2011 (5) TMI 843 - HC - Companies Law

Jurisdiction - Petition under section 482 of the Code of Criminal Procedure - Negotiable Instruments Act - cheque was not issued in discharge of any debt or other liability but was given towards security - respondent No. 1 contended that the cheque had been issued by the petitioner to discharge his part liability towards supply of goods made by the respondent No. 1. Cheque had been handed over by the petitioner to respondent No. 1 at New Delhi, thus, Delhi courts had jurisdiction to try and entertain the complaint under section 138 of the Act Held that - As regards second contention of learned counsel for the petitioner that the cheque had been issued towards security and not in discharge of any legally enforceable debt or any other liability as a whole or in part is concerned, the same is also subject-matter of trial since it is a disputed question of fact in view of the specific averment made in the complaint that the cheque had been issued in discharge of part liability. petition dismissed

Summary

Issues: Jurisdiction of Delhi courts in a case under section 138 of the Negotiable Instruments Act, 1881.

Analysis:
1. The petitioner sought to quash the summoning order and complaint under section 138 of the Act, arguing that no cause of action arose in Delhi as the business transactions occurred in Punjab. The petitioner contended that the cheque issued was for security, not to discharge any debt. Citing precedents, the petitioner claimed Delhi courts lacked jurisdiction. The respondent argued that the cheque was issued in Delhi towards a liability, giving Delhi courts jurisdiction. The court noted specific averments in the complaint that the cheque was issued in Delhi, which, according to legal precedent, could establish jurisdiction.

2. The court referred to the Supreme Court's ruling in K. Bhaskaran v. Sankaran Vaidhyan Balan, stating that the offence under section 138 of the Act involves a series of acts, including drawing the cheque, presenting it to the bank, and giving notice of payment failure. These acts can occur in different localities, allowing any court within those localities to have jurisdiction. The complaint's assertion that the cheque was drawn in Delhi supports the jurisdiction of Delhi courts. The petitioner's denial created a disputed question of fact, to be resolved during trial.

3. The court emphasized that at the current stage, the averments in the complaint cannot be disregarded, even if disputed. The contention that the cheque was issued for security, not to discharge a liability, also remained a subject for trial due to conflicting claims. Consequently, the court found no merit in the petition and dismissed it, clarifying that this decision would not impact the final outcome of the complaint case. Each party was directed to bear their own costs, concluding the judgment.