Yashomala Engineering Pvt. Ltd. & others vs Tata SSL Ltd. & another

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1998 Supreme(Bom) 468

IN THE HIGH COURT OF BOMBAY
Pandya N.J., J.
Yashomala Engineering Pvt. Ltd. others .... Petitioners.
Versus
Tata SSL Ltd. another.... Respondents.
Criminal Writ Petition No. 327 of 1997, decided on 24-8-1998.
Advocates appeared :
P.R. Vakil with Vijay Patil A.V. Doijode, for petitioners.
A.P. Mundargi with S.V. Marvadi, for respondent No. 1.
D.N. Salvi, A.P.P., for respondent No. 2.

Headnote:Section 138-Commission of offence by company-Liability of the offence imposes on Chairman and Managing Director-Held-Petitioner as Chairman and Managing Director are held to be liable.-As to the second alternative point as to the probable liability of the remaining two petitioners who are respectively the Chairman and Managing Director of the company. The noticing question no doubt clearly says that petitioner Nos. 2 and 3 respectively are liable because they are Chairman and Managing Director.
       Sections 141 and 138--Complaint against dishonour of cheque-Persons against whom complaint filed were persons holding responsible positions in management of company -Complaint against Chairman and Managing Director definitely worth entertained.-It was not exactly conceded but the point relating to the petitioner No.3, the Managing Director was not seriously pressed and carried further. This is the correct approach. The Managing Director will be a person falling into the category of one who is in-charge of and responsible to the company for conduct of the business. The position of the Chairman if considered in the light of provisions of Section 141 of the said Act, will not be very much different from that of the Managing Director. The Chairman of the Company can certainly be considered to be responsible to the Company for the conduct of the business of the Company. On that basis also, the petitioner has no case. The net result, therefore, is that the petition fails. It is rejected. Interim relief vacated. Rule discharged.
       Section 13B--Criminal Procedure Code, 1973, Section 178(b)-Territorial jurisdiction--cheque dishonoured-Service of demand notice- Notice of demand served from Head Office of the payee company Amount due also required to be paid at Bombay--Court at Bombay has jurisdiction to take cognizance of offence.- The serving of a notice or written intimation of the return of the cheque to the drawer and opportunity thus being given to the drawer to meet with his liability within 15 days of receipt of intimation or notice is an integral part of the commission of offence. It is failure on the part of the drawer to avail of this opportunity which will bring into play the first part of Section 138.
       If no demand notice is served, obviously no action could be taken against the offender. Going by the logic of the petitioners submission, if we create a situation where an offence is constituted under an act but it will not attract any penalty, as no opportunity to get the offence condoned has been given.
       Serving of notice of demand is considered t\l be a necessary ingredient for commission of an act on the part of the defaulter which would amount to an offence.
       It Section 178 of the Code of Criminal Procedure is read, clause (b) thereof will make the position clear. If part of the offence has occurred at one place and part at the other, courts at both the places will have jurisdiction.
       The cheque was issued at Pune and credited at Pune and it having returned, that part of offence is taken place in Pune. However, when the notice has been served from Bombay, registered office of the Company i.e., payee is at Bombay and when the amount was required to be paid to the payee, obviously Bombay Court does have jurisdiction as per Seetion 178 clause (b).

JUDGMENT - PANDYA N.J., J.:The petitioner No. 1 company is accused No. 1 in Criminal Case No. 1/S of 1997 instituted in the Court of Additional Chief Metropolitan Magistrate 26th Court, Borivali, Mumbai. The said complaint has been filed under section 138 of the Negotiable Instruments Act as amended in 1988. It relates to a cheque worth Rs. 15,54,370/- drawn on Indian Bank, Kirkee Branch, Pune.

2. The dispute between the parties qua the said complaint relates to the jurisdiction of the Court of Mumbai. The arguments advanced on behalf of the petitioner company is that the entire sale transaction with the complainant-respondent No.1 company had taken place in Pune where the petitioner-company is situated and respondent No.1 company has its sale office. Developing further the case on the footing of delivery having been effected at Pune, cheque having been issued at Pune by the petitioner company and it having been deposited for realisation in the accounts of the complainant company at Pune, it is very strenuously urged on behalf of the petitioner- company that only the Court at Pune will have jurisdiction.

3. In other words based on the aforesaid factual position, the argument is to the effect that no part of cause of action has arisen anywhere else except Pune. The learned Advocate appearing for the petitioner-company had formulated the points to the effect that when in a criminal case jurisdiction is determined by the place where offence takes place, can the Court of the place where notice is issued can get jurisdiction.

4. Needless to say, the aforesaid point is formulated on the basis os section 177, Criminal Procedure Code. The said section reads as under:

"Every offence shall ordinarily be enquired into and tried by a Court within whose local jurisdiction it was committed."

The very wording suggest that this will ordinarily be the situation and in the situation other than this there are provisions in the Code which may be kept in mind and in particular section 178 thereof. It would be referred to hereinafter.

5. In order to understand the controversy, first it has to be seen what constituted the offence. It is not an offence under Indian Penal Code. It is offence created for the first time by way of amendment to the Negotiable Instruments Act, 1881. By an amendment in the year 1988, Chapter XII came to be added to the said Act. The section constituting the offence reads as under:

"138. Dishonour of cheque for insufficiency, etc. of funds in the account.---Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both;

Provided that nothing contained in this section shall apply unless--

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days

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1998 Supreme(Bom) 468

Cases Referred (1)