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BRIJENDRA ENTERPRISE C/O SHAIL ENTERPRISE AND 1 Versus STATE OF GUJARAT AND 1

2016 (4) TMI 2 - GUJARAT HIGH COURT

Metropolitan Magistrate, Ahmedabadterritorial jurisdiction to try the offence of dishonour of cheque, punishable under Section 138 of Negotiable Instruments Act, 1881 - Held that:- In the case in hand, there is no question of presenting the cheque for payment over the counter because the cheque is crossed. When a cheque is crossed, the holder cannot encash it at the counter of the bank. The payment of such cheque is only credited to the bank account of the payee. A cheque is either 'open' or 'cr .....

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ying banker that the cheque should be paid only to a banker or a specified banker. To restrain negotiability, addition of words 'Not Negotiable' or “Account Payee Only' is necessary. A crossed bearer cheque can be negotiated by delivery and crossed order cheque by endorsement and delivery. Crossing affords security and protection to the holder of the cheque. Thus, in view, the learned Metropolitan at Ahmedabad has the jurisdiction to try the case instituted by the complainant for the dishonou .....

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758 of 2009 filed in the Court of the learned Metropolitan Magistrate (Negotiable Instruments Act), Court No.7, Ahmedabad. They have also prayed to quash the order dated 3rd April 2010 passed below application Exh.3, by which the learned Magistrate recorded a finding that it had the territorial jurisdiction to proceed with the case. The applicant no.1 is a proprietory concern of which the applicant no.2 is the proprietor. The facts of this case may be summarised as under : The respondent no.2, a .....

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used issued a cheque bearing No.064039 dated 4th June 2009 drawn on the Union Bank of India for the amount of ₹ 15,21,741=00 duly signed by him as the proprietor of the proprietory concern. The cheque was drawn by the accused no.2 of the account maintained by him with the Union Bank of India, Badalapur, District Jaunpur, State of Uttar Pradesh. The complainant deposited the cheque with the ICICI Bank Limited, Gorakhpur Branch, Gorakhpur, State of Uttar Pradesh. The cheque was dishonoured a .....

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ate of Uttar Pradesh, the Court at Ahmedabad had no territorial jurisdiction to entertain the complaint for the dishonour of the cheque although the registered office of the complainant is situated in Ahmedabad. The learned Magistrate, by order dated 3rd April 2010, rejected the application. Hence, this petition. On 19th September 2011, this Court passed the following order : Notice to the Respondents returnable on 10.10.2011. Learned APP Mr.K.P.Raval waives service of Notice for Respondent No.1 .....

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istrate, Ahmedabad. In such circumstances, he prays that the order passed by the learned Magistrate below application Exh.3 be quashed and the complaint be returned to the complainant to be filed before the appropriate Court in the State of Uttar Pradesh. On the other hand, this application has been vehemently opposed by Mr.Gaurav Mathur, the learned counsel appearing for the respondent no.2 - original complainant. Mr.Mathur invited my attention to the affidavit-in-reply filed on behalf of the c .....

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nied that the Petitioner has no business dealings with the Answering Respondent at its Ahmedabad office. I say that the Petitioner has purchased goods manufactured by the Answering Respondent. The order for the goods delivered are processed at Ahmedabad office. The Answering Respondent in turns maintains a current and running account of the purchasers, in the present case, the Petitioners herein. The Invoices issued for the goods dispatched were subject to Ahmedabad Jurisdiction. Copy of a sampl .....

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ited. In the said system, a centralised pooling account is created at Ahmedabad. Cheques received by the Answering Respondent at any place in India can be deposited in any ICICI Bank Ltd branch in India and the credit thereof is made available at the Central Pooling Account in Ahmedabad. Such a system has been worked out in order to simplify the banking transactions of large corporations and obviate delay in realizing payments. In the facts of the present case. the subject cheque, though deposit .....

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s from Ahmedabad. As such necessary ingredients for instituting proceedings u/s 138 of the Act at Ahmedabad are fulfilled and the Criminal Case No.8758 of 2009 is rightly instituted before the court of Ld. Metropolitan Magistrate, Court No. 7 at Ahmedabad. 6. I, however, deny that the Answering Respondent is required to prove that the said cheque was issued in discharge of a legal liability, as alleged or at all. I submit that once a cheque is issued, it is presumed to be issued in discharge of .....

