2018 (6) TMI 1370 - HC - Indian Laws

Dishonor of cheque - Jurisdiction of the courts - location of the accused - return of cheque for the reason Account Closed - case of petitioner is that The 2nd petitioner resigned his post as Managing Director of the first petitioner company with effect from 31.03.2012 and since the cheques were presented only on 08.06.2012 the 2nd petitioner cannot be held liable for the offence punishable under Section 138 of Negotiable Instruments Act - Held that - Section 202 of Code of Criminal Procedure envisages that the Magistrate should postpone the issue of summons against the accused if the accused is residing at a place beyond the area in which the Magistrate exercises his jurisdiction. In this case the Magistrate is exercising his jurisdiction in Chennai District and the petitioners/accused admittedly are residing in Karnataka State - The amendment of Section 202 of Criminal Procedure Code was made by the Central Act 25 of 2005 in order to curb the practice of private complaints being filed by unscrupulous person against persons residing in far off places. In a case under Section 138 of Negotiable Instruments Act petitioners/accused and the complainant would be knowing each other and there should have been some transactions between them. In the instant case the petitioners/accused had purchased computers and other accessories from the respondent/complainant and they are not stranger to the complainant. It is relevant to note that under the amended provision of Negotiable Instruments Act the complaint under Section 138 of Negotiable Instruments Act can be filed within the jurisdiction of the court where the banker of the complainant is situate. In this case the bank of the complainant is in Chennai and therefore the complaint was filed within the jurisdictional court. Since the case is of the year 2013 the learned Metropolitan Magistrate III Fast Track Court Saidapet Chennai is directed to dispose off the matter within a period of 3 months from the date of receipt of a copy this order. At this juncture the learned counsel appearing for the petitioners would contend that since the 2nd petitioner is a senior citizen aged 81 years his personal appearance before the trial court should be dispensed with. Petition dismissed.

Summary

Issues:
Accused challenging proceedings under Section 482 of CrPC - Liability under Section 138 of NI Act - Role of accused in company - Enquiry under Section 202 of CrPC - Jurisdiction of Magistrate - Frozen account defense.

Analysis:

1. Liability under Section 138 of NI Act:
The accused contended that since one petitioner resigned before the cheques were presented, he cannot be held liable. However, the court cited precedents like Laxmi Dyechem v. State of Gujarat to establish liability of signatories even after resignation. The court rejected this ground.

2. Enquiry under Section 202 of CrPC:
The accused argued that an enquiry under Section 202 should have been conducted due to their residence in Bangalore. The court noted that the amendment aimed to prevent false complaints against distant parties. However, in cases under Section 138 of NI Act, where parties have prior transactions, such an enquiry is not mandatory. The court upheld the proceedings.

3. Role of Accused in Company:
The accused claimed the complaint lacked specifics about their role in the company. The court observed that the complaint implicated the accused in day-to-day management, establishing a prima facie case. This ground was dismissed.

4. Frozen Account Defense:
The accused argued that their account was frozen, leading to cheque dishonor. However, as the cheques were presented within six months of issuance and the accused failed to inform the complainant about the frozen account, this defense was rejected. The court found no reason to quash the proceedings.

The court directed the trial court to dispose of the matter within three months. The personal appearance of the senior citizen petitioner was dispensed with, with the condition to appear when required. The Criminal Original Petition was dismissed, and the connected miscellaneous petition was closed.