* IN THE HIGH COURT OF DELHI AT NEW DELHI + CRL.REV.P. No.166/2009 Decided on 23.09.2010 IN THE MATTER OF : M/S RELIGARE FIN VEST LIMITED ..... Petitioner Through: Mr. Vijay Aggarwal, Advocate with Mr.Gurpreet Singh, Mr.Manoj Taneja and Mr. Amit Shrivastava, Advocates versus STATE AND ANR. . .... Respondents Through: Mr. M.N. Dudeja, APP for the State. None for R-2. CORAM * HON'BLE MS.JUSTICE HIMA KOHLI 1. Whether Reporters of Local papers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? HIMA KOHLI, J. (Oral) Despite service, none appears on behalf of the respondent No.2. Therefore the said respondent is proceeded against ex-parte. For orders, see Cri.Rev.P.No.179/2009. Registry is directed to place a copy of the order passed in Cri.Rev.P.No.179/2009 in this file. SEPTEMBER 23, 2010 rkb c~ (HIMA KOHLI) JUDGE Digitally Signed By:AMULYA Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified , .. * IN THE HIGH COURT OF DELHI AT NEW DELHI + CRLRIEV.P.179/2((])09, 166/2009, 169/2009 and 171/2009 Decided on 23.09.2010 IN THE MATTER OF : M/S RELIGARE FINVEST LIMITED ..... Petitioner Through: Mr. Vijay Aggarwal, Advocate 'with Mr.Gurpreet Singh, Mr.Manoj Taneja and Mr. Amit Shrivastava, Advocates versus STATE AND ANR. ..... Respondents Through: Mr. M.N.·Dudeja, APP for the State. Mr. Buddy A. Ranganadhan, Advocate for R-2 in Crl. RP-179/2009. CORAM * HON'BlE MS.JUSTICE H!MA KOHli 1. Whether Reporters of Locaf papers may be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? L,_ r I I ____ ..-li, HIMA KOHli, J. (Orad) I' .:2:J 1. This common order shall dispose of the petitions filed by the petitioner as the facts of these cases are identical and raise common question of law. For the sake of convenience, facts of Crl. Rev. P. No.179/2009 are being taken not·e of. 2. The present petition is filed by .the petitioner under Section 397 read with Section 401 of the Cr.PC, against the judgment dated 09.03.2009 passed by the learned Metropolitan IVIagistrate in a complaint case I No.106/l/~~009 under Section 138 of the r~egotiab/e Instruments Act, 188+ (hereinaftc;r ,-efe;Ted to as 'the Act") holding intei- afia that the cou,-t did not have tile terrir.orial jurisdiction to entertain the complaint and returning the CRLREV.P. 179/2009 . ( Page 1 of 18 ---------------·- --- same to the complainant/petitioner, for being presented before the court having territorial jurisdiction to try the same. 3. It is. averred in the complaint petition that the petitioner/complainant is a public limited company haying its registered and corporate office at New Delhi and is dealing with the business of providing its custome·rs various types of loans. It is further stated that the I. respondent/accused availed loan facility from the petitioner/complainant but the account became irregular. Towards discharge of part of the debts, the respondent/accused issued cheques, which when presented by the petitioner/complainant to its bankers namely, HDFC Bank Ltd., Connaught Place, New Delhi, were returned unpaid by the bankers of the accused under the return memo dated 29.12.2008, with the remarks, "insufficient funds". The return memo was received by the petitioner/complainant at Delhi. In para 4 of the complaint, it is stated that the aforesaid cheques were submitted by the respondent/accused at the corporate and registered office of the complainant/petitioner. Thereafter, a legal demand notice was issued by the petitioner/complainant to the respondent/accused frorri Delhi, duly dispatched on 14. 01.2009. As the respondent/accused failed to make the payments of ) the cheque amount, demanded through the legal notice within the stipulated period, the petitioner/complainant filed the aforesaid complaint before the court of the learned Metropolitan Magistrate. The impugned order came to be passed at the pre.:.cognizance stage. In other words, notices were not issued on the complaint to the accused and instead, the complaint was returned at the pre-summoning stage by the learned Metropolitan Magistrate to the petitioner/complainant for want of territorial jurisdiction. 