jurisdiction 138

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Citation :- CDJ 2011 MHC 3873

Court : High Court of Judicature at Madras

Case No : CRL.O.P.Nos. 3265, 3266, 3267 & 3268 of 2010 & M.P.Nos.1 of 2010 (4

in Nos.)

Judges: THE HONOURABLE MR. JUSTICE G.M. AKBAR ALI

Parties : Mohammed Haneef Versus Shankarraj

Appearing Advocates : For the Appellant: Abudu Kumar Rajarathinam for S. Ahok

Kumar, Advocates. For the Respondent: A. Laxmi Raj Rathnam, Advocates.

Date of Judgment : 13-06-2011

Head Note :-

Criminal Procedure Code – Section 482 - Negotiable Instruments Act, 1988 –

Section 138, 142 - petitioner made a challenge as Judicial Magistrate has no

jurisdiction to take cognizance, where respondent has initiated proceedings under

Sec.138 and 142 of Negotiable Instruments Act and lower court had taken

cognizance of the offence - Presentation of the cheque and the dishonor of the

cheque by the drawee bank may be referred to as commencement of the offence,

which is followed by issuing of a statutory notice demanding payment and giving

an opportunity to the drawee to avoid criminal prosecution – cheque was issued

at Bangalore and the notice was also served at Bangalore, the place where the

cheque has been returned unpaid by the drawee bank only at Chennai - court

which has jurisdiction is neither the lower court at Bangalure nor the lower court,

Chennai, but the Metropolitan Magistrate’s Court.

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Cases Referred:

1. 2009 (1) SCC 720 (Harman Electronics Pvt Ltd vs National Panasonic India

Private Limited)

2. 1999(7) SCC 510 (K.Bhaskaran vs Shankaran Vaidhyan Balan and another)

3. Shri Ishar Alloy Steels Ltd vs Jayaswals Neco Ltd, (2001) 3 SCC 609

Comparative Citations:

2011 (4) CTC 567, 2011 (4) MLJ(Crl) 661, 2011 (3) MWN(Cr) DCC 39, 2012 CrLJ

99, 2012 AIR(NOC) 24

Judgment :-

(Prayer: Criminal Original Petitions filed under Section 482 Cr.P.C. for the reliefs

as stated therein.)

COMMON ORDER

1. The petitions are filed seeking a direction to call for the records in C.C.Nos.437,

438, 439 and 440 of 2009 on the file of the learned Judicial Magistrate, Ambattur.

2. The respondent has initiated proceedings under Sec.138 and 142 of

Negotiable Instruments before the learned Judicial Magistrate Court, Ambattur

against the petitioner. In the complaint, it is alleged that the petitioner has taken a

sum of Rs.35,00,000/- assuring an admission for a post graduate course in M.S.

Ortho for the respondent’s son Dr.S. Manivannan. Since he did not obtain any

admission, he is liable to pay the amount.

3. It is further submitted that the petitioner executed promissory notes dated

8.3.2009 and also issued four cheques dated 26.3.2009 each for Rs.7,50,000/-.

He also assured the complainant that he will pay the amount within sixty days.

Since the amount was not paid, the cheques were presented by the complainant

in his bank on 5.9.2009 and the cheques were dishonoured by the petitioner’s

banker on 7.9.2009. The complainant issued a statutory notice on 23.9.2009

demanding repayment within fifteen days which was received by the petitioner


who also sent a reply on 30.9.2009. Since the demand made in the notice was

not complied with, the respondent has initiated the above said proceedings. The

learned Magistrate had also taken cognizance of the offence.

4. Challenging taking cognizance of the offence by the learned Judicial

Magistrate, Ambattur, the petitioner is before this Court on the sole ground that

the learned Judicial Magistrate has no jurisdiction to take cognizance.

5. Mr.Abudu Kumar Rajarathinam, learned counsel for the petitioner would submit

that the entire transaction took place only at Bangalore and the cheque was

drawn on Central Bank of India, Indira Nagar Branch, Bangalore and the same

has been returned dishonoured only by the drawee bank, the notice has been

received by the petitioner only at Bangalore and therefore, the learned Judicial

Magistrate, Ambattur had no jurisdiction.

