In the High Court of Punjab and Haryana at Chandigarh ...... (1) Criminal Misc. No.M-18587 of 2010 ..... Date of decision:5.8.2010 M/s Arjan Dass Brij Lal & Co. and another .....Petitioners v. M/s Subash Chand Ajay Kumar Commission Agents .....Respondent .... (2) Criminal Misc. No.M-18588 of 2010 ..... M/s Arjan Dass Brij Lal & Co. and another .....Petitioners v. M/s Subash Chand Ajay Kumar Commission Agents .....Respondent .... Present: Mr. Sanjay Majithia, Senior Advocate with Mr. Shailendra Sharma, Advocate for the petitioners. ..... S.S. Saron, J. This order will dispose of Criminal Misc. No.M-18587 of 2010 and Criminal Misc. No.M-18588 of 2010 as they are between the same parties and relate to dishonour of cheques given by the petitioners to the complainant-respondent. The respondent-M/s Subash Chand Ajay Kumar Commission Agents filed two separate complaints (Annexure-P.4 in both the criminal miscellaneous petitions) under Section 138 of the Negotiable Instruments Act, 1881 (`NI Act' – for short) against the petitioners alleging that the petitioners had been purchasing paddy from time to time from their Rice Cr. Misc. Nos.M-18587 of 2010 etc. [2] Mill at Anaj Mandi Safidon. It is alleged that as on 10.5.2008 a sum of Rs.3,20,31,477.51 was due from the petitioners to the complainant- respondent on account of paddy purchased by the petitioners from the respondent. The respondent had filed a suit in the Court of Additional Civil Judge (Senior Division), Safidon (Jind) for recovery of the said amount. A compromise was entered into between the parties and the petitioners agreed to pay a sum of Rs.2 Crores to the respondent in full and final settlement of the claimed amount. In consequence of the said settlement Sunil Khurana (petitioner No.2) issued 11 cheques of various amounts, the details of which are mentioned in the complaints (Annexure-P.4 in both the cases). One of the cheques had been cleared by the petitioners, however, some cheques had been dishonoured by the bankers of the petitioners. The complaint (Annexure-P.4 in Criminal Misc. No.M-18587 of 2010) has been filed regarding dishonour of cheque No.332003 dated 28.11.2008 for an amount of Rs.28 Lacs drawn on State Bank of Saurashtra, Chandni Chowk Branch, Delhi. It is alleged by the complainant-respondent that the State Bank of Patiala Safidon, which is the bank of the complainant, informed the complainant vide memo dated 15.5.2009 that the State Bank of Saurashtra, Chandni Chowk Branch, Delhi had intimated that the amount of the cheque could not be realized due to the reason; “payment stopped by drawer”. The complaint (Annexure-P.4 in Criminal Misc. No.M-18588 of 2010) is regarding dishonour of cheque No.332002 dated 28.11.2008 for an amount of Rs.28 Lacs which was issued by Sunil Khurana (petitioner No.2). The said cheque was presented for collection by the complainant on Cr. Misc. Nos.M-18587 of 2010 etc. [3] 13.3.2009 in the State Bank of Patiala, Wazirpur Industrial Area, New Delhi through its account. The complainant-respondent was informed that the cheque could not be honoured due to the reason; “insufficient funds” in the account of the accused (petitioners). The complainant-respondent on account of the dishonour of the said cheque contacted Sunil Khurana (petitioner No.2) who assured to make the payment and further requested the complainant to present the said cheque after 16.4.2009. The said cheque was presented for collection by the complainant-respondent in the State Bank of Patiala, Safidon through its account. On 11.5.2009, the complainant-respondent was informed by its bankers i.e. the State Bank of Patiala, Safidon that the amount of cheque No.332002 dated 28.11.2008 of Rs.28 Lacs could not be realized due to the reason; “payment stopped by drawer”. In view of the cheques being not paid legal notices dated 21.5.2009 (Annexure-P.2 in Criminal Misc. No.M-18587 of 2010) and dated 25.5.2009 (Annexurre-P.2 in Criminal Misc. No.M-18588 of 2010) were sent by the Advocate of the complainant-respondent from Safidon to the petitioners. However, despite the said legal notices, the accused (petitioners) failed to make the payments. The office of the complainant- respondent, it is pleaded, is situated at Safidon, the cheques were issued at Safidon and were presented for encashment at Safidon. Intimations regarding the dishonour of the cheques were received at Safidon and the payments were also to be made at Safidon. The legal notices (Annexure- P.2) were also served from