M-S. HARMAN ELECTRONICS (P) LTD. & ANR. v. M-S. NATIONAL PANASONIC INDIA LTD

Citation: [2008] 17 S.C.R. 487

Court: Supreme Court of India

Bench: S.B. SINHA, CYRIAC JOSEPH

Case summary

M-S. HARMAN ELECTRONICS (P) LTD. & ANR. v. M-S. NATIONAL PANASONIC INDIA LTD.pdf

Judgment text

[2008) 17 S. C. R. 487 . , MlS. HARMAN ELECTRONICS (P) LTD. & ANR. v. \ M/S. NATIONAL PANASONIC INDIA LTD. (Crimi_nal Appeal No. 2021 of 2008) DECEMBER 12, 2008 [S. B. SINHA AND CYRIAC JOSEPH, JJ. ] Code of Criminal Procedure, 1973 - s. 177 - Territorial --........... jurisdiction of criminal court - To try case u/s. 138 of Negotiable Instruments Act - Held: In order to determine territorial jurisdiction of criminal Court place of commission of offence is material - Court derives jurisdiction when the cause of action arises - In a case u/s. 138 of the Act, cause of action for filing complaint arises only after completion of the offence, i. e. , after service of notice by the holder of the instrument and failure to pay on the part of accused within 15 days thereafter - Complaint can be filed at the place where ~ cause of action arose - On facts, complaint filed at Delhi not ..

maintainable - Direction to transfer the complaint to __competent court at Chandigarh - Negotiable Instruments Act, 1881 - s. 138. Doctrines/Principles: Principle that 'debtor must seek the creditor' - Applicability of - In criminal case - Held: Not applicable. Jurisdiction: Jurisdiction of criminal Court - Determination of - Basis t for - Held: Jurisdiction of Criminal Court is governed by the • provisions of Cr. P. C. and not on common law principle. Words and Phrases: 'Communication' - Meaning of. The question for consideration in the instant appeal .. was as to what is the jurisdiction of a Court to try an offence u/s. 138 of Negotiable Instruments Act, 1881. • Allowing the appeal, the Court .. HELD: 1. 1. Section 177 Cr. P. C. determines the 1 jurisdiction of a court trying the matter. The court ordinarily will have the jurisdiction only where the offence has been committed. Therefore, the place where an offence has been committed plays an important role.

1 [Paras 19 and 20] [501-D-E] 8 1. 2. A Court derives a jurisdiction only when the cause of action arises within its jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the! accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. [Para 24] [503-D] 2. 1. The offence under Sectibn 138 of the Negotiable Instruments Act, 1881 can be completed only with the concatenation of a number of acts, namely, (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, _ (3) Returning the cheque unpaidI by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice.

If five different ;icts were done in five different localities, any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence u/s. 138 of the Act and the complainant would be at liberty t file a complaint petition at any of those places. [Para 9] [495-F-H; 496-A] 2. 2. It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that di~honour of a cheque by itself constitutes an offence. For the purpose of proving its case that the accused had committed an offence u/s. 138 of the Act, the ingredients thereof are required to be proved. What would constitute an offence is stated in the main provision. The proviso apPiended thereto, however, _ imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be NATIONAL PANASONIC INDIA LTD. taken.

If the ingredients for constitution of the offence laid down in the provisos (a), (b) and (c) appended to Section _.. _,. 138, intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint. As it is only on receipt of the notice the 8 accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to Section 138 therefore, must be read together. Issuance of notice ~ would not by itself give rise to a cause of action but communication of the notice would. [Para 14] [499-C-F] 2. 3. While issuance of a notice by the holder of 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, commission of an 'D offence completes. Giving of notice, therefore, cannot have any precedent over the service.

