M/S. Harman
Electronics (P) Ltd. & ANR. Vs. M/S. National Panasonic India Ltd. [2008]
INSC 2146 (12 December 2008)
Judgment
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 2021 OF 2008
[arising out of SLP (Criminal) No. 1712 of 2004] M/S. HARMAN ELECTRONICS (P)
LTD.
& ANR. ...
APPELLANTS VERSUS
S.B. SINHA, J.
1.
Leave
granted.
2.
Territorial
jurisdiction of a court to try an offence under Section 138 of the Negotiable
Instruments Act, 1881 (for short, "the Act") is in question in this
appeal.
1 The said question
arose in the following circumstances.
Appellants and
respondent entered into a business transaction.
Appellant is a
resident of Chandigarh. He carries on business in Chandigarh. The cheque in
question admittedly was issued at Chandigarh.
Complainant also has
a branch office at Chandigarh although his Head Office is said to be at Delhi.
It is stated that the cheque was presented at Chandigarh. However, it is in
dispute as to whether the said cheque was sent for collection to Delhi. The
cheque was dishonoured also at Chandigarh. However, the complainant -
respondent issued a notice upon the appellant asking him to pay the amount from
New Delhi. Admittedly, the said notice was served upon the respondent at
Chandigarh. On failure on the part of the appellant to pay the amount within a
period of 15 days from the date of communication of the said letter, a
complaint petition was filed at Delhi. In the complaint petition, it was
stated:
"10. That the
complainant presented aforesaid cheque for encashment through its banker Citi
Bank NA. The Punjab & Sind Bank, the banker of the accused returned the
said cheque unpaid with an endorsement "Payment stopped by drawer"
vide their memo dated
30.12.2000. The aforesaid memo dated 30.12.2000 was received by the complainant
on 3.1.2001.
11. Upon dishonour of
the above mentioned cheque, the complainant sent notice dt. 11.1.2001 in terms
of section 138 of Negotiable Instruments Act to the accused persons demanding
payment of aforesaid cheque amount at Delhi. The accused persons were served
with said notice by registered A/D.
12. By the said
notice the accused persons were called upon to pay to the complainant the sum
of Rs.5,00,000/- within 15 days of the receipt of said notice.
13. Despite the
service of notice dt. 11.1.2001 the accused persons have failed and/or
neglected to pay amount of aforesaid cheque within the stipulated period of 15
days after the service of the notice.
14. Accused persons
clandestinely/deliberately and with malafide intention and by failing to make
the payment of the said dishonoured cheque within the stipulated period have
committed the offence under Section 138 read with Section 141 of the Negotiable
Instruments Act, 1881.
15. The complainant
further submit that the complaint is being filed within 1 month from the date
of expiring of the 15 days grace time given under the notice for payment of
said amount.
16. This Hon'ble
Court has jurisdiction to entertain the present complaint as complainant
carries on its business at Delhi. The demand notice dt. 11.1.2001 was issued
from Delhi and the amount of cheque was payable at Delhi and because accused
failed to make the payment of amount of said cheque within statutory period of
15 days from receipt of notice."
3. Cognizance of the
offence was taken against the appellant by the learned judge.
Questioning the
jurisdiction of the court of Additional Sessions Judge, New Delhi, an
application was filed which was disposed of by the learned Additional Sessions
Judge, New Delhi in terms of an order dated 3.2.2003 stating:
"2. The main
grievance of the accused is that the accused persons, as well as the
complainant are carrying their business at Chandigarh. The cheque in question
was given by the accused to the complainant in Chandigarh, and it was present
to their banker at Chandigarh. Only notice was given by the complainant to the
accused persons, from Delhi. That the same was served on the accused
admittedly, at Chandigarh and that both the parties are carrying out their
business also at Chandigarh.
Therefore, it is
contended that it would amount to absurdity if the complaint of the complainant
is entertained, in Delhi, in view of the case law reported in AIR 1999 Supreme
Court 3782, K. Another.
6. I have considered
the arguments advanced at the bar, and I am of the considered opinion that this
court has jurisdiction to entertain this complaint, as admittedly the notice
was sent by the complainant to the accused persons from Delhi, and the complainant
is having its registered office at Delhi, and that they are carrying out the
business at Delhi. Admittedly, it is also evident from the record that accused
allegedly failed to make the payment at Delhi, as the demand was 4 made from
Delhi and the payment was to be made to the complainant at Delhi."
