KBP 1778-08.sxw 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.1778 OF 2008 The Saswad Mali Sugar Factory Ltd., Malinagar ..Petitioner Vs. Shamrao Maruti Bhosale and ors. ..Respondents WITH CRIMINAL WRIT PETITION NO.1453 OF 2009 Bhagwan Pralhad More ..Petitioner Vs. State of Maharashtra and ors. ..Respondents. WITH CRIMINAL WRIT PETITION NO.1454 OF 2009 Bhagwan Pralhad More ..Petitioner Vs. State of Maharashtra and ors. ..Respondents. ......... Appearances: W.P.1778 of 2008 Mr.Surel S.Shah, for petitioner Mr.S.P.Kadam & Mr.P.H.Gaikwad, for respondent No.1 and 2. Ms.S.V.Gajare, APP for the State. W.P.1453 and 1554 of 2009 Mr.Surel S.Shah, for petitioner. Mr.Milind Deshmukh, for respondent no.2. Ms.S.V.Gajare, APP for the State. ......... KBP 1778-08.sxw 2 CORAM : A.S.OKA, J.. DATE : 13 th and 17 th August, 2009. JUDGMENT : 1] The submissions of the learned counsel for the parties were heard earlier and today the petitions are kept for dictation of judgment. 2] The issue involved in these petitions is as regards the territorial jurisdiction of the Criminal Court to entertain a complaint under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the said Act”). Before dealing with the submissions made by the learned counsel for the parties, it will be necessary to advert to the facts leading to the filing of these petitions. FACTS OF CRIMINAL WRIT PETITION NO.1778 OF 2008 3] As far as Writ Petition No.1778 of 2008 is concerned, the petitioner is the complainant and the first and the second respondents are the accused. The subject matter of the complaint is a cheque dated 25 th September, 2001 drawn by the first respondent on Bank of Maharashtra at Sakharwadi Branch, Taluka Phaltan, District Satara. The case of the petitioner in the complaint is that the said cheque was presented by the petitioner to Malinagar branch of Central Bank of India in Taluka Malshiras, District Solapur. A notice was issued prior to filing of the complaint. The notice was issued by an advocate KBP 1778-08.sxw 3 having office at Malshiras, District Solapur. The address of the Petitioner disclosed in the complaint is of Malinagar, Taluka Malshiras, District Solapur. The address of the accused (1 st and 2 nd respondent) is shown as Sakharwadi, Taluka Phaltan, District Satara. The complaint was filed in the Court of the learned Judicial Magistrate F.C., Malshiras. An application was made by the accused in the said complaint raising an objection to the jurisdiction to the Court of the learned Judicial Magistrate F.C., Malshiras. The case made out in the said application was that though the petitioner presented the said cheque for encashment with the Central Bank of India, Malinagar branch, the amount covered by the cheque was to be paid by the Sakharwadi branch of Bank of Maharashtra. A contention was raised that Sakharwadi branch of Bank of Maharashtra in Taluka Phaltan was the drawee bank, and therefore, the complaint was maintainable in the Court of Judicial Magistrate F.C. at Phaltan. The said application was contested by the petitioner. By order dated 26 th May, 2008, the said application was rejected by the learned Magistrate. Being aggrieved by the said order, the first respondent (first accused) filed a Revision Application before the Sessions Court. By the impugned judgment and order dated 12 th August, 2008, the Revision Application was allowed by setting aside the order of learned Magistrate. The Session Court directed the learned Magistrate to pass an order on the complaint holding that his Court had no jurisdiction to KBP 1778-08.sxw 4 entertain the complaint. FACTS OF CRIMINAL WRIT PETITION NOS. 1453 and 1454 OF 2009 4] As far as other Writ Petitions i.e. Criminal Writ Petition Nos.1453 and 1454 of 2009 are concerned, the petitioners in both the petitions have been arraigned as accused in the complaints filed by the second respondents therein. As far as the complaint is concerned the same was filed in the Court of J.M.F.C., Malshiras. The facts of the complaint subject matter of these two writ petitions are identical. The case made out by the second respondent complainant is that the said respondent is a manufacturer of sugar at village Shripur, Taluka Malshiras, District Solapur. It is alleged that the petitioner (first accused) was the Vice Chairman of Manganga Sahakari Sakhar Karkhana Ltd, Sonar Siddhanagar, Taluka Atpadi, District Sangli. The second accused at the relevant time was acting as the Managing Director of the said sugar factory. It is alleged that in the complaint the said Manganga Sahakari Sakhar Karkhana purchased the excess stock of sugarcane from second respondent – complainant, however, the price of the sugarcane was not paid to the second respondent – complainant, and therefore, the proceedings were initiated in the Co-operative Court for recovery of the amount. There was a compromise entered into between the parties and in terms of the said compromise, a cheque was issued by the accused drawn KBP 1778-08.sxw 5 on the Sangli District Central Co-operative Bank Ltd. at Kothuli branch, Taluka Atpadi, District Sangli. The said cheque was deposited by the second respondent in its account with Shripur branch of the Solapur District Central Co-Operative Bank. The cheque was dishonoured. The address of the second respondent disclosed in the complaint is of village Shripur, Taluka Malshiras, District Solapur and the address of accused is of Sonar, Siddhnagar, Taluka Atpadi, District Sangli. 