Judgment:
ORDER:
1. This Criminal Petition has been taken out under Section 428 Cr.P.C. by accused-N.Shanthi Lakshmi in C.C.No.742 of 2009 on the file of X Metropolitan Magistrate, Cyberabad at Malkajgiri, Ranga Reddy District, to quash the proceeding therein.
2. 2nd respondent-Kapil Chit Funds Private Limited is a Company registered under the Companies Act, having its registered office at 3-1-631, Vijaya Raghunandan Nagar, Karimnagar, A.P., and has been carrying on business in chit funds. It has branches all over the State and one such branch is situated at Nellore. The petitioner/accused joined as a subscriber in one of the chits of the 2nd respondent/Complainant at Nellore Branch. The total value of the chit is Rs.5,00,000/- and duration of the chit is 40 months. The petitioner/accused became the successful bidder of the chit having agreed to forgo Rs.2,24,000/- out of total chit amount of Rs.5,00,000/-. She received the prized amount. She issued an account payee cheque bearing No.205379, dated 10.10.2008, for Rs.88,945/- drawn on Indus Ind Bank Limited, Nellore Branch, towards arrears of chit amount. The 2nd respondent/complainant presented the cheque in its account at Union Bank of India, A.S.Rao Nagar, Hyderabad Branch, Ranga Reddy District, for collection. The cheque came to be returned on 02.12.2008 with an endorsement 'insufficient funds'. Thereupon, the 2nd respondent/complainant issued a legal notice on 15.12.2008 to the petitioner/accused calling upon her to pay the amount covered under the cheque in question. Since the petitioner/accused failed to make any payment despite receipt of notice on 30.12.2008, the 2nd respondent/complainant presented a complaint before X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District. The learned Magistrate took cognizance of the offence under Section 138 r/w.142 of the Negotiable Instruments Act, 1881, (for short, 'the NI Act') and registered the case as C.C.No.742 of 2009. Hence, this Criminal Petition under Section 482 Cr.P.C. by the accused in C.C.No.742 of 2009 to quash the proceedings therein.
3. Heard learned counsel appearing for the petitioner/accused and learned counsel appearing for the 2nd respondent/complainant.
4. Learned counsel appearing for the petitioner/accused submits that no part of cause of action for filing the complaint for the offence under Section 138 r/w 142 of the NI Act against the petitioner/accused has arisen within the territorial jurisdiction of X Metropolitan Magistrate Court, Cyberabad, at Malkajgiri, Ranga Reddy District and therefore, continuation of proceeding against the petitioner/accused in C.C.No.742 of 2009 amounts to abuse of process of Court. According to the learned counsel, the entire chit transaction took place at Nellore and the cheque has been issued by the petitioner/accused at Nellore and the Bank of the petitioner/accused, on which cheque has been drawn, is situated at Nellore and the cheque has been dishonoured by the Bank at Nellore and therefore, it is only the Nellore Court which has jurisdiction and no other Court has jurisdiction. It is also contended that the 2nd respondent/complainant filed a suit in O.S.No.1322 of 2009 on the file of III Additional Junior Civil Judge, Nellore, for recovery of the amounts, in which case, it is impermissible for the 2nd respondent/complainant to initiate criminal proceedings on the same set of facts in a different Court and that the 2nd respondent/complainant filed the complaint in the Court of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District, to harass the petitioner/accused. In support of his submissions, reliance has been placed on the following cases: 1) Harman Electronics (P) Ltd. v. National Panasonic India Ltd.1 2) Surjeet Singh v. G.E. Capital Transport Financial Services2 3) Raj Travels & Tours Ltd. v. Destination of the World (subcontinent) Pvt. Ltd.3.