6. The learned counsel relied on the judgment reported 2009 (1) SCC 720

(Harman Electronics Pvt Ltd vs National Panasonic India Private Limited)

(hereinafter referred to as Harman Electronics Case).

7. The learned counsel also relied on an order of this court dated 1.2.2011 in

Crl.O.P.No.23732 and 23733 of 2010.

8. In the case of Harman Electronics Private Limtied and another vs National

Panosonic India Private Limited, reported in 2009 (1) SCC 720, the Hon'ble

Supreme Court held as follows:

13. It is one thing to say that sending of a notice is one of the ingredients

maintaining the complaint but it is another thing to say that dishonour of a cheque

by itself constitutes an offence. For the purpose of proving its case that the

accused had committed an offence under Section 138 of the Negotiable

Instruments Act, the ingredients thereof are required to be proved. What would

constitute an offence is stated in the main provision. The proviso appended


thereto, however, imposes certain further conditions which are required to be

fulfilled before cognizance of the offence can be taken. If the ingredients for

constitution of the offence laid down in provisos (a), (b) and (c) appended to

Section 138 of the Negotiable Instruments Act are intended to be applied in

favour of the accused, there cannot be any doubt that receipt of a notice would

ultimately give rise to the cause of action for filing a complaint. As it is only on

receipt of the notice that the accused at his own peril may refuse to pay the

amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be read

together. Issuance of notice would not by itself give rise to a cause of action but

communication of the notice would.

9. Following the above said decisions, this Court has also held in

Crl.O.P.No.23732 and 23733 of 2010 that place of issuance of notice will not give

rise to jurisdiction.

10. On the contrary, Mr.Laxmi Rajarathinam, learned counsel for the respondent

would submit that the cause of action arose only within the jurisdiction of the

learned Judicial Magistarte, Ambattur, where the cheque was received, presented

for encashment, returned dishonoured and the statutory notice was issued.

11. The learned counsel also relied on a decision reported in 1999(7) SCC 510

(K.Bhaskaran vs Shankaran Vaidhyan Balan and another) herein after referred to

as Bhaskaran’s case, wherein the Apex Court has held

"14. The offence under Section 138 of the Act can be completed only with the

concatenation of a number of acts. The following are the acts which are

components of the said offence:(1) (1) drawing of the cheque, (2) presentation of

the cheque to the bank, (3) returning the cheque unpaid by the drawee bank, (4)

giving notice in writing to the drawer of the cheque demanding payment of the

cheque amount (5) failure of the drawer to make payment within 15 days of the

receipt of the notice"


15. It is not necessary that all the above five acts should have been perpetrated at

the same locality. It is possible that each of those five acts could be done at five

different localities. But a concatenation of all the above five is a sine qua non for

the completion of the offence under Section 138 of the Code, In this context a

reference to Section 178(d) of the Code is useful. IT is extracted below:

“178 (a)-(c)

(d) where the offence consists of several acts done in different local areas

It may be enquired into or tried by a court having jurisdiction over any of such

local areas

16. Thus it is clear, if the five different acts were done in five different localities

any one of the courts exercising jurisdiction in one of the five local areas can

become the

12. He also relied on the following unreported judgment of High Court of Bombay

in Criminal Writ Petition No.615 of 2008 and also an order passed by this Court in

Crl.O.P.No.8673 of 2010 dated 1.2.2011

13. According to the learned counsel, the court has jurisdiction where any one of

the transaction takes place viz., issuance of cheque, presentation of the cheque,

return of the cheque by drawee bank or place of issuing of statutory notice.

14. Heard and perused the materials available on record.

15. The question of jurisdiction in compliance under Sec.138 of NI Act came up

for consideration before the Apex Court in Bhaskaran’s case. The Apex Court

referred five components which constitute an offence under Sec.138 of NI Act.

The Apex Court further held that if these five different acts were done in five

different localities, any of the courts exercising jurisdiction in one of the five local

areas can become the place for trial for offence under Sec.138 of NI Act and the


complainant can choose any one of those Courts having jurisdiction over any one

of those local areas where any of these five acts were done.

