2024 (4) TMI 896 - HC - Indian Laws

Dishonour of Cheque - territorial jurisdiction - Foreign instrument - Cheque not made payable in India; and, was not drawn on a bank in India - whether the presentation of the subject cheque at the Branch in Greater Kailash-I, New Delhi will be sufficient to invoke the provisions of Section 138 of the NI Act and make the complaint filed by the respondent no. 2 as maintainable? - HELD THAT - In the present case, the cheque in question is not made in India; it was not made payable in India; and, was not drawn on a bank in India. It is, therefore, not an inland instrument - In the present case, the cheque in question is therefore, a foreign instrument . While it is true that in the absence of stipulation that the cheque can only be presented for payment at Dubai, the cheque could be deposited by the respondent no. 2 at its bank in India as far as Section 135 of the NI Act, it requires the cheque to be specifically made payable at a place different from where it was made or indorsed. In my opinion, therefore, merely because there is no prohibition on the cheque being presented for payment at a place different from where it is made or indorsed, Section 135 of the NI Act cannot be attracted - as far as a cheque is concerned, unless specifically made payable at some other place, it must be presented at the bank upon which it is drawn, that is, where the bank of the drawer is situated. This would also have the effect on the place where the offence under Section 138 of the NI Act is said to have been committed, as shall be discussed herein below. In DASHRATH RUPSINGH RATHOD VERSUS STATE OF MAHARASHTRA ANOTHER 2014 (8) TMI 417 - SUPREME COURT , the Supreme Court has held that a reading of Section 138 of the NI Act in conjunction with Section 177 of the Cr.P.C. leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed. It held that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank is located. It held that the complainant is statutorily bound to comply with Section 177, etc., of the Cr.P.C. and therefore, the place or situs where the Section 138 complaint is to be filed is not of his choosing; the territorial jurisdiction is restricted to the court within whose local jurisdiction the offence was committed, which is where the cheque is dishonoured by the bank on which it is drawn. The offence under Section 138 of the NI Act is deemed to have been committed at a place where a cheque is delivered for collection at the branch of the bank of the payee or holder in due course, and the offence shall be inquired into and tried only by a court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated. In the present case, the cheque was presented for payment by the respondent at Delhi. There is no prohibition of the cheque being deposited by the respondent no. 2 for collection in Delhi. Therefore, in terms of Section 142(2) of the NI Act, the Court at Delhi shall have jurisdiction to inquire into and try the offence under Section 138 of the NI Act. In the present case, due to the amendment in Section 142 of the NI Act, now the dishonour of the cheque, due to its presentation for payment at the bank of the respondent no. 2 at Delhi, is deemed to have taken place at Delhi. Though, Section 134 of the NI Act states that in absence of a contract to the contrary, the liability of the drawer of a foreign cheque is regulated in all essential matters by the law of the place where he made the cheque, there is nothing in the said provision which would exclude the application of Section 138 of the NI Act read with Section 142 of the NI Act. Merely because the payee or holder in due course of a foreign cheque chooses to present the cheque in India out of mala fide, the application of the provision of Section 138 of the NI Act and the jurisdiction of the court where such cheque is deposited for payment, cannot be ousted. The unexplained delay itself is sufficient ground for this Court to refuse to exercise its inherent jurisdiction under Section 482 of the Cr.P.C. to quash the complaint at this belated stage. There are no merit in the present petition, the same is dismissed.

Summary

Issues Involved:
1. Jurisdiction of Indian courts under Section 138 of the Negotiable Instruments Act (NI Act) for a foreign cheque.
2. Applicability of Section 138 of the NI Act to cheques drawn and payable outside India.
3. Delay and laches in filing the petition.

Summary:

1. Jurisdiction of Indian courts under Section 138 of the NI Act for a foreign cheque:

The primary issue before the court was whether the presentation of the cheque at the ICICI Bank, Greater Kailash-I, New Delhi, suffices to invoke the provisions of Section 138 of the NI Act and makes the complaint maintainable. The court noted that the cheque was not made in India, not payable in India, and drawn on a bank in Dubai, making it a foreign instrument u/s 12 of the NI Act. The court referred to Section 142(2) of the NI Act, which states that the offence under Section 138 shall be inquired into and tried by a court within whose local jurisdiction the cheque is delivered for collection. Since the cheque was presented for payment in Delhi, the court held that the Delhi court has jurisdiction to inquire into and try the offence.

2. Applicability of Section 138 of the NI Act to cheques drawn and payable outside India:

The petitioners argued that the NI Act does not have extraterritorial application and that the liability of the maker of the cheque is regulated by the laws of Dubai, where the cheque was drawn. They cited Section 134 of the NI Act, which states that the liability of the maker of a foreign cheque is regulated by the law of the place where the cheque was made. The court, however, noted that Section 138 of the NI Act was introduced to regulate financial promises and enhance the acceptability of cheques, and there is no exclusion for foreign cheques. The court also referred to the legislative intent behind the amendment to Section 142 of the NI Act, which allows the payee to present the cheque in India and invoke the jurisdiction of Indian courts.

3. Delay and laches in filing the petition:

The respondent argued that the petition should be dismissed on the grounds of delay and laches, as it was filed more than five years after the complaint was made and at a stage when the defence evidence was being recorded. The court noted that the petitioners provided no explanation for the delay in filing the petition and held that the unexplained delay itself is sufficient ground to refuse to exercise its inherent jurisdiction under Section 482 of the Cr.P.C. to quash the complaint.

Conclusion:

The court dismissed the petition, finding no merit in the arguments presented by the petitioners and upheld the jurisdiction of the Delhi court to try the complaint under Section 138 of the NI Act. The court also emphasized the legislative intent to curb the indiscriminate issuance of cheques and safeguard the interests of creditors.