IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH WEDNESDAY, THE 23RD SEPTEMBER 2009 / 1ST ASWINA 1931 CRL.REV.PET.NO. 2371 OF 2009() ------------------------------------------ CC.926/2006 OF JUDL.MAGISTRATE OF FIRST CLASS COURT-I, PATHANAMTHITTA .................... REVN. PETITIONER(S):/COMPLAINANT --------------------------------------------------- P.M.PHILIPOSE, MANAGING PARTNER LOYAL BANKERS, CHERUKOLE, (PULICKATHARAYIL HOUSE, CHERUKOLE) BY ADV. SRI.V.PHILIP MATHEW RESPONDENT(S): ACCUSED/STATE ------------------------------------------------- 1. P.C.CHANDY,PERUMANNNOR PUTHENPURAYIL MALAM PO, KOTTAYAM. 2. STATE OF KERALA REPRESENTED BY PUBLIC PROSECUTOR HIGH COURT OF KERALA ERNAKULAM. BY PUBLIC PROSECUTOR SHRI C.S. HRITHWIK R2 SRI.C.S.MANILAL FOR R1 THIS CRIMINAL REVISION PETITION HAVING BEEN FINALLY HEARD ON 26.8.2009, THE COURT ON 23/09/2009 PASSED THE FOLLOWING: “C.R.” THOMAS P.JOSEPH, J. = = = = = = = = = = = = = = = = = = = = = = = = CRL. R.P. NO.2371 of 2009 = = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 23rd day of September, 2009 O R D E R -------------- The question raised for a decision in this revision is whether the mere fact of residence of the complainant in a prosecution for offence under Section 138 of the Negotiable Instruments Act (for short, “the Act”) at a particular place would confer territorial jurisdiction on the court within whose territorial limits that place is situated. According to the learned counsel for petitioner/complainant, the court within whose territorial limits complainant is residing has got jurisdiction to entertain the complaint while counsel for the accused would contend that mere fact of residence cannot confer jurisdiction. 2. Petitioner/complainant preferred a complaint in the court of learned Chief Judicial Magistrate, Pathanamthitta (in Pathanamthitta District). In the complaint, complainant is described as Managing Partner of a private financing institution situated at Kottayam (in Kottayam District). His residential address is given as at Cherukole in Ranni Taluk (in Pathanamthitta District). He is represented in the complaint by his Power of Attorney Holder who is also a resident of Cherukole. It is averred in the complaint that complainant is the Managing Partner of a private financing institution at Kottayam, CRL. R.P. No.2371 of 2009 -: 2 :- accused availed a loan from the complainant and in repayment of that debt he issued a cheque drawn on a bank situated at Kottayam. The cheque was presented for collection through the bank of the complainant situated at Kottayam but it was dishonoured for insufficiency of funds. Complainant caused statutory notice to be issued to the accused through his counsel. Accused received the notice but there was no payment and hence the complaint. In paragraph six of the complaint it is stated that cause of action for the case arose at Pathanamthitta Village wherefrom notice demanding amount covered by the cheque was issued which is within the local limits of the court of learned Chief Judicial Magistrate, Pathanamthitta. Learned Chief Judicial Magistrate after taking cognizance of the offence made over the case for trial to the court of learned Judicial First Class Magistrate-I, Pathanamthitta. Accused on appearance disputed territorial jurisdiction of that court to try the case. Learned magistrate heard both sides on the question of jurisdiction, observed that except the issue of legal notice all remaining part of the transaction leading to completion of cause of action took place within the territorial jurisdiction of the court at Kottayam and hence in view of the decision rendered by this Court in Ahammedkujtty Haji v. State of Kerala (2007 (1) KLT 68) CRL. R.P. No.2371 of 2009 -: 3 :- none of the courts in Pathanamthitta District could have jurisdiction to take cognizance of the offence. Accordingly complaint was returned to the complainant under Section 201 of the Code of Criminal Procedure (for short, “the Code”) for presentation before proper court. That order is challenged in this revision (in the meantime complainant has presented the complaint before a magistrate at Kottayam who I am told, has taken the case on file). 