Judgename : R.BASANT
M.S.Santhoshkumar - Appellant
Versus
K.G.Mohanan - Respondents
Case No : Tr.P(Crl.).No.50 of 2003(A)
Decided On : 07/10/2008
Territorial Jurisdiction - Negotiable Instruments Act - Section 138 - Bhaskaran v. Balan [1999(3) KLT 440] - Ishar Alloy Steels Ltd. v. Jayaswants Neco Ltd [2001(2) KLT 148 (SC)]
Fact of the Case:
The case involves the determination of territorial jurisdiction to try an accused for an offence under Section 138 of the Negotiable Instruments Act. The petitioner sought transfer of the case for the convenience of the parties due to the practice of presenting cheques for collection at distant places, leading to inconvenience and injustice for the drawers of cheques.
Finding of the Court:
The court found that the presentation of the cheque to the drawee bank alone confers jurisdiction, not the presentation to the collecting bank. The subsequent decision in Ishar Alloy Steels Ltd. v. Jayaswants Neco Ltd. clarified that 'the bank' referred to in Bhaskaran v. Balan refers to the drawee bank, not the collecting bank. The court also noted that the purpose of Section 138 is to ensure respectability for cheques, but this does not justify expanding territorial jurisdiction to courts where the complainant hands over the cheque to the collecting bank.
Issues: The issues involved the interpretation of 'the bank' in Bhaskaran v. Balan, the practice of presenting cheques for collection at distant places, and the determination of territorial jurisdiction under Section 138 of the Negotiable Instruments Act.
Ratio Decidendi: The presentation of the cheque to the drawee bank alone confers jurisdiction, and the subsequent decision in Ishar Alloy Steels Ltd. v. Jayaswants Neco Ltd. clarified that 'the bank' referred to in Bhaskaran v. Balan refers to the drawee bank, not the collecting bank. The court also emphasized that the purpose of Section 138 does not justify expanding territorial jurisdiction to courts where the complainant hands over the cheque to the collecting bank.
Final Decision: The Transfer Petition was allowed, and the case was transferred to the J.M.F.C, Adimali for the convenience of the parties.
Which court has territorial jurisdiction to try the accused for an offence under Section 138 of the Negotiable Instruments Act? Can the complainant present the cheque for collection at any bank anywhere in India and on that ground alone compel the drawer to contest the indictment at such place? Which is the bank referred to as venue No.2 in Bhaskaran v. Balan [1999(3) KLT 440]? Is it the drawee bank only or any bank anywhere in India where the cheque is presented by the payee or the holder in due course for collection? How is the expression "the bank" appearing in Bhaskaran (Supra) to be understood and interpreted in the light of the decision in Ishar Alloy Steels Ltd. v. Jayaswants Neco Ltd [2001(2) KLT 148 (SC)]? These interesting questions have been raised for consideration in this case by the learned counsel for the petitioner though in the petition, transfer has been claimed only to cater to the interests of the convenience of the parties.
2. An oppressive practice appears to have come to stay following the decision in Bhaskaran (Supra). These questions are raised cognizant of the inconvenience, prejudice and injustice which drawers of cheques are compelled to face and endure as a result of such a practice. The practice is this. Cheques are presented for collection at distant places, at times in other States. Some complainants like companies having their principal places of business in far away places conveniently present the cheques for collection in the accounts maintained by the head office in such distant territories and drag the drawers to such places to face prosecutions under Section 138 of the Negotiable Instruments Act. In short, the jurisdiction is manipulated conveniently by complainants by presenting cheques for collection in their accounts (either existing already or at times opened only for such specific purpose of vexation) at distant places. The presentation for collection is at such places where the parties at the time of issue, even in their wildest imagination, would not have contemplated the presentation of such cheque. When dishonour takes place at the drawer banks, complaints are filed at such distant territories with the only explanation that the cheque was presented for collection there and that is the venue permitted as venue No.2 by Bhaskaran (supra). Is this just? Is this permissible? Can this be tolerated? Did Bhaskaran (supra) contemplate this situation or give its stamp of approval to such a course.? The learned counsel for the petitioner contends that virtually the right of an accused to reasonable opportunity to defend himself is effectively frustrated and drawers of cheques are at the mercy of the powerful complainants who have the resources, infrastructure and the wherewithal to institute prosecutions at such distant places. Out of fear of the inconvenience, on being obliged to face trial at such distant places, drawers surrender to the inevitable cursing their fate. The counsel prays that it may be clarified that law does not permit this course at all.
3. It is unnecessary to search for the law on the point as according to me Bhaskaran holds the field in supersession of the decisions rendered by the High Courts prior to that pronouncement in 1999. In Bhaskaran the question received detailed consideration. I am hence not adverting in detail to the decisions of various High Courts including this Court prior to 1999 when different and conflicting views appear to have been taken by the High Courts on the question of territorial jurisdiction for the purpose of Section 138 of the Negotiable Instruments Act.
4. The question arose for consideration in Bhaskaran as to which Court can entertain jurisdiction in a prosecution under Section 138 of the Negotiable Instruments Act. After adverting to Section 177, 178 (d) and 179 Cr.P.C, conclusions were expressed in para.14 and 16. Before adverting to the conclusions, I feel that it is only proper and apposite that I extract Section 177, 178 (
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