5] The accused in the said two complaints made an application before the learned Magistrate raising an objection to the jurisdiction of the learned Magistrate at Malshiras. The said application was rejected by the learned Magistrate. A Revision Application was preferred by the petitioners in these two petitions. The Revision Applications have been dismissed by the Sessions Court. SUBMISSIONS 6] The learned Counsel appearing for the petitioner of Criminal Writ Petition No.1778 of 2008 has made detailed submissions. He invited my attention to the averments made in the complaint subject matter of the writ petition. He submitted that the material on record of the complaint shows that the payment of the amount subject matter of the cheque was to be made at Malinagar and not at the place where the drawee bank is situated. He KBP 1778-08.sxw 6 pointed out that the payment of the amount of subject matter of the cheque was to be made to the petitioner complainant at Malinagar, Taluka Malshiras, District Solapur. He invited my attention to the various decisions of the Apex Court as well as this Court. He pointed out a decision of the Apex Court in the case of K.Bhaskaran Vs.Shankaran Vaidhyan Balan and another [1999(7) SCC 510]. He also invited my attention to Clause (b) of Section 138 of the said Act and submitted that the time period provided for issuing notice is to be reckoned from the date when the complainant’s bank informs the complainant about the dishonour of cheque and not from the date on which the drawee bank returns the cheque. Inviting my attention to the aforesaid decision of the Apex Court, he submitted that the only Court in which the complaint could have been filed was the Court at J.M.F.C., Malshiras, within whose jurisdiction the place Malinagar was situated. On facts he invited my attention to the agreement (exhibit “H”) to the petition. He also invited my attention to the findings recorded by the Sessions Court. He submitted that the observation of the Sessions Court that the amount was intended to be paid to the bank of the accused at Sakharwadi, Taluka Phaltan, District Satara, is totally erroneous. He submitted that the learned Sessions Judge committed an error by applying the decisions in the case of Nutan Damodar Prabhu and another Vs. Ravindra Vassant Kenkre and another [2008 (1) Mh.L.J. 889) as well as Ahuja Nandkishore Dongre Vs. State of Maharashtra KBP 1778-08.sxw 7 [2007 Cr.L.J. 115]. The learned counsel for the accused in Criminal Writ Petition No.1778 of 2003 supported the impugned judgment and order passed by the Sessions Court. He relied upon the decision of this Court in the case of Ahuja (Supra) and submitted the Sessions Court has correctly applied the said decision. He submitted that no interference was called for. 7] As far as Writ Petition Nos.1453 and 1454 are concerned, the submission of the learned counsel appearing for the petitioners in both petitions is that the payment of amount subject matter of the cheques was to be made at Atpadi, and therefore, the Court ot Malshiras has no jurisdiction. He submitted that the view taken by this Court in case of in case of Nutan (Supra) has been confirmed by the Apex Court in the case of M/s.Harman Electronics (P) Ltd. & Anr. Vs. M/s.National Panasonic India Ltd. [2009(1) All M.R. (479)]. He also invited my attention to a decision in the case of Shamshad Begum Vs. B. Mohammed [(2008) 13 SCC 77]. He submitted that in view of the subsequent decision of the Apex Court, the courts below ought have applied the ratio laid down in the case of Nutan (Supra). 8] Learned counsel for the second respondent in the aforesaid two Writ Petitions supported the impugned orders. He also invited my attention to the observations made by the Apex Court in the case of Shamshad Begum (Supra). He submitted that no interference is called for. KBP 1778-08.sxw 8 CONSIDERATION OF LEGAL SUBMISSIONS 9] Before considering the facts of the case it is necessary to analyse the various decisions relied upon by the learned counsel on the aspect of territorial jurisdiction of the court to entertain and try a complaint under Section 138 of the said Act. The first decision relied upon by the parties is in the case of Rakesh Nemkumar Porwal Vs Narayan Dhondu Joglekar [1994 (3) B.C.R.355]. The Division Bench of this Court was dealing with a petition arising out of a complaint Section 138 of the said Act. Apart from other contentions, one of the challenge raised by the petitioner accused was that though he was a resident of Nagpur and his place of business was at Chandrapur, the complaint was filed in the Court of J.M.F.C., Kolhapur. Per contra it was contended that the complainant was a resident of Kolhapur and the event of non payment of money to complainant occurred at Kolhapur. A reliance was placed by the complainant on Section 177 of the Code of Criminal Procedure, 1973 (hereinafter referred to “as the said Code”). It will be necessary to consider what is held by the Division Bench of this Court in paragraph 15 of the said judgment : “....... The anatomy