2012 (9) TMI 1213 - HC - Indian Laws

Determination of Territorial jurisdiction of magistrate - Dishonor of cheque - discharge of legally enforceable debt or blank cheque issued for the purpose of security - rebuttal of presumption - accused is guilty for commission of offence punishable u/s 138 of N.I. Act or not? - Application u/s 482 CrPC for Quashing complaint - plea of the petitioner is that the entire business transaction including the taking of the loan and deposit of security cheques took place in Kolkata, respondent cannot create jurisdiction of the Gurgaon Court simply because depositing the cheque (for encashment) at a place, other than the place of its issuance. Territorial Jurisdiction - HELD THAT - keeping in view of principle of law laid down in K. Bhaskaran's case 1999 (9) TMI 941 - SUPREME COURT , it is held that complaint is maintainable within the territorial jurisdiction of Gurgaon as the complainant company (respondent herein) has its corporate office at Gurgaon and the collecting bank with regard to the cheque in question is situated at Gurgaon. The criminal courts at Gurgaon have territorial jurisdiction to try and decide the complaint. Regarding Security Cheque - There can be no doubt regarding the fact that the security cheque is an integral part of the commercial process entered into between the Petitioner and Respondent/Complainant. The security cheque is not only a deterrent for the drawer against dishonoring his financial commitment but can also be legally and validly utilized towards the discharging of the liability of the Drawer. In the considered opinion of the Court, a security cheque is an acknowledgment of liability on the part of the drawer that the cheque holder may use the security cheque as an alternate mode of discharging his/its liability. Thus, the argument of the ld counsel for the petitioner that on dishonoring of a security cheque no offence punishable u/s 138 of the Negotiable Instruments Act is made out. Consequently, this petition is dismissed.

Summary

Issues:
1. Jurisdiction of the Court at Gurgaon to try the complaint under section 138 of the Negotiable Instruments Act.
2. Liability arising from the dishonour of a security cheque under the Negotiable Instruments Act.

Issue 1: Jurisdiction of the Court at Gurgaon:
The petition sought the quashing of a complaint under section 138 of the Negotiable Instruments Act pending in the court of Judicial Magistrate 1st Class, Gurgaon. The main contention was whether the Gurgaon Court had the competence to try the complaint. The petitioner argued that since the loan transaction and security cheque were executed in Kolkata, Gurgaon Court lacked jurisdiction. Reference was made to the case of M/s. Harman Electronics (P) Ltd. v. M/s. National Panasonic India Limited. On the other hand, the respondent relied on the decision in K. Bhaskaran v. Sankaran Vaidhya Balan, emphasizing that acts like presenting the cheque and issuing notice to the drawer were done in Gurgaon, justifying the Court's jurisdiction.

Issue 1 Analysis:
The Court analyzed the jurisdictional aspect in light of the K. Bhaskaran case, which established that the offense under section 138 of the Negotiable Instruments Act could be tried at any place where any of the acts constituting the offense occurred. The Court emphasized that the offense is complete only when all the essential acts are done. Referring to Section 178(d) of the Code of Criminal Procedure, the Court clarified that if the acts constituting the offense happen in different areas, each court with appropriate jurisdiction can try the case. The Court illustrated this principle with a hypothetical scenario involving commercial transactions between two companies in different locations.

Issue 1 Conclusion:
Based on the legal principles established in the K. Bhaskaran case, the Court held that the complaint was maintainable within the territorial jurisdiction of Gurgaon. The presence of the complainant company's corporate office and the collecting bank in Gurgaon justified the Gurgaon Court's jurisdiction to try the complaint. The Court rejected the petitioner's argument challenging the jurisdiction and upheld the validity of trying the case in Gurgaon.

Issue 2: Liability from Dishonour of Security Cheque:
The petitioner contended that dishonoring a security cheque should not impose liability under the Negotiable Instruments Act. It was argued that a security cheque is not issued to discharge any existing liability, but rather as a preventive measure against dishonoring financial commitments. The Court disagreed, stating that a security cheque is an acknowledgment of liability by the drawer and can be used to discharge the drawer's obligation. Rejecting the petitioner's argument, the Court emphasized that dishonoring a security cheque could constitute an offense under section 138 of the Negotiable Instruments Act.

Overall Conclusion:
In conclusion, the Court dismissed the petition, affirming the jurisdiction of the Gurgaon Court to try the complaint under section 138 of the Negotiable Instruments Act. Additionally, the Court clarified that dishonoring a security cheque could lead to liability under the Act, emphasizing the importance and validity of security cheques in commercial transactions.