(1) drawing of the cheque

(2) presentation of the cheque to the bank

(3) returning the cheque unpaid by the drawee bank

(4)giving notice in writing to the drawer of the cheque demanding payment of the

cheque amount

(5) failure of the drawer to make payment within 15 days of the receipt of the

notice.”

16. However, inthe case of ShriIshar Alloy Steels Ltd vs Jayaswals Neco Ltd

reported in (2001) 3 SCC 609, (cited supra), the following questions were raised.

"2.(a) what is meant by "the bank" as mentioned in clause(a) of the proviso to

Section 138 of the Negotiable Instruments Act, 1881?

(b) Does such bank mean the bank of the drawer of the cheque or covers within

its ambit any bank including the collecting bank of the payee of the cheque?

(c) To which bank the cheque is to be presented for the purposes of attracting the

penal provisions of Section 138 of the Act?

17. The three Judges Bench of the Hon'ble Supreme Court held that the Bank

referred to in proviso (a) to Sec.138 of the Act would mean 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 favour the cheque is issued.

18. By this judgment the five different acts were reduced to four local areas which

can become the place for trial. The place where the bank of the payee is situated


is excluded from having jurisdiction.

19. Further, in the case of Harman’s Electronics, the Apex Court categorically

held that issuance of notice would not by itself give rise to cause of action but

communication of notice would. Therefore, five different acts referred by the Apex

court in Bhaskaran’s case have been reduced into three different acts viz., a)

where the cheque has been issued b) where the cheque has been returned by

the drawee bank and (c ) where the notice has been served or communicated to

the accused. The place of presentation of cheque of the holder’s bank and the

place of issuance of notice by the complainant would no more have jurisdiction.

20. In similar circumstances, referring to all the above case laws, this court in

Crl.O.P.(MD)No.14835 of 2010 has held that the courts which has jurisdiction to

the offence under Sec.138 of the Act shall be

1) the place where the cheque has been drawn;

2) the place where the cheque returned unpaid by the drawee bank;

3) the place where the statutory notice demanding payment of the cheque was

served on the drawer.

21. However, Mr.Abudu Kumar Rajarathinam, learned counsel for the petitioner

would submit that the jurisdiction lies only in the place where the statutory notice

demanding payment of the cheque was served on the accused.

22. The learned counsel pointed out that on the part of the payee he has to make

a demand by giving a notice in writing and that was the only requirement to

complete the offence. According to the learned counsel, the offence is said to

have been committed only on the failure of the drawer to pay the cheque amount

within fifteen days from the date of receiving of such statutory notice. In other

words, the learned counsel restricted the place of jurisdiction where a statutory


notice was served or received and failure to make such payment.

23. On the contrary, Mr.A. Laxmi Raj Rathnam, learned counsel for the

respondent relied on an unreported judgment of Bombay High Court in Criminal

Writ Petition No.615 of 2008 , wherein, it has been observed as follows:

“In fact, it would appear that in Harman Electronics, whole of the transaction had

taken place at Chandigarh and the complainant had also its branch office at

Chandigarh but only to cause harassment to the accused, the notice was issued

from Delhi and complaint was filed in Delhi. In these circumstances, the Supreme

Court held that merely issuance of notice from Delhi would not give jurisdiction to

the Delhi Court. Therefore, on facts, the authority in Harman Electronics would

not be applicable to the facts of the present case”.

24. The learned counsel also relied on the judgment reported in 2008 (1) MHLJ

889, wherein, the High Court of Bombay had also discussed about the issuance

of notice and the practice of presenting a cheque to the payee’s or holder’s own

banker. The court ultimately held that

“In other words, the accused after having received the statutory demand notice,

having failed to make the payment to the Complainant's at his address where he

permanently resides, within the jurisdiction of JMFC, Panaji, committed the

offence within the jurisdiction of JMFC, Panaji and it is the JMFC, Panaji, who has

to try the same. To reiterate, the money due on the cheques which were

dishonoured we required to be paid by the accused to the Complainant at his

residence and that is within the jurisdiction of learned JMFC, Panaji”.