of section 138 comprises certain necessary components before the offence can be said to be complete, the last of them being the act of non-payment in spite 15 days having elapsed after receipt of the final notice. It is true that the KBP 1778-08.sxw 9 cheques may have been issued by the accused at his place of residence or business, the Bank on which it is drawn being often located at a second spot and inevitably the complainant or the payee has his place of residence or business at yet another location. It was for this reason that the Kerala High Court in the case of (P.K.Muraleedharan V.C.K.Pareed), reported in 1992 Cri. L.J. 1965 took the view that any of the three Courts could exercise jurisdiction. In our considered view, where undoubtedly each of the components constitute a stage in the commission of the offence, the final non-payment being the ultimate one, section 178, Cr.P.C. would clearly apply to an offence of this type. It would be perfectly valid and reasonable to hold, therefore, that the aggrieved party Viz.,the complainant is fully justified in approaching the local Court having jurisdiction over the area where the payment was to be made to him in the final instance. Having defaulted in the first instance, the law casts special obligation on the drawer of the cheque to make amends by tendering the payment to the payee on the correct approach in such a situations would be, to construe the offence having been complete at the place where the payment ought to have been tendered to the drawee but was wrongfully not done. Applying these principles, therefore, it cannot be held that the invocation of the jurisdiction of the Court at Kolhapur was either incorrect or that it constituted abuse. (Emphasis added) KBP 1778-08.sxw 10 The Division Bench considered the necessary components of the offence under Section 138 of the said Act. The Division Bench noted that the last component is the act of non payment after lapse of 15 days after the service of notice of demand. The Division Bench held that each of the components constitute commission of offence but the final non payment being ultimate one, Section 178 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the said Code) will apply to the offence under Section 138 of the said Act. The Division Bench, therefore, proceeded to hold that the complainant was justified in approaching the Court having jurisdiction over the area where payment was to be made to him at the final instance. The Division Bench held that the correct approach in such case will be that the offence has been committed at the place where payment ought to have been tendered to the payee but the payment is wrongfully denied. The Division Bench observed that the complaint under Section 138 will also lie in the Court having jurisdiction over a place at which the payment ought to have been tendered to the drawee after notice of demand was issued by the drawee. 10] In the case of K. Bhaskaran (Supra.) the complaint under Section 138 of the said Act was filed in the Court of Magistrate at a place called as Adoor. The cheque was dishonoured by a branch of Syndicate branch at a place in KBP 1778-08.sxw 11 another district. In the case before the Apex Court, the Magistrate had held that he had no jurisdiction to try the case as the cheque was dishonoured by the branch office of the concerned branch situated in a different district. The High Court had interfered on the ground that the cheque was issued at a shop under the jurisdiction of the learned Magistrate in whose Court the complaint was lodged. The Apex Court considered the Section 177 of the said Code which provides that every offence shall ordinarily be enquired into and tried in a Court within whose jurisdiction the same was committed. The Apex Court observed that the locality where the bank dishonoured the cheque is situated cannot be the sole basis to determine the place of offence. It will be necessary to quote what is observed by the Apex Court. “.....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. 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 KBP 1778-08.sxw 12 particular locality as the place of failure to pay the amount covered by the 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. Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence under Section 138 of the Act.” (Emphasis added) The Apex Court observed that Section 177 of the said Code is not inflexible as is indicated by the use of word “ordinarily”. The Apex Court, therefore, referred to Section 178 of the said Code which provides that if there is uncertainty as to where amongst different localities, the offence has been committed, the trial can be held in a court having jurisdiction over any of these localities. Thereafter, the Apex Court proceeded to consider the ingredients of the offence under Section 138 of the said Act. Paragraphs 14 to 16 of the Apex Court judgment read thus: “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) drawing of the KBP 1778-08.sxw 13 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 KBP 1778-08.sxw 14 exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act.” (Emphasis added) It must be noted here that one of the five acts considered of by the Apex Court is the failure of the drawer to make payment within 15 days of the receipt of the notice. 