JUDGMENT
S.K. Agarwal, J.
1. This petition under Section 397/401 read with
Section 482 of Code of Criminal Procedure (for short
‘Cr.P.C.’) is directed against the order dated 3rd July,
1999 passed by the court of Metropolitan Magistrate, New
Delhi dismissing application of the petitioners for
recalling the order of summoning dated 25th July, 1998
under Sections 138 read with Section 142 of Negotiable
Instruments Act (for short ‘N.I. Act’).
2. Facts in brief are that the respondent filed a
complaint under Section 138 of N.I. Act against the
petitioners alleging that the complainant company, during
the course of its business of leasing and financing
provided inter-corporate deposit of Rs. 50 lacs (fifty
lacs) to the petitioners; and they executed guarantee,
promissory note, receipt and other connected documents.
The deposit was extended from time to time at their
request. It was lastly renewed for 90 days on 7.6.1997.
The petitioners issued advance post dated cheque dated
30th September, 1997 drawn on Bank of India, Andheri
(East), Mumbai towards discharge of the principal amount.
The cheque was sent for encashment by the complainant on
4th March, 1998 through its bankers ABN Amro Bank, at New
Delhi. It was returned un-paid by the bankers of the
accused company with the remarks “insufficient funds”
through memo dated 7th March, 1998. The information in
this regard was given to the complainant vide return memo
on 17th March, 1998. Thereafter, through notice dated
28th March, 1998 petitioners were called upon to pay the
amount covering the said cheque. The accused failed to
pay the amount despite notice. The complaint against the
company, its Chairman and Managing Director, who are
responsible for the conduct of the business of the company
was filed. After preliminary evidence, the petitioners
were summoned under Section 138 read with Section 142 of
N.I. Act. They moved an application for recalling the
order of summoning. Complainant opposed the same.
Learned trial judge by order dated 3rd July, 1999
dismissed their application. This order is under
challenge.
3. I have heard the learned counsel for the parties
and have been taken through the record.
4. Learned counsel for the petitioners firstly
argued that the transaction had taken place at Mumbai;
the cheque was drawn on “the bank” at Mumbai; it was to
be encashed at Mumbai and the cheque was dishonoured at
Mumbai, therefore, courts in Delhi have no territorial
jurisdiction to entertain the complaint; and that the
complaint was instituted at Delhi with an intent to harass
them. The strength to support this argument was sought to
be drawn from the observations made by the Supreme Court
in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.
2001 CRI.L.J. 1250. The complainant’s case is that one
of its office is in Delhi; the cheque in question was
deposited by them with their bank at Delhi; the
complainant came to know of the dishonouring of the cheque
at Delhi; notice was issued from Delhi, therefore, part
of cause action had arisen in Delhi.
5. Law in this regard is settled by the Supreme
Court in K. Bhaskaran v. Sankaran Vaidhyan Balan and
Anr. 1999 (6) Scale 272. The Supreme Court has observed
that the offence under Section 138 of N.I. Act is
complete only on the concatenation of five acts which are
components of the offence. These are drawing of cheque,
presentation of cheque, returning of the cheque un-paid by
the drawee bank, giving notice in writing to the darwer
demanding payment of the cheque and failure of the drawer
to make payment within 15 days of the receipt of the
notice. It was further noticed that it is not necessary
that all five acts should happen in the same locality;
and it is possible that all five acts may have been done
at five different localities. It was held that under
Sub-clause (d) of Section 178 of Cr.P.C. which provides
that where the offence consists of several acts done in
different local areas, it may be enquired into or tried by
a court having jurisdiction over any such local area. It
was held:
“14. The offence under Section 138
of the Act 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.
15. It is not necessary that all
the above five acts should have been
perpetrated at the same locality. It is
possible that each of those five acts
could be done at 5 different localities.
But concatenation of all the above five
is a sine qua non for the completion of
the offence under Section 138 of the
Code. In this context a reference to
Section 178(d) of the Code is useful. It
is extracted below:
“Where the offence consists of
several acts done in different
local areas, it may be inquired
into or tied by a court having
jurisdiction over any such
local area”.
16. Thus it is clear, 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 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. As the amplitude stands
so widened and so expansive it is an idle
exercise to raise jurisdictional question
regarding the offence under Section 138
of the Act”.
6. In this case, as noticed above, Branch office of
the complainant company is in Delhi; the cheque in
question was presented to the bank in Delhi and it was
returned un-paid in Delhi; the notice to the petitioners
was given from Delhi; and the failure of the petitioners
to pay the amount was in Delhi. Therefore, I have no hesitation in holding that part of the cause of action had
arisen at Delhi, and the courts in Delhi have jurisdiction
to try the complaint.
7. Learned counsel in support of the proposition
that the courts in Delhi have no jurisdiction had also
placed reliance on the decisions, in R.K. Jain v. State
and Ors. 1998 (1) Crimes 514, Canbank Finance Services Ltd.
v. Gitanjali Motors Ltd. 1995 CRI LJ 1222 and some
decisions of the other High Courts. In my view, after
authoritative pronouncement by the Supreme Court in
K. Bhaskaran (supra) reference to other decisions cited by
learned counsel for petitioner is not necessary. Learned
counsel heavily relied upon the observations made by
Supreme Court in Shri Ishar Alloy Steels Ltd. (supra).
