitioner-company failed to discharge its liability to the creditors (the complainant herein). For discharging the debt, the petitioners had to find out their creditors and since the creditor had its office at Pehowa, the offence was complete at that place and, in this situation, the court at Kurukshetra had the territorial jurisdiction to try the matter. No ground for quashing the impugned complaint and the subsequent proceedings is made out. All other pleas will be available to the petitioners at the time of trial. The liability of petitioners other than M. M. Malik can be urged before the trial Magistrate. All the three criminal miscellaneous (enumerated above) are hereby dismissed.

12. The parties, through their learned counsel, are directed to appear before the trial Magistrate on March 12, 1991.