25. The learned counsel for the respondent also relied on an unreported judgment

of this court Crl.O.P.No. 8673 of 2010 dated 1.2.2011, wherein this court has held

“13. Now it is very clear that the place of issuance of notice would not by itself

give rise to cause of action, but the above referred five acts which constitute an


offence in any one area alone confers jurisdiction”.

26. The learned counsel also relied on an unreported judgment of Bombay High

Court in Crl.Appln.No.2674 of 2008 wherein it is held as follows:

“20. It thus appears to be a consistent view that in order to avoid unnecessary

harassment to an accused, if the complaint is filed at a place where the

complainant does not ordinarily reside or carries on his business and the cheque

is presented at some other place and a notice is given to such place only in order

to file a complaint at such place, the complaint would not be tenable in the Court

of such a place. However, if the cheque is presented at a place where the

complainant ordinarily resides or carries on business or if it is a company where

its registered office is situated and if a notice demanding payment is issued from

such a place, then the Court at such a place will have jurisdiction to entertain the

complaint”.

27. As stated earlier, in Bhaskaran’s case, the Apex Court has referred five local

areas which can become the place for trial for an offence under Sec.138 of NI

Act. However, the three judges Bench of the Apex Court in ShriIshar Alloy Steels

Ltd vs Jayaswals Neco Ltd reported in (2001) 3 SCC 609 has clarified the bank

referred to in proviso a to Sec.138 of the Act would mean that 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 or holder.

28. In Harman’s case it is held that the issuance of notice would not by itself give

rise to a cause of action but the communication of the notice would.

29. However, I am unable to agree with the contentions of the learned counsel for

the petitioner, who would insist that the place where the statutory notice

demanding payment of cheque was received or served on the accused alone can

have jurisdiction.


30. Issuing of cheque per-se is not an offence. Presentation of the cheque and

the dishonor of the cheque by the drawee bank may be referred to as

commencement of the offence, which is followed by issuing of a statutory notice

demanding payment and giving an opportunity to the drawee to avoid criminal

prosecution.

31. On receipt of such notice and on failure to make payment, the offence is

completed and therefore, the cumulative effect of all the above acts has to be

taken into consideration to decide the jurisdiction of the Court.

32. Therefore, this court has already held that the jurisdiction for a trial of the

offence shall be the place where a) the cheque has been issued b) the place

where the cheque has been returned unpaid by the drawee bank and c) the place

where the statutory notice demanding payment of the cheque was served or

received.

33. In the present case, though the cheque was issued at Bangalore and the

notice was also served at Bangalore, the place where the cheque has been

returned unpaid by the drawee bank is only at Chennai.

34. In the additional common set of typed set of papers filed by the respondent,

the return memo of Central Bank of India having office at Montieth Road, Chennai

has been furnished. The respondent has presented the cheque to his bank viz.,

Indian Bank, Padi Branch, Chennai and the same has been forwarded to Central

Bank of India, Montieth Road, Chennai where it is returned with an endorsement

stating “exceeds arrangement”. Though the cheque was drawn on the Central

Bank of India, Indira Nagar, Bangalore Branch, it has been returned by the

Central Bank of India, Montieth Road, Egmore Branch, Chennai.

35. Therefore, the court which has jurisdiction is neither the Magistrate’s court at

Bangalure nor the Judicial Magistrate court, Ambattur, Chennai, but the


Metropolitan Magistrate’s Court at Egmore, Chennai.

36. Therefore, initiation of proceedings and taking cognizance by the learned

Judicial Magistrate, Ambattur, Chennai is not proper but it is only a curable defect

which can be rectified by giving an opportunity to the respondent to withdraw the

complaint and present the same before the jurisdiction court at Egmore, Chennai.

37. In the result, the criminal original petition is disposed of with a direction to the

respondent to withdraw the complaint pending before the Judicial Magistrate,

Ambattur and present the same before the jurisdictional Metropolitan Magistrate

Court at Egmore, Chennai within a period of four weeks from the date of receipt of

copy of this order.

CDJLawJournal

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