Safidon which is within the jurisdiction of the Court at Safidon. Therefore, the Court at Safidon had jurisdiction to Cr. Misc. Nos.M-18587 of 2010 etc. [4] entertain and try the complaint. The learned Sub Divisional Judicial Magistrate vide separate orders dated 4.7.2009 (Annexure-P.5 in both the cases) summoned the petitioners for the commission of offence punishable under Section 138 of the NI Act. The petitioner aggrieved against the summoning orders filed revision petitions before the Sessions Court. It was contended that the Court of Sub Divisional Judicial Magistrate at Safidon had no territorial jurisdiction to try the complaint. Besides, the summoning orders were non- speaking orders. The learned Additional Sessions Judge, Jind in terms of his order dated 12.4.2010 (Annexure-P.6 in both the cases) found no illegality in the summoning orders dated 7.4.2009 (Annexure-P.5) and accordingly dismissed the revision petitions. The petitioners aggrieved against the same have filed the present petitions. Mr. Sanjay Majithia, learned Senior Advocate appearing with Mr. Shailendra Sharma, Advocate for the petitioners has raised two-fold contentions. Firstly, that the Court at Safidon has no territorial jurisdiction to entertain the complaints (Annexure-P.4) for the reason that no cause of action accrued to the complainant at Safidon where only the cheque in question was presented. It is submitted that the offence pertaining to the dishonour of cheque had been committed at New Delhi where the cheque was finally presented for encashment and the same could not be encashed on account of instructions; “payment stopped” issued by the petitioners. Secondly, it is contended that no inquiry as contemplated by the provisions of Section 202 of the Code of Criminal Procedure (`Cr.P.C.' - for short), which has been recently amended, was conducted by the learned trial Cr. Misc. Nos.M-18587 of 2010 etc. [5] Magistrate before passing the summoning order. It is submitted that the learned Magistrate in terms of Section 202 Cr.P.C. is liable to conduct an inquiry where the accused (petitioners) are residing at a place beyond the area in which the Magistrate exercises his jurisdiction. The Magistrate, it is submitted, was liable to postpone the issue of process against the accused and either inquire into the case himself or direct investigation to be made by the Police Officer or by such other person which he thinks fit. It is submitted that on account of the failure to hold an inquiry, the summoning orders that have been issued are vitiated. I have given my thoughtful consideration to the contentions of the learned counsel for the petitioners, however, find no merit in the same. As regards the jurisdiction to entertain the complaints (Annexure-P.4 in both the cases) it may be noticed that the cheques which were given by the petitioners to the complainant-respondent were in respect of transactions for the supply of paddy from the Rice Mill of the complainant situated at Anaj Mandi, Safidon. In respect of the business transactions the complainant- respondent claim that as on 10.5.2008 a sum of Rs.3,20,31,477.51 was due from the petitioners towards the complainant which was not paid. The complainant-respondent filed a civil suit titled M/s Subash Chand Ajay Kumar v. M/s Arjan Dass Brij Lal & Co. in the Court of the learned Additional Civil Judge (Senior Division), Safidon (Jind) for recovery of the said amount. In the said suit a compromise was entered into between the parties and the petitioner had agreed to pay a sum of Rs.2 Crores to the complainant in full and final settlement of the entire amount that had been claimed. Accordingly, Sunil Khurana (petitioner No.2) towards the Cr. Misc. Nos.M-18587 of 2010 etc. [6] discharge of his liability issued 11 cheques of various amounts which were having different dates. The dispute in the present case relates to cheque No.332003 dated 28.11.2008 for an amount of Rs.28 Lacs which is subject matter of complaint (Annexure-P.4 in Criminal Misc. No.M-18587 of 2010) and cheque No.332002 dated 28.11.2008 for an amount of Rs.28 Lacs which is subject matter of complaint (Annexure-P.4 in Criminal Misc. No.M-18588 of 2010). The said cheques were drawn on the State Bank of Saurashtra, Chandni Chowk Branch, Delhi. Cheque No.332003 dated 28.11.2003 which is subject matter of complaint (Annexure-P.4 in Criminal Misc. No.M-18587 of 2010) was presented by the complainant-respondent for collection in the State Bank of Patiala, Safidon