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, to allege harassment. I deny that the impugned complaint is unsustainable or that the Ld. Magistrate did not have jurisdiction to try the case, as alleged or at all. I deny that the Petitioners' place of residence or business or place of handing over the cheque is relevant for deciding the territorial jurisdiction for a complaint under Section 138 of the Act. The Petitioners have admitted that one of the vital elements for deciding jurisdiction i.e. place from which notice is issued is at .....

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ayment of the amount of dishonoured cheque pursuant to the Notice dated 6.7.2009 issued under Section 138 of the Act. It is denied that the Complaint suffers from the vice of nondisclosure or is vitiated, as alleged or at all. I deny that the complainant requires to plead or prove as to pursuant to which business deal or order is the dishonoured cheque issued, as alleged or at all. I deny that the impugned Complaint and Order dated 8.9.2009 issuing summons deserve to be quashed and set aside. I .....

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he ICICI Bank Limited in India and the credit thereof would be given at the centralized pooling account in Ahmedabad. Mr.Mathur, the learned counsel appearing for the complainant submitted that such system has been introduced with a view to simplify the banking transactions of large corporations. It would obviate the delay in realizing payments. He submitted that although the cheque was handed over by the accused in the State of Uttar Pradesh and deposited also in the ICICI Bank at Uttar Pradesh .....

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e learned Metropolitan Magistrate, Ahmedabad. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is, whether the Court of the learned Metropolitan Magistrate, Ahmedabad, has the territorial jurisdiction to try the offence of dishonour of cheque, punishable under Section 138 of the Act. This matter is of the year 2011. The same will have to be now considered keeping in mind the Negotiable Inst .....

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onour of cheque under Section 138 of the Act needs to be now filed in a Court at a place in accordance with the provisions of Section 142(2) of the Act, which has been inserted by the new Ordinance referred to above. According to the new Ordinance, even the pending cases would stand transferred to the Courts. In Dashrath Rupsingh Rathod (supra), a three Judge bench of the Supreme Court took the view that a complaint for dishonour of cheque can be filed only in a Court which has the territorial j .....

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yee of the cheque and if he presents a cheque for clearing at Vadodara, it cannot be filed at Vadodara. The judgment of the Supreme Court proceeded on the footing that the payee of a cheque should not necessarily harass the drawer of the cheque by filing complaint for dishonour at the place of his choice by deliberately choosing a different place for presenting the cheque or for sending the notice, etc. The above was the position according to the decision of the Supreme Court. It appears that th .....

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rted, which reads as follows: "(2) The offence under Section 138 shall be inquired into and tried only by a Court within whose local jurisdiction:- (a) If the cheque is delivered for collection through an account, the branch of the Bank where the payee or holder in due course, as the case may be, maintains the account, is situated: or (b) If the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of the drawee bank where the drawer m .....

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hing contained in the Code of Criminal Procedure, 1973 (2 of 1974) or any judgment, decree, order or directions of any Court, all cases arising out of Section 138 which were pending in any Court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Ordinance, 2015 shall be transferred to the Court having jurisdiction under sub-section (2) of Section 142 as if that sub-section had been in force at all material times. (2) Notwithstanding .....

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e of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that Court. (3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Ordinance, 2015, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different Courts, upon the said fact having been brought to the notice of the Court, such Court shall transfer the case .....

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on 138 of the said Act to be inquired and tried only by a court within whose local jurisdiction the branch of the bank, where the payee or the holder in due course maintains the account, is situated; (ii) cases under section 138 pending in any court before the commencement of the proposed legislation to be transferred to the court in accordance with the new scheme of jurisdiction for such cases as proposed under sub-section (2 ) of section 142; (iii) where a complaint has been filed against the .....

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n the said fact having been brought to the notice of the court, the court shall transfer the case of the court having jurisdiction as per the new scheme of jurisdiction proposed under sub-section (2 ) of section 142; and (v) amending Explanation I under section 6 of the said Act which relates to the meaning of expression a cheque in the electronic form , as the said meaning is found to be deficient because it presumes drawing of a physical cheque, which is not the objective in preparing a cheque .....

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provisions of the principal Act, as amended by this Act. In view of the amendment, a complaint for dishonour of cheque under Section 138 of the Act can be now filed only in the Court situated at the place where the bank, in which the payee has account, is located. Let me give an example to understand the jurisdiction according to the amendment : (1) 'A' holds an account with the Navrangpura Branch, Ahmedabad, of 'XYZ' Bank, issues a cheque payable at par in favour of 'B' .....

