India: Cheque Bouncing- Jurisdisction Of Courts Redefined

The legal nodus of determining the Jurisdistion of Courts in cheque bouncing cases has finally been resolved by the Supreme Court of India. A three Judges bench of the Hon'ble Supreme Court in Dashrath Rupsingh Rathod vs State of Maharashtra1 has finally decided the issue of territorial jurisdiction concerning criminal complaints filed under section 138 of the Negotiable Instruments Act, 1881. The Court held that return of the cheque by the drawee bank alone constitutes the commission of the offence under section 138 of the Negotiable Instruments Act, 1881 and indicates the place where the offence is committed. Hence the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located.

The aforementioned judgment took a contrary view from what was laid down by a two Judges bench of the same court in K. BhaskaranVs.Sankaran Vaidhyan Balan and Anr2. K. Bhaskaran observed that the offence under Section 138 of the NI Act, 1881 can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence: (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice. It is not necessary that all the five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at five different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under Sec. 138 of the NI Act. Referring Section 178(d) of the Code of Criminal Procedure, 1973 it is clear that 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 NI Act. 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.

But the Hon'ble Supreme Court in Dashrath Rupsingh Rathod disagreed with the Bhaskaran judgment and observed that Bhaskaran allows multiple venues to the Complainant which runs counter to this Court's preference for simplifying the law. Courts are enjoined to interpret the law so as to eradicate ambiguity or nebulousness, and to ensure that legal proceedings are not used as a device for harassment, even of an apparent transgressor of the law. Law's endeavour is to bring the culprit to book and to provide succour for the aggrieved party but not to harass the former through vexatious proceedings. Therefore, precision and exactitude are necessary especially where the location of litigation is concerned. The Court further observed that a reading of Section 138 of the NI Act in conjunction with Section 177 of Code of Criminal Procedure leaves no manner of doubt that the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed. In this analysis the Hon'ble Supreme Court held that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank, is located.

Keeping in mind the fact that the present decision will have a massive impact on the cases already pending in various Courts if the same is applied prospectively, the Supreme Court thought it to be expedient to direct that only those cases where, post the summoning and appearance of the alleged Accused, the recording of evidence has commenced as envisaged in Section 145(2) of the Negotiable Instruments Act, 1881, will proceed to continue at that place. To obviate and eradicate any legal complications, the category of Complaint cases where proceedings have gone to the stage of Section 145(2) or beyond shall be deemed to have been transferred by us from the Court ordinarily possessing territorial jurisdiction, as now clarified, to the Court where it is presently pending. All other Complaints, including the ones where the accused/ Respondent has not been properly served shall be returned to the Complainant for filing in the proper Court. If such Complaints are filed /refiled within thirty days of their return, they shall be deemed to have been filed within the time prescribed by law, unless the initial or prior filing was itself time barred.

It was also observed by the Hon'ble Supreme Court that the relief introduced by Section 138 of the NI Act is in addition to the contemplations in the Indian Penal Code. It is still open to such a payee recipient of a dishonoured cheque to lodge a First Information Report with the Police or file a Complaint directly before the concerned Magistrate. If the payee succeeds in establishing that the inducement for accepting a cheque which subsequently bounced had occurred where he resides or ordinarily transacts business, he will not have to suffer the travails of journeying to the place where the cheque has been dishonoured. All remedies under the Indian Penal Code and Code of Criminal Procedure are available to such a payee if he chooses to pursue this course of action, rather than a Complaint under Section 138 of the NI Act. And of course, he can always file a suit for recovery wherever the cause of action arises dependent on his choosing.

CONCLUSION

The Hon'ble Supreme Court by way of this latest judgment has finally put an end to the perplexity of territorial jurisdiction in cases under 138 of NI Act by clearly laying down that only return of the Cheque by the drawee bank constitutes the commission of the offence under section 138 of the Negotiable Instruments Act, 1881 and also indicates the place where the offence has actually been committed. Hence it is that place, situs or venue where the drawee bank is located, is the place where judicial inquiry and trial of the offence must logically be restricted.

Footnotes

1. Dashrath Rupsingh Rathod vs State of Maharashtra 2014(9) SCALE97

2. K. BhaskaranVs.Sankaran Vaidhyan Balan and Anr (1999)7SCC510

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