through its account. The State Bank of Saurashtra, Chandni Chowk Branch, Delhi vide memo dated 5.5.2009 did not honour the cheque for the reason that the payment had been stopped by the drawer. This was intimated to the complainant- respondent on 15.5.2009 by their banker State Bank of Patiala, Safidon. The cheque No.332002 dated 28.11.2008 for an amount of Rs.28 Lacs which is subject matter of complainant (Annexure-P.4 in Criminal Misc. No.M-18588 of 2010) was initially presented for collection by the complainant-respondent on 13.3.2009 in the State Bank of Patiala, Wazirpur Industrial Estate, New Delhi. The complainant was informed vide forwarding letter dated 16.3.2009 that the cheque could not be honoured on account of insufficient funds in the account of the accused. The complainant-respondent contacted Sunil Khurana (petitioner No.2) who assured to make the payment and requested the complainant to present the cheque after 16.4.2009. The said cheque was then presented for collection Cr. Misc. Nos.M-18587 of 2010 etc. [7] by the complainant through the State Bank of Patiala, Safidon. The said bank vide forwarding letter dated 11.5.2009 informed the complainant that the State Bank of Saurashtra, Chandni Chowk, New Delhi vide memo dated 9.5.2009 had not honoured the cheque as the payment had been stopped by the drawer. Therefore, the cause of action to file the complaint occurred to the complainant-respondent at Safidon. Section 142 of the NI Act provides for cognizance of offence. It is envisaged therein that in terms of clause (b) that notwithstanding anything contained in the Cr.P.C. such complaint is made within one month of the date on which the cause of action arose under clause (c) of the proviso to Section 138. Clause (c) of the proviso to Section 138 provides that nothing contained in Section 138 relating to dishonour of cheque for insufficiency etc. of funds in the account shall apply unless 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. Therefore, the cause of action to file the complaint arose on the failure of the petitioners to make the payment of the amount of the cheque to the complainant-respondent. The criminal prosecution has to be launched within one month of the expiry of 15 days period from the issuance of notice as provided by Section 142(b) of the NI Act. Mr. Sanjay Majithia, Senior Advocate for the petitioners has contended that only the Court within whose territorial jurisdiction the drawee bank is situated would have territorial jurisdiction and not at the payee bank. In support of his contention, learned counsel cites Harman Electronics (P) Ltd. v. National Panasonic (P) Limited, (2009) 1 SCC 720. Cr. Misc. Nos.M-18587 of 2010 etc. [8] In the said case the appellant therein was carrying on business in Chandigarh. The cheque was issued and dishonoured in Chandigarh but the notice was sent by the complainant from Delhi and the complaint was filed in Delhi. It was held that issuance of notice would not by itself gives rise to a cause of action but communication of the notice would. It was observed that a Court derives jurisdiction only when the cause of action arises within its jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, the commission of an offence completes. Giving of notice, therefore, can not have any precedent over this service. Besides, the complaint petition did not show that the cheque therein was presented at Delhi. It was further observed that banking institutions holding several cheques signed by the same borrower can not only present the cheque for its encashment at four different places but may also serve notices from four different places so as to enable it to file four complaint cases at four different places. This only causes grave harassment to the accused. It was, therefore, necessary in a case of this nature to strike a balance between the right of the complainant and the right of an accused vis-a-vis the provisions of the Code of Criminal Procedure. Principle that the debtor must seek the creditor cannot be applied in a criminal case. Jurisdiction of the Court to try a criminal case is governed by the provisions Cr. Misc. Nos.M-18587 of 2010 etc. [9] of the Criminal Procedure Code and not on common law principle. In the facts of the said case, it was held that only by issuing of notice from the jurisdiction of the Court at Delhi where no cause of action had accrued would not confer jurisdiction to the Court at Delhi to take cognizance of the offence. Accordingly, the case