w w w . L a w y e r S e r v i c e s . i n



M/s. Prakiti Enterprisers & Another v/s M/s. Super Health Care

    CRLMP No. 153 of 2014

    Decided On, 09 April 2014

    At, High Court of Orissa

    By, THE HONOURABLE MR. JUSTICE S.C. PARIJA

    For the Petitioner: M/s. Goutam Kumar, Acharya M/s. Subash Ch. Hota, S.K. Behera, R. Nayak, D. Naik, Advocates. For the Opposite Party: None.



Judgment Text

S.C. Parija, J.

1. This writ petition has been filed under Articles 226 and 227 of the Constitution of India, praying for quashing of the Complaint Case No.31064 of 2013, pending in the Court of learned J.M.F.C., Chandigarh, under Section 138 of the Negotiable Instruments Act.

2. The case of the petitioners is that the petitioner no.1 is a proprietorship firm dealing in pharmaceutical products and in course of business, it was appointed as the super distributor of opposite party. On being appointed as the super distributor, the petitioner no.1 firm issued three cheques in favour of the opposite party as security, without bearing any dates and amount, drawn on State Bank of India, Tulashipur Branch, Cuttack (Orissa). While issuing the said three cheques, the petitioner no.1 firm had intimated the opposite party that the cheques have been issued towards security. It is the case of the petitioners that subsequently, as the opposite party did not extend any support to the petitioner no.1 firm, it was not able to market the pharmaceutical products which had been received from the opposite party. Inspite of complaint, as no effective steps were taken by the opposite party to support the distributorship of the petitioner no.1 firm, the stock of pharmaceutical products lying with the petitioner no.1 firm reached its expiry date, for which the same had to be destroyed, with the consent of the opposite party. It is alleged that as no support was extended by the opposite party, the petitioner no.1 firm stopped payment of all the three cheques issued as security, under intimation to opposite party, vide registered letter dated 29.9.2010. It is the further case of the petitioners that on receipt of such intimation regarding ‘stop payment’ of the three security cheques, opposite party informed the petitioners of not proceeding further or utilizing the security cheques and it was decided to wind up the business relationship between the petitioners and the opposite party.

3. It is alleged by the petitioners that surprisingly, on 07.5.2013, they received a legal notice under Section 138 of the Negotiable Instruments Act (‘N.I.Act’ for short), regarding dishonour of cheque no.534589, dated 17.4.2013, for Rs.1,00,000/- drawn on State Bank of India, Tulashipur Branch, Cuttack, (Orissa), due to payment stopped by the drawer. On receipt of the notice, petitioner no.1 firm gave a reply indicating that the fact regarding stop payment had been intimated to the opposite party since 2010 and requested the opposite party not to proceed further in the matter.

4. It is the case of the petitioners that inspite of receipt of reply to the legal notice issued under Section 138 of the N.I. Act, the opposite party has filed a criminal complaint vide Complaint Case No.31064 of 2013, before the learned J.M.F.C., Chandigarh, who has taken cognizance of the offence under Section 138 of the N.I. Act and issued summons to the petitioners.

5. The case of the opposite party (complainant), as detailed in the complaint is that the complainant is a proprietorship firm, duly registered with the Sales Tax authorities in Chandigarh and is carrying on business of selling pharmaceutical and FMCG products (Generics and OTC) on behalf of M/s. Shivek Labs Ltd. The petitioners have been purchasing different pharmaceutical/FMCG products (medicines) from the complainant firm from time to time. Whenever, the petitioners purchased pharmaceutical products from the complainant, a proper invoice was raised and a copy thereof was also dispatched to the petitioners, who chose to make part payment against the different invoices from time to time. In order to discharge the partial liability, the petitioners issued and delivered a cheque to the complainant firm bearing no.534589, dated 17.4.2013, amounting to Rs.1,00,000/-, drawn on State Bank of India, Tulashipur Branch, Cuttack (Orissa). On presentation of the said cheque with the banker of the complainant firm i.e. Punjab National Bank, Sector 17-B, Chandigarh, for its encashment, the same was dishonoured due to the reason 'payment stopped by drawer' and the cheque was returned to the complainant vide cheque returning memo dated 20.4.2013. After receipt of information from the Bank regarding dishonour of the cheque, the complainant firm issued a legal notice dated 07.5.2013 to the petitioners under Section 138 of the N.I.Act, which was duly served on the petitioners. The cheque amount having not been paid, the opposite party filed a complaint under Section 138 N.I.Act in the court of learned Chief Judicial Magistrate, Chandigarh, which was registered as Complaint Case No.31064 of 2013, which appears to be now pending before the learned J.M.F.C., Chandigarh, who has taken cognizance of the offence under Section 138 N.I.Act and has issued summons to the petitioners for their appearance.