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par in favour of 'B'. 'B' presents the said cheque at the Vadodara Branch of the 'XYZ' Bank (but 'B' does not hold account in any branch of the 'XYZ' Bank) and the cheque is dishonoured. The complaint will have to be filed before the Court having the local jurisdiction where the Navrangpura Branch, Ahmedabad, of the 'XYZ' Bank is situated. Therefore, to summarise, first, when the cheque is delivered for collection through an account, the complaint .....

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onoured, then all such subsequent complaints for dishonour of the cheques against the same drawer will also have to be filed in the same Court (even if the person presents them in some bank in some other city or area). This would ensure that the drawer of the cheques is not harassed by filing multiple complaints for dishonour at different places. It necessarily implies that even multiple complaints for dishonour of cheques against the same party can be filed only in one Court even though the che .....

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e parties as on 15th June 2015, then all such complaints would be transferred to the Court having jurisdiction to try the first case. To put it briefly, the (Amendment) Act takes care of the interest of the payee of the cheque while, at the same time, also takes care to see that the drawer of the multiple cheques is not harassed by filing different complaints at different locations to harass him (if more than one cheque is bounced). The (Amendment) Act virtually supersedes the decision of the Su .....

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explained by the complainant, the complainant was to receive the credit of the said cheque at the centralized pooling account in Ahmedabad. Since the cheque could not be cleared, the intimation regarding the same was given by the ICICI Bank Limited, JMC House, Ahmedabad Branch, to the complainant at its address of the registered office in Ahmedabad. Whatever may be the arrangement of the complainant with its banker, could it be said that the cheque was deposited in the ICICI Bank Limited at Ahm .....

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fore adverting to the rival submissions canvassed on either side, let me look into the decision of the Supreme Court in the case of Bridgestone India Pvt. Ltd. v. Inderpal Singh, 2016(2) SCC 75. In the case before the Supreme Court, a cheque drawn on the Union Bank of India, Chandigarh, was issued by the respondent to the appellant. The appellant presented the cheque at the IDBI Bank in Indore. The appellant received intimation of its being dishonoured on account of exceeds arrangement at Indore .....

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ank of India, Chandigarh. The prayer made by the respondent that the learned JMFC, Indore, did not have the jurisdiction to entertain the proceedings initiated by the appellant was declined on 2nd June 2009. The respondent being dissatisfied with the order passed by the learned JMFC, Indore, preferred a petition under Section 482 of the Code in the High Court of Madhya Pradesh before its Indore Bench. The High Court remitted the case to the learned JMFC, Indore, directing him to pass a fresh ord .....

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sfied with the order passed by the High Court of Madhya Pradesh, approached the Supreme Court. The Supreme Court, while allowing the appeal of the appellant and set-asiding the order passed by the High Court of Madhya Pradesh, observed thus : [9] During the course of hearing, learned counsel for the appellant cited the decision rendered by a three-Judge Bench of this Court in Dashrath Rupsingh Rathod vs. State of Maharashtra and another, 2014 9 SCC 129, and pointedly invited our attention to the .....

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on 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause (c) of proviso to Section 138. 58.3 The cause of action to file a complaint accrues to a complainant/payee/holder of a cheque in due course if (a) the dishonoured cheque is presented to the drawee bank within a period of six months from the date of its issue. (b) If the complainant .....

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till such time cause of action in terms of clause (c) of proviso accrues to the complainant. 58.6 Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured. 58.7 The general rule stipulated under Section 177 CrPC applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before .....

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is apparent, that the impugned order dated 05.05.2011, passed by the High Court of Madhya Pradesh, Bench at Indore, was wholly justified. 10. In order to overcome the legal position declared by this Court in Dashrath Rupsingh Rathod's case, learned counsel for the appellant has drawn our attention to the Negotiable Instruments (Amendment) Second Ordinance, 2015 (hereinafter referred to as 'the Ordinance'). A perusal of Section 1(2) thereof reveals, that the Ordinance would be deemed .....

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re being extracted hereunder: "3. In the principal Act, section 142 shall be numbered as sub-section (1) thereof and after subsection (1) as so numbered, the following sub-section shall be inserted, namely:- (2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,- (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the accoun .....

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may be, maintains the account." 4. In the principal Act, after section 142, the following section shall be inserted, namely:- 142A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or directions of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, shall be deemed to have been transferred under this Ordinance .....

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section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court. (3) If, on the date of the commencement of this Ordinance, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of t .....