5. Learned counsel appearing for the 2nd respondent/complainant submits that the cheque issued by the petitioner/accused has been presented for encashment through the Union of Bank of India, A.S.Rao Nagar, Hyderabad Branch, Ranga Reddy District, and therefore, the Court situated in the local area of A.S.Rao Nagar Branch has jurisdiction to entertain the complaint. In a way, his contention is that A.S.Rao Nagar comes within the territorial area of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District, and therefore, the said Court has jurisdiction to entertain the complaint. In support of his contention, reliance has been placed on the decision of the Supreme Court in K.Baskaran v. Sankaran Vaidhyan Balan & Anr.4
6. Section 177 of the Code of Criminal Procedure determines the jurisdiction of the Court trying the matter. The court ordinarily will have the jurisdiction only where the offence has been committed. The provisions of Sections 178 and 179 of the Code of Criminal Procedure are exceptions to Section 177. These provisions presuppose that all offences are local. Therefore, the place where an offence has been committed plays an important role. In terms of Section 177 of the Criminal Procedure Code, it is the place where the offence is committed. In essence, it is the cause of action for initiation of the proceedings against the accused. A court derives a jurisdiction only when the cause of action arises within its jurisdiction. A distinction must be borne in mind between ingredient of an offence and commission of a part of the offence.
7. A perusal of the complaint would show that jurisdiction of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District, was claimed on the ground that the bank of the 2nd respondent/complainant is situated at A.S.Rao Nagar, Hyderabad, within the territorial jurisdiction of the Court of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District.
8. There are five essential ingredients of the offence under Section 138 of the N.I. Act as held by the Supreme Court in the case of K.Bhaskaran v. Sankaran Vaidhyan Balan (4 supra) and they are: 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.
9. It is not the case of the 2nd respondent/complainant that the cheque in question was issued and delivered at A.S.Rao Nagar, Hyderabad. The only ground alleged to confer the territorial jurisdiction on the Court of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District, is presentation of the cheque at the Union Bank of India, A.S.Rao Nagar, Hyderabad Branch, Ranga Reddy District for collection. As regards the presentation of the cheque, the Supreme Court in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.5, held that the bank referred to in clause (a) to the proviso to Section 138 of the N.I. 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. It was further observed that the payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In para.20 of the said judgment, it is observed as hereunder: "A combined reading of Sections 3, 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." Ratio of the above referred judgment of the Supreme Court is that the cheque is deemed to have been presented to the drawee bank irrespective of the fact where it is deposited by the payee in his own bank.
10. In Shri Ishar Alloy's case (5 supra), a three Judge bench of the Supreme Court dealt with the issue as to what would be meant by, 'the bank' as mentioned in clause (a) of the proviso to Section 138 of the N.I.Act. Was it the drawee bank or the payee bank? The Supreme Court answered the question in the following words: "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 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?, are the questions to be determined by this Court in this appeal. 7. It has further to be noticed that to make an offence under Section 138 of the Act, it is mandatory that the cheque is presented to "the bank" within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. It is the cheque drawn which has to be presented to "the bank" within the period specified therein. When a post-dated cheque is written or drawn, it is only a bill of exchange. The postdated cheque becomes a cheque under the Act on the date which is written on the said cheque and the six months period has to be reckoned, for the purposes of Section 138 of the Act, from the said date. 8. Section 138 provides that where any cheque drawn by a person on an account by him with a 'banker' for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by "the bank" unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence punishable with imprisonment as prescribed therein subject to the conditions mentioned in Clauses (a), (b) and (c) of the proviso. Section 3 of the Act defines the "banker" to include any person acting as a banker and any post office saving bank. Section 72 of the Act provides that a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relations between the drawer and his banker has been altered to the prejudice of the drawer. 9. The use of the words "a bank" and "the bank" in the section is indicator of the intention of the Legislature. The former is indirect (sic indefinite) article and the latter is pre-fixed by direct (sic definite) article. If the Legislature intended to have the same meanings for "a bank" and "the bank", there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the word "banker" in Section 3 of the Act is prefixed by the indefinite article "a" and the word "bank" where the cheque is intended to be presented under Section 138 is pre- fixed by the definite article "the". The same section permits a person to issue a cheque on an account maintained by him with "a bank" and makes him liable for criminal prosecution if it is returned by "the bank" unpaid. The payment of the cheque is contemplated by "the bank" meaning thereby where the person issuing the cheque has an account. "The" is the word used before nouns, with a specifying of particularising effect opposed to the indefinite or generalising force of "a" or "an". It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. "The" is always mentioned to denote particular thing or a person. "The" would, therefore, refer implicitly to a specified bank and not any bank. "The bank" referred to in Clause (a) to the proviso to Section 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. 10. It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection 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." (Emphasis supplied)." The said decision brings out in no uncertain terms that Section 138 of the N.I.Act contemplates that a cheque is required to be presented for encashment to the drawee Bank and that the payee bank, merely acts as an agent of the payee/complainant for the purposes of presenting the cheque in question for encashment to the drawee Bank.
