Ge Capital Transportation Financial Services Ltd v. Shyam Roadlines

judgment as the impugned judgment is common in all these cases and the question involved is also common. For the sake of convenience, only the facts of CRL.REV.P. No. 166/2010 are referred to. % Certify that the digital file and physical file have been compared and the digital data is as per the physical file and no page is missing. ©

¶2The present petition is filed by the petitioner under Section read with Section 401 Cr.P.C. read with Section 482 Cr.P.C. praying inter alia for quashing of the order dated

30.3.2010 passed by the learned Metropolitan Magistrate, whereunder complaint preferred by petitioner under Section 138 of the Negotiable Instruments Act, 1881 (in short 'the Act') was dismissed by the trial court on the ground of lack of territorial vested in Delhi courts to entertain try complaint.

¶3Vide order dated 30.3.2010, the learned Metropolitan Magistrate returned the complaint of the petitioner for presentation of the same before the court having territorial jurisdiction, on the ground that there was nothing in the complaint or the documents annexed, which showed that any of the acts constituting the offence under Section 138 of the Act had taken place in New Delhi, except for the presentation of cheque for encashment issuance of legal notice. The learned Metropolitan Magistrate rejected the argument of the complainant that the fact that the complainant-company has its registered office in Delhi or the cheque in question was presented at a service branch of the Drawee Bank situated at Delhi, would confer territorial jurisdiction on the courts at Delhi. In the impugned order, it was observed that in the present case, the cheque for encashment was issued by a drawee bank located outside the territorial of Delhi and hence, the complaint was not maintainable in Delhi merely because of issuance of legal notice from Delhi.

¶4Learned counsel submits that the impugned order of the learned Metropolitan Magistrate dated 30.3.2010 is erroneous, inasmuch as the court below failed to consider the fact that in the case of Bhaskaran vs. Sankaran Vaidhvan Balan & Anr., reported as (1999) 7 SCC 510, it was held by the Supreme Court that the following acts were the necessary components for the offence under Section 138 of the Act to be constituted :

(i) drawing of the cheque,

(ii) presentation of the cheque to the bank,

(iii) returning the cheque unpaid by the drawee bank,

(iv) giving notice in writing to the drawer of the cheque demanding payment of the cheque amount and,

(v) failure of the drawer to make payment within 15 days of the receipt of the notice. It is urged that the aforesaid decision had made it clear that it was not necessary that all the above five acts ought to have been perpetrated at the same locality and it is possible that each of those five acts could have occurred at five different localities and that any one of the courts exercising jurisdiction in those five local areas could then have become the place of trial for the offence under Section 138 of the Act.

¶5Learned counsel further submits that reliance placed by the court below in the case of M/s Harman Electronics fP') Ltd. vs. M/s National Panasonic India Ltd.. 156 (2009) DLT 160 (SC) is misplaced, as in the aforesaid decision, it was particularly noticed that the complaint was completely silent on the fact whether the cheques were presented-at Chandigarh or not. It is stated that in the aforesaid case, as the parties were carrying on business at Chandigarh, the transactions took place at Chandigarh, the cheques were issued at Chandigarh, the Supreme Court had o observed that it had no option but to presume that the cheques were also presented at Chandigarh dishonour of the cheques took place at Chandigarh, hence mere sending of a demand notice from Delhi would not vest jurisdiction on Delhi courts to take cognizance under the Act. It is the contention of the counsel that unlike the facts in the case of M/s Harman Electronics fsuora). in the present case, mere issuance of a legal notice by the petitioner/complainant from Delhi alone does not confer territorial on Delhi courts, rather the aforesaid act combined with act of presentation of cheque for encashment dishonor of the cheque would confer such jurisdiction. He submits that the petitioner has filed an additional affidavit, wherein it is stated that the loan agreement was executed at New Delhi and that the loan was disbursed to the respondent from the account of the petitioner from New Delhi.