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the Negotiable Instruments Act, 1881, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction. 11. It is, however, imperative for the present controversy, that the appellant overcomes the legal position declared by this Court, as well as, the provisions of the Code of Criminal Procedure. Insofar as the instant aspect of the matter .....

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on account of the non-obstante clause in sub-section (1) of Section 142A. Likewise, any judgment, decree, order or direction issued by a Court would have no effect insofar as the territorial jurisdiction for initiating proceedings under Section 138 of the Negotiable Instruments Act is concerned. In the above view of the matter, we are satisfied, that the judgment rendered by this Court in Dashrath Rupsingh Rathod's case would also not non-suit the appellant for the relief claimed. 12. We are .....

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payee or holder in due course maintains an account). We are also satisfied, based on Section 142A(1) to the effect, that the judgment rendered by this Court in Dashrath Rupsingh Rathod's case, would not stand in the way of the appellant, insofar as the territorial jurisdiction for initiating proceedings emerging from the dishonor of the cheque in the present case arises. 13. Since cheque No.1950, in the sum of ₹ 26,958/-, drawn on the Union Bank of India, Chandigarh, dated 02.05.2006, .....

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at all material times..." used with reference to Section 142(2), in Section 142A(1) gives retrospectivity to the provision. 14. In the above view of the matter, the instant appeal is allowed, and the impugned order passed by the High Court of Madhya Pradesh, by its Indore Bench, dated 05.05.2011, is set aside. The parties are directed to appear before the Judicial Magistrate, First Class, Indore, on 15.01.2016. In case the complaint filed by the appellant has been returned, it shall be re-p .....

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as presented in the ICICI Bank Limited, Gorakhpur Branch, Gorakhpur, Uttar Pradesh. Thereafter, the bank acted according to the cash management service agreement as explained by me earlier. The new banking system provides that the payee can present the cheque for collection in any branch of the ICICI Bank anywhere in the country without there being any account being maintained in the said branch. The branch bank which accepts the cheques will thereafter process the same, and as explained above, .....

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eemed to have been delivered to the branch of the bank in which the payee or the holder in due course, as the case may be, maintains the account. For example, like in the present case, the cheque was delivered for collection at the ICICI Bank, Gorakhpur branch, Uttar Pradesh, where the complainant has no account but, by virtue of the said explanation, it is deemed to have been delivered at the ICICI Bank, JMC House Branch, Ahmedabad, where the account is maintained. It is now well settled that a .....

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dinarily enlarge the scope of the original section which it explains, but only makes the meaning clear beyond dispute." Swarup in 'Legislation and Interpretation' very aptly sums up the scope and effect of an Explanation thus : "Sometimes an explanation is appended to stress upon a particular thing which ordinarily would not appear clearly from the provisions of the section. The proper function of an explanation is to make plain or elucidate what is enacted in the substantive p .....

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on that it is supposed to explain. It is axiomatic that an explanation only explains and does not expand or add to the scope of the original section.... The purpose of an explanation is, however, not to limit the scope of the main provision.... The construction of the explanation must depend upon its terms, and no theory of its purpose can be entertained unless it is to be inferred from the language used. An 'explanation' must be interpreted according to its own tenor." The principl .....

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id of the Article, because this reverses their roles." In Bihar Co-operative Development Cane Marketing Union Ltd. v. Bank of Bihar (1967) 1 SCR 848 : (AIR 1967 SC 389), the Supreme Court observed thus : "The Explanation must be read so as to harmonise with and clear up any ambiguity in the main section. It should not be so construed as to widen the ambit of the section." In Hiralal Rattanlal etc. v. State of U.P. [(AIR 1973 SC 1034)], the Supreme Court observed thus : "On th .....

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Court observed thus : "It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity in it.......... Therefore, even though the provision in question has been called an Explanation, we must construe it according to its plain language and not on any a priori considerations." Thus, from a conspectus of the authorities referred to above, it is manifest that the object .....

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re some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. A deeming fiction is a supposition of law that the .....

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Sometimes, it means generally regarded. At other time, it signifies 'taken prima facie to be', while in other case, it means, 'taken conclusively'. Its various meanings are, - 'to deem' is 'to hold in belief, estimation or opinion'; to judge; adjudge; decide; considered to be; to have or to be of an opinion; to esteem; to suppose, to think, decide or believe on considerations; to account, to regard; to adjudge or decide; to conclude upon consideration. (see Major .....

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