6. Learned counsel for the petitioners submits that as the business transaction has taken place at Cuttack and the cheque in question is payable at Cuttack, no cause of action arises at Chandigarh and therefore the complaint filed at Chandigarh is not maintainable in law. It is further submitted that as the cheque in question had been issued as a security and not for payment of any debt due, the same cannot be the basis for initiating a proceeding against the petitioners under Section 138 of the N.I.Act. It is the further case of the petitioners that even otherwise, as a part of the cause of action arises at Cuttack, in the State of Orissa, this Court has jurisdiction to entertain the writ petition and quash the complaint filed by the opposite party at Chandigarh, in exercise of its extraordinary jurisdiction under Article 226 (2) of the Constitution of India.

7. In support of his contention, learned counsel for the petitioners has relied upon a Division Bench decision of this Court in Kailash Chandra Mishra v. Ajitsinh Ulhasrao Babar (W.P.(Crl.) No.138 of 2005), where a complaint lodged before the Chief Judicial Magistrate at Daman, in the State of Uttaranchal, has been quashed by this Court in exercise of its writ jurisdiction under Article 226(2) of the Constitution, relying upon the decision of the Supreme Court in Harman Electronics Pvt., Ltd. & Another v. National Panasonic India Pvt. Ltd., (2009) 1 SCC 720, on the ground that the cause of action had taken place in the State of Orissa and therefore the institution of complaint at Daman in the State of Uttaranchal is not maintainable. The conclusion arrived at by the Division Bench is as under:

'In so far as the jurisdiction of this Court is concerned, since the cheque was issued by the petitioner at Balasore and the cheque was dishonoured at Bhubaneswar, cause of action had taken place in the State of Orissa. Therefore, institution of said complaint at Daman in the State of Uttaranchal is not maintainable. Further, though the complaint is lodged at Daman in the State of Uttaranchal, in view of the amendment to Article-226 of the Constitution of India the Writ Petition filed before this Court, questioning the correctness of the same and seeking to quash the proceedings initiated at Daman, is perfectly maintainable in view of the decision of the Supreme Court referred to supra upon which reliance has been placed by the learned Senior Counsel appearing for the petitioner.'

8. The expression ‘cause of action’ has a definite connotation, which means a bundle of facts which would be required to be proved. In legal parlance the expression ‘cause of action’ is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a Court; a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in Court from another person. (See-Black’s Law Dictionary)

9. Under Section 177 of the Code of Criminal Procedure 'every offence shall ordinarily be inquired into and tried in a Court within whose jurisdiction it was committed.' The locality where the bank (which dishonoured the cheque) is situated cannot be regarded as the sole criteria to determine the place of offence. It must be remembered that offence under Section 138 would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque amount within the expiry of 15 days mentioned in Clause (c) of the proviso to Section 138 of the Act. It is normally difficult to fix up a particular locality as the place of failure to pay the amount covered by the cheque. A place, for that purpose, would depend upon a variety of factors. It can either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business. Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence under Section 138 of the Act.

10. Even otherwise, the rule that every offence shall be tried by a Court within whose jurisdiction it was committed is not an unexceptional or unchargeable principle. Section 177 itself has been framed by the legislature thoughtfully by using the precautionary word 'ordinarlily' to indicate that the rule is not invariable in all cases.

