2007 (10) TMI 710 - HC - Indian Laws

Summary

Issues Involved:
1. Territorial jurisdiction of the court.
2. Presentation of the cheque and its implications.
3. Cause of action in the context of dishonoured cheques.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction of the Court:
The primary issue raised by the defendant was whether the Delhi High Court had the territorial jurisdiction to entertain the suit. The plaintiffs argued that since the cheque was presented for clearance in New Delhi and dishonoured there, part of the cause of action arose in New Delhi, giving the Delhi High Court jurisdiction. The defendant contended that all relevant actions occurred in Ootacamund, where both parties resided, the contract was signed, and the cheque was drawn and handed over.

2. Presentation of the Cheque and Its Implications:
The plaintiffs presented the cheque at ICICI Bank in New Delhi, which then routed it through Indian Bank, Chennai, to the Oriental Bank of Commerce, Ootacamund, where it was dishonoured. The plaintiffs argued that this sequence of events meant that part of the cause of action arose in New Delhi. The court examined the concept of "presentation of the cheque" and its role in determining jurisdiction.

3. Cause of Action in the Context of Dishonoured Cheques:
The court analyzed whether the presentation of a cheque for collection at a bank in a different location from the drawee bank could confer jurisdiction. The plaintiffs relied on several precedents, including the Supreme Court's decision in *K. Bhaskaran v. Sankaran Vaidhyan Balan* and others, which dealt with the offence under Section 138 of the Negotiable Instruments Act, 1881. The court noted that the principles applicable to criminal cases under Section 138 were not directly applicable to civil suits for cheque dishonour.

Detailed Analysis:

1. Territorial Jurisdiction of the Court:
The court examined the facts and found that the cheque was handed over and accepted in Ootacamund, drawn on a bank in Ootacamund, and dishonoured by that bank. The plaintiffs' administrative office and the bank where the cheque was presented for collection being in New Delhi were deemed irrelevant for determining jurisdiction. The court concluded that the cause of action arose entirely in Ootacamund.

2. Presentation of the Cheque and Its Implications:
The court referred to the Supreme Court's decision in *Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.*, which clarified that "the bank" referred to in Section 138 of the Negotiable Instruments Act meant the drawee bank. Applying this reasoning, the court held that the presentation of the cheque for collection at the plaintiffs' bank in New Delhi did not confer jurisdiction on the Delhi High Court. The relevant presentation was to the drawee bank in Ootacamund.

3. Cause of Action in the Context of Dishonoured Cheques:
The court reviewed various precedents cited by both parties. It distinguished the facts of the present case from those in *Ogale Glass Works Ltd.*, *Gouri Shankar v. Ram Banka*, and *A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies Salem*. The court reiterated that the cause of action in a civil suit for cheque dishonour is the refusal by the drawee bank to honour the cheque, which in this case occurred in Ootacamund.

The court also referred to Section 64(1) of the Negotiable Instruments Act, which stipulates that a cheque must be presented for payment to the drawee bank. The court concluded that the essential fact to be proved by the plaintiffs was the dishonour of the cheque by the drawee bank in Ootacamund, and thus, no part of the cause of action arose in Delhi.

Conclusion:
The court upheld the defendant's objection regarding territorial jurisdiction and dismissed the suit for want of jurisdiction. The court made it clear that it had not expressed any opinion on the merits of the matter.