[Para 24] [503-0-E] -l( 2. 4. For constitution of an offence u/s. 138 of the Act, )' the notice must be received by the accused. It may be deemed to have been received in certain situations. The word 'communicate' inter alia means 'to 'ma·ke known, inform, convey, etc. ' It is one thing to say that presumption is raised that notice is served but it is another thing to say that service of notice may not be held to be of any significance or may, be held to be wholly unnecessary. [Paras 17 and 20] [500-H; 501-A-E] \ 2'. 5. Presumption raised in support of service of t notice would depend upon the facts and circumstances ... of each case. Its application is on the question of law or the fact obtaining. Presumption has to be raised not on the hypothesis or surmises but if the foundational facts are laid down therefor.

Only because presumption of service· of notice is possible to be raised at the trial, the same by itself may not be a ground to hold that the distinction ~etween giving of notice and se.. Vice of notice ceases to exist. [Para 23] [503-A-B] ~: ' 2. 6. In the instant case, the parties had been carrying , on business at Chandigarh. The Head Office of the +-complainant-respondent may be at Delhi but it has a ~ branch office at Chandigarh. It is not in dispute that the transactions were carried on only from Chandigarh. It is furthermore not in dispute that the cheque was issued and presented at Chandigarh. [Para 12] [498-B] 2. 7. The complaint petition does not show that the cheque was presented at Delhi. The facility for collection -,. ---.. -ofJhe cheque admittedly was available at Chandigarh and the said facility was availed of.

The certificate issued by the Bank, which was not produced before the court taking cognizance, even if taken into consideration, does not show that the cheque was presented at the Delhi Branch of the Bank. Therefore, it /is presumed that the cheque was. presented at Chandigarh. Indisputably, the dishonour of the cheque also took place at Chandigarh. • I [Para 13] [498-G-H; 499•A] State of Punjab vs. Amar Singh] Harika AIR (1966) SC )!.. . , 1313, followed. K. Bhaskaran v. Sankaran Vaidhyan Ba/an and Anr. (1999) 7 SCC 510; Mis. Dalmia Cement (Bharat) ltd. vs. Ml s Galaxy Traders and Agencies Ltd. f! nd Ors. AIR (2001) SC 676; State of Punjab vs. Khemi Ram (1969) 3 SCC 28; Sultan Sadik vs. Sanjay Raj Subba and Ors (2004) 2 SCC 1 377; Mosaraf Hossain Khan vs. Bhagheeratha Engg. Ltd. (2006) 3 sec 658; Y. A. Ajit. v. Sofaha Ajit AIR (2007) SC 1 3151, relied on. . --t 3. 1.

A banking institution holding several cheques 'fl signed by the·same borrower ca~not only present the cheque for its encashment at four different places· but also may serve notices from four diff~rent places so as to enable it to file four complaint cases at four different places. This only causes grav~ harassment to the accused. It is, therefore, necessary iin a case of this nature • to strike a balance between the right of the complainant and the right of an accused vis-a-vis the provisions of • MIS. HARMAN ELECTRONICS (P) LTD. & ANR. v. MIS. 491 NATIONAL PANASONIC INDIA LTD. Cr. P. C. [Para 25] (503-F-H] ·3. 2. The principle that the debtor must seek the I "-i creditor cannot be applied in a criminal case. Jurisdiction of the Court to try a criminal case is governed by the provisions of Cr. P. C. and not on common law principle. (Paras 26 and 27] (504-A-B] 4. It is directed that the complaint case pending in the.

=='court at New Delhi, be transferred to the competent Court: at Chandigarh. (Para 28] [504-D] ~ Case Law Reference: (1999) 1 sec 510 relied on. Para 9 AIR 2001 SC 676 relied on Para 11 .. AIR (1966) SC 1313 followed Para 16 (1969) 3 sec 28 relied on Para 17 (2004) 2 sec 377 relied on Para 18 (2006) 3 sec 658 relied on Para 21 D-. (2007) SC 3151 relied on Para 22 CRIMINAL APPELLATE JURISDICTION: Criminal Appeal ~ P' No. 2021 of 2008. From the final Judgment and Order dated 13. 2. 2004 of the High Court of Delhi at New Delhi in Crl. M. C. No. 1023 of 2003. Ashok Grover, Mehul Sharma (for Madhu Moolchandani) for the Appellants. Sakesh Kumar, M. A. Khan and Ramenswar Prasad Goyal for the Respondent. The Judgment of the Court was delivered by .. >· S. B. SINHA, J. 1. Leave granted. ' 't 2. Territorial jurisdiction of a court to try an offence under Section 138 of the Negotiable Instruments Act, 1881 (for short, "the Act") is in question in this appeal.