11] Before dealing with the subsequent decisions of the Apex Court, it will be necessary to deal with two decisions of this Court. The first decision is in the case of Ahuja (Supra). It is brought to my notice that another single Judge of this Court at Goa Bench felt that the decision in the case of Ahuja (Supra.) needs reconsideration, and therefore, a reference was made to the larger bench. However, it is transpires that the reference could not be heard KBP 1778-08.sxw 15 as the case in which the reference was made ended in a settlement. I am informed across the bar that this decision in the case of Ahuja is the subject matter of challenge in a pending petition before the Apex Court, but the decision has neither been stayed nor set aside. The said decision extensively considers Bhaskaran’s case. In the case before this Court, the applicant was the accused who had applied under Section 482 of the said Code. The complainant was a resident of Village Soyjana, taluka Manora, District Washim. He was employed at Bhandara. The Applicant accused was also a resident of Bhandara. The case of the complainant was that a loan of Rs.35,000/- was given by him to accused and in discharge of said liability, the accused issued three cheques drawn on Bank of India, Bhandara Branch. The said cheques were presented for encashment by the complainant at Digras branch of the Yavatmal Urban Co-Operative Bank Ltd., in District Yavatmal. The cheques were returned dishonored. A notice was issued by the complainant through an Advocate who was a resident of Digras, District Yavatmal calling upon the accused to pay the amount covered by the cheque. No reply was sent by the accused. The complaint was filed in the court of J.M.F.C. at Digras, District Yavatmal. The accused raised a contention before the learned Magistrate that the said Court had no territorial jurisdiction to take cognizance of the complaint. The said application was rejected, and therefore, a petition under Section 482 of the said Code was KBP 1778-08.sxw 16 filed by the applicant accused. The learned Single Judge of this Court has dealt with what was held by the Apex Court in Bhaskaran’s case. This court observed that the reference in clause 2 of paragraph 14 of the decision in the Bhaskaran’s case to the presentation of the cheque to the bank and reference in clause 3 of paragraph 14 of the return of the cheque to the drawee bank is a reference to the bank on which the cheque was drawn. In paragraph 15 of the said decision, this Court observed thus: “15.The Apex Court must have chosen to prefix the word, “bank” by definite article “the” in order to avoid the confusion and problems that would be created by using indefinite article “a”. A cheque is negotiable instrument and by approprite endorsement and delivery it can be negotiated. If instead of the Courts at the place where the bank on which the cheque was drawn, the Courts at the place where the cheque was presented were to have jurisdiction, drawers of the cheque would be exposed to an unforeseen risk. When a person issues a cheque to an other, he intends to make payment to that another, for a consideration which he has received at the bank on which the cheque is drawn. That other, may, in turn, negotiate the KBP 1778-08.sxw 17 cheque in favour of third person for a liability which that other may have to discharge towards such third person. The drawer of the cheque cannot be said to have foreseen that, by such negotiation, his cheque would land at place far away from the place at which it was meant to be paid, making him liable to be haulted up in a Court at a place where the cheque was presented by the holder in due course. Therefore, with utmost humility and with great respect to the observations made by Andhra Pradesh High Court, it is difficult to deduce the ratio elicited by the Andhra Pradesh High Court, from the observations of the Supreme Court from K. Bhaskaran’s case. It must be held that the observations in Bhaskaran’s case do not support such a view of law.” (Emphasis added) Thereafter, this Court referred to Section 72 of the said Act and observed that the practice of presenting a cheque to payee’s or holder’s own banker does not make such banker “the drawee”. Such a banker merely undertakes to present the cheque on behalf of the holder to the drawee bank for KBP 1778-08.sxw 18 clearance and such a bank merely acts as an agent for holder and not as the agent of the drawee bank. In paragraph 20, this Court held thus: “20. Likewise if the High Court of Kerala has, relying on Bhaskaran’s case, held that Court, within whose jurisdiction the cheque was presented could entertain such a complaint, I respectfully disagree. As already stated, in my humble view, the observations in Bhaskaran’s case do not support such a conclusion. At the cost of repetition it has to be pointed out that the wording of Section 138 of the Negotiable Instruments Act too does not support such a view. If the Courts, within whose jurisdiction the cheque was merely presented for realisation, were to be allowed to entertain complaints, the result would be opening flood gates for harassment to persons who issued cheques. A person who issues a cheque on his bank indicates