Case Note & Summary
The petitioners, Jambu Kumar Jain and Prafull Kumar Jain, filed an application under Section 482 of the Code of Criminal Procedure, 1973, seeking to quash Criminal Case No.11638/SS/2009 pending before the Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, and the process issued therein. The complaint was filed by respondent No.1, TATA Capital Limited, under Section 138 of the Negotiable Instruments Act, 1881, against the petitioners and other respondents, alleging dishonour of a cheque for Rs.8,48,500/- issued by respondent No.2 company (Nanesh Foods Limited) on 5.8.2009. The cheque was drawn on Andhra Bank, Jawahar Marg, Indore Branch, and deposited by the complainant with HDFC Bank Ltd., Indore Branch. The cheque was dishonoured, and despite statutory notice, payment was not made. The petitioners raised two grounds for quashing: first, that they had resigned as directors on 7.7.2009, before the cheque was issued, and thus were not liable; second, that the entire transaction took place at Indore, and the Mumbai Magistrate lacked territorial jurisdiction. The court did not address the resignation issue as it found the jurisdictional ground sufficient to quash the proceedings. The court held that under Section 138 of the Negotiable Instruments Act, the cause of action arises where the cheque is presented to the drawee bank. Since the cheque was drawn on Andhra Bank, Indore Branch, and deposited at Indore, no part of the transaction occurred within the territorial jurisdiction of the Mumbai Magistrate. Therefore, the complaint was not maintainable at Mumbai, and the proceedings were quashed. The court allowed the application and set aside the process issued by the Metropolitan Magistrate.
Headnote
A) Criminal Procedure Code - Quashing of Proceedings - Section 482 CrPC - Territorial Jurisdiction - Complaint under Section 138 of Negotiable Instruments Act, 1881 filed at Mumbai - Entire transaction including agreement, issuance of cheque, and dishonour took place at Indore - Held that the Magistrate at Mumbai lacked territorial jurisdiction to entertain the complaint, and proceedings were liable to be quashed (Paras 4-6).
B) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Territorial Jurisdiction - Cause of action arises where the cheque is presented to the drawee bank - In this case, the cheque was drawn on Andhra Bank, Indore Branch, and deposited at Indore - No part of the transaction occurred within the jurisdiction of the Mumbai Magistrate - Held that the complaint was not maintainable at Mumbai (Paras 4-6).
Issue of Consideration
Whether the Metropolitan Magistrate at Mumbai had territorial jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act, 1881, when the entire transaction occurred at Indore.
Final Decision
The court allowed the application and quashed the proceedings in Criminal Case No.11638/SS/2009 pending before the Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, and set aside the process issued therein.
Law Points
- Territorial jurisdiction under Section 138 of Negotiable Instruments Act
- 1881
- Quashing of criminal proceedings under Section 482 CrPC
- Liability of directors who resigned before cheque issuance
Case Details
2011 LawText (BOM) (03) 203
Criminal Application No. 196 of 2011
Mr. Prabhajit Jawhar a/w Atman Mehta & Hemant S.Telkar, i/b. M/s. Haresh Mehta & Co., Advocates, for the applicant. Mrs. V.R.Bhosale, APP, for the respondent No.6 - State. Mr. Subhodh Desai, Advocate, for the respondent No.1.
Jambu Kumar Jain and Prafull Kumar Jain
TATA Capital Limited, Nanesh Foods Limited, Dilip Kumar Jain, Pradeep Kumar Jain, Samarthmal Jain (deceased), State of Maharashtra
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Nature of Litigation
Criminal application under Section 482 CrPC seeking quashing of proceedings in a complaint under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
Petitioners sought quashing of Criminal Case No.11638/SS/2009 and the process issued therein.
Filing Reason
Petitioners contended that they had resigned as directors before the cheque was issued and that the Mumbai Magistrate lacked territorial jurisdiction as the entire transaction occurred at Indore.
Issues
Whether the Metropolitan Magistrate at Mumbai had territorial jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act, 1881.
Whether the petitioners, having resigned as directors before the cheque was issued, could be prosecuted under Section 138.
Submissions/Arguments
Petitioners argued that they resigned on 7.7.2009, before the cheque was issued on 5.8.2009, and thus were not liable.
Petitioners argued that no part of the transaction took place at Mumbai; the agreement, facility, cheque issuance, and dishonour all occurred at Indore, so the Mumbai Magistrate lacked territorial jurisdiction.
Respondent No.1 (complainant) opposed the application, but the court did not detail their arguments.
Ratio Decidendi
For a complaint under Section 138 of the Negotiable Instruments Act, 1881, the territorial jurisdiction of the Magistrate is determined by the place where the cheque is presented to the drawee bank. Since the cheque was drawn on Andhra Bank, Indore Branch, and deposited at Indore, the Mumbai Magistrate had no jurisdiction to entertain the complaint.
Judgment Excerpts
The petitioners have mainly raised two grounds for quashing the proceedings. Firstly, according to them, both these petitioners had resigned from the post of director on 7.7.2009 ie. even before the cheque in question was issued by the accused No.1 and therefore, the present petitioners are not liable to be prosecuted under Sec. 138. The second ground is that no part of the transaction had taken place at Mumbai and therefore the Metropolitan Magistrate, Mumbai does not have territorial jurisdiction to entertain the complaint.
It is contended that the agreement for credit facility was entered into by the parties at Indore. The facility was given and availed at Indore.
Procedural History
Respondent No.1 filed a complaint under Section 138 of the Negotiable Instruments Act, 1881, before the Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai, which was registered as Criminal Case No.11638/SS/2009. The Magistrate issued process against the accused. The petitioners then filed Criminal Application No. 196 of 2011 under Section 482 of the Code of Criminal Procedure, 1973, seeking quashing of the proceedings.
Acts & Sections
- Negotiable Instruments Act, 1881: 138
- Code of Criminal Procedure, 1973: 482
