Laxmi Vishnu Textiles v. Indiabulls Credit Services Ltd. & Anr

* IN THE HIGH COURT OF DELHI AT NEW DELHI

+

Crl.M.C.3309/2009 & Crl.M.C.3334/2009 %

Date of Order : 24th February, 2010

# LAXMI VISHNU TEXTILES

..... Appellant ! Through: Mr.Arvind Chaudhary, Adv.

versus

$ INDIABULLS CREDIT SERVISES LTD. &.... Respondent ^

Through: Mr.Sanjay Abbot, Advocate for

Respondent No.2.

* CORAM:

HON'BLE MR. JUSTICE V.K. JAIN

¶1Whether the Reporters of local papers may be allowed to see the judgment? No

¶2To be referred to the Reporter or not? No

¶3Whether the judgment should be

No

reported in the Digest?

: V.K. JAIN, J. (ORAL)

¶1This is a petition seeking quashing of the criminal complaint filed against the petitioner under Section 138 of Negotiable Instruments Act. Quashing has been sought primarily on the ground that Delhi Court does not have jurisdiction to entertain and try the complaint.

¶2There are five essential ingredients of offence under Section 138 of the Negotiable Instruments Act: (i) drawing of the cheque, (ii) presentation of the cheque to the bank of the payee, (iii) return of the cheque unpaid by the drawee bank,

(iv) giving of notice 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.

¶3This is not the case of the complainant that cheque in question was issued and delivered to it in Delhi. There is no such allegation to this effect in the complaint and during the course of arguments also no such stand was taken by the learned counsel for the complainant. It is an admitted case that the petitioner is a resident of Mumbai and does not have either a residence or a place of work in Delhi. It is an admitted case that cheque in question was drawn on a bank in Mumbai and was dishonoured by that bank at Mumbai. It is also an admitted position that the notice of demand though issued from Delhi was sent to the petitioner at Mumbai. This is nowhere the case of the complainant that the notice of demand was served upon the petitioner in Delhi.

¶4The averments made in the complaint show that according to the complainant, cheque issued by the petitioner/respondent was deposited by it with HDFC Bank, New Delhi and the Notice of Demand was also issued from Delhi.

¶5The question whether issue of Notice of Demand from Delhi to a person who resides and works for gain outside Delhi came up for consideration before the Hon"ble Supreme Court in "Harman Electronics Private Limited and Anr. v. National Panasonic India Private Limited', (2009) 1 SCC 720. In that case, the appellant was carrying business at Chandigarh. The complainant had its head office at Delhi and a branch office at Chandigarh. The cheque in question was issued, presented and dishonoured at Chandigarh. The respondent/complainant issued notice to the appellant from Delhi. The notice was served upon the appellant at Chandigarh. On failure of the appellant to pay the amount of the cheque, a complaint was filed at Delhi. An application filed by the appellant questioning jurisdiction of the court at New Delhi was dismissed on the ground that since the notice was sent by the complainant from Delhi, the appellant had failed to make payment at Delhi and the respondent was carrying out business at Delhi, the Delhi

court had jurisdiction to entertain the complaint.

¶6As regard, issue of notice from Delhi, Hon"ble Supreme Court held that issuance of notice would not by itself give rise to a cause of action but communication of notice would give. The Hon"ble Court was of the view that for constituting offence u/s 138 of Negotiable Instruments Act, the notice must be received by the accused, though it may be deemed to have been received in certain situations.

¶7It was noted that while issuance of notice by the holder of Negotiable Instrument is necessary, service thereof is also imperative and only after 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 and, therefore, giving of notice cannot have precedence over the service. The Hon"ble Court declined to apply the civil law Principle that the debtor must seek the creditor, to a criminal case. Holding that jurisdiction in a criminal case is governed by the provisions of Criminal Procedure Code and not on common law principle, it was held that Delhi Court had no jurisdiction to try the case.

¶8The following observations made by the Hon"ble Supreme Court in this case are pertinent: "A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on a 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."

¶9This issue has been examined by me in a number of cases, including the WP.(Crl.).861/09, 884/09, 885/09 decided on 8th February, 2010 and Crl.M.C.1841/2009 decided on 17th February, 2010. After referring to the decision of the Hon"ble Supreme Court in the case of Herman Electronics (supra), this Court, inter alia, held as under: "Proviso (b) to Section 138 of Negotiable Instruments Act requires payee of the cheque or its holder in due course, as the case may be, to make a demand of the amount of the cheque by giving a written notice to the drawer of the cheque. The question which arises for consideration is as to whether the demand is made at the place where the drawer of the cheque resides or works for gain or it is made at the place from where the notice of demand is dispatched to the drawer of the cheque. Since the requirement of the proviso will not be fulfilled without

service of notice upon the drawer and considering the decision of the Hon"ble Supreme Court in the case of Harman Electronics (supra) holding therein that civil law principle that the debtor must seek the creditor does not apply to a criminal case, the demand shall be deemed to have been made at the place where the notice is served upon the drawer and not at the place from where it is dispatched to him. In fact in view of the decision in the case of Harman Electronics (supra), the notice shall be deemed to have been given at the place where it is served upon the addressee and not at the place from where it was dispatched."

¶10In 'Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd,' (2001) 3 SCC 609, the Hon"ble Supreme Court inter-alia, held that "The bank" referred to in clause (a) to the proviso of Section 138 of the Act would mean the drawee bank on which the cheque is drawn and not all the banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued." It was further observed that "the payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or Payee bank on

which the cheque is drawn within the period of six months from the date on which it is shown to have been issued." In para 10 of the judgment the Hon"ble Supreme Court further observed that "Sections 3, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable."

¶11The ratio of the above referred judgment of the Hon"ble Supreme Court is that a cheque is deemed to have been presented to the banker of the drawer irrespective of the fact whether it is deposited by the payee in his own bank. The banker of the payee, after receiving the cheque from him, is required to present it to the banker of the drawer and therefore if the cheque issued from a bank outside Delhi is deposited in Delhi, the bank in which it is deposited in Delhi, is required to present it to the bank outside Delhi, for the purpose of encashment.

¶12For the reasons given in the preceding paragraphs, I am of the view that Delhi Court has no jurisdiction to entertain and try this complaint. It is, therefore, directed that the complaint filed by respondent No.1 be returned to it within

four weeks for presenting it before a competent court having jurisdiction in the matter.

(V.K.JAIN) JUDGE FEBRFUARY 24, 2010 'sn'