3. Learned counsel for complainant would contend that in view of the decision of the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510) the court within whose territorial limits the place of giving notice or place of residence of the complainant is situated has got jurisdiction to entertain the complaint and hence learned Chief Judicial Magistrate, Pathanamthitta had jurisdiction to entertain the complaint take cognizance of the offence and make over the case to the court of learned Judicial Magistrate of First Class-I, Pathanamthitta for trial. Learned counsel for respondent No.1/accused would contend that the place of issue of statutory notice or mere residence of complainant cannot confer jurisdiction on the court in view of the decision of this Court in Ahammedkutty Haji referred supra and the decision of the Supreme Court in Harman Electronics (P) Ltd. v. National CRL. R.P. No.2371 of 2009 -: 4 :- Panasonic India (P) Ltd. (2009 (2) KLT 113 (SC). 4. Though in the memorandum of revision petition it is contended by complainant that he filed objection (to the petition preferred by respondent No.1 challenging jurisdiction of learned Judicial Magistrate of First Class-I, Pathanamthitta) contending that complainant is permanently residing at Cherukole Village in Ranni Taluk which is within the jurisdiction of the court of learned Chief Judicial Magistrate, Pathanamthitta who took cognizance of the offence, in the complaint the only reason stated to confer jurisdiction on that court is the giving notice under Sec.138(b) of the Act. However notwithstanding lack of averment in the complaint as to the place of residence of complainant giving jurisdiction for the court at Pathanamthitta I shall advert to that contention also. 5. In K.Bhaskaran's case complaint was filed in the court of learned Judicial First Class Magistrate at Adoor, in Pathanamthitta District where according to complainant the cheque was issued but the cheque was presented in a bank situated at Kottayam. It was contended by the accused that the court at Adoor (within whose territorial limits the cheque was issued) had no jurisdiction to entertain the complaint. Learned magistrate upheld the contention. Supreme Court held in paragraph 11, CRL. R.P. No.2371 of 2009 -: 5 :- “We fail to comprehend as to how the trial court could have found so regarding the jurisdiction question. Under Section 177of the Code “every offence shall ordinarily be enquired 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 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.” CRL. R.P. No.2371 of 2009 -: 6 :- 6. The Supreme Court held that 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. Reference was made to Sec.179 of the Code which states that 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 consequence has ensued. The Supreme Court after referring to the various components of the offence under Sec.138 of the Act, viz., 1) the drawing of the cheque, 2) presentation of the cheque to the bank, 3) returning of the cheque unpaid by the drawee bank, 4) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount and, 5) failure of the drawer to make payment within 15 days of the receipt of the notice held, “Thus it is clear, if the five different acts were done in five different localities any one of the courts 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 CRL. R.P. No.2371 of 2009 -: 7 :- 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.” 7. Explaining the decision in K.Bhaskaran's case this Court held in Ahammedkutty Haji's case (referred supra) that the mere sending of a notice from the office of a lawyer at a particular place will not confer jurisdiction on the court at the place where the lawyer who demanded the payment is. This Court held, “The demand is and must be presumed, assumed and reckoned as made by the complainant and on behalf of the complainant and therefore the demand must be held to be made at the place where the complainant permanently is” This Court held that the mere fact that the lawyer who issued the notice on behalf of the complainant has his office at a particular place will not confer jurisdiction on the court. It is based on that decision that learned magistrate found that he has no jurisdiction to try the CRL. R.P. No.2371 of 2009 -: 8 :- case and returned it for presentation in the proper court. 