4. By reason of the
impugned judgment, Criminal Miscellaneous Petition filed by the appellant has
been dismissed.
5. Mr. Ashok Grover,
learned Senior Counsel appearing on behalf of the appellant would submit that
as the entire cause of action arose within the jurisdiction of the courts at
Chandigarh, the learned Additional Sessions Judge, New Delhi had no
jurisdiction to take cognizance of the offence.
6. Mr. Sakesh Kumar,
learned counsel appearing on behalf of the respondent, on the other hand, would
contend:
i. The cheque
although was deposited at Chandigarh, the same having been sent by Citi Bank NA
for collection at Delhi, the amount became payable at Delhi.
ii. Giving of a
notice being a condition precedent for filing a complaint petition under
Section 138 of the Negotiable Instruments Act, a notice having been issued from
Delhi, the Delhi Court had the requisite jurisdiction, particularly when 5
demand was made upon the appellant to pay the complainant at Delhi.
7. Section 138 of the
Negotiable Instruments Act reads as under:
"138. Dishonour
of cheque for insufficiency, etc., of funds in the account. - Where any cheque
drawn by a person on an account maintained by him with a banker for payment of
any amount of money to another person from out of that account for the
discharge, in whole or in part, of any debt or other liability, is returned by
the bank unpaid, either because of the amount of money standing to the credit
of that account is insufficient to honour the cheque or that it exceeds the
amount arranged to be paid from that account by an agreement made with that
bank, such person shall be deemed to have committed an offence and shall,
without prejudice to any other provisions of this Act, be punished with
imprisonment for a term which may be extended to two years, or with fine which
may extend to twice the amount of the cheque, or with both:
Provided that nothing
contained in this section shall apply unless-- (a) the cheque has been
presented to the bank within a period of six months from the date on which it
is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the
holder in due course of the cheque, as the case may be, makes a demand for the
payment of the said amount of money by giving a notice in writing, to the
drawer of the cheque, within thirty days of the receipt of information by him
from the bank regarding the return of the cheque as unpaid; and 6 (c) the
drawer of such cheque fails to make the payment of the said amount of money to
the payee or, as the case may be, to the holder in due course of the cheque,
within fifteen days of the receipt of the said notice.
Explanation.-- For
the purposes of this section, "debt or other liability" means a
legally enforceable debt or other liability."
8. The proviso
appended thereto imposes certain conditions before a complaint petition can be
entertained.
9. Reliance has been
placed by both the learned Additional Sessions Judge as also the High Court on
a decision of this Court in K. Bhaskaran v.
Sankaran Vaidhyan
Balan and Anr. [(1999) 7 SCC 510]. This Court opined that the offence under
Section 138 of the Act can be completed only with the concatenation of a number
of acts, namely, (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 was opined that if 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 Act and the complainant would be at liberty to file a complaint petition at
any of those places. As regards the requirements of giving a notice as also
receipt thereof by the accused, it was stated:
"18. On the part
of the payee he has to make a demand by "giving a notice" in writing.
If that was the only requirement to complete the offence on the failure of the
drawer to pay the cheque amount within 15 days from the date of such
"giving", the travails of the prosecution would have been very much
lessened. But the legislature says that failure on the part of the drawer to
pay the amount should be within 15 days "of the receipt" of the said
notice. It is, therefore, clear that "giving notice" in the context
is not the same as receipt of notice. Giving is a process of which receipt is
the accomplishment. It is for the payee to perform the former process by
sending the notice to the drawer at the correct address. "
10. The court,
however, refused to give a strict interpretation to the said provisions despite
noticing Black's Law Dictionary in regard to the meaning of the terms `giving
of notice' and `receiving of the notice' in the following terms:
"19. In Black's
Law Dictionary, 'giving of notice' is distinguished from 'receiving of the
notice.' (vide page 621) "A person notifies or gives notice 8 to another
by taking such steps as may be reasonably required to inform the other in the
ordinary course, whether or not such other actually comes to know of it."
A person 'receives' a notice when it is duly delivered to him or at the place
of his business.