The said question arose in the following circumstances•. Appellants and respondent entered into a business , transaction. Appellant is a resident of Chandigarh. He carries on business in Chandigarh. The cheque in question admittedly • was issued at Chandigarh. Complainant also has a branch office at Chandigarh although his Head Office is said to be at Delhi. It is stated that the cheque was presented at Chandigarh. f-:iowever, it is in dispute as to whether the said cheque was 'sent for collection to Delhi. The cheque was dishonoured also at Chandigarh. However, the complainant - respondent issued a notice upon the appellant asking him to pay the amount from New Delhi. Admittedly, the said notice was served upon the appellant at Chandigarh. On failure on the part of the appellant to pay the amount within a period of 15 days from the date o_f communication of the said letter, a complaint petition was filed ~ at Delhi. In the complaint petition, it was stated: "10.

That the complainant presen~ed aforesaid cheque for encashment through its banker Oiti Bank NA. The Punjab & Sind Bank, the banker of the accused returned the said cheque unpaid with an endorsement "Payment stopped by drawer" vide their memo dated 3d. 12. 2000. The aforesaid memo dated 30. 122000 was rec~ived by the complainant 1 on 3. 1. 2001. 11. Upon dishonour of the above mentioned cheque, the1 complainant sent notice dt. 11. 1. 2001 in terms of section ~ >( 138 of Negotiable Instruments Act to the accused persons demanding payment of aforesaid cheque amount at Delhi. The accused persons were served with said notice by registered AID. 12. By the said notice the accused persons were called upon to pay to the complainant the sum of Rs. 5,00,000/within 15 days of the receipt of said notice. 13. Despite the service of notice dt. 11. 1. 2001 the accused persons have failed and/or neglected to pay amount of .... I -. ,.

aforesaid cheque within the stipulated period of 15 days after the service of the notice. 14. Accused persons clandestinely/deliberately and with malafide intention and by failing to make the payment of the said dishonoured cheque within the stipulated period have committed the offence under Section 138 read with ' · Section 141 6f the Negotiable Instruments Act, 1881. ¥ 15. The complainant further submit that the ,complaint is being filed within 1 month from ! he date of expiring of the M/S. HARMAN ELECTRONICS (P) LTD. & ANR. v. M/S. 493 15 days grace time given under the notice for payment of said amount. 16. This Hon'ble Court has jurisdiction to entertain the present complaint as complainant carries on its business at Delhi. The demand notice dt. 11. 1. 2001 was issued from Delhi and the amount of cheque was payable at Delhi and because accused failed to make the payment of amount of said cheque within statutory period of 15 days . . ,. _ from receipt of notice. " ---- . I 3.

Cognizance of the offence was taken against the appellant by the learned judge. Questioning the jurisdiction of the court of Additional Sessions Judge, New Delhi, an application was filed which was disposed of by the learned Additional Sessions Judge, New Delhi in terms of an order dated 3. 2. 2003 stating: "2. The main grievance of the accused is that the accused persons, as well as the complainant are carrying their business at Chandigarh. The cheque in question was given by the accused to the complainant in Chandigarh, and it was present to their banker at Chandigarh. Only notice was given by the complainant to the accused persons, from 'E Delhi. That the same was served on the accused admittedly, at Chandigarh and that both the parties are carrying out their business also at Chandigarh. Therefore, it is contended that it would amount to absurdity if the complaint of the complainant is entertained, in Delhi, in view of the case law reported in AIR 1999 Supreme Court 3782, K.

