2014 JTR(SC) 563
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SUPREME COURT OF INDIA
T.S. THAKUR, C. NAGAPPAN, JJ.
M/s. Apex Distributors & ANR. – Appellant
Vs.
M/s. Timex Group India Ltd. – Respondent
[Transfer Petition (CRL.) No.197 / 2012]
Decided On : 05-08-2014
IMPORTANT POINT
Place of issuance of statutory notice cannot confer jurisdiction u/s 138, NI Act.
Act
Referred
:CRIMINAL PROCEDURE CODE : S.406
NEGOTIABLE INSTRUMENTS ACT : S.138
(A) The Negotiable Instruments Act, 1881, read with Section 406 of the Criminal Procedure Code, governs the present dispute. Section 138 of the NI Act creates an offence upon dishonour of a cheque for non-payment of a legally enforceable debt or liability, and it contemplates a specific complaint jurisdiction analysis. Section 406 of the Cr.P.C. empowers a higher court to transfer a pending criminal complaint to a court competent to try it. The complaint in this case was instituted solely on the basis that statutory notices were served from Delhi, which does not, in itself, establish the territorial jurisdiction of the Delhi Court under Section 138 NI Act.
(B) The issue of a statutory notice demanding payment is not a valid ground to confer jurisdiction upon the court for entertaining an offence under Section 138 of the NI Act. The cause of action and the trial must be linked to the location where the bank account is maintained or where the dishonour took place, not merely the location from where a notice is sent. The accused person's suffering from medical problems is a relevant humanitarian factor to be considered while transferring the proceedings.
Facts of the case:
A cheque issued by the petitioners was dishonoured upon presentation. The respondent served statutory notices from Delhi demanding payment within fifteen days. The petitioners failed to pay, leading to the filing of Criminal Complaint No.3960 of 2008 before the Metropolitan Magistrate in Delhi solely on the ground that notices were dispatched from there. The complaint was instituted on the basis of this jurisdictional premise.
Findings of Court:
The court held that the mere issuance of statutory notices from Delhi does not vest the Delhi courts with jurisdiction to try a case under Section 138 of the NI Act. The complaint was found to have been instituted on a sole and insufficient ground. The court relied on prior precedents to reinforce the position that the location of notice issuance is immaterial to establishing territorial competence.
Issues:
Whether the Courts in Delhi had the jurisdiction to entertain the complaint merely because the statutory notices were issued from Delhi, and whether the complaint should be transferred to the competent court at the location where the cheque was dishonoured.
Ratio Decidendi:
The territorial jurisdiction under Section 138 of the NI Act is determined by the location of the bank account on which the cheque is drawn, and not by the location from where a statutory notice is issued. Consequently, a complaint based solely on the ground of notice issuance at a particular place lacks legal foundation for jurisdiction.
Result:
The petition is allowed, and the criminal complaint is directed to be transferred from the Metropolitan Magistrate at Patiala House Courts, New Delhi, to the Chief Judicial Magistrate at Vellore, Tamil Nadu, for appropriate disposal.
(A) The Negotiable Instruments Act, 1881, read with Section 406 of the Criminal Procedure Code, governs the present dispute. Section 138 of the NI Act creates an offence upon dishonour of a cheque for non-payment of a legally enforceable debt or liability, and it contemplates a specific complaint jurisdiction analysis. Section 406 of the Cr.P.C. empowers a higher court to transfer a pending criminal complaint to a court competent to try it. The complaint in this case was instituted solely on the basis that statutory notices were served from Delhi, which does not, in itself, establish the territorial jurisdiction of the Delhi Court under Section 138 NI Act.
(B) The issue of a statutory notice demanding payment is not a valid ground to confer jurisdiction upon the court for entertaining an offence under Section 138 of the NI Act. The cause of action and the trial must be linked to the location where the bank account is maintained or where the dishonour took place, not merely the location from where a notice is sent. The accused person's suffering from medical problems is a relevant humanitarian factor to be considered while transferring the proceedings.
Facts of the case:
A cheque issued by the petitioners was dishonoured upon presentation. The respondent served statutory notices from Delhi demanding payment within fifteen days. The petitioners failed to pay, leading to the filing of Criminal Complaint No.3960 of 2008 before the Metropolitan Magistrate in Delhi solely on the ground that notices were dispatched from there. The complaint was instituted on the basis of this jurisdictional premise.
Findings of Court:
The court held that the mere issuance of statutory notices from Delhi does not vest the Delhi courts with jurisdiction to try a case under Section 138 of the NI Act. The complaint was found to have been instituted on a sole and insufficient ground. The court relied on prior precedents to reinforce the position that the location of notice issuance is immaterial to establishing territorial competence.
