ISSUE
Territorial jurisdiction of courts in case of a case as per Section 138, Negotiable Instruments Act (hereafter, the Act)
CASES REFERRED
- Bhaskaran v. SankaranVidhyanBalan [(1999) 7 SCC 510]
Held: the offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence : (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”.” 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 place of trial for the offence under Section 138 of the Act.
Harman Electronics Pvt.Ltd. v. National Panasonic India Pvt. Ltd. [(2009) 1 SCC 720]
Held: “It is one thing to say that sending of a notice is one of the ingredients for 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 the provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act 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 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.”
JUDGEMENT
JUSTICE VIKARMAJIT SEN
Vikaramjit Sen J. respectfully disagrees with the Bhaskaran ratio, quoting the judgment in the Harman case which says that it is fast becoming common-place where several cheques signed by the same drawer are presented for encashment and requisite notices of demand are also dispatched from various places. Because of this, the manipulative abuse of territorial jurisdiction is becoming a recurrent and piquant factor. Hence, he orders dismissal of appeal and overrules the Bhaskaran judgement of the same Court.
JUSTICE T.S THAKUR
T.S Thakur J. gave a separate but concurrent view on the case. He summarized the principles as mentioned under Section 138 of the Act and stated that the general rule stipulated under Section 177 of Cr.P.C applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only in the court in whose jurisdiction the dishonour takes place.
CONCLUSION
Since 1999, the Bhaskaran ratio was followed by the courts at their own discretion. Though in 2001, a three judge bench gave a ruling conflicting to the one given by a two judge bench in Bhaskaran case, in the case of Shree Ishar Alloy Steels (2001) 3 SCC 609, certain courts continued to follow the Bhaskaran ratio.
This decision by a three judge bench is hence a landmark for any future cases on these lines and negates the Bhaskaran ratio which left a huge scope of harassment of the drawer.
RATIO
The jurisdiction for filing a complaint under Section 138 of the Negotiable Instrument Act lies where the drawee bank is situated.
Author: Akshay Goel, Hidayatullah National Law University