Bhaskaran Vs. Sankaran Vaidyyan Ba/an and .... Another. - 6. I have considered the arguments advanced at the bar,. and I am of the considered opinion that this court has jurisdiction to entertain this complaint, as admittedly the notice was sent by the complainant to the accused persons from Delhi, and the complainant is having its registered office at Delhi, and that they are carrying out the business at Delhi. Admittedly, it is also evident from the record that accused allegedly failed to make the payment ! """ t at Delhi, as the demand was made from Delhi and the payment was to be made to the! complainant at Delhi. " 4. By reason of the impugned judgmen't, Criminal Miscellaneous Petition filed by the appellant has been dismissed. I 5. Mr. Ashok Grover, learned Senior Counsel appearing on behalf of the appellant would submit that as the entire cause .

of action arose within the jurisdictioh of the courts at Chandigarh, the learned Additional Sessions Judge, New Delhi I had no jurisdiction to take cognizance of the offence. 6. Mr. Sakesh Kumar, learned counsel appearing on behalf of the respondent, on the other hand1 would contend: i. The cheque although was! deposited at Chandigarh, the same having been sent by Citi Bank NA for collection at Delhi, the amount became payable at Delhi. . I ii. Giving of a notice being ~ condition precedent for filing a complaint petition under Section 138 of the Negotiable lnstrur:n,e,ms Act, a n. otice having been issued from Delhi, the Uethi Court had the reqJ. Jisite jurisdiction, particularly '1hen demand was made , upon the appellant to pay the complain~nt at Delhi. 7. Section 138 of the Negotiable Instruments Act reads as unde~ . [ "138. Dishonour of cheque for insufficiency, etc. , offunds in the account.

- Where any cheque drawn by a person on an account maintained by him with a banker for I • payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by t~e bank unpaid, either because ,of the amount pf money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount ar~anged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be, punished with imprisonment for a term which may be NATIONAL PANASONIC INDIA LTD. [S. 8. SINHA, J.

] extended to two years, or with fine which may extend to __, twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless-- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the .. ,_ cheque, as the case may be, makes a demand for the -r payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of ' the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the ,.. payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, io within fifteen days of the receipt of the said notice. -'I" Explanation.

-- For the purposes of this-section, "debt or ~-"' other liability" means a legally enforceable debt or other liability. " 8. The proviso appended thereto imposes certain conditions before a complaint petition can be entertained. 9. Reliance has been placed by both the learned Additional Sessions Judge as also the High Court on a decision I of this Court in K. Bhaskaran v. Sankaran Vaidhyan Ba/an and Anr. [(1999) 7 SCC 510]. This Court opined that the offence under Section 138 of the Act can be completed only with the t lo concatenation of a number of acts, namely, (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the notice. It was opined that if five different acts were done in five different localiti~s.

any one of the courts exercising jurisdiction in one ·of the five local areas can become the place of trial for the offence under Section 138 of the Act and the complainant would j. - ' be at liberty to file a complaint petition at any of those places. As regards the requirements of giving a notice as also receipt thereof by the accused, it was stated: "18. On the part of the payee he has to make a demand I by "giving a notice" in writing. If that was the only requirement to complete the off~nce on the failure of the 8 drawer to pay the cheque amount within 15 days from the date of such "giving", the travailsl of the prosecution would have been very much lessened. But the legislature says. ~,. ) that failure on the part of the drawer to pay the amount should be within 15 days "of the ~eceipt" of the said notice. It is, therefore, clear that "giving notice" in the context is not the same as receipt of notice. Givi,ng is a process of which receipt is the accomplishment.

INs for the payee to perform the former process by ~ending the notice to the drawer at the correct address. " 1 10. The court,. however, refused to give a strict interpretation to the said provisionsi despite noticing Black's ,,.. _ Law Dictionary in regard to the meaning of the terms 'giving of ~. notice' and 'receiving of the notice' i~ the following terms: "19. In Black's Law Dictionary, 'giving of notice' is distinguished from 'receiving of the notice. ' (vide page_ 621) "A person notifies or gives notice' to another by taking such steps as may be reasonably required to inform the other in the ordinary course, whether or not such otheractually comes to know of it. " A person 'receives' a notice when it is duly delivered to him or at the place of his business. -t 20.