Issues:
Whether the Courts in Delhi had the jurisdiction to entertain the complaint merely because the statutory notices were issued from Delhi, and whether the complaint should be transferred to the competent court at the location where the cheque was dishonoured.
Ratio Decidendi:
The territorial jurisdiction under Section 138 of the NI Act is determined by the location of the bank account on which the cheque is drawn, and not by the location from where a statutory notice is issued. Consequently, a complaint based solely on the ground of notice issuance at a particular place lacks legal foundation for jurisdiction.
Result:
The petition is allowed, and the criminal complaint is directed to be transferred from the Metropolitan Magistrate at Patiala House Courts, New Delhi, to the Chief Judicial Magistrate at Vellore, Tamil Nadu, for appropriate disposal.
JUDGMENT :
T.S. THAKUR, J.
1. In this petition under Section 406 of the Cr.P.C., the petitioners seek transfer of Criminal Complaint No.3960 of 2008 under Section 138 of the Negotiable Instruments Act, 1881 pending before the Metropolitan Magistrate, Patiala House Court at New Delhi to the Court competent to try the same at Pondicherry. The cheque in question appears to have been issued on Vyasya Bank Ltd., Vellore, Tamil Nadu. When presented for encashment the same was dishonoured, whereupon, the respondent got notices issued to the petitioners asking them to pay the cheque amount within the statutory period of fifteen days from the date of the receipt of the said notices.
Failure of the petitioners to make the payment led to the filing of criminal complaint No.3960 of 2008 before the Metropolitan Magistrate at Patiala House, New Delhi in which the Court took cognizance and issued summons to the petitioners. The complaint, it is noteworthy, justified the institution of the case in Delhi on the solitary ground that the statutory notices demanding payment of the cheque amount had been issued to the petitioners from Delhi. In para 13 of the complaint, the complainant said:
"That the cause of action has arisen within the jurisdiction of this Hon'ble Court in as much as the notice of demand for the Cheque amount was issued to all the Accused from Delhi. Therefore, this Hon'ble Court has the jurisdiction to entertain, try and decide the present complaint."
2. The petitioners' case, in the present transfer petition, is that the cheque in question was not in discharge of any debt or liability but had been given to the respondent-company by way of security. Dishonour of any such cheque was not, according to the petitioners, an offence punishable under Section 138 of the Act aforementioned. That apart, the petitioners claim that the Courts in Delhi have no jurisdiction to entertain the complaint. Simply because the statutory notices were issued to the petitioners from Delhi did not clothe the Courts in Delhi to take cognizance of the offence assuming that the same had been committed. Multiple ailments of Petitioner No.2 are also urged as a ground for transfer of the proceedings from Delhi to Pondicherry.
3. The only question that primarily arises for our consideration is whether the Courts in Delhi had the jurisdiction to entertain the complaint in the facts and circumstances of the case especially when issue of statutory notices was the only reason urged by the respondent-complainant for filing a complaint in Delhi. Issue of a statutory notice demanding payment of the cheque amount is, in our opinion, not sufficient to vest the Delhi Courts with the jurisdiction to entertain the complaint and try the case. We say so on the authority of the decision of this Court in Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. (2009) 1 SCC 720 where this aspect was examined at length.
This Court ruled that issue of a statutory notice cannot constitute a valid ground for conferring jurisdiction upon the Court concerned to take cognizance of an offence under Section 138. That position has been reiterated in a recent decision delivered on 1st August, 2014 by this Court in Dashrath Rupsingh Rathod v. State of Maharashtra & Anr. Criminal Appeal No.2287 of 2009.
In Dashrath Rupsingh's case (supra) this Court has overruled the earlier decision delivered by a two-Judge Bench of this Court in K. Bhaskaran v. Sankaran Vaidhyan Balan & Anr. (1999) 7 SCC 510 upon which the respondent sought to place reliance in support of their contention that Delhi Court could exercise jurisdiction based on the fact that notice of demand of the cheque amount was issued from Delhi.
4. In the circumstances and keeping in view the admitted factual position that the cheque in question was dishonoured at Vellore where the bank on which it was drawn is located, we see no reason why the complaint filed by the respondents should not be transferred to Vellore for further proceedings. The fact that petitioner No.2 is suffering from several medical problems will also, in our opinion, be taken care by the transfer of the proceedings from Delhi to Vellore.
5. We accordingly allow this petition and direct transfer Criminal Complaint No.3960 of 2008 titled M/s Timex Group India Ltd. v. M/s Apex Distributers & Anr. from Metropolitan Magistrate at Patiala House Courts in New Delhi to the Chief Judicial Magistrate at Vellore who shall try the case himself or transfer the same to any other Court competent to try the same. No costs.