2006 (9) TMI 601 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Court to entertain the complaint under Section 138 of the Negotiable Instruments Act.
2. Interpretation of Section 138 of the Negotiable Instruments Act and Sections 177 and 178 of the Code of Criminal Procedure.
3. Application of precedents from various High Courts and the Supreme Court.

Detailed Analysis:

1. Jurisdiction of the Court to entertain the complaint:

The primary issue was whether the Judicial Magistrate First Class at Digras had jurisdiction to entertain the complaint filed by the complainant under Section 138 of the Negotiable Instruments Act. The accused challenged the jurisdiction on the grounds that no part of the cause of action had arisen within the jurisdiction of the Digras Court. It was argued that the cheques were issued, drawn, and dishonored at Bhandara, and the complainant did not reside or work within the territorial jurisdiction of the Digras Court.

The complainant countered that the presentation of the cheque at Yavatmal Urban Co-operative Bank, Digras Branch, and the receipt of the dishonor intimation at Digras constituted part of the cause of action, thus conferring jurisdiction on the Digras Court.

2. Interpretation of Section 138 of the Negotiable Instruments Act and Sections 177 and 178 of the Code of Criminal Procedure:

The judgment delved into the interpretation of Section 138 of the Negotiable Instruments Act, which outlines the components of the offence, including the drawing of the cheque, presentation to a bank, dishonor by the bank, issuance of notice demanding payment, and failure to make payment within 15 days of receipt of the notice.

The Court referred to the Supreme Court's judgment in K. Bhaskaran v. Sankaran Vaidhyan Balan, which held that the offence under Section 138 consists of several acts that could occur in different localities, thus allowing the complainant to choose any court within whose jurisdiction any of these acts occurred. However, the Court emphasized the significance of the definite article "the" used in relation to the bank and drawee bank, indicating that the cheque must be presented to the drawee bank.

3. Application of precedents from various High Courts and the Supreme Court:

The judgment analyzed precedents from the Andhra Pradesh, Delhi, and Kerala High Courts, which had interpreted the Supreme Court's ruling in Bhaskaran's case to allow jurisdiction based on the place where the cheque was presented or the notice was issued. However, the Court respectfully disagreed with these interpretations, emphasizing that the cheque must be presented to the drawee bank for jurisdiction to be conferred.

The Court concluded that the Judicial Magistrate First Class at Digras did not have jurisdiction to entertain the complaint as the cheque was drawn and dishonored at Bhandara, and the presentation at the Digras bank did not suffice to confer jurisdiction. The order of the Magistrate rejecting the application for dismissal of the complaint was quashed, and the complainant was given the liberty to present the complaint to the appropriate court with competent jurisdiction.

Conclusion:

The judgment clarified that for jurisdiction under Section 138 of the Negotiable Instruments Act, the cheque must be presented to the drawee bank, and the mere presentation at any bank does not confer jurisdiction. The complainant was allowed to refile the complaint in the appropriate court, and the proceedings at the Digras Court were halted.