1 Cri.appln.no.2165/09 SNS IN THE HIGH COURT OF JUDICATURE AT MUMBAI APPELLATE CRIMINAL JURISDICTION CRIMINAL APPLICATION NO.2165 OF 2009 Shri Dinesh B. Pokhriyal Age 38 yrs., Occ: Business, Flat No.403, Deep Building, Amber Society, Kalyan (East), Thane 421301 ...Applicant. v. 1 M/s. Unique Securities having its registered office at 61/8, Chandanbala, Road No.25-C, Sion (West), Mumbai 400 022 Through its partner Mr.Paresh V. Popat 2 State of Maharashtra ...Respondents. Mr.M.S.Lagu, adv. For the Applicant. Mr.Ajay K.J.Panickar, adv. For the Respondent No.1. Shri Y.S.Shinde, APP for the R.No.2/State. CORAM : J.H. BHATIA, J. DATED : AUGUST 3, 2010 ORAL JUDGMENT: 1 Heard the learned counsel for the parties. The Respondent No.1 filed a complaint under Section 138 of the Negotiable Instruments Act in the Court of Metropolitan Magistrate and it was registered as Case No.10181/SS/2008 and is pending before the Special Metropolitan 2 Cri.appln.no.2165/09 Magistrate, Small Causes Court, Bombay. The process was issued by the learned Magistrate on 8.8.2008. That order was challenged by the accused before the Sessions Court alongwith an application for condonation of delay. However, that application came to be rejected by the order dated 12th March, 2009. Therefore, original accused has filed this application under Article 227 of the Constitution of India read with Section 482 of the Cr.P.C. contending that the trial Court had committed an error in issuing the process and that there was no material to issue the process. It is also contended that proper enquiry under Section 202 of the Cr.P.C., was not conducted while issuing the process. The Metropolitan Magistrate has no territorial jurisdiction and, therefore, the process issued by the trial Court is liable to be set aside. 2 On perusal of the complaint and other documents, there appears no dispute that the respondent no.1/complainant is a member of the National Stock Exchange for Capital Market Segment and Futures and Options Segment (Hereinafter referred to as ‘F & O Segment’). The accused/applicant had entered into an agreement with the complainant for the trading in F & O Segment for which he was required to keep margin money with the complainant/respondent no.1 and on behalf of the accused/applicant, complainant could enter into transactions of 3 Cri.appln.no.2165/09 purchase and sale of the stocks under F & O Segment. The accused/applicant is resident of Kalyan, District: Thane while the complainant/respondent no.1 has its office at Sion, Bombay. According to the complainant on 18th January, the accused owed an amount of Rs. 41,01,071/- including margin money. On 21st January, he issued a cheque for Rs.41 lacs. On January 21st, he owed additional amount of Rs. 46,36,982/- including margin money and on 22nd January, he gave a cheque of Rs.46 lacs. Both these cheques were dishonoured. Notice was issued to the accused to make the payment. In spite of service of notice, he failed to make the payment. On the basis of second cheque of Rs.46 lacs, which was dishonoured on the ground ‘Payment stopped by the drawer’, complaint was filed under Section 138 of the Negotiable Instruments Act. According to the complainant, payment of Rs. 3,88,220/- was received by the complainant and still the accused owes amount of Rs.50,20,000/-. 3 After perusal of the record, it appears that the learned Magistrate had recorded verification statement. Complainant also submitted relevant documents, which would go to support the complaint, therefore, it may not be stated that the Magistrate had not made enquiry under Section 202 of the Cr.P.C. while issuing the process. 4 Cri.appln.no.2165/09 4 Next point is about jurisdiction. It is settled position of law that if the payee is a company or a firm and the cheque is dishonoured and the notice is issued by the complainant/payee from place where its head office is situated, particularly when it has no branch at the place where the accused/drawer is residing or carrying on business, the Court within whose local jurisdiction the head office of the complainant is situated also gets territorial jurisdiction in view of the judgment in K.Bhaskaran v. Sankaran Vaidhyan Balan and another (1999) 7 SCC 510. It is not the case of the accused that the complainant in this case has any branch either at Kalyan or Thane. Admittedly, the complainant is carrying on business in the stock market at Bombay. The complainant was receiving the amounts at Bombay from the accused as well as on behalf of the accused. Though the cheque was drawn against the Federal Bank Ltd., Branch Dombivali, after getting information of dishonour, the complainant issued the notice from Mumbai where its office is situated. In spite of service of notice, payment was not received. In view of the parameters laid down in K.Bhaskaran (Supra), the learned Metropolitan Magistrate at Mumbai gets territorial jurisdiction. 5 The learned counsel for the accused/applicant contended 5 Cri.appln.no.2165/09 that the cheque was not issued for discharge of any debt or liability but only as a security and, therefore, section 138 of the Negotiable Instruments Act is not applicable. Alongwith the complaint a statement of account was presented by the complainant. It is true that in the complaint, it is mentioned that the amount due was inclusive of the margin money but it maintained that an amount was actually due from the accused. On perusal of the Client Obligation Statement maintained by the complainant in respect of the accused, it appears that even if two entries of initial margin money dated 18th January and 21st January, 2008 are not taken into consideration, still prima-facie an amount of Rs.54 lacs was due from the accused on 22nd January, 2008. As per that statement, on 18th January, 2008, balance of Rs.12,32,915/- was to his credit. On 21st January, 2008 a bill of Rs.36,26,894 was received and debited to his account. After that there was debit balance of Rs.23,93,000/- and odd. On 22nd January again there was bill of Rs.30 lacs and odd debited to his account. Thus, total amount due from him was about Rs.54 lacs. It was not inclusive of margin money. Thus, prima-facie, it appears that the cheque of Rs.46 lacs was issued to discharge the debt or liability and, therefore, prima-facie, there is no substance in the contention of the accused. The learned counsel for the respondent/complainant contended 6 Cri.appln.no.2165/09 that the question, whether the cheque was issued as security or in discharge of debt or other liability existing on the date, when it was issued, can be looked into at the time of the trial. It will be for the accused to prove that the said cheque was not issued by him for discharge of any debt or liability existing on 22nd January, 2008 and that it was only towards the security. In view of these circumstances, I find that there is no substance in the present application and no fault can be found with the issuance of process. 6 For the aforesaid reasons, application stands rejected. However, it is clarified that the accused shall have the right to prove that the cheque was not issued towards any existing debt or liability but only as a security, at the time of trial of the case. (J.H. BHATIA,J.)