Section 178 of the Code suggests that if there is uncertainty as to where, among different localities, the offence would have been committed, the trial can be had in a Court having jurisdiction over any of those localities. The provision has further widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area, the Court in either of the localities can exercise jurisdiction to try the case. Further again, Section 179 of the Code stretches its scope to a still wider horizon. It reads thus:

'179. Offence triable where act is done or consequence ensues.- when an act is an offence by reason of anything which has been done and of a consequence which has ensued, the offence may be inquired into or tried by a Court within whose local jurisdiction such thing has been done or such consequence has ensured.'

11. In K. Bhaskaran v. Sankaran Vaidhyan Balan and another, AIR 1999 SC 3762, the apex Court while dealing with the question regarding jurisdiction of the Court to entertain a complaint under Section 138 of the N.I. Act, has observed as under:

'The offence under Section 138 of the Act can be completed only with the con-catenation 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.

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 Act. 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 tried by a Court having jurisdiction over any of such local areas.'

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.'

12. In Harman Electronics (supra), the complainant and the accused therein had entered into a business transaction. The accused was a resident of Chandigarh. He carried on the business in Chandigarh and issued a cheque in question at Chandigarh. The complainant had a branch office at Chandigarh although his head office was at Delhi. He presented the cheque given by the accused at Chandigarh. The cheque was dishonoured at Chandigarh. The complainant issued a notice upon the accused asking him to pay the amount from New Delhi. The said notice was served on the accused at Chandigarh. On failure on the part of the accused to pay the amount within 15 days from the date of the communication of the said letter, the complainant filed a complaint at Delhi. In the complaint, it was stated that the Delhi Court has jurisdiction to try the case because the complainant was carrying on business at Delhi, the demand notice was issued from Delhi, the amount of cheque was payable at Delhi and the accused failed to make the payment of the said cheque within the statutory period of 15 days from the date of receipt of notice. The cognizance of the offence under Section 138 N.I.Act was taken by the learned Magistrate at Delhi. The accused questioned the jurisdiction of the Magistrate at Delhi before the learned Addl. Sessions Judge, New Delhi. Learned Sessions Judge held that the Magistrate at Delhi had jurisdiction to entertain the complaint as, admittedly, the notice was sent by the complainant to the accused from Delhi and the complainant was having its registered office at Delhi and was carrying on business at Delhi. The learned Sessions Judge also observed that the accused failed to make payment at Delhi as the demand was made from Delhi and the payment was to be made to the complainant at Delhi. The Delhi High Court dismissed the petition filed by the accused. Thereafter, the accused approached apex Court. The Hon’ble Court considered Section 138 of the N.I. Act and also referred to K. Bhaskaran’s case (supra) and quoted the five components of offence under Section 138. The Hon’ble Court reiterated that the five different acts which are the components of offence under Section 138 of the N.I.Act 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 N.I.Act and the complainant would be at liberty to file a complaint at any of those places. Ultimately, the apex Court held that the Chandigarh Court had jurisdiction to entertain the complaint because the parties were carrying on business at Chandigarh, branch office of the complainant was also in Chandigarh, the transactions were carried on only from Chandigarh and the cheque was issued and presented at Chandigarh.

The Hon’ble Court pointed out that the complaint did not show that the cheque was presented at Delhi, because it was absolutely silent in that regard and, therefore, there was no option but to presume that the cheque was presented at Chandigarh. It was not in dispute that the dishonour of the cheque also took place at Chandigarh and, therefore, the only question which arose before apex Court for consideration was whether the sending of notice from Delhi itself would give rise to a cause of action in taking cognizance under the N.I.Act. The Hon’ble Court, relying upon the principles laid down in K.Bhaskaran (supra), accepted that the place where the cheque was presented and dishonoured has jurisdiction to try the complaint. In this way, the apex Court concluded that mere issuance of notice would not by itself give rise to a cause of action but only on the service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, the commission of an offence completes.

