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TMI Blog2007 (10) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is stated that the cause of action in the present suit partly arose at New Delhi as the cheque issued by the defendant was presented for clearance by plaintiff No. 1 through its bankers at New Delhi and the same was returned dishonoured at New Delhi. It was also stated that the plaintiff No. 1 has its administrative office at New Delhi and accordingly, maintains a bank account at New Delhi through which the said cheque was presented for clearance. On the basis of these statements, it is submitted, on behalf of the plaintiffs, that this Court has jurisdiction to try and entertain the present suit. On the other hand, it is contended on behalf of the defendant that the plaintiff as well as the defendant reside at Ootacamund. The contract between the parties, that is, between the plaintiff No. 1 and the defendant was signed at Ootacamund. The contract relates to properties at Ootacamund. The cheque in question was drawn on Oriental Bank of Commerce, Ootacamund and the cheque had been handed over by the defendant to the plaintiffs at Ootacamund. Therefore, the entire cause of action has arisen at Ootacamund and nothing has happened in Delhi. It was also pointed out by the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... informed the plaintiff of the dishonour of the cheque, meant that a part of the cause of action arose in New Delhi and, Therefore, this Court would have territorial jurisdiction over the subject matter of the present suit. 5. The learned Counsel for the plaintiffs placed reliance on the following decisions: (i) I.T. Commr. v. Ogale glass Works Ltd. [1954] 25 ITR 259 (SC); (ii) Gouri Shankar v. Ram Banka AIR 1963 Pat 398; (iii) K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. 1999 CriLJ 4606; (iv) M. Vittal Rao v. M.H. Ranganath 2000 AIHC 1973 (Karnataka High Court); (v) A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies Salem 1989 (2) SCC 341; and (vi) Navinchandra N. Majithia v. State of Maharashtra AIR2000SC2966 . 6. On the other hand, the learned Counsel for the defendant placed reliance on: (i) Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. 2001 CriLJ 1250 ; (ii) Escorts Limited v. G.K. Automobile 127 (2006) DLT 559 ; and (iii) Gujrat Insecticides Ltd. v. Jainsons Minerals 140 (2007) DLT 465. 7. In Ogale Glass Works (supra), a decision on which the learned Counsel for the plaintiffs had placed great reliance, the question of liability to income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question had been dishonoured, it was construed by the Court that the payment took effect at the time of delivery. The Supreme Court ultimately held that the posting of the cheques at Delhi, in law, amounted to payment in Delhi and, Therefore, the income, profits and gains in respect of the sales made to the Government of India was received in Delhi, which was part of British India and was, Therefore, taxable. The Supreme Court did not examine the question of dishonour of cheques. There is nothing in this decision of the Supreme Court which in any way advances the case of the plaintiffs. The said decision pertains to a situation where the cheques had been honoured and it was concluded that in such cases, the question of payment by cheques sent by post would depend upon the agreement between the parties and the course of conduct of the parties. In Ogale Glass Works (supra), the Supreme Court observed that: There can be no doubt that as between the sender and the addressee it is the request of the addressee that the cheque be sent by post that makes the post-office the agent of the addressee. So, as Ogale Glass Works Ltd. had expressly requested the Government of India to remit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment by a negotiable instrument is a conditional payment in the sense that such payment is subject to a condition subsequent that if the negotiable instrument is dishonoured on presentation the creditor may consider it as waste paper and resort to his original demand. The payment takes effect from the delivery of the instrument, but it is defeated by happening of the condition, that is, non-payment on maturity. It was further observed that a cheque, unless dishonoured, is payment, subject to the condition that it should be duly honoured at the proper date, in other words, the cheque should operate as payment unless defeated by dishonour. The Court ultimately observed that: In the instance case, Therefore, the cause of action arose partly at Giridih where the cheques were delivered and partly at Bombay where the cheques were honoured by the Bank ; and it must be held that the Bombay Court had jurisdiction to entertain the suit. Although the above observation, on a first look, appears to support the contentions of the plaintiffs in the present case, that is not the position. The