was transferred from the Court of Additional Sessions Judge, New Delhi to the Court of District & Sessions Judge, Chandigarh for assigning it to Court of competent jurisdiction. Therefore, it may be noticed that in the said case the cheque was issued and dishonoured at Chandigarh and only notice had been sent from the Court at Delhi. It was in the said context that the Hon'ble Supreme Court observed that the mere issuance of notice by itself would not give rise to a cause of action. In the present case, the cause of action has accrued to the complainant within the jurisdiction of the Court at Safidon, inasmuch as, in the complaint (Annexurre-P.4) it has been alleged that the cheque was presented for collection by the complainant-respondent in the State Bank of Patiala, Safidon. The dishonoured memo was communicated to the complainant-respondent through the State Bank of Patiala at Safidon. The cheque was issued at Safidon and the payment was to be made at Safidon; besides, the office of the complainant is situated at Safidon. Therefore, the cause of action accrued to the complainant-respondent at Safidon and the complaint is not liable to be filed within territorial jurisdiction of the drawee bank, which is the bank of the petitioners at Delhi. Learned senior counsel has, however, placed strong reliance on the case of Times Business Solution Limited v. Debayan Bagchi, 2010 (2) RCR (Cr.) 673 (Delhi); ICICI Bank Ltd. v. Subhash Chand Bansal, 2010 (1) Cr. Misc. Nos.M-18587 of 2010 etc. [10] Civil Court Cases 468 (Delhi) and Shri Ishar Alloy Steels Ltd. v. Jayaswals NECO Ltd., 2001 (1) RCR (Cr.) 834 (SC). In Times Business Solution Limited v. Debayan Bagchi (supra), the petitioner therein filed a complaint under Section 138 NI Act against the respondent as the cheque given to it had been returned unpaid on presentation. The learned Metropolitan Magistrate ordered return of the complaint for its presentation to the Court of competent territorial jurisdiction as the Court at Delhi had no jurisdiction to entertain and try the complaint as no part of offence had been committed at Delhi. The cheques in question were presented in Delhi for the purpose of encashment. Therefore, it was submitted that one of the acts forming component of the offence took place in Delhi thereby attracting the jurisdiction of the Delhi Courts. It was contended on behalf of the petitioners therein that the complainant can choose any one of those Courts having jurisdiction over any local areas within the territorial limits of which any one of the following five acts, the complaints of offence, took place: (i) drawing of the cheque; (ii) presentation of the cheque to the bank; (iii) returning of the cheque unpaid by the drawee bank; (iv) giving of notice in writing to the drawer of the cheque demanding payment of the cheque amount and (v) failure of the drawer to make payment within 15 days of the receipt of the notice. It was observed that Section 138 of the NI Act shows that cheque has to be presented on the drawer's bank where account is being maintained. It is only banker of the drawer which will be in a position to say that the cheque amount exceeds arrangement. Only drawer's bank can return the cheque unpaid for “insufficient funds in the account of drawer” or for any other Cr. Misc. Nos.M-18587 of 2010 etc. [11] reason. The payee of the cheque has no option but to present the cheque for encashment to the drawer's bank on which the cheque had been drawn either personally or through a bank. The payee of the cheque has the option to present the cheque in any bank but to attract the criminal liability of the drawers of the cheque such collecting bank is obliged to present the cheque to drawer's bank on which the cheque is drawn that too within a period of six months. It was held that merely because the payee had deposited the cheque at Delhi would not mean that he had presented the cheque at Delhi. Therefore, it was in the context of the said facts and circumstances of the said case that the cheque had been deposited at Delhi for encashment so as to confer jurisdiction that it was held that the Court at Delhi has no jurisdiction to entertain the complaint. In ICICI Bank Ltd. v. Subhash Chand Bansal (supra), it was held that the Court in whose territorial jurisdiction the drawee bank is situated would have territorial jurisdiction to entertain a complaint. The petitioner therein has filed 8 complaints under Section 138 of the NI Act before the Metropolitan Magistrate, Dwarka