Case Note & Summary
The complainant, a non-banking finance company, had its regional office at Nagpur and provided a loan to the accused for purchase of a vehicle. The accused issued a cheque for Rs. 1,60,305 drawn on Yavatmal Gramin Bank in favour of the complainant. The cheque was presented at IDBI Bank, Sitabuldi, Nagpur, but was dishonoured with the remark 'account closed'. The complainant sent a demand notice from Nagpur to the accused at Yavatmal; the notice sent by registered post was returned 'not claimed', and the notice under certificate of posting was deemed served. The accused failed to pay within 15 days, leading to a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed before the Judicial Magistrate First Class and Special Court, Nagpur. The trial court took cognizance, recorded evidence, including examination of a bank witness and the accused, and then, upon an application by the accused, passed an order on 21.12.2009 directing return of the complaint for presentation before the proper court, holding that it lacked territorial jurisdiction because the drawee bank and the accused were in Yavatmal. Aggrieved, the complainant filed the present application under Section 482 CrPC seeking to quash that order. The applicant argued that under Sections 178 and 179 CrPC, the court at Nagpur had jurisdiction as part of the cause of action arose there—the cheque was presented and dishonoured at the collecting bank in Nagpur, and the demand notice required payment at Nagpur, which the accused failed to comply with. The applicant relied on the Division Bench ruling in Preetha v. Voltas Ltd. which held that a complaint could be filed where the collecting bank is situated. The respondent supported the trial court's order, citing Harman Electronics and Dipti Kumar Mohanty. The High Court examined the five acts constituting the offence under Section 138, as per K. Bhaskaran and Shamshad Begum, and noted that the offence could be tried where any of those acts occurred. Relying on the binding Division Bench ruling in Preetha v. Voltas Ltd., the court held that the presentation of the cheque at the collecting bank in Nagpur and the failure to pay at the place mentioned in the notice gave Nagpur court jurisdiction. The trial court's reliance on earlier single-judge decisions was misplaced in view of the subsequent Division Bench. Accordingly, the application was allowed, the impugned order was quashed, and the parties were directed to appear before the Nagpur court on 9th January 2012, with no order as to costs.
Headnote
A) Criminal Procedure - Territorial Jurisdiction in Cheque Bounce Cases - Section 138, Negotiable Instruments Act, 1881 and Sections 178, 179, Code of Criminal Procedure, 1973 - The complainant's cheque was presented at IDBI Bank, Nagpur and dishonoured, and demand notice was sent from Nagpur; the accused failed to pay, thus part cause of action arose in Nagpur. The court held that as per Section 178(d) CrPC, where an offence consists of several acts done in different areas, inquiry and trial may be held by any court having jurisdiction over any of those areas, and the Nagpur court had jurisdiction. Therefore, the trial court's order returning the complaint was contrary to law and was set aside. Held, the complaint is to proceed before the Nagpur court. (Paras 2-9) B) Precedent - Binding Precedent on Jurisdiction Under Section 138 - Section 138, Negotiable Instruments Act, 1881 - Following the Division Bench ruling in Preetha v. Voltas Ltd. (2010), which held that where cheque is presented through collecting bank, the court at the place of collecting bank has jurisdiction, overruling earlier contrary single-judge decisions. The court relied on this binding precedent and also referred to Crompton Greaves Ltd. v. Shivam Traders, concluding that the impugned order was unsustainable and thus quashed. Held, the trial court must proceed with the complaint as per law. (Paras 5-8)
Issue of Consideration
Whether the Nagpur court had territorial jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act when the drawee bank and accused's residence were in Yavatmal, and the cheque was presented at a collecting bank in Nagpur?
Final Decision
The application was allowed; the impugned order returning the complaint was quashed and set aside. The parties were directed to appear before the Judicial Magistrate First Class and Special Court, Nagpur, on 9th January 2012 for further proceedings according to law. No order as to costs.
Law Points
- Option of complainant to choose any court having jurisdiction over any local area where any of the five acts under Section 138 NI Act occurred
- including place of collecting bank
- place where debtor fails to pay after demand notice also confers jurisdiction
- Division Bench ruling in Preetha v. Voltas Ltd. clarifies that complaint can be filed at place of collecting bank
- Sections 178 and 179 CrPC apply to provide multiple venues
- return of complaint after cognizance and evidence impermissible.