Patna High Court had observed that the cause of action would arise partly where the cheque is issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act. However, the learned Counsel for the defendant submitted straightaway, and in my opinion, rightly so, that the decision would be limited to the question of dishonour of cheques under Section 138 of the Negotiable Instruments Act, 1881 read with the Code of Criminal Procedure, 1973. The entire emphasis of cause of action in a civil suit is different from the question of jurisdiction of a criminal court in respect of an offence. The Supreme Court in K. Bhaskaran (supra) considered the offence under Section 138 of the Negotiable Instruments Act, 1881 and regarded it to be a concatenation of a number of acts such as drawing of the cheque, presentation of the cheque to the bank, returning the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of the cheque or did it cover within its ambit any bank including the collecting bank of the payee of the cheque. To which bank is the cheque to be presented for the purposes of attracting the penal provisions of Section 138 of the Negotiable Instruments Act, 1881? In Shri Ishar Alloy Steels Ltd (supra), the Supreme Court held that the bank referred to in Clause (a) of the proviso to said Section 138 had reference to the drawee bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee in whose favor the cheque is issued. The learned Counsel for the plaintiffs had raised an objection with regard to placing reliance on the Supreme Court decision in the case of Shri Ishar Alloy Steels Ltd (supra) on the ground that it only related to the question of limitation. While it is true that the issue was with regard to presentment of the cheque within the stipulated period of six months, the specific questions, as noted above, were raised before the Supreme Court and were specifically answered by it in the following manner: 9. The use of the words a bank and the bank in the Section is indicator of the intentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to the (C) bank. The non presentation of the cheque to the drawee-bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee. Consequently, even if the plaintiffs submission based upon K. Bhaskaran (supra) that presentment of the cheque to the bank constituted a vital component, was to be accepted for the purpose of the present civil action, it is clear that the expression the bank has reference only to the drawee bank. The drawee bank in the present case is the Oriental Bank of Commerce at Ootacamund, Tamil Nadu. Therefore, presentation of the cheque to the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case on hand also the demand for payment having been made by the plaintiff in Bangalore through Ex. P 3 demand notice in exercise of the right reserved for him under Ex. P1 pro-note the cause of action for the suit based thereon had arisen in part in Bangalore and within the jurisdiction of the Court below in the light of Sub-section (c) of Section 20 of the CPC. But, the factual position in the present case is entirely different. First of all, this is a case of a cheque and not a promissory note. Secondly, there is no such stipulation and thirdly, the cheque is, in any event, honoured or dishonoured only upon presentment at the drawee bank. 12. The learned Counsel for the plaintiffs had also referred to the Supreme Court decision in the case of A.B.C. Laminart Pvt. Ltd. (supra) to point out as to what constitutes cause of action. He also referred to paragraph 12, which reads as under: 12. A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order to support its right to a judgment of the Court. The essential and key fact which had to be proved by the plaintiffs in the present case is that the drawee bank refused to honour the cheque drawn on it by the defendant. The fact, Therefore, pertains to the dishonour of the cheque by the drawee bank. The drawee bank is the Oriental Bank of Commerce at Ootacamund and its refusal to honour the cheque on the ground that the payment had been stopped by the drawer is the cause of action for filing the present suit. That cause of action has arisen entirely at Ootacamund. The depositing of the cheque at ICICI Bank, New Delhi, its transmission to Indian Bank, Chennai and its return in the same route but in the reverse order does not constitute part of the cause of action. The cause of action is and remains to be the refusal by the Oriental Bank of Commerce at Ootacamund to honour the cheque because the drawer had stopped payment. Therefore, applying the general principles with regard to cause of action, as enunciated in A. B. C. Laminart Pvt. Ltd. (supra) and Navinchandra N. Majithia (supra) to the facts of the present case, it is apparent that no part of the cause of action arose i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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