2018 (8) TMI 630 - HC - Indian Laws

Dishonor of cheque - Prosecution of the respondents - it was alleged that no payments had been made by them pursuant to the notices of demand in the wake of dishonor of certain cheques which had been issued by the respondents in favour of the petitioner (complainant) towards discharge of their liability. Held that - The legislature has thus clarified that the court within whose local jurisdiction the branch of the bank where the payee or the holder in due course maintains the account in which the cheque in question is delivered for collection would ordinarily be the court of competent jurisdiction to take cognizance of and inquire into and try the offence under Section 138 of the Negotiable Instruments Act 1881. By this reckoning the court of the Metropolitan Magistrate at New Delhi District would be the jurisdictional court to deal with the criminal complaint cases in as much as the cheques in question here were presented by the petitioner for collection through its bank having branch in Connaught Place New Delhi. The criminal complaint cases would stand revived on the file of the concerned Metropolitan Magistrate of New Delhi district who is directed to proceed further thereupon in accordance with law - petition allowed.

Summary

Issues:
1. Territorial jurisdiction of the court in cases of dishonor of cheques under Section 138 of the Negotiable Instruments Act, 1881.
2. Impact of the Negotiable Instruments Act (Amendment) Ordinance, 2015 on the jurisdiction of courts.
3. Interpretation of Section 142 and Section 142A of the Negotiable Instruments Act, 1881.

Detailed Analysis:
1. The judgment dealt with the issue of territorial jurisdiction concerning the dishonor of cheques under Section 138 of the Negotiable Instruments Act, 1881. The petitioner company had filed criminal complaints seeking prosecution of the respondents for dishonoring cheques issued to the petitioner. Initially, the complaints were accepted by the Metropolitan Magistrate in New Delhi. However, the complaints were later returned citing lack of territorial jurisdiction based on the location of the drawee bank in Jaipur. This decision was influenced by the Supreme Court's ruling in Dashrath Rupsingh Rathod Vs. State of Maharashtra and Anr., (2014) 9 SCC 129, which emphasized jurisdiction based on the location of the drawee bank.

2. The judgment discussed the impact of the Negotiable Instruments Act (Amendment) Ordinance, 2015 on the court's jurisdiction. The petitioner sought a recall of the order returning the complaints based on the promulgation of the ordinance. However, as the ordinance lapsed and was re-promulgated, fresh applications were made by the petitioner. The Metropolitan Magistrate initially declined to entertain the complaints again, citing lack of power to review or recall the transfer order. The subsequent enactment of the Negotiable Instruments (Amendment) Act, 2015 introduced changes to Section 142 and added Section 142A, clarifying the jurisdictional aspects of cases under Section 138.

3. The judgment extensively interpreted Section 142 and Section 142A of the Negotiable Instruments Act, 1881. Section 142(2) specified the jurisdiction of courts based on the location of the bank where the payee or holder maintains the account or where the drawer maintains the account. Section 142A validated the transfer of pending cases to courts with jurisdiction under the amended Section 142. It clarified that cases against the same drawer should be filed before the same court, irrespective of the location of delivery or presentation of the cheques. The court concluded that the jurisdictional court for the criminal complaint cases was the Metropolitan Magistrate in New Delhi due to the location of the bank branch where the cheques were presented for collection. The judgment allowed the petitions, setting aside the orders transferring or declining to entertain the complaints and reviving the cases before the Metropolitan Magistrate in New Delhi for further proceedings.