20. If a strict
interpretation is given that the drawer should have actually received the
notice for the period of 15 days to start running no matter that the payee sent
the notice on the correct address, a trickster cheque drawer would get the
premium to avoid receiving the notice by different strategies and he could
escape from the legal consequences of Section 138 of the Act. It must be borne
in mind that Court should not adopt in interpretation which helps a dishonest
evader and clips an honest payee as that would defeat the very legislative
measure."
11. For the said
purpose, a presumption was drawn as regards refusal to accept a notice. We may,
before proceeding to advert to the contentions raised by the parties hereto,
refer to another decision of this Court in M/s Dalmia Cement (Bharat) Ltd. vs.
M/s Galaxy Traders & Agencies Ltd. & ors. [AIR 2001 SC 676], wherein
this Court categorically held:
"6. Section 27
of the General Clauses Act deals with the presumption of service of a letter
sent by post. The dispatcher of a notice has, therefore, a right to insist upon
and claim the benefit of such a presumption. But as the presumption is
rebuttable one, he has two options before him. One is to concede to the stand of
the sendee that as a matter 9 of fact he did not receive the notice, and the
other is to contest the sendee's stand and take the risk for proving that he in
fact received the notice. It is open to the despatcher to adopt either of the
options. If he opts the former, he can afford to take appropriate steps for the
effective service of notice upon the addressee. Such a course appears to have
been adopted by the appellant-company in this case and the complaint filed,
admittedly, within limitation from the date of the notice of service conceded
to have been served upon the respondents."
(Underlying is mine)
It was furthermore held:
"The payee or
holder of the cheque may, therefore, without taking peremptory action in
exercise of his right under clause (b) of Section 138 of the Act, go on
presenting the cheque so as to enable him to exercise such right at any point
of time during the validity of the cheque. But once a notice under clause (b)
of Section 138 of the Act is 'received' by the drawer of the cheque, the payee
or the holder of the cheque forfeits his right to again present the cheque as
cause of action has accrued when there was failure to pay the amount within the
prescribed period and the period of limitation starts to run which cannot be
stopped on any account. This Court emphasised that `needless to say the period
of one month from filing the complaint will be reckoned from the date
immediately falling the day on which the period of 15 days from the date of the
receipt of the notice by the drawer expires'.
12. Indisputably, the
parties had been carrying on business at Chandigarh.
The Head Office of
the complainant - respondent may be at Delhi but it has a branch office at
Chandigarh. It is not in dispute that the transactions were carried on only from
Chandigarh. It is furthermore not in dispute that the cheque was issued and
presented at Chandigarh. The complaint petition is totally silent as to whether
the said cheque was presented at Delhi. As indicated hereinbefore, the learned
counsel appearing on behalf of the complainant - respondent contended that in
fact the cheque was put in a drop box but as the payment was to be obtained
from the Delhi Bank, it was sent to Delhi. In support of the said contention, a
purported certificate issued by the Citi Bank NA has been enclosed with the
counter affidavit, which reads as under:
"This is to
confirm that M/s National Panasonic India Pvt. Ltd. (NPI) having registered
office at AB- 11, Community Centre, Safdarjung Enclave, New Delhi - 110029 are
maintaining a Current Account No. 2431009 with our Bank at Jeevan Bharti
Building, 3, Parliament Street, New Delhi- 110001 only and not at any other
place in India including Chandigarh.
Further confirmed
that CITI bank has provided the facility for collection of Cheques/Demand
Drafts from branches of NPI located at various places/cities in India. However,
all amounts of cheques/Demand Drafts so collected on behalf of National
Panasonic India Private Limited are forwarded and debited/credited to the
aforesaid 11 Current Account No. 2431009 with our Bank at Jeeval Bharti
Building, 3, Parliament Street, New Delhi - 110001."
13. The complaint
petition does not show that the cheque was presented at Delhi. It is absolutely
silent in that regard. The facility for collection of the cheque admittedly was
available at Chandigrh and the said facility was availed of. The certificate
dated 24.6.2003, which was not produced before the learned court taking
cognizance, even if taken into consideration does not show that the cheque was
presented at the Delhi Branch of the Citi Bank. We, therefore, have no other
option but to presume that the cheque was presented at Chandigarh.
Indisputably, the dishonour of the cheque also took place at Chandigarh. The
only question, therefore, which arises for consideration is that as to whether
sending of notice from Delhi itself would give rise to a cause of action for
taking cognizance under the Negotiable Instruments Act.