In my view, the observations made therein do not answer
the question involved here. In that case, Supreme Court
was considering the question of presentation of the cheque
within six months from the date on which it was drawn on
‘the drawee bank’ either directly or otherwise. It is in
that context that the Supreme Court considered the use of
direct article “The in words “The bank”. It was held
that the cheque must read “The bank” (the drawee bank)
within six months. The emphasis laid by the learned
counsel on the words ‘a bank’ and ‘the bank’ used in
Section 138 of the NI Act, does not help the contention.
Learned counsel even argued that there is a typing error
in the Supreme Court judgment. There is no merit in this
contention and the same is rejected.
8. Learned counsel for the petitioners next argued
that except the directors arrayed as accused Nos. 2, 8, 9 and
10 in the complaint, remaining seven directors have no
concern with the accused company. They did not enjoy any
control over the day-to-day functioning of the company,
that impleading of all directors of the company is an
abuse of the process of the court. Reliance was place on
Mahendra Pratap Singh Ratra and Anr. v. N.K.
Metals and Anr. and Vikas Pawha v.
State 1996(4) Crimes 520. Factual situation in these
cases was different. In this case there is a clear
averment to the effect that the accused 2 to 12 were
officers were in-charge and responsible to the company for
the conduct of day-to-day business at the time of
commission of offence. The Annual Report of the company
showing that all accused persons were active directors was
also filed along with the complaint. (mark “C”). It is
essentially a question of fact, which can be decided only
after the parties lead their respective evidence and not
at this stage. By virtue of Section 141 of the N.I. Act,
the onus to prove that some of the accused persons were
not responsible for the conduct of the business would be
on them. There is no merit in the above contention and
the same is rejected.
9. Learned counsel for the petitioners next argued
that cheque in question had become stale, as after the
issuance of the cheque, the accused company made part
payment which was accepted by the complainant. Reliance
was place on the letter dated 9th April, 1997 written by
the petitioners to the complainant company by which they
had sent a proposal stating that if the proposal was
acceptable, duplicate copy of the same be signed and sent
back. He argued that along with the proposal they had
also sent a cheque of Rs. 3,62,866/-, to the complainant
which was encashed, therefore, the cause of action did not
survive. I am unable to agree. In this case the cheque
dated 30.9.1997 is for Rs. 50.0 lacs (Rupees fifty lacs
only). It was dishonoured on 17th March, 1998. The
petitioners failed to pay the amount despite notice dated
28th March, 1998. The payment of Rs. 3,62,866/- sent vide
cheque dated 29th December, 1997 was accepted subject to a
fresh cheque for re-payment of the principal amount being
issued by the petitioners. That having not been done, it
did not wash away the offence committed on the basis of
previous cheque. In any case, what is the effect of such
a payment can be appreciated only after trial.
10. Learned counsel for the petitioners also argued
that the cheque in question was not given for discharge,
in the whole or in part of any debt or other liability.
It was given as collateral security, and on the basis of
such a dishonoured cheque, proceedings under Section 138
of N.I. Act are not maintainable. In support of his
submission, reliance was placed on the decision of the
Gujarat High Court in Om Prakash v. Gurucharan Singh
1997 (3) Crimes 433. The answer to my mind is simple.
Section 139 of N.I. Act states that it shall be presumed
unless contrary is proved that the holder of a cheque
received the cheque of the nature referred to in the
Section 138 of the discharge in whole or in part of any
debt or other liability. The Section raises presumption
that cheque was drawn for consideration. This issue was
also settled by several authoritative pronouncements of
the Supreme Court in Maruti Udyog Ltd. v. Narender and
Ors. JT 1998 (9) SC 411, and M.M.T.C. Ltd. v.
Medchl Chemicals & Pharma (P) Ltd., ,
wherein it was held:
“15. A similar view has been taken by
this Court in the case of K.N. Beena v.
Muniyappan reported in 2001(7) Scale 331,
wherein again it has been held that under
Section 139 of the Negotiable Instruments
Act the Court has to presume, in
complaint under Section 138, that the
cheque had been issued for a debt or
liability.
16. There is therefore no requirement
that the Complainant must specifically
allege in the complaint that there was a
subsisting liability. The burden of
proving that there was no existing debt
or liability was on the respondents.
This they have to discharge in the trial.
At this stage, merely on basis of
averments in the Petitions filed by them
the High Court could not have concluded
that there was no existing debt or
liability.”
The Apex Court rejected the similar contention in recent
case in A.V. Murthy v. B.S. Nagabasayanna, and it was held:
“This is not a case where the cheque was
drawn in respect of a debt or liability,
which was completely barred from being
enforced under law. If for example, the
cheque was drawn in respect of a debt or
liability payable under a wagering
contract, it could have been said that
that debt or liability is not legally
enforceable as it is a claim, which is
prohibited under law. This case is not a
case of that type. But we are certain
that at this stage of the proceedings, to
say that the cheque drawn by the
respondent was in respect of a debt or
liability, which was not legally
enforceable, was clearly illegal and
erroneous.”
(emphasis supplied)
11. In view of the settled proposition of law, this
contention also stands rejected. No other point was
argued.
12. For the foregoing reasons, I find no merits in
the petition and the same is dismissed. Trial court
record be sent back forthwith and trial court is directed
to expedite the trial.