TMI Blog2010 (10) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... 141 of the Negotiable Instruments Act, 1881 in respect of seven dishonoured cheques drawn on M/s. Danvers Savings Bank, One Conant Street, Danvers, MA 01923 in favour of the respondent herein. In respect of two cheques dated 15.06.2006 bearing cheque Nos. 002661 and 002663, each for a sum of US$ 5000, totalling a sum of US$ 10,000, the respondent preferred a separate complaint and the same has been taken on file by the above said IX Metropolitan Magistrate as C.C. No. 1506/2007. The said cheques had been presented for collection through the banker of the respondent, namely M/s. ICICI Bank Limited, Anna Nagar, Chennai-102 on 09.08.2006 and the same were dishonoured for the reason stop payment instructions were issued by the drawer. The said fact of dishonour of the cheques, according to the averments found in the complaint, was intimated to the respondent on 23.08.2006 by memo of the bank dated 21.08.2006 and the original cheques were also returned with a memo dated 25.08.2006. After issuing a legal notice dated 19.09.2006, which was received by the petitioners on 28.09.2006, the respondent preferred the complaint on 31.10.2006 alleging commission of the offences punishable under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioners are sought to be quashed invoking the inherent powers of this Court under Section 482 Cr.P.C. on the following grounds: i) The court below does not have the jurisdiction to entertain the complaint; ii) No offence was committed within the jurisdiction of the court below; iii) The entire cause of action arose outside the limits of the territory of India over which the domestic criminal law is made applicable; and iv) The very filing of the complaint in the court below is a glaring example of forum shopping and the complaints preferred before the court below are nothing but examples of abuse of process of court. 7. Along with the criminal original petitions, petitioners had also filed criminal miscellaneous petitions seeking interim stay of further proceedings on the file of the trial court in all the calendar cases concerned in these petitions and this Court also granted interim stay of all further proceedings pending further orders. When the miscellaneous petitions came up for hearing, the learned Counsel for the petitioners and the respondent expressed their readiness and willingness to make their submissions on the merits of the criminal original petitions for the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the court below is against law and the complaints are liable to be quashed using the inherent powers by this Court. 10. It is the further submission made by the learned Counsel for the petitioners that, as the cheques having been issued in the United States of America, drawn on a bank in the United States of America and made payable in the United States of America, the mere fact that the cheques were presented in a bank in Chennai in Tamil Nadu, India, for collection, shall not confer jurisdiction on the Judicial Magistrate exercising territorial jurisdiction over the place wherein the collecting branch of the said office is situated and that accepting the contention of the respondent court having jurisdiction over the place of the branch of the payee's bank wherein the cheques were presented for collection shall get jurisdiction to entertain the complaint against the drawer, whereas the actual place of drawal of the cheques and the place wherein the cheques were made payable are situated outside the said jurisdiction, to enable unscrupulous litigants to select a forum wherein a particular act is made punishable as an offence and the procedure makes it easy to recover money by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o entertain the complaint preferred by the respondent; that the summons issued by the court below in all the three cases, cannot be said to be without jurisdiction and that hence the prayer for quashing the complaints should be dismissed. 13. It is an admitted fact that the first petitioner is a company incorporated and registered in the United States of America and the second petitioner is the President of the said company and is a resident of the United States of America. It is nobody's case that either the first petitioner or the second petitioner is a resident of India. It is also not the case of the respondent that the petitioners are doing business or carrying on business in India. It is also the admitted case of the parties, which is also evident from the documents produced by the petitioners in the form of typed set of papers, that the original contract giving rise to the liability of the petitioners to make payment to the respondent arose at New York, United States of America. When a demand Promissory Note dated 27.06.2005 was executed at, and authenticated by a Notary Public on 28.06.2005 at Roselyn Heights, New York. It is also evident from the said document itself t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that no doubt the payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account, but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. It has also made the point clear by citing an illustration. The following are the observations made in the said judgment: A cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to the (C) bank. The non presentation of the cheque to the drawee bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st seek the creditor should be applied in a case of this nature. 27. 