By Harpreet Kaur, Advocate
LANDMARK CASE LAW OF SUPREME COURT
For filing of the complaint under section 138, Negotiable Instruments Act; Hon’ble Supreme Court in the landmark judgment of
Dashrath Rupsingh Rathod v. State of Maharashtra, 2014 AIR (SC) 3519,
has held that “The interpretation of Section 138 of the NI Act which commends itself to us is that the offence contemplated therein stands committed on the dishonour of the cheque, and accordingly the JMFC at the place where this occurs is ordinarily where the Complaint must be filed, entertained and tried. The cognizance of the crime by the JMFC at that place however, can be taken only when the concomitants or constituents contemplated by the Section concatenate with each other. We clarify that the place of the issuance or delivery of the statutory notice or where the Complainant chooses to present the cheque for encashment by his bank are not relevant for purposes of territorial jurisdiction of the Complaints even though non-compliance thereof will inexorably lead to the dismissal of the complaint. It cannot be contested that considerable confusion prevails on the interpretation of Section 138 in particular and Chapter XVII in general of the NI Act. The vindication of this view is duly manifested by the decisions and conclusion arrived at by the High Courts even in the few cases that we shall decide by this Judgment. We clarify that the Complainant is statutorily bound to comply with Section 177 etc. of the CrPC and therefore the place or situs where the Section 138 Complaint is to be filed is not of his choosing. The territorial jurisdiction is restricted to the Court within whose local jurisdiction the offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn.”
It concluded that
“(i) An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank.
(ii) Cognizance of any such offence is however forbidden under Section 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause (c) of proviso to Section 138.
(iii) The cause of action to file a complaint accrues to a complainant/payee/holder of a cheque in due course if-
(a) The dishonoured cheque is presented to the drawee bank within a period of six months from the date of its issue.
(b) If the complainant has demanded payment of cheque amount within thirty days of receipt of information by him from the bank regarding the dishonour of the cheque and
(c) If the drawer has failed to pay the cheque amount within fifteen days of receipt of such notice.
(iv) The facts constituting cause of action do not constitute the ingredients of the offence under Section 138 of the Act.
(v) The proviso to Section 138 simply postpones/defers institution of criminal proceedings and taking of cognizance by the Court till such time cause of action in terms of clause (c) of proviso accrues to the complainant.
(vi) Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured.
(vii) The general rule stipulated under Section 177 of Cr.P.C applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before the Court within whose jurisdiction the dishonour takes place except in situations where the offence of dishonour of the cheque punishable under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof.”
THE NEGOTIABLE INSTRUMENTS (AMENDMENT) ORDINANCE, 2015
After the passing of landmark judgment, The Negotiable Instruments (Amendment) Ordinance, 2015 was also promulgated by the President. The Ordinance amends the Act to regulate the jurisdiction of courts for cases of cheque bouncing, such that in a case of cheque bouncing:
- If the cheque is delivered for collection to the account of the payee, the jurisdiction lies in the area of the bank branch where the payee maintains an account, or
- If the payee presents a cheque to a bank in any other way, the jurisdiction lies in the area of the bank branch where the drawer (person who writes the cheque) maintains an account.
All cases regarding cheque bouncing which were pending in any court, before this Ordinance came in force, will be transferred to a court with appropriate jurisdiction. If the payee has filed a complaint against the drawer of a bounced cheque in a court with the appropriate jurisdiction then all subsequent complaints against that person regarding cheque bouncing will be filed in the same court. This will be irrespective of whether the cheque was delivered for collection or presented at a bank branch within the territorial jurisdiction of that court. If more than one case is filed by the same payee against the same drawer before different courts, the case will be transferred to the court with the appropriate jurisdiction, before which the first case was filed.
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