Courts Delhi against the respondent therein regarding dishonour of the cheques. The complaints were dismissed by the trial Court on the ground of territorial jurisdiction relying upon the decision in the case of Harman Electronics (P) Ltd. v. National Panasonic (P) Limited (supra). The said case, as already noticed, is with respect to a case in which it has been held that mere issuance of notice would not by itself give rise to a cause of action. Therefore, the ratio of the said judgment is inapplicable to the facts of the present case. In Shri Ishar Alloy Steels Ltd. v. Jayaswals NECO Ltd. (supra), Cr. Misc. Nos.M-18587 of 2010 etc. [12] the question that was considered was as to what is meant by, “the Bank” as mentioned in clause (a) of the proviso to Section 138 of the NI Act and 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. Besides, to which bank the cheque is to be presented for the purpose of attracting the penal provision of Section 138 of the NI Act. In the said case, the appellant had issued a cheque drawn on State Bank of Indore Industrial Estate Branch, Indore in favour of the respondent therein. The respondent presented the cheque for payment on 26.9.1997 which was returned unpaid. It was again presented on 20.1.1998 to its bank i.e. the State Bank of India, Raipur. The cheque reached the drawer bank (sic. - drawee bank) on 24.1.1998 admittedly after six months from the date it became payable. The cheque was returned unpaid by the banker of the respondent on 3.2.1998. This led to sending of a notice as required under proviso (b) of Section 138 of the NI Act and further filing of a complaint. The case, therefore, was considered as to what is meant by “the Bank” as mentioned in clause (a) of the proviso to Section 138 of the NI Act. In other words, the case related to the calculation of period of six months from the date on which the cheque was drawn for the purpose of calculating the period of its validity. It was in the context of the said fact that it was considered by the Supreme Court that the expression, “the bank” as mentioned in clause (a) of proviso to Section 138 would mean the drawer's bank or the drawee bank. The ratio of the said judgment is inapplicable to the facts of the present case as the expression, “the bank” was considered for the purposes of calculating the period of six months and that it relates to Cr. Misc. Nos.M-18587 of 2010 etc. [13] the date when the cheque is received in the drawee bank. In the present case, as already noticed, the cause of action accrued to the petitioners within the territorial jurisdiction of the Court of the trial Magistrate at Safidon. Cause of action is to be seen on the basis of the averments made in the complaint (Annexure-P.4) wherein it has been alleged that the office of the complainant is situated at Safidon, the cheque was issued at Safidon, the cheque was presented at Safidon and intimation regarding the cheque being unpaid or dishonoured was received at Safidon; besides, the payment was to be made at Safidon. It may also be noticed that as per allegations in the complaint the compromise in the civil suit had also been effected at Safidon. Therefore, in the facts and circumstances, the Court at Safidon has the jurisdiction to entertain and try the case. In K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510, the Supreme Court considered the question regarding territorial jurisdiction of Courts relating to an offence under Section 138 of the N.I. Act. It was held that under Section 177 of the Criminal Procedure Code, “every offence shall ordinarily be inquired into and tried in a court within whose jurisdiction it was committed”. The locality where the Bank (which dishonoured the cheque) is situated cannot be regarded as the sole criterion to determine the place of offence. It must be remembered that offence under Section 138 would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque amount within the expiry of 15 days mentioned in clause (c) of the proviso to Section 138 of the Act. It is normally difficult to fix up a particular locality as the place of failure to pay the amount covered by the Cr. Misc. Nos.M-18587 of 2010 etc. [14] cheque. A place, for that purpose, would depend upon a variety of factors. It can either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business. 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) 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. 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.