13. In the case of Nishant Aggarwal v. Kailash Kumar Sharma, AIR 2013 SC 2634, the question which fell for consideration before the apex Court was whether the Court, where a cheque is deposited for collection, would have territorial jurisdiction to try the accused for an offence punishable under Section 138 of the N.I.Act or would it be only the Court exercising territorial jurisdiction over the drawee bank or the bank on which the cheque is drawn. The Hon’ble Court took note of the decision in K. Bhaskaran (supra), wherein it was clarified that the place in the context of territorial jurisdiction as per the fifth component, namely, 'failure of the drawer to make payment within 15 days of the receipt.' The place of failure to pay the amount has been clearly qualified by the apex Court as the place where the drawer resides or the place where the payee resides and that the amplitude of territorial jurisdiction pertaining to a complaint under the N.I.Act is very wide and expansive.

14. The apex Court in Nishant Aggarwal (supra) also took note of the decision in Harman Electronics (supra) and observed as under:

'xxx In such circumstances, we are of the view that Harman Electronics (supra) is only an authority on the question where a Court will have jurisdiction because only notice is issued from the place which falls within its jurisdiction and it does not deviate from the other principles laid down in K.Bhaskaran (supra). This Court has accepted that the place where the cheque was presented and dishonoured has jurisdiction to try the complaint. In this way, this Court concluded that issuance of notice would not by itself give rise to a cause of action but communication of the notice would. In other words, the Court clarified only on the service in such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days, thereafter, the commission of an offence completes. We are of the view that this Court in Harman Electronics (supra) affirmed what it had said in K.Bhaskaran (supra) that court within whose jurisdiction the cheque is presented and in whose jurisdiction there is failure to make payment within 15 days of the receipt of notice can have jurisdiction to try the offence under Section 138 of the NI Act. It is also relevant to point out that while holding that the Chandigarh Court has jurisdiction, this Court in Harman Electronics (supra) observed that in the case before it, the complaint was silent as to whether the said cheque was presented at Delhi. In the case on hand, it is categorically stated that the cheque was presented at Bhiwani whereas in Harman Electronics (supra) the dishonour had taken place at Chandigarh and this fact was taken into account while holding that Chandigarh court has jurisdiction. In the complaint in question, it is specifically stated that the dishonor took place at Bhiwani. We are also satisfied that nothing said in Harman Electronics (supra) had adverse impact on the complainant’s case in the present case.'

15. In Escorts Limited v. Rama Mukherjee, (2014) 2 SCC 255, the apex Court while relying upon the ratio laid down in K. Bhaskaran (supra) and reiterated in Harman Electronics (supra), has also taken note of the decision rendered in Nishant Aggarwal (supra), wherein it has been concluded that the Court within whose jurisdiction whereof the dishonoured cheque was presented for encashment would have jurisdiction to entertain the complaint under Section 138 of the N.I.Act. The Hon’ble Court has also taken note of the decision rendered in Fil Industries Limited V. Imtiyaz Ahmed Bhat, (2014) 2 SCC 266, wherein the apex Court has relied upon and reiterated the ratio in K.Bhaskaran (supra) and Harman Electronics (supra).

16. In a recent decision of the apex Court in Devendra Kishanlal Dagalia v. Dwarkesh Diamonds Pvt. Ltd. and others, (2014) 2 SCC 246, the Hon’ble Court has again reiterated and reaffirmed what it had said in K.Bhaskaran (supra), Nishant Aggarwal (supra) and Escorts Limited (supra), with regard to the territorial jurisdiction of the Court to entertain a complaint under Section 138 of the N.I.Act.

17. In view of the decisions referred to above, the legal position is now well established that a criminal complaint under Section 138 of the N.I.Act can be filed at any one of the five places as indicated above and that the Court within whose jurisdiction the dishonoured cheque was presented for encashment would also have the jurisdiction to entertain the complaint under Section 138 N.I.Act. In the present case admittedly, a part of the cause of action did arise at Chandigarh and the opposite party (complainant) has approached the Court at Chandigarh by filing the complaint under Section 138 of the N.I.Act and the learned Magistrate has taken cognizance of the said offence and issued summons to the petitioners.