14. It is one thing
to say that sending of a notice is one of the ingredients for maintaining the
complaint but it is another thing to say that dishonour of a cheque by itself
constitutes an offence. For the purpose of proving its case that the accused
had committed an offence under Section 138 of the Negotiable Instruments Act,
the ingredients thereof are required to be 12 proved. What would constitute an
offence is stated in the main provision.
The proviso appended
thereto, however, imposes certain further conditions which are required to be
fulfilled before cognizance of the offence can be taken. If the ingredients for
constitution of the offence laid down in the provisos (a), (b) and (c) appended
to Section 138 of the Negotiable Instruments Act intended to be applied in
favour of the accused, there cannot be any doubt that receipt of a notice would
ultimately give rise to the cause of action for filing a complaint. As it is
only on receipt of the notice the accused at his own peril may refuse to pay
the amount. Clauses (b) and (c) of the proviso to Section 138 therefore must be
read together. Issuance of notice would not by itself give rise to a cause of
action but communication of the notice would.
15. It is in the
aforementioned situation, the distinction noticed by the Bench in M/s Dalmia
Cement (Bharat) Ltd. (supra) and the meaning of `giving of notice' and
`receiving of notice' as contained in Black's Law Dictionary assumes
significant.
16. What is meant by
`communication' albeit in different context, has been considered by a
Constitution Bench of this Court in State of Punjab vs. Amar Singh Harika [AIR
1966 SC 1313] stating:
13 "It is plain
that the mere passing of an order of dismissal would not be effective unless it
is published and communicated to the officer concerned."
17. The distinction
between passing of an order which is final and a communication thereof is not
necessary has been noticed by this Court subsequently in State of Punjab vs.
Khemi Ram [(1969) 3 SCC 28] stating:
"In our view,
once an order is issued and it is sent out to the concerned Government servant,
it must be held to have been communicated to him, no matter when he actually
received it. We find it difficult to persuade ourselves to accept the view that
it is only from the date of the actual receipt by him that the order becomes
effective. If that be the true meaning of communication, it would be possible
for a Government servant to effectively thwart an order by avoiding receipt of
it by one method or the other till after the date of his retirement even though
such an order is passed and despatched to him before such date. An officer
against whom action is sought to be taken, thus, may go away from the address given
by him for service of such orders or may deliberately give a wrong address and
thus prevent or delay its receipt and be able to defeat its service on him.
Such a meaning of the word 'communication' ought not to be given unless the
provision in question expressly so provides. Actual knowledge by him of an
order where it is one of dismissal, may, perhaps, become necessary because of
the consequences which the decision in The State of Punjab v. Amar Singh (AIR
1966 SC 1313) contemplates. But such consequences would not occur in the case
of an officer who has proceeded on leave and against 14 whom an order of
suspension is passed because in his case there is no question of his doing any
act or passing any order and such act or order being challenged as invalid."
For constitution of
an offence under Section 138 of the Act, the notice must be received by the
accused. It may be deemed to have been received in certain situations. The word
`communicate' inter alia means `to make known, inform, convey, etc.'
18. This Court in
Sultan Sadik vs. Sanjay Raj Subba and Ors [(2004) 2 SCC 377], held:
"33. The
decision of this Court in Khemi Ram [(1969) 3 SCC 28] relied upon by Mr.
Bachawat is not apposite as therein an order of suspension was in question.
This Court in the said decision itself referred to its decision in State of
Punjab v. Amar Singh Harika [AIR 1966 SC 1313], which stated that communication
of an order dismissing an employee from service is imperative. If communication
of an order for terminating the jural relationship is imperative, a fortiori it
would also be imperative at the threshold."
19. Section 177 of
the Code of Criminal Procedure determines the jurisdiction of a court trying
the matter. The court ordinarily will have the jurisdiction only where the
offence has been committed. The provisions of Sections 178 and 179 of the Code
of Criminal Procedure are exceptions to Section 177. These provisions
presuppose that all offences are local.
20. Therefore, the
place where an offence has been committed plays an important role. It is one
thing to say that a presumption is raised that notice is served but it is
another thing to say that service of notice may not be held to be of any
significance or may be held to be wholly unnecessary.