8. After referring to the decision in K.Bhaskaran's case, the Supreme Court held in Harman Electronics' case that giving of notice is distinguishable from 'receiving of the notice' and that mere fact of issuance of notice would not by itself give rise to a cause of action but communication of the notice would. It was held in paragraph 14, “It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonour of a cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence under S.138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If the ingredients for constitution of the offence laid down in the provisos (a), (b) and (c) appended to S.138 of the Negotiable Instruments Act intended to be applied in CRL. R.P. No.2371 of 2009 -: 9 :- favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As it is only on receipt of the notice the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to S.138 therefore must be read together. Issuance of notice would not by itself give rise to a cause of action but communication of the notice would.” (emphasis supplied) Supreme Court held that to constitute an offence under Sec.138 of the Act notice must be received by the accused. Reference was made to Sec.177 of the Code as well. It was held that only on service of notice and violation on the part of accused to pay the demanded amount within 15 days thereafter commission of offence is completed and hence giving of notice cannot have any precedence over service of notice. It was held that mere fact of giving of notice is of no consequence. 9. In Harman Electronics' case notice was issued to the accused from New Delhi. All other transactions took place at Chandigarh. Supreme Court held that the court at New Delhi had no CRL. R.P. No.2371 of 2009 -: 10 :- territorial jurisdiction to entertain the complaint for the mere reason that statutory notice was issued from its local limits. If that be so, mere fact that notice was issued at a place within the local limits of jurisdiction of the court at Pathanamthitta will not and cannot confer jurisdiction on that court. 10. Now I shall refer to the contention that place of residence of the complainant would determine the issue of jurisdiction. Learned counsel for petitioner, inviting my attention to paragraphs 11 and 16 of the decision in K.Bhaskaran's case reminds me that the place of residence of the complainant also can confer jurisdiction on a court so far as offence under Sec.138 of the Act is concerned. Learned counsel invited my attention to Sec.179 of the Code and stated that the amount covered by the cheque was payable and the consequence of dishonour of the cheque has ensued at the place of residence of complainant. In response learned counsel for respondent No.1 placed reliance on the decision in Harman Electronics and contended that there is no case for the petitioner that the amount was agreed to be paid at the place of residence of complainant and hence consequence of dishonour of the cheque cannot ensue at the place of residence of complainant. Learned counsel argued that the principle that debtor should seek the creditor cannot apply in a Criminal CRL. R.P. No.2371 of 2009 -: 11 :- prosecution. 11. Normally a place where the creditor resides (or even the place where the debtor resides) cannot be said to be the place of payment under a negotiable instrument for the mere fact of such residence unless there is an indication to that effect either expressly or impliedly. The place of payment of the amount can be at the place of residence of the payee provided it is so agreed upon by the parties expressly or impliedly. 12. There is no averment in the complaint that it was agreed upon by the parties that the amount borrowed was payable at the place of residence of complainant. On the other hand, a reading of the complaint would show that loan was availed from the financing institution of complainant at Kottayam and the cheque was also issued at that place. In other words the amount was payable at the place of transaction and issuance of cheque, both at Kottayam in the absence of any other indication as to the place of payment. In Kirlosker Bros. Ltd. v. Commissioner of I.T. (AIR 1952 Bombay 306) it was held, “It is also well settled in commercial practice, as I shall presently point out, that a cheque is CRL. R.P. No.2371 of 2009 -: 12 :- looked upon as a payment if a creditor accepts a cheque in place of the country's currency...”. The issuance of cheque amounts to payment itself unless it is dishonoured. Hence the place of transaction and issue of cheque can be taken as the place of payment. 13. Lort-Williams J, held in Srilal Singhania v. Ananat Lal Mondel (AIR 1940 Calcutta 443) that on a demand promissory note where place of payment is not expressed, common law rule that debtor must seek out the creditor would apply and consequently the place of payment is where creditor resides. But Beaumont, C.J., speaking for the Division Bench in Jivatlal Purtapshi and Others v. Lalbhai Fulchand Shah (AIR (29) 1942 Bombay 251) differed from the view of Lort-Williams, J and held that the common law rule about place of payment does not apply to negotiable instruments. A learned Single Judge of this Court in Muraleedharan v. Pareed (1992(1) KLT 59) referring to Secs.138 and 142 of the