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2010 Supreme(Mad) 4630

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P.R. SHIVAKUMAR
Pale Horse Designs & Another
Versus
Natarajan Rathnam
CRL.O.P.Nos.20946, 20991 & 20992 of 2007 & M.P.Nos.1+1+1 of 2007
Decided On : 26-10-2010

Advocates Appeared:
For the Petitioners:R. Amizhdu for S. Sashi Kumar, Advocates.
For the Respondent:V.P. Sengottuvel, Advocate.

Headnote:A. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 134 -

       Liability of drawer or maker of foreign negotiable instrument, in case of dishonour -HELD from Section 134 it is Clear that liability of a foreign negotiable instrument shall be governed by law of place where it was made in all essential matters - On facts, cheques were drawn at Massachusetts (USA) and so in all essential matters, law in USA shall be attracted towards any action against drawer - Section 134 deals only with civil liability and not criminal liability.

       (Para 24)

       B. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 135 -

       Foreign Instruments - Liability of drawer of negotiable instrument - HELD, law of place where cheque is made payable, determines what constitutes dishonour and what notice of dishonour is sufficient in case of negotiable instrument payable at a place different from where it is made or endorsed - Places where cheques where made in the petition being only at Melachutts, Section will not help respondent.

       C. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTION 136 -

       Liability under foreign instrument in case of dishonour - HELD, Section 136 is to the effect that if a negotiable instrument is made, drawn, accepted or indorsed outside India, but in accordance with law of India, then the circumstance that any agreement evidenced by such Instrument shall not be valid according to the law of the country wherein it was entered into, will not invalidate any subsequent acceptance or endorsement made thereon within India - Subsequent acceptance and endorsement made within India alone are not invalidated because of the law of the other country in which it was entered into, even though the agreement evidenced by the instrument made in the foreign country shall be invalidated in accordance with the law of the said country.

       (Para 26)

       D. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTIONS 137 & 138 -

       Liability of foreign instrument - Section 137 also deals with the presumption of law of foreign country regulating civil rights and liabilities in respect of negotiable instruments. When an act is not generally recognized by the international community, by a general convention, treaty or a universal declaration to be an offence, no presumption can be made that, simply because such an act made is punishable as an offence under the law of India, the same shall have also been made punishable under the law of any foreign country, though the liability is civil in nature - By a special provision under Section 138 of the Negotiable Instruments Act, 1881, the dishonour of a cheque when the cheque amount is not paid within a specified time after the receipt of statutory notice of demand, it is made an offence.

       (Para 27)

       E. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTIONS 1, 11, 12 AND 134-137 -

       A combined reading of Sections 1, 11, 12 and 134 to 137 of the Negotiable Instruments Act, 1881, will make it clear that a cheque made/drawn In a foreign country on a drawee bank functioning in the foreign country and made payable therein shall be a foreign instrument and the law of the country wherein the cheque was drawn or made payable shall be the law governing the rights and liabilities of the parties and the dishonour of the cheque. As such the payee cannot select a country and present it through a bank therein for collection to confer Jurisdiction on a court functioning therein.

       (Para 31)

       F. NEGOTIABLE INSTRUMENTS ACT, 1881 - SECTIONS 134 to 138 -

       Liability for dishonour of foreign instrument - Act constituting the offence, namely issuance of the cheque, the dishonour of the cheque, the failure to make payment of the cheque after receipt of the statutory notice were all committed by them not in India, but in USA. Therefore, they cannot be prosecuted in India for the said act as an offence punishable under Section 138 - Prayer to quash proceedings allowed.

       Result: Crl. O.P. Allowed.

Judgment :-

The parties in all the three criminal original petitions are same. The first petitioner M/s.Pale Horse Designs is a company registered in the United States of America of which the second petitioner is the president. Natarajan Rathnam, who figures as the respondent in all the three criminal original petitions, is a Non-Resident Indian living in the United States of America at No.3, Parkway Drive, Roselyn Heights, New York.

2. Natarajan Rathnam, the respondent herein, furnishing a local address in Chennai, namely No.37, Venkatarathinam Nagar, Adyar, Chennai as his residential address, has preferred three complaints on the file of the IX Metropolitan Magistrate, Saidapet, Chennai under Section 200 Cr.P.C for alleged offences punishable under Sections 138 and 141 of the Negotiable Instruments Act, 1881 in respect of seven dishonoured cheques drawn on M/s.Danvers Savings Bank, One Conant Street, Danvers, MA 01923 in favour of the respondent herein. In respect of two cheques dated 15.06.2006 bearing cheque Nos.002661 and 002663, each for a sum of US$ 5000, totalling a sum of US$ 10,000, the respondent preferred a separate complaint and the same has been taken on file by the above said IX Metropolitan Magistrate as C.C.No.1506/2007. The said cheques had been presented for collection through the banker of the respondent, namely M/s.ICICI Bank Limited, Anna Nagar, Chennai-102 on 09.08.2006 and the same were dishonoured for the reason "stop payment" instructions were issued by the drawer. The said fact of dishonour of the cheques, according to the averments found in the complaint, was intimated to the respondent on 23.08.2006 by memo of the bank dated 21.08.2006 and the original cheques were also returned with a memo dated 25.08.2006. After issuing a legal notice dated 19.09.2006, which was received by the petitioners on 28.09.2006, the respondent preferred the complaint on 31.10.2006 alleging commission of the offences punishable under Sections 138 and 141 of the Negotiable Instruments Act, 1881, since within the time allowed by the said Act after the receipt of the statutory notice, the petitioners/accused did not make payment of the amount covered by the cheques.

3. With similar averments regarding two more cheques dated 15.02.2006 and 15.04.2006 respectively, bearing cheque Nos.002647 and 002649, each one drawn for a sum of US$ 5000, which were also presented for collection through ICICI Bank Limited, 3rd Avenue, Anna Nagar, Chennai and returned by the bankers for the reason "stop payment" instructions had been given and contending similar allegations, another complaint was preferred on the very same day, namely 31.10.2006 and the same was taken on file by the IX Metropolitan Magistrate, Saidapet as C.C.No.1505/2007.

4. The third complaint was also preferred on the very same day by the respondent herein in respect of three more cheques drawn on 15.03.2006, 15.04.2006 and 15.05.2006 bearing cheque Nos.002658, 002659 and 002660 respectively, each one for a sum of US$ 5000, which were also presented for collection through the very same bank and dishonoured for the very same reason. The said complaint was taken on file as C.C.No.1507/2007.

5. In all the three complaints uniform averments have been made to the effect that the said cheques drawn on Danvers Savings Bank, One Conant Street, Danvers, MA 01923 were issued in favour of the respondent herein/complainant in discharge of a liability in part of the petitioners herein towards the respondent herein/complainant. Since the said complaints were taken on file and registered as calendar cases on the file of the IX Metropolitan Magistrate, Saidapet, Chennai and the said Metropolitan Magistrate has also ordered issuance of summons to the petitioners/accused, pursuant to which summons were served on them in the United States of America, they have come forward with all the three criminal original petitions, invoking the inherent powers of the High Court under Section 482 Cr.P






























































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