If a-strict interpretation is given that the drawer should have actually received the notice for the period of 15 days "' I to start running no matter that the payee sent the notice on the correct address, a tricks1er cheque drawer would )=--= get the premium to avoid receiving the notice by different strategies and he could esc;ape from the legal consequences of Section 138 of the Act. It must be borne . ,. ' in mind that Court should not adbpt in interpretation which helps a dishonest evader and clips an honest payee as > that would defeat the very legislative measure. " .... NATIONAL PANASONIC INDIA LTD. [S. S. SINHA, J. ] 11. For the said purpose, a presumption was drawn as .. __, regards refusal to accept a notice. We may, before proceeding to advert to the contentions raised by the parties hereto, refer to another decision of this Court in Mis Dalmia Cement (Bharat) Ltd. vs. Mis Galaxy Traders & Agencies Ltd. & ors. [AIR 2001 SC 676], wherein this Court categorically held: 8 "6.

Section 27 of the General Clauses Act deals with the presumption of service of a letter sent by post. The -~. - dispatcher of a notice has, therefore, a right to insist upon and claim the benefit of such a presumption. But as the presumption is rebuttable one, he has two options before him. One is to concede to the stand of the sendee that as - a matter of fact he did not receive the notice, and the other is to contest the sendee's stand and take the risk for proving that he in fact received the notice. It is open to the despatcher to adopt either of the options. If he opts the former, he "-. - distinction between giving of notice and service of notice ceases to exist. 24. Indisputably all statutes deserve their strict application, but while doing so the cardinal principles therefor cannot be lost sight of. A Court derives a jurisdiction only when the cause of action arose within its jurisdiction.

The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between D. 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 al~o imperative. Only on a service of such notice and failure dn the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an offence completes. Giving of notice, therefore, cannot have any precedent over the service. It is only from that view of the matter in Dalmia Cement (Bharat) Ltd. v. Galaxy Traders &Agencies Ltd. , [(2001) 6 SCC 463] emphasis has been laid on service of notice. 25. We cannot, as things stand today, be oblivious of the t fact that a banking institution holding several cheques signed .... by the same borrower cannot only present the cheque for its encashment at fo.

ur different places but also may serve notices from four different places so as to enable it to file four complaint cases at four different places. This only causes grave harassment to the accused. It is, therefore, necessary in a case of this nature to strike a balance between the right of the -+ eomplainant and the right of an accused vis-a-vis the provisions of the Code of Criminal Proce,dure. - 26. Learned counsel for the respondent contends that the principle that the debtor must seek the creditor should be applied in a case of this nature. ' 27. We regret that such a principle cannot be applied in a criminal case. Jurisdiction of the Oourt to try a criminal case is governed by the provisions of the Criminal Procedure Code 8 and not on common law principle1 28. For the views we have taken it must be held that Delhi High Court has no jurisdiction to t~ the complaint.

We, however, while exercising our jurisdiction under Article 142 of the Constitution of India direct that Complaint Case No. 1549 pending in the Court of Shri N. K. Kaushik, Additional Sessions Judge, New Delhi, be transferred to the Court of the District and Sessions Judge, Chandigarh whb shall assign the same to a court of competent jurisdiction. The transferee court shall fix a specific date of hearing and shall not grant any adjournment on the date on which the compla,nant and its witnesses are present. The transferee court is fyrthermore directed to dispose of the matter within a period of . six months from the date of receipt of the records of the case 'on assignment by the learned District and Sessions Judge, CHandigarh. 29. The appeal is allowe'd with the aforementioned observations and directions. There shall, however, be no order as to costs. K. K. T. Appeal allowed. -