2020 (10) TMI 311 - HC - Indian Laws

Dishonor of Cheque - Territorial Jurisdiction for initiation of proceedings - payee/complainant bank is having account only at Calcutta, the presentation of cheques at Chennai - offence u/s 138 of NI Act - HELD THAT - Section 142(2)(a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015 vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction of the Court, where the cheque is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account) - In this case, the petitioners are doing business at Calcutta and they are residing only at Calcutta. Further, they availed loan from the respondent bank at Calcutta branch and issued the cheques only to the Calcutta branch. The respondent bank could have presented the said cheques at Calcutta branch itself, but it has presented the said cheques at Chennai branch and for that the respondent bank has not stated any reason. As per the decision of the Delhi High Court in Good Luck Traders Vs. State and Others 1779123 , merely because the cheque has been presented at non-home branch of drawee bank, it does not in any manner become the drawee bank. As per Sub-section (2) of Section 142 of the Negotiable Instruments Act, 1881, amended through the Negotiable Instruments (Amendment) Act, 2015, the offence under Section 138 of the Negotiable Instruments Act shall be inquired into and tried only by a court within whose local jurisdiction the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course maintains the account is situated, except in cases of bearer cheques, which are presented to the branch of the drawee bank and in that case, the local court of that branch would get jurisdiction. Explanation to Sub-section (2) of Section 142 of the Act clarifies that even if the cheque is presented for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been presented to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account - In this case, since payee/complainant bank is having account only at Calcutta, the presentation of cheques at Chennai, shall be deemed to be presented at Calcutta Branch. Hence, the Courts at Calcutta alone will have jurisdiction and not the Courts at Chennai. Therefore, the cognizance taken by the VII Metropolitan Magistrate, George Town, Chennai is liable to be quashed. The cognizance taken by the VII Metropolitan Magistrate, George Town, Chennai is quashed. The learned VII Metropolitan Magistrate, George Town, Chennai is directed to return the complaint to enable the complainant to present the same before the Court having territorial jurisdiction (Court at Calcutta) - Petition allowed.

Summary

Issues Involved:
1. Jurisdiction of the Court to try the case under Section 138 of the Negotiable Instruments Act.
2. Validity of the presentation of cheques at a non-home branch.
3. Applicability of amendments to the Negotiable Instruments Act on jurisdiction.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Court to try the case under Section 138 of the Negotiable Instruments Act:

The petitioners sought to quash the proceedings against them on the grounds that the Court at Chennai lacked jurisdiction. They argued that all transactions, including the issuance of cheques, occurred in Calcutta. The respondent bank presented the cheques in Chennai, which the petitioners contested, stating that the proper jurisdiction was in Calcutta where the transactions took place. The petitioners relied on the Delhi High Court decision in *Good Luck Traders Vs. State and Others* to support their claim that the Chennai Court lacked jurisdiction.

2. Validity of the presentation of cheques at a non-home branch:

The petitioners contended that the cheques given for security purposes were presented in a frozen account in Chennai, although the transactions occurred in Calcutta. They argued that presenting cheques in a non-home branch does not confer jurisdiction on that branch. The respondent countered by citing amendments to the Negotiable Instruments Act, specifically Section 142(2)(a), which allows jurisdiction where the cheque is delivered for collection. The Court referred to the Supreme Court’s ruling in *Dashrath Rupsingh Rathod V. State of Maharashtra and another*, which established that prosecution should be launched where the dishonour occurs unless covered by specific provisions of the Code of Criminal Procedure.

3. Applicability of amendments to the Negotiable Instruments Act on jurisdiction:

The respondent cited the amendments introduced through the Negotiable Instruments (Amendment) Act, 2015, which vested jurisdiction in the Court where the cheque is delivered for collection. The Court referred to the Supreme Court’s decision in *M/s. Bridgestone India Pvt. Ltd., Vs. Inderpal Singh*, which upheld that jurisdiction lies where the cheque is presented for collection. However, the Court noted that the respondent bank did not provide a reason for presenting the cheques in Chennai instead of Calcutta. The Court concluded that the presentation of cheques at a non-home branch does not alter the jurisdiction, as the primary transactions and accounts were in Calcutta.

Conclusion:

The Court held that the presentation of cheques at a non-home branch does not confer jurisdiction on that branch. The amendments to the Negotiable Instruments Act stipulate that the jurisdiction lies where the cheque is delivered for collection through the account maintained by the payee or holder. Since the respondent bank’s account was in Calcutta, the Chennai Court lacked jurisdiction. Consequently, the proceedings in Chennai were quashed, and the complaint was directed to be filed in the appropriate Court in Calcutta. The petition was allowed, and the cognizance taken by the VII Metropolitan Magistrate, George Town, Chennai, was quashed.