11. The matter regarding jurisdiction can also be decided with reference to Sections 6, 7, 64 and 72 of the N.I.Act. Section 6 defines a 'cheque' and it is thus: "6. "Cheuqe"- A 'cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand." Under Section 64 of the N.I. Act, promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder. Section 72 of the N.I. Act contemplates that a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relation between the drawer and his banker has been altered to the prejudice of the drawer.
12. A conjoint reading of Sections 6, 7, 64 and 72 and also Section 138 of the N.I. Act brings out that in order to attract penal provisions of Section 138 of the N.I. Act a cheque is required to be presented for encashment to the drawee Bank and that the payee Bank acts merely as an agent of the payee/complainant for the purposes of presenting the cheque in question to the drawee Bank.
13. Section 138 of the N.I.Act reads as hereunder: "138. Dishonour of cheque for insufficiency, etc., of funds in the account.-- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both. Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it was drawn or within the period of its validity, whichever is earlier. (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation- For the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability.
14. The expression presentation of the cheque to the bank used in the Section is referable to only drawee bank. The payee's bank has no relevance for the purpose of constituting an offence under Section 138 of the N.I.Act. What is required under the section is dishonour of the cheque by the drawee bank. Payee's bank rather called it as only collecting bank, the question of dishonour of cheque by the collecting bank does not arise. The collecting bank acts only as an agent on behalf of payee. A combined reading of Sections 3, 72, and 138 of the N.I. Act would leave no doubt that the law mandates the cheque to be presented to 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.
15. Similar issue fell for consideration before the Delhi High Court in Raj Travels and Tours Ltd.'s case (3 supra), wherein it has been held as hereunder: "A conjoint reading of Sections 6, 7, 64 and 72 as also of Section 138 of the N.I. Act brings out that in order to attract penal provisions of Section 138 of the N.I. Act a cheque is required to be presented for encashment to the drawee Bank and that the payee Bank acts merely as an agent of the payee/complainant for the purposes of presenting the cheque in question to the drawee Bank. The necessary corollary thereof is that no part of cause of action for the offence punishable under Section 138 of the N.I. Act arises in the Court within the local limits of which the collecting Bank of the complainant i.e. payee Bank is situated and thus said Court has no jurisdiction to try a complaint under Section1 38 of the N.I. Act filed by the complainant."
16. In that view of the matter, I hold that on the pleadings in the complaint, no part of cause of action can be said to have arisen within the local area of X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District.
17. Accordingly, the Criminal Petition is allowed quashing the order of taking cognizance of the case for the offence under Section 138 r/w.142 of the N.I. Act by the learned X Metropolitan Magistrate, Cyberabad at Malkajgiri, Ranga Reddy District on the complaint presented by the 2nd respondent/complainant and the learned X Metropolitan Magistrate, Cyberabad, at Malkajgiri, Ranga Reddy District is directed to return the complaint to the 2nd respondent/complainant for presenting it before the Court having jurisdiction, within fifteen days.