21. In Mosaraf Hossain
Khan vs. Bhagheeratha Engg. Ltd. [(2006) 3 SCC 658], this court held:
"30. In terms of
Section 177 of the Code of Criminal Procedure every offence shall ordinarily be
inquired into and tried by a court within whose local jurisdiction it was
committed. 178 provides for place of inquiry or trial in the following terms:
`178. (a) When it is
uncertain in which of several local areas an offence was committed, or (b)
where an offence is committed partly in one local area and partly in another,
or 16 (c) where an offence is a continuing one, and continues to be committed
in more local areas than one, or (d) where it consists of several acts done in
different local areas.
31. A bare perusal of
the complaint petition would clearly go to show that according to the
complainant the entire cause of action arose within the jurisdiction of the
district courts of Birbhum and in that view of the matter it is that court
which will have jurisdiction to take congnizance of the offence. In fact the
jurisdiction of the court of CJM, Suri, Birbhum is not in question. It is not
contended that the complainant had suppressed material fact and which if not
disclosed would have demonstrated that the offence was committed outside the
jurisdiction of the said court. Even if Section 178 of the Code of Criminal
Procedure is attracted, the court of the Chief Judicial Magistrate, Birbhum
will alone have jurisdiction in the matter.
32. Sending of
cheques from Ernakulam or the respondents having an office at that place did
not form an integral part of 'cause of action' for which the complaint petition
was filed by the appellant and cognizance of the offence under Section 138 of
the Negotiable Instruments Act, 1881 was taken by the Chief Judicial
Magistrate, Suri." 22. In Y.A. Ajit. v. Sofana Ajit [AIR 2007 SC 3151),
this Court held:
17 "The crucial
question is whether any part of the cause of action arose within the
jurisdiction of the concerned Court. In terms of Section 177 of the Code it is
the place where the offence was committed. In essence it is the cause of action
for initiation of the proceedings against the accused.
While in civil cases,
normally the expression "cause of action" is used, in criminal cases
as stated in Section 177 of the Code, reference is to the local jurisdiction
where the offence is committed. These variations in etymological expression do
not really make the position different. The expression "cause of
action" is therefore not a stranger to criminal cases."
23. Presumption
raised in support of service of notice would depend upon the facts and
circumstances of each case. Its application is on the question of law or the
fact obtaining. Presumption has to be raised not on the hypothesis or surmises
but if the foundational facts are laid down therefor.
Only because
presumption of service of notice is possible to be raised at the trial, the
same by itself may not be a ground to hold that the distinction between giving
of notice and service of notice ceases to exist.
24. Indisputably all
statutes deserve their strict application, but while doing so the cardinal
principles there for cannot be lost sight of. A Court derives a jurisdiction
only when the cause of action arose within his 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
completes. Giving of notice, therefore, cannot have any precedent over the
service. It is only from that view of the matter in Dalmia Cement (Bharat) Ltd.
v. Galaxy Traders & Agencies Ltd., [ (2001) 6 SCC 463 ] emphasis has been
laid on service of notice.
25. We cannot, as
things stand today, be oblivious of the fact that a banking institution holding
several cheques signed by the same borrower cannot only present the cheque for
its encashment at four different places but also may serve notices from four
different places so as to enable it to file four complaint cases at four
different places. This only causes grave harassment to the accused. It is,
therefore, necessary in a case of this nature to strike a balance between the
right of the complainant and the right of an accused vis-`-vis the provisions
of the Code of Criminal Procedure.
26. Learned counsel
for the respondent contends that the principle that the debtor must 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.
28. For the views we
have taken it must be held that Delhi High Court has no jurisdiction to try the
case. We, however, while exercising our jurisdiction under Article 142 of the
Constitution of India direct that Complaint Case No.1549 pending in the Court
of Shri N.K. Kaushik, Additional Sessions Judge, New Delhi, be transferred to
the Court of the District and Sessions Judge, Chandigarh who shall assign the
same to a court of competent jurisdiction. The transferee court shall fix a
specific date of hearing and shall not grant any adjournment on the date on
which the complainant and its witnesses are present. The transferee court is
furthermore directed to dispose of the matter within a period of six months
from the date of receipt of the records of the case on assignment by the
learned District and Sessions Judge, Chandigarh.
29. The appeal is
allowed with the aforementioned observations and directions. There shall,
however, be no order as to costs.
...........................J.
[ S.B. SINHA ]
...........................J.
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