2014 (10) TMI 366 - SC - Indian Laws

Maintainability of appeal - Dishonour of cheque - Jurisdiction of courts - High Court directed return of all complaints filed under Section 138 of the Negotiable Instrument Act, 1881 in which the Metropolitan Magistrates in Delhi have taken cognizance only because the statutory notices in terms of proviso to Section 138 of the Act have been issued to the drawers of the cheque from Delhi - Held that - The order passed by the High Court simply directs return of complaints in cases where the same have been filed only because the statutory notices have been issued from Delhi. The direction proceeds on the basis that issue of statutory notices from Delhi by itself is not sufficient to confer jurisdiction on the Delhi Courts to entertain the complaints. An offence under Section 138 is committed no sooner the cheque issued on an account maintained by the drawer with a bank and representing discharge of a debt or a liability in full or part is dishonoured on the ground of insufficiency of funds or on the ground that the same exceeds the arrangements made with the banker. Prosecution of the offender and cognizance of the commission of the offence is, however, deferred by the proviso to Section 138 till such time the complainant has the cause of action to institute such proceedings. This Court found that the proviso to Section 138 does not constitute ingredients of the offence punishable under Section 138. Issue of a notice from Delhi or deposit of the cheque in a Delhi bank by the payee or receipt of the notice by the accused demanding payment in Delhi would not confer jurisdiction upon the Courts in Delhi. What is important is whether the drawee bank who dishonoured the cheque is situate within the jurisdiction of the Court taking cognizance. In that view, we see no reason to interfere with the order passed by the High Court which simply requires the Magistrate to examine and return the complaints if they do not have the jurisdiction to entertain the same in the light of the legal position as stated in Harman s case (2008 (12) TMI 677 - SUPREME COURT OF INDIA). All that we need to add is that while examining the question of jurisdiction the Metropolitan Magistrates concerned to whom the High Court has issued directions shall also keep in view the decision of this Court in Dashrath s case (2014 (8) TMI 417 - SUPREME COURT) - Decided against Appellant.

Summary

Issues Involved:
1. Territorial jurisdiction of courts under Section 138 of the Negotiable Instruments Act, 1881.
2. Validity of complaints based on the location of statutory notice issuance.
3. Impact of Supreme Court decisions on jurisdictional matters.

Issue-wise Detailed Analysis:

1. Territorial jurisdiction of courts under Section 138 of the Negotiable Instruments Act, 1881:
The Supreme Court addressed the issue of whether the issuance of statutory notices from Delhi alone could confer jurisdiction on Delhi courts to entertain complaints under Section 138 of the Negotiable Instruments Act, 1881. The Court referred to its previous decision in Harman Electronics Private Limited v. National Panasonic India Private Limited, stating that the mere issuance of statutory notices from Delhi does not confer jurisdiction on Delhi courts. The Court emphasized that the jurisdiction is determined by the location of the drawee bank where the cheque was dishonored. The legal position was further clarified in Dashrath Rupsingh Rathod v. State of Maharashtra, where the Court held that the place of dishonor of the cheque determines the jurisdiction.

2. Validity of complaints based on the location of statutory notice issuance:
The High Court of Delhi had directed the return of all complaints filed under Section 138 of the Negotiable Instruments Act, 1881, where cognizance was taken solely based on the issuance of statutory notices from Delhi. The Supreme Court upheld this direction, stating that such complaints should be returned for presentation before competent courts with proper jurisdiction. The Court reiterated that the issuance of notices from Delhi or the deposit of cheques in Delhi banks does not confer jurisdiction on Delhi courts.

3. Impact of Supreme Court decisions on jurisdictional matters:
The Supreme Court referred to its decision in Dashrath Rupsingh Rathod v. State of Maharashtra, which clarified the principles of jurisdiction under Section 138 of the Negotiable Instruments Act. The Court summarized the legal position, stating that:
- An offence under Section 138 is committed when a cheque is dishonored due to insufficiency of funds.
- Cognizance of the offence is deferred until the complainant has the cause of action to institute proceedings.
- The cause of action accrues when the dishonored cheque is presented to the drawee bank, a demand for payment is made within thirty days, and the drawer fails to pay within fifteen days of receiving the notice.
- The jurisdiction to try the case is determined by the location of the drawee bank where the cheque was dishonored.
- The general rule under Section 177 of Cr.P.C applies, and prosecution can only be launched in the court within whose jurisdiction the dishonor took place.

The Supreme Court dismissed the appeals, affirming the High Court's decision to return the complaints for lack of jurisdiction. The Court emphasized that the Metropolitan Magistrates should examine the jurisdictional question in light of the legal position stated in Harman's case and Dashrath's case.

Separate Judgments:
The Supreme Court also addressed similar issues in separate judgments involving different High Courts:
- In the case from the High Court of Bombay, the Supreme Court upheld the decision that the presentation of cheques before banks in Delhi or the issuance of dishonor notices from Delhi does not confer jurisdiction on Delhi courts.
- In another case from the High Court of Judicature at Bombay, the Supreme Court reversed the High Court's decision that relied on K. Bhaskaran's case, stating that the presentation of cheques for collection or the issuance of notices does not confer jurisdiction.
- In the case from the High Court of Kerala at Ernakulam, the Supreme Court affirmed the decision that the presentation of cheques in Kerala did not confer jurisdiction on Kerala courts, relying on Harman's case.

The Supreme Court consistently held that jurisdiction under Section 138 is determined by the location of the drawee bank where the cheque was dishonored, not by the place of issuance of statutory notices or presentation of cheques.