¶6Counsel for the petitioner further states cheques in question issued by the respondent were payable at par at all branches of the drawee bank because of the core banking system adopted by banks in the ^ country, thus entitling an outstation cheque to be paid at par at all the branches of a drawee bank in any part of the country. He submits that the cheques in question were presented at the bank of the petitioner at New Delhi for encashment, through the clearance house of the Reserve Bank of India, and were dishonoured by the bank of the respondent at New Delhi and returned unpaid to the petitioner through its bank at New Delhi with the remarks "insufficient funds". Hence, it is canvassed contrary to the finding of the court below, territorial jurisdiction would vest in the courts at Delhi.

¶7It was also brought to the notice of this court that a Division Bench of this Court in the case of Delhi High Court Legal Services Committee vs. Govt. of NCT of Delhi, decided on 23.09.2009 in WP (C.) 11011/2009, had directed return of all those complaints where courts had taken cognizance without actually having territorial jurisdiction. Learned counsel states that the Supreme Court in SLP(C) No.29044/2009 entitled Viiav Kumar Shailendra vs. Delhi High Court Legal Services Committee and Anr filed against the aforesaid order, had directed status quo to be maintained until further orders. He states while present complaints were filed in May 2009, the status quo order was passed by the Supreme Court on 3.11.2009 and in view of the said order, the complaints ought not to have been returned by the court below, particularly when the aforesaid interim order was pointed out to the court below.

¶8The question of territorial vesting in the Courts in Delhi, in the context of complaints filed under Section 138 of the Act came up for consideration before this Court in a batch of matters, lead matter j being l^/s Religare Finvest Ltd. vs. State &. Anr. CrI.Rev.P.No.179/2009, reported as 173(2010) DLT 185. In the aforesaid case, after examining a number of judgments cited by both sides on issue of territorial including K. Bhaskaran vs. Sankaran Vaidhvan Balan and Anr. reported as (1999) SCC 510; Trisuns Chemical Industry vs. Raiesh Agarwal and Ors. reported as (1999) 8 SCC 686; Shri Ishar Allov Steels Ltd. vs. Javaswals NECO Ltd. reported as 2001 (3) SCC 609; Lok Housing Constructions Limited vs. Raghupati Leasing Finance Limited Anr. reported as

(2002) DLT 38; l^losaraf Hossain Khan vs. CRL.REV.P. 166/2010 & Ors. Bhaqheeratha Enqq. Ltd. reported as (2006) 3 SCC 658; Smt. Shamshad Bequm vs. B. Mohammed reported as 2008 (13) SCALE 669; Raiiv Modi vs. Saniav Jain reported as V (2009) SLT 725; ICICI Bank Ltd. vs. Subhas Chand Bansal reported as 160 (2009) DLT 379; Achintva Mandal vs. Chaltanva Aqro Products & Ors. reported as 2009

(108) DRJ 471; M/s Harman Electronics Pvt. Ltd. vs. M/s National Panasonic India Ltd. reported as 2009 II AD SC 21; Reliqare Finvest Limited vs. Sambath Kumar A reported as (2010) JCC (NI) 266 and Patiala Castinq P. Ltd. & Ors. vs. Bhushan Steel Ltd. reported as 2010 IV" AD (CRL)(DHC) 266, this Court had held as below;- "15. As regards submission of the counsel for the respondent that territorial vests in a Court in whose jurisdiction, the major portion of the cause of action arises, i.e., locality where bank of the accused which has dishonoured cheque Is situated, Supreme Court has clarified in the case of K. Bhaskaran (supra), that the locality where the bank of the accused, which has dishonoured the cheque, is situated cannot be regarded as the sole criteria to determine place of offence and that a place, for the purpose of invoking provisions of Section 138 of the Act, would depend on a ^ variety of facts. Pertinently, the term used by the Supreme Court in the aforesaid case for completing ^ offence under Section 138 of the Act is "acts" and not "cause of action". The said position emerges clearly from a bare reading of paras 11, 14 and 16 of the aforesaid judgment reproduced hereinabove. Therefore, this Court is not inclined to agree with the submission of the counsel for the respondent that the major portion of the cause of action in the present case arose only after cheque issued by the respondent/accused was forwarded by the banker of the petitioner/complainant to the banker of the accused, where, on presentation, cheque was dishonoured, which In the present case. Is situated not in Delhi, but in Pune.