4. Counsel for the petitioner/complainant submits that the learned Metropolitan Magistrate erred in arriving at the conclusion that his Court did CRLREV.P. 179/2009 Page 2 of 18 not have the territorial jurisdiction to entertain. th'e complaint. He states that a perusal of the complaint itself indicates that part of the cause of action arose in Delhi, and_ the following acts were done in Delhi:- (i) That the registered and corporate office of the petitioner/complainant ' ' is at New Delhi. (ii) That the cheques were submitted by the respondent/accused at the corporate and registered office of the complainant/company situated at Delhi. (iii)· That the petitioner/complainant presented the cheques for encashment to its banker situated at Delhi. (iv) That the cheques, upon being dishonoured when presented to th~: bankers of the respondent/accused, were returned to the petitioner/complainant through its bankers\at Delhi. (v) That the legal notice was dispatched by the petitioner/complainant ·~ to the respondent/accused from· Delhi. 5. Counsel for the petitioner/complainant submits that while passing the impugned order, the learned Metropolitan Magistrate· misinterpreted the judgment of the Supreme Court in the case of M/s Harman Electronics Pvt; Ltd. vs. M/s National Panasonic India Ltd. reported as 20109 II AD SC 21. He states that the aforesaid judgment was in fact not applicable to the facts of the present case. It is further stated that the judicial pronouncement in the case of K. Bhaskaran vs. Sankaran Vaidhyan Balan and Anr. reported as ; (1999) 7 sec 510 still holds the field and has not been watered down bv any of the subsequent decisions on the point of territorial jurisdiction. Rather, if the subsequent decisions down the years are perused, the case of K,_ Bhaskaran (supra), remains the fountainhead and has been reiterated from CRLREV.P. 179/2009 Page 3 of 18 time to time. It is further urged that the i3spect of territorial jurisdiction ought not to have been gone into by the.lear·ned Metropolitan Magistrate at the pre- . . summoning stage, and the said aspect could have been considered and decided either ways, even after cognizance was taken. 6. · In support of his submission that the averments contairied in the complaint petition prima facie revealed that it was maintainable within the i territorial jurisdiction of Delhi, counsel for the pe~itioner relied on the following judgments: /,"- i. K. Bhaskaran vs. Sankaran Vaidhyan Balan and Anr. (1999) 7 SCC 51[] ii. Trisuns Chemical Industry vs. Rajesh Agarwal and Ors. {1999) 8 sec 686. iii. Alchemist Ltd. vs. State Bank of Sikkim, (2007) 1:11. SICC 335 iv. . Smt .. Shamshad Begum vs. B. Mohammed 2.008 (13) SCAlE 669 v. Rajiv Modi vs. Sanjay Jain V (2009) Sl u 725 vi. Religare Finvest Limited vs. Sambath Kumar A (21010Y JCC (NI) 266 vii. Patiala Casting P. Ltd. & Ors. vs. Shushan Steel Ltd. 2010 IV AO (CRL)(DHC) 266. 7. Per contra, counsel for the respondent supports the impugne~ judgment and submits that the same does not deserve interference. He states tha.t in the present case, the distinction between the term, "cause of action". and "offence" must be understood. He relies on the provision of Section 142(b) of the· Act to urge that the aforesaid provision alone deals with the issue of cause of action and that the proviso (c) to Section 138 of the Act postulates that the said Section would not apply until the drawer of the CRL.REV.P. 179/2009 Page 4 of 18 cheque fails to make payment of the amount to the holder in due course of the cheque, within 15 days of the receipt of the said notice. He, therefore, submits that the location where the major part of the cause of action arises( 1 i.e., the place where the clleque on presentation, is dishonoured has to be examined for deciding the issue of territorial jurisdiction. To fortify his submission that tile offence under Section 138 is completed only on non- payment of the amount, as contemplated in proviso(c) and the locality where the drawer fails to make the payment within 15 days of the receipt of the ~-_, notice, is of primary consideration; he relies on the following judgments: · i. Shri Ishar Alloy Steels Ltd. vs. Jayaswals NECO Ltd. 2001 (3) sec 609 ii. ICICI Bank Ltd. vs. Subhas Chand Bansal 160 (20019) Dl T 379 iii. · Achintya Mandai vs. Chaitanya Aqro. Products & Ors. 1009 (108) DRJ 4'71 iv M/s Harman Electronics Pvt. Ltd. vs. M/s National Panasonic India_ Ltd. 2009 II AD SC 21 i..' 8. In the case of K.Bhaskaran(supra), the question .of territorial jurisdiction of the Magistrate's Court situated at Adoor in Pathanamthitta District in the State of Kerala, to try the case under Section 138 of the Act .. i was under consideration where, the cheque was dishonoured in another District in the State of Kerala. The learned Magistrate held that the court did not have the territorial jurisdiction to try the case as the cheque was