Case Note & Summary
The petitioners, Sharda Polycolours Private Limited and its directors, were accused in a complaint under Section 138 of the Negotiable Instruments Act, 1881, filed by the respondent no.2 company. The complaint alleged that the accused had issued six cheques towards payment for supplies of Titanium Dioxide, which were dishonored with the remark 'payment stopped by the drawer'. The cheques were drawn on a bank at Silvassa but were deposited by the complainant in its bank accounts in Mumbai. The Metropolitan Magistrate at Mazgaon, Mumbai, took cognizance and issued process. The accused challenged the territorial jurisdiction of the Magistrate, arguing that since the drawee bank was in Silvassa, only courts there had jurisdiction. They filed a revision before the Sessions Court, which was dismissed. The accused then approached the High Court under Articles 226 and 227 of the Constitution. The High Court examined the provisions of Section 138 and Section 142(2) of the NI Act, as well as the relevant case law. It held that the place where the cheque is presented for collection is a relevant factor for determining jurisdiction. Since the complainant presented the cheques in Mumbai, the Magistrate at Mumbai had jurisdiction. The court dismissed the petition, upholding the order of the Magistrate and the Sessions Court.
Headnote
A) Criminal Law - Territorial Jurisdiction - Section 138 Negotiable Instruments Act, 1881 - Place of Presentation - The court held that for an offence under Section 138 of the NI Act, the place where the cheque is presented for collection to the payee's bank is a relevant factor for determining territorial jurisdiction, and not merely the location of the drawee bank. The complaint was filed at Mumbai where the complainant deposited the cheques in its bank accounts. The court dismissed the petition challenging jurisdiction, holding that the Magistrate at Mumbai had jurisdiction to try the case. (Paras 1-20)
Issue of Consideration
Whether the Metropolitan Magistrate at Mumbai had territorial jurisdiction to entertain a complaint under Section 138 of the Negotiable Instruments Act, 1881, when the cheques were drawn on a bank at Silvassa but were deposited for collection in Mumbai.
Final Decision
The High Court dismissed the petition, holding that the Metropolitan Magistrate at Mumbai had territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act.
Law Points
- Territorial jurisdiction for Section 138 NI Act determined by place where cheque is presented for collection
- not where drawee bank is located
- Section 138 Negotiable Instruments Act
- 1881
- Section 142(2) Negotiable Instruments Act