¶16It is clear from provision itself an offence under Section 138 would not be completed with the dishonour of the cheque. Rather, it attains completion only with the failure of the drawer to pay the cheque amount within the expiry of the fifteen days after the legal notice is served upon the drawer of the cheque/s whose cheque/s have been dishonoured. As noted above, offence under Section 138 of the Act can be completed only with the concatenation of a number of acts, the acts being, drawing of the cheque, presentation of the cheque with bank, returning of the cheque unpaid by the drawee bank, giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, failure of the drawer to make payment within 15 days of the receipt of the notice. It is not essential that all the acts should be committed at the same locality. It is quite possible all five acts are perpetrated in five different localities. In such a situation, any one of the courts exercising in one of the five localities can become the place of trial for the offence under Section 138 of the Act. At the stage of entertaining a complaint under Section 138 of the Act, the Court is only required to arrive at a prima facie opinion as to territorial jurisdiction, on the basis of the averments made therein, without launching into a fact finding mission as to their correctness or otherwise. xxxx xxxx

¶25From aforesaid facts circumstances, there appears no ambiguity on the aspect of the right of the petitioner/complainant to file a complaint in a Court having in the context of the five acts mentioned in the case of K. Bhaskaran (supral. In the present case, as noted above, a substantial part of the cause of action for filing of the complaint by the petitioner/company against respondent/accused under Section of the Act, prima facie appears to have arisen within the jurisdiction of the courts in Delhi. However, it is clarified that if after taking cognizance, the respondent/accused is able to place such material facts on the record which demonstrate the Courts in Delhi do not have the territorial to entertain complaint, learned Metropolitan Magistrate shall still have a free hand to ascertain the truth of the allegations made by the petitioner/complainant arrive at a different conclusion."

¶9On a plain reading of the principles laid down in the aforesaid cases, it is clear that the two acts of presentation of the cheque issuance of legal notice from Delhi, constitute two of five acts CRL.REV.P. 166/2010 & Ors. contemplated by K. Bhaskaran vs. Sankaran Valdhvan Balan & Anr. fsupraV Further, petitioner/complainant claims loan agreement was executed at Delhi and the loan was disbursed to the respondent, from the account of the petitioner, from New Delhi. Hence this court is inclined to agree with the petitioner that on a prima facie view, territorial would vest in Delhi.

¶10Admittedly, the cases were at the pre-summoning stage evidence had yet not been recorded by the learned Metropolitan Magistrate. On this point, this Court has already held in the case of M/s Reliqare Finvest Ltd. vs. State & Anr. fsupra) that the Magistrate taking cognizance of an offence must not necessarily have the territorial to try the case. The observations made in this context in the aforesaid judgment are reproduced hereinbelow: "24. As discussed above, Magistrate taking cognizance of an offence must not necessarily have the territorial to try the case as well. Only when an enquiry or trial begins, does the jurisdictional aspect become relevant. In fact, after taking cognizance of the offence, the Magistrate may have to decide as to which court would have the jurisdiction to enquire into the case and such a situation can arise only during post-cognizance stage. At the pre-cognizance stage, the Magistrate has only to examine the averments, as set out in the complaint and not more, for prima facie arriving at a decision as to whether some of the acts essential for completing an offence under Section 138 of the Act were done in the territorial of that Court. In the present case, having perused the complaint filed by petitioner/complainant without ascertaining correctness of the allegations made therein, prima facie it has to be held that a part of the cause of action has arisen in Delhi and the same is not based solely on the issuance of a legal notice by petitioner/complainant to respondent/accused from Delhi, but some other acts done prior thereto, as set out in para (3) hereinabove." (emphasis added) CRL.REV.P.166/2010 & Ors. r\