dishonoured by the branch office . of the. complainant/bank situated in a ' different District. On an appeal preferred by the complainant before the High Court of Kerala, the Single Judge accepted complainant's version that the. cheque was issued within the territorial limits of the trial court's jurisdiction CRL.REV.P. 179/2009 Page 5 of 18 ® and reversed the order of the Magistrate. Aggrieved by the order of the High Court, the appellant/accused. approached the Supreme Court. While dealing with the subm(ssions of both the parties on ·the question of territorial jurisdiction, the Supreme Court observed as below:- "11. We fail to comprehend as to how the trial court could have found s.o regarding the jurisdiction question. Under Section 177 of the Code "every offence shall ordinarily be enquired into and tried in a , court within whose jurisdiction it was committed". The ~ocaWty where the bank (which dlisholf'lloured the cheque) ns sMituated cannot be regarded as the so~e c:riterion to determine the place of offence. Jit must be remembered that o1Ffence under Secitnon 138 would not be comp~eited with the dishonour of the cheque. It attanns c~mpletuon ot11!y with the faiiure of the drawer of tlhe cheque to pay the cheque amount withnn the expnry of 15 days mentnolf'lledl in Clause (c) of the proviso to Sectnon 138 of the Act. It is normaily dnfficult to fox (U]pl a particular locaHty as the place of fai~ILfllre to pay the amount covered lb!y the cheque. A place, for that pm·pose, wouid depend upon a varnety of factors. It can either be at the place where the drawer resides or at the p~ace where the payee resides or at the piace wltu::ll"e either of them carries on busnness. Hence, the difficulty to fix up any particular locality as the place of occurrence. for the offence under Section 138 of the Act. 12. Even otherwise the rule that every offence shall be tried by a court within whose jurisdiction it was committed is not an unexceptional or unchangeable principle. Secbon 117 itself has been framed lby the ~egis!"ature thoughtfuHy · 1 bly I!Jsing the precaiUltnonary "fOII"dl ~'ordinaruiy" to Hrrullkate that the ru~e is not invariable in all cases. Section 178 I' of tlhle Code suggests that uf there us urncertainty as to where, among different ~ocalities, the offence would lhlave been commmtted the trial can be had fin a court having ]urisdlictuon over any of those loca!itues. The provision has further widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area the court in either of the localities can exercise jurisdiction to try the case. further agaill1l, Sectnon 179 of the Code stretches uts scope to a stn~~ wfider horizon. It reads thus: CRL.REV.P. 179/2009· Pag~ 6 of 18 "179. Offence triable where act is done or consequence ensues- When an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be enquired into or tried by a court within whose local jurisdiction such thing has been done or such consequence has' 'ensued." 13. ·The above provisions in the Code should have been borne in mind when the question regarding territorial jurisdiction of the courts to try the offence was sought to be determined. 14. The offence under Section 138 of the Act can be completed on~y with the concatenat.mon of a number of acts. The following are the acts which are components of the said offence : (1) drawing of the clhequeu: (2) presentation oif the cheque to the bank, (3) l!"eturning the cheque unpaid lby the drawee bank, ( 4) giving notice on wrutnrng to tlhe drawer of the cheque demanding [payment oif the cheque amount, (5) failur~ of the drawer to make paymernt within 15 days of the. receipt of the notice. 15. It is not necessary that ail the above five acts shoiUI~dl have been perpetrated at the same ~ocam:y. It is possible that each of those 1Fnve acts coiUI~dl be dlorne at 5 different ~ocaWties. But concatenation of all the above five is a sine qua non for the completion of the offence un'der 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. ThiUis it ns dear, if the five different acts were done ifi1l five dlufferent localities any one o1f the courts exerdsnng jurnsdktion nn one of ithe ifnve ~ocal areas can become the place of trial ifor the offence under SectiOJn 138 of the Actt. 