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. In the said judgment, referring to earlier judgments of the Supreme Court wherein the scope of Sections 177 and 178 of the Criminal Procedure Code was considered, it was also held as follows: A court derives a jurisdiction only when the cause of action arose within its jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days, thereafter, commission of an offence completes. Giving of notice, therefore, cannot have any precedent over the service. 17. In Ahuja Nandkishore Dongre v. State of Maharashtra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 days of the receipt of the notice. 20. It must be noticed that a larger bench of the Supreme Court consisting of three Hon'ble Judges in Shri Ishar Alloy Steels Ltd v. Jayaswals Neco Limited has impliedly overruled the view expressed by the Division Bench of the Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr. reported in (1999) 7 SCC 510 by holding that the criminal liability of the drawer of the cheque is attracted only, if the cheque is presented in the drawee bank within the period of six months from the date on which it is shown to have been issued and that it is not enough to have it presented in the collecting bank within the said period of six months. In view of the said judgment of a larger bench, we have to accept the contention of the learned Counsel for the petitioners that the view expressed in K. Bhaskaran's case that the complainant can choose any one of the above said five places, including the place from which the statutory notice is issued for the selection of jurisdiction, stands impliedly overruled and modified. 21. In yet another case, a recent one, namely Harman Electronics (P) Ltd. and Anr. v. National Panasonic India Ltd. reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptor or indorser alone shall be governed by the law of the place where the instrument is made payable. The illustration provided to Section 134 will make it clear that when a bill of exchange was drawn by 'A' in California, where the rate of interest was 25% and the same was accepted by 'B' and was made payable in Washington, where the rate of interest was 6%, an action on the bill against 'B' shall attract only 6% rate of interest, but, if the action is directed against the drawer 'A', he shall be liable to pay interest at the rate of 25%, the rate applicable in the place wherein the instrument was drawn. From Section 134 it is quite clear that the liability of a foreign negotiable instrument shall be governed by law of the place where the instrument was made in all essential matters. In this case, it is not in dispute that the cheques were drawn in Massachusetts, United States of America. Therefore, in all essential matters the law in the United States of America shall be attracted towards any action against the drawer. It is again reiterated that the said section deals with the question of civil liability and not criminal liability. 25. Similarly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame as a referee to law relating to criminal liability found in the next chapter also, it was held by the learned single judge of this Court in the said case that the instrument made in Singapore was valid in accordance with Indian law. Here again this Court wants to remind that Section 137 also deals with the presumption of law of foreign country regulating civil rights and liabilities in respect of negotiable instruments. When an Act is not generally recognised by the international community, by a general convention, treaty or a universal declaration to be an offence, no presumption can be made that, simply because such an act made is punishable as an offence under the law of India, the same shall have also been made punishable under the law of any foreign country. It must be kept in mind that though the liability is civil in nature, by a special provision under Section 138 of the Negotiable Instruments Act, 1881, the dishonour of a cheque when the cheque amount is not paid within a specified time after the receipt of statutory notice of demand, it is made an offence. The section has been placed in Chapter XVII of Negotiable Instruments Act, 1881. Therefore, the presumption enshr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11, shall be deemed to be a foreign instrument. 31. A combined reading of Sections 1, 11, 12 and 134 to 137 of the Negotiable Instruments Act, 1881, will make it clear that a cheque made/drawn in a foreign country on a drawee bank functioning in the foreign country and made payable therein shall be a foreign instrument and the law of the country wherein the cheque was drawn or made payable shall be the law governing the rights and liabilities of the parties and the dishonour of the cheque. As such the payee cannot select a country and present it through a bank therein for collection to confer jurisdiction on a court functioning therein. If the payee is given such a right to proceed criminally against the drawer by selecting the jurisdiction, the same will encourage forum shopping making the payees to go to a country wherein the dishonour of the cheque is made a criminal offence and wherein the law is more favourable to the payee enabling him to collect the amount covered by the cheque by way of fine or compensation by resorting to criminal prosecution. A person who is not a citizen of India for an act committed in a foreign country wherein it is not a punishable offence, cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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