Act held that the common law rule that the debtor must seek the creditor (and Sec.49 of the Indian Contract Act) cannot be made applicable to negotiable instruments. CRL. R.P. No.2371 of 2009 -: 13 :- 14. In K.Bhaskaran's case Supreme Court stated at which all places offence can be said to be committed. But in a case where there is no agreement between the parties that the amount is payable at the place of residence of complainant and there is nothing to indicate even impliedly that payment was to be made by the debtor at that place could it be said that the amount was payable at that place and the court within whose jurisdictional limits that place is has got jurisdiction? In my view it cannot. For, if that view is accepted it is possible for the complainant to confer jurisdiction on any court as he wished even by shifting of his residence or place of work from place to place. Assuming that complainant is a holder in due course, the accused may not even know his place of residence or work to seek him and make the payment. That is not what is contemplated under Sec.142 of the Act or 179 of the Code. Different will be the situation if there is an agreement between the parties, express or implied that the amount is payable at the place of work/residence of the complainant. In Harman Electronics's case it was contended on behalf of the complainant that since complainant has its head office at New Delhi, amount was payable at that place, the principle that debtor must seek the creditor should apply and hence the court at New Delhi has got jurisdiction. CRL. R.P. No.2371 of 2009 -: 14 :- Repelling that contention the Supreme Court held, “We regret that such a principle cannot be applied in a criminal case. Jurisdiction of the court to try a criminal case is governed by the provisions of the criminal procedure code and not on common law principle.” 15. Learned counsel for petitioner would then contend that proceeding under Sec.138 of the Act is of a civil nature so that the common law rule could apply and placed reliance on the decision in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders & Agencies Ltd (2001) 6 SCC 463). It was also argued that observations of the Supreme Court in paragraph 27 of the decision in Harman Electronics's case can only be taken as obiter. The further argument is that the Supreme Court while deciding Harman Electronics's case had not overruled the decision in K.Bhaskaran's case. 16. Dalmia Cement (Bharat) Ltd's case held that Sec.138 of the Act made a civil transaction to be an offence. But it is not stated that proceeding under Sec.138 of the Act is of a civil nature. It is a criminal prosecution for an offence though statutory in character. CRL. R.P. No.2371 of 2009 -: 15 :- Nor am I impressed by the argument that what the Supreme Court stated in paragraph 27 of the decision in Harman Electronics's case as to the application of the common law rule in criminal cases is only obiter. Supreme Court has laid down the law that the rule is not applicable to criminal cases. Law declared by the Supreme Court is binding on all courts. The contention that while deciding the case in Harman Electronics's case the decision in K.Bhaskaran's case was not overruled also cannot hold good. Though the decision in Harman Electronics's case is rendered by a Bench of co-equal strength as in K.Bhaskaran's case, the decision is rendered after referring to the decision in K.Bhaskaran's case. It is true that in Shamshad Begum v. B. Mohammed (2009) 3 SCC 264), the Supreme Court reiterated and applied the law laid down in K.Bhaskaran's case. But that decision was rendered on November 3, 2008 while after referring to K.Bhaskaran's case, Harman Electronics's case was decided on December 13, 2008. Hence the decision in Harman Electronics's case has to be followed. 17. In a case like the instant one where no part of the transaction took place at the place of residence of the complainant and there was no stipulation that payment was to be made at the place of residence of the complainant, such mere residence of the complainant CRL. R.P. No.2371 of 2009 -: 16 :- shall not confer jurisdiction on the court at the place of residence of complainant. Accused challenged the territorial jurisdiction and learned magistrate considered that question at the earliest point of time as required under law and the authorities on the point. 18. In the light of the above, I do not find reason to interfere with the order of learned magistrate returning the complaint for presentation in the proper court. Revision petition is dismissed. THOMAS P.JOSEPH, JUDGE. vsv