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 a:dded) CRL.REV.P. 179/2009 Page 7 of 18 9. The aforesaid judgment thus clarifies that the five essential ingredients for completing the offence under Section 138 of the Act are as below:- (i) Drawing of the cheque, (ii) Presentation of the cheque with the bank, (iii) Returning of the cheque unpaid by the drawee bank, (iv) Giving 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 noti~e. 10. The aforesaid judgment was echoed by the Supreme Court in the case of Smt. Shamshad Begum (supra), wherein it was reiterated that: 11. "8. U: us no1t necessary that the above five acts shoiUIId have been perpetrated at the same loca~ity. It is possibie that each of those five acts coiUih:il be done at five dnfiferent ~ocalifcies. !But concatenation of all the above fnve is sine qua non for completion of the offence under Section 138 of the Act.",( emphasis added) In the case of Trisuns Chemical Industry (supra), while examining the judgment of the Gujarat High Court, passed in a revision petition, wherein, it was held that a perusal of the complaint filed before the trial court showed that there was nothing to reflect that any part of th~ transaction took place within the territories of the State of Gujarat and the Judicial Magistrate, Gandhidham ought not to ir1ave taken cognizance of the matter and ought not had directed issuance of process, the Supreme Court held that the Magistrate erroneously assumed that for the purpose of taking cognizance of an offence, the Court must necessarily have the territorial jurisdiction to try the case as well. Adverting to Chapter XIII of the Code of CRL.REV.P. 179/2009 Page 8 of 18 Criminal Procedure, relating to "Jurisdiction of Criminal Cou.rts in Enqukies and Trials", the Court held that the jurisdictional aspect becomes relevant only when the question of enquiry and .trial arises. In this regard, reference may be made to the following observations: "13 .......... Therefore, when there is nothing in Chapter XIV of the Code to impair the po'wer of a Judicial Magistrate of the First Class taking cognizance of the offence on the strength of any territorial reason it is impermissible to deprive such a Magistrate of the power to take cognizance of an offence - of course, in certain special enactments special provisions are incorporated for restricting the power of taking cognizance of offences falling under such acts. But such provisions are protected by non obstante clauses. Anyway this is a different matter. 14. The jurisldlnctional aspect becomes relevant only \1\fhen the question of enquiry or tria~ arises. It is t:hereifore a fal~acious thinkill1lg that only a Magistrate having jurisdiction to tn·y the case has the power to take cognizance oif the offel!1lce. Iif he us a Magistrate of the First C~ass his power to take cognizance of the oiffence is mot impaired by terrntoriai restrictions. After taking cognizance he may have to decide as to the court which has ]urisdictnon to enquire nnto or try the offel!1lce and that situation woiLI!Id reach only during the post- cognnza1T11ce stage and not ecaHdier." (emphasis added) 12. In the case of Rajiv Modi (supra), the Supreme Court formulated the following question for consideration:- "10. The issue before us is, whether the High Court under Section 482 Cr.P.C. was justified in quashing the complaint on the ground that no cause o.f action has arisen in Patna in respect of the alleged offences under the provisions of IPC. 11. The learned Counsel for the appellant would submit, that, the cognizance stage and the trial stage are two different aspects of criminal jurisprudence and under the Code, there is no territorial restriction for any Magistrate to take cognizance of an offence although at the stage of trial, the said issue may become relevant in v.iew of the prc;JVisions of Chapter XIII of the· Code. The Counsel would also assert that CRL.REV.P. 179/2009 Page 9 of 18 13. Section 177 of the Code relating to the jurisdiction of the Criminal Courts do not trammel the powers of any Court to take cognizance of the offence and thus, would apply to Sections 190 and 200 as well ......... . 12. In order to appreciate the jurisdictional aspect, it would be relevant to discuss the meaning of the expression "cause of action". This Court has laid down. that the cause of action is a fundamental element to confer the jurisdiction upon any Court and which has to be proved by the plaintiff to support his right to a judgment of the Court. It is relevant to take note of what was stated by this Court in State of Bombay v. Narottamdas Jethabhai, 1951 SCR 51. In this case, it is observed that the jurisdiction of the Courts gepencled in civil cases on a "cause of action" giving rise to a civil liability and in criminal cases on the commission of an offence, and on the provisions made in the two Codes of Procedure as to the venue of the trial and other relevc:mt matters." After taking into consideration a cat.