18. In Kailash Chandra Mishra (supra), on the facts pleaded, this Court had come to find that the cause of action for initiating the criminal proceeding under Section 138 N.I.Act arose in the State of Orissa and therefore the filing of the complaint at Daman, in the State of Uttaranchal, was not maintainable. In arriving at such a conclusion, this Court had relied upon the decision of the apex Court in Harman Electronics (supra), which is only an authority on the question whether a Court will have jurisdiction to entertain a complaint under Section 138 N.I.Act, merely because the notice demanding payment was issued from that place, as has been observed by the apex Court in Nishant Aggarwal (supra). Therefore, the decision rendered by the Division Bench of this Court in Kailash Chandra Mishra (supra) has no application to the facts of the present case, where it is not disputed that the Court at Chandigarh has the jurisdiction to entertain the complaint of the opposite party under Section 138 N.I.Act.

19. The question which now falls for consideration in this case is whether this Court, in exercise of its extraordinary writ jurisdiction under Article 226(2) of the Constitution, can quash the criminal proceeding initiated by the opposite party (complainant) before a competent Court at Chandigarh, having jurisdiction to entertain the complaint under Section 138 N.I.Act.

20. A near similar question arose for consideration before the apex Court in Musaraf Hossain Khan v. Bhagheeratha Engg. Ltd. and others, AIR 2006 SC 1288, where the respondent therein had some business transaction in West Bengal. The cheque issued by the respondent in favour of the appellant bounced. The appellant moved the Chief Judicial Magistrate, Birbhum at Suri, in the State of West Bengal, alleging commission of the offence under Section 138 of the N.I.Act. The Magistrate took cognizance of the offence and issued summons to the accused. Instead of appearing before the Court, the respondents moved the Kerala High Court and obtained interim stay of further proceedings in the matter. The said interim order was challenged in appeal before the Supreme Court and the Hon’ble Court while allowing the appeal held that the Kerala High Court has no jurisdiction to entertain the writ petition, as no part of the cause of action arose in Kerala.

21. The Hon’ble Court wh

Please Login To View The Full Judgment!

ile considering the question as to whether the Kerala High Court had jurisdiction in the matter, has observed as under: 'It is no doubt true that in a criminal matter also the High Court may exercise its extraordinary writ jurisdiction but interference with an order of Magistrate taking cognizance under Section 190 of the Code of Criminal Procedure will stand somewhat on a different footing as an order taking cognizance can be the subject matter of a revisional jurisdiction as well as of an application invoking the inherent jurisdiction of the High Court.' 22. The Hon’ble Court while considering the ambit and scope of Articles 226/227 of the Constitution of India has proceeded to hold as under: 'We have referred to the scope of jurisdiction under Articles 226 and 227 of the Constitution only to highlight that the High Courts should not ordinarily interfere with an order taking cognizance passed by a competent court of law except in a proper case. Furthermore only such High Court within whose jurisdiction the order of subordinate court has been passed, would have the jurisdiction to entertain an application under Article 227 of the Constitution of India unless it is established that the earlier cause of action arose within the jurisdiction thereof.' 23. The existence of jurisdiction is one thing and the exercise of it by the Court is quite another. The wider is the jurisdiction, the greater is the need for care and caution in exercise of it. This Court is not oblivious of its limitations to transgress into the jurisdiction of another High Court, merely because some part of the cause of action has taken place within the jurisdiction of this Court, to which the petitioners have approached at their own choice and convenience. Moreover, in the instant case, as it is not disputed by the petitioners that Court at Chandigarh has the jurisdiction to entertain the complaint of the opposite party under Section 138 N.I.Act and further as the learned Magistrate on consideration of the materials on record has taken cognizance under Section 190 Cr.P.C. and issued process, it would neither be proper nor desirable for this Court to interfere in the said proceeding and quash the complaint on merit, in purported exercise of its extraordinary writ jurisdiction under Article 226 of the Constitution. The proper course for the petitioners would be to approach the appropriate Court at Chandigarh, for redressal of their grievance. For the reasons as aforestated, the writ petition fails and the same is accordingly dismissed. No cost.
O R