¶11Furthermore, in light of averments contained in additional affidavit filed by the petitioner, the petitioner is justified in stating that since the matter was still at the pre-summoning stage, the petitioner-company was not heard by the learned MM and had it been afforded an opportunity to be heard, it could have filed such an additional affidavit along with the supporting documents in the trial court, so as to satisfy the court that it had the territorial to proceed with the complaint filed by the petitioner. Reliance can be placed on CrI. M.C. 50 of 2010 entitled Hartai Singh v. Godrei Aarovet Ltd. & Anr.. decided by a coordinate bench of this court on 31.05.2010, wherein at the pre-summoning stage, the complainant (respondent in that case) could not file an additional affidavit and supporting documents to make out a case of territorial jurisdiction. The Single Judge in that case held that if objections as to lack of territorial were raised at the pre-summoning stage, the complainant could have filed an additional affidavit by way of evidence along with supporting documents to take a categorical stand and justify its stand that the criminal courts in Delhi were vested with territorial to entertain the complaint.

¶12In the instant cases, when the learned counsel for the petitioner has filed additional affidavits along with the relevant documents and has taken a clear and categorical stand with regard to additional acts relevant for purpose of deciding issue of territorial jurisdiction, this Court is inclined to agree with him that the averments contained in the complaint, when read in conjunction with the additional affidavit, would prima facie show that there vests territorial in the court at New Delhi. It is further relevant to note in case respondent/accused enters appearance before the court below after being summoned, he shall still have a right to take a plea with regard to the aspect of territorial of the court by placing such material facts on record, as may be considered necessary at that stage. Learned Metropolitan Magistrate would then be in a position to ascertain truth of assertions made by petitioner/complainant and could then arrive at a different conclusion.

¶13As for the argument of the counsel that the learned MM had erred in returning the complaint, in the light of the status quo order passed by the Supreme Court in the SLP filed against the order of a Division Bench of this Court in Delhi High Court Legal Services Committeersupra^. wherein directions were issued for the return of all those complaints, where cognizance had been taken by the trial court without being vested with territorial jurisdiction, this court is inclined to agree with observation of the learned MM that such a status quo order would operate only against those complaints where cognizance had already been taken and not in cases, such as the one at hand, where cognizance had yet to be taken. Hence, the argument of the counsel in this ® regard is turned down.

¶14In view of the above, the present petitions are allowed and the impugned orders are set aside. The cases are remanded back to the trial court with directions to proceed further and deal with the complaint of the petitioner filed under Section 138 of the Act in accordance with law. The petitioner shall appear before learned Metropolitan Magistrate on

04.04.2011 at 2.00 PM for further proceedings.

¶15It is however made clear that while passing the present order, this Court has refrained from dealing with the arguments urged by the learned counsel on the issue of the core banking system adopted by banks in the country, which requires outstation cheques to be paid at par at all the branches of a drawee bank in any part of the country, which as per the petitioner, is an additional ground for conferring territorial jurisdiction on courts at Delhi, for the reason that, without going into the merits of the aforesaid argument, this Court finds that there exist other grounds which are considered sufficient to hold that, on a prima facie view, courts at Delhi would be vested with territorial to entertain complaint filed by the petitioner under Section 138 of the Act. A copy of this order be forwarded by the Registry forthwith to the trial court for information. FEBRUARY 28, 2011 sk CRL.REV.P. 166/2010 & Ors. (HIMA KOHLI) JUDGE

29 to 31 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CRL.REV.P.No.166/2010 &Crl.M.A. No.4077/2010 CRL.REV.P.No.191/2010 &Crl.M.A. No.5522/2010 CRL.REV,P.No.l95/2010 StCrl.M.A. No.5537/2010 Decided on 28.02.2011 IN THE MATTER OF : G.E. CAPITAL TRANSPORTATION FINANCIAL SERVICES LTD. ..... Petitioner Through: l^r. Vinay K. Shailendra with Ms. Worthing Kasar, Advs. versus IQBAL KHAN ....Respondent in CRLREV.P. 166/2010 SHYAM ROADLINES ....Respondent in CRL.REV.P.191/2010 SATPAL ....Respondent in CRLREV.P.195/2010 Through: None. CO RAM * HON'BLE MS.JUSTICE HIMA KOHLI 1. Whether Reporters of Local papers nnay be allowed to see the Judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? HIMA KOHLI. 3. (Oral) 1. The present petitions are disposed of by this common order and