~na of decisions on the point of "cause of action", while tracing the decisions starting from the year 1950's right upto 2009, including judgments rendered in the cases of State ot Bombay vs. Narottamdas Jethabhai, 1951 SCR 51; State of Madras vs. V.P. Agencies, AIR 1960 SC 1309, Gurdit Singh vs. Munsha Singh, (1977) 1 SCC 791; State of Rajasthan vs. Swaika Properties, (1985) 3 SCC 217; ONGC vs. Utpal Kumar Basu, (1994} 4 SCC 711; Bloom Dekor Ltd. vs. Subash Himatlal Desai, (1994) 6 SCC 322; Rajasthan High Court Advocates' Assn. vs. Union of India, (2001) 2 SCC 294; Y. Abraham Ajith vs. Inspector of Police, (2004) 8 SCC 100; and Alchemist Ltd. vs. State Bank of Sikkim, (2007) 11 SCC 335, the Supreme Court crystallized the law as follows:-. "22. It is evident from the abov~ dledsio1111s, that, to constitute the terrntorual jull"lisdktmon, the whole or a part of "cause of ac~io1111" must have arise1111 w~thin the territ~ria~ jurisdktion of the CoiL!Irt and the same must be dedded on the basis of the averments made in the comp~aint without embarknng !LIIJP(Q)B1l an inquiry as to the correctness or otherwise of the sand fact." XXX XXX XXX CRL.REV.P. 179/2009 Page 10 of 18 29. In view of the albove principles, itlhe Court on basns of the averments made nn the comp~aint, if it is prima facie of the opinion that the whole or a part of ca!Ulse of action has arnsen fin its jurisdiction, it can certainly take cognuzance of the complannt. There is no need to ascertaan that · the a~legations made are true un fact." (emphasis added) 14. The attention of this Court has been drawn to the two recent ·decisions of Single Benches of this Court in the cases of Religare Finvest Limited vs. Sambath Kumar A reported as (2010) JCC (NI) 266 and Patiala - Casting P. Ltd. & Ors. vs. Shushan Steel Ltd. reported as 2010 IV AD (CRl)(DHC) 266. In both the cases, the Single Benches noticed the judgment in the case of Harman Electronics· (supra), and held that mere sending of notice from Delhi would itself not give rise to a cause of action in Delhi, for taking cognizance under the Act and the said act ought to be accompanied by some. other act(s), for vesting territorial jurisdiction in a particular court. In the case of Religare Finvest Limited (supra), the Single Judge also considered the judgment in the cases of Mosaraf Hossain Khan vs. Bhagheeratha Engg. Ltd. reported as (2006) 3 sec 658 and Lok Housing and Constructions Limited vs. Raghupati Leasing·:,;and Finance Limited and Anr. i reported as 100 (2002) Dl T 38 to hold that a complaint under Section 138 of the Act could be filed in any of the five local areas where any of the five different acts constituting the offence under Section 138 of the NI Act were done. The judgment in the case of Delhi High Court Legal Services Committee vs. Government of N.C.T. of Delhi reported as 163 (2009) DlT 56 was also distinguished by holding that the same had no application to the facts of the said case as the said judgment directed return of complaints in cases, in which Deihl courts did not have territorial jurisdiction to try the complaints. It may be· noted that the aforesaid judgment is stated to have been taken in CRL.REV.P. 179/2009 Page 11 of 18 - ! appeal to the Supreme Court and status quo w?s ordered to be maintained until further orders and the matter has been directed to be posted before a: three Judges Bench. It is stated that the said matter is still pending disposal. 15. As regards the submission of the counsel for the respondent that territorial jurisdiction vests in a Court in whose jurisdiction, the major portion of the cause of action arises, i.e., the locality where the bank of the accused _, , which has dishonoured the cheque is situated, the Supreme Court has clarified in the case of K. Bhaskaran (supra), that the locality where the bank of the -~ accused, which has dishonoured the cheque, is situated cannot be regarded as the sole criteria to determine the place of offence and that a place, for the purpose of invoking the provisions of Section 138 of the Act, would depend on a variety of facts. Pertinently, the term used by the Supreme Court in the aforesaid case for coml]leting the offence und~r Section 138 of t~e Act is ',I' "acts" and !lOt "cause of action" .. The said