NI cases to be filed at the place where the accused has account - Apex Court redfines jurisdiction of NI Act cases retrospectively-- However cases where trail commenced as on date can be continued in the court where it is instituted

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                      CRIMINAL APPEAL NO. 2287  OF 2009

Dashrath Rupsingh Rathod                     …..Appellant

      Versus

State of Maharashtra & Anr.            …..Respondents

                                   W I T H

                     CRIMINAL APPEAL NO. 1593   OF 2014

                [Arising out of S.L.P.(Crl.)No.2077 of 2009];

                     CRIMINAL APPEAL NO. 1594   OF 2014

                [Arising out of S.L.P.(Crl.)No.2112 of 2009];

                      CRIMINAL APPEAL NO. 1595  OF 2014

                [Arising out of S.L.P.(Crl.)No.2117 of 2009];

                  CRIMINAL APPEAL NOS. 1596-1600   OF 2014

             [Arising out of S.L.P.(Crl.)Nos.1308-1312 of 2009];

                      CRIMINAL APPEAL NO.1601   OF 2014

                [Arising out of S.L.P.(Crl.)No.3762 of 2012];

                      CRIMINAL APPEAL NO. 1602  OF 2014

                [Arising out of S.L.P.(Crl.)No.3943 of 2012];

                      CRIMINAL APPEAL NO.1603   OF 2014

              [Arising out of S.L.P.(Crl.)No.3944 of 2012]; AND

                      CRIMINAL APPEAL NO. 1604  OF 2014

                 [Arising out of S.L.P.(Crl.)No.59 of 2013].

                               J U D G M E N T

VIKRAMAJIT SEN, J.

Leave granted in Special Leave  Petitions.   These  Appeals  raise  a  legal

nodus of substantial public importance  pertaining  to  Court’s  territorial

jurisdiction concerning criminal complaints filed under Chapter XVII of  the

Negotiable Instruments Act, 1881 (for short, ‘the NI Act’).  This  is  amply

adumbrated by the Orders dated 3.11.2009 in I.A.No.1  in  CC  15974/2009  of

the three-Judge Bench presided over by the then Hon’ble  the  Chief  Justice

of India, Hon’ble Mr. Justice V.S. Sirpurkar  and  Hon’ble  Mr.  Justice  P.

Sathasivam which SLP is also concerned with the  interpretation  of  Section

138 of the NI Act, and  wherein  the  Bench  after  issuing  notice  on  the

petition directed that it be posted before the three-Judge Bench.

                                 PRECEDENTS

  The earliest and the most often quoted decision of this Court relevant  to

the present conundrum is K. Bhaskaran v. Sankaran Vaidhyan  Balan  (1999)  7

SCC 510 wherein a two-Judge Bench has, inter alia, interpreted  Section  138

of the NI Act to indicate that,  “the  offence  under  Section  138  can  be

completed only with the concatenation of a number of  acts.   Following  are

the acts which are components of  the  said  offence:  (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.”

The provisions of Sections 177 to 179 of the  Code  of  Criminal  Procedure,

1973 (for short, ‘CrPC’) have also been dealt with in detail.   Furthermore,

Bhaskaran in terms draws  a  distinction  between  ‘giving  of  notice’  and

‘receiving of notice’.  This is for the reason that clause  (b)  of  proviso

to Section 138 of the NI Act postulates a demand being made by the payee  or

the holder in due course of the dishonoured cheque by  giving  a  notice  in

writing to the drawer thereof.  While doing so, the question of the  receipt

of the notice has also been cogitated upon.

The issuance and the receipt of the  notice  is  significant  because  in  a

subsequent judgment of a Coordinate Bench, namely, Harman  Electronics  Pvt.

Ltd. v. National Panasonic India Pvt. Ltd. (2009) 1  SCC  720  emphasis  has

been laid on the receipt of the notice, inter alia, holding that  the  cause

of action cannot arise by any act of omission or commission on the  part  of

the ‘accused’, which on a holistic reading has to be read as  ‘complainant’.

 It appears that Harman transacted business out of  Chandigarh  only,  where

the Complainant also maintained an office, although its Head Office  was  in

Delhi.  Harman issued the cheque to the Complainant  at  Chandigarh;  Harman

had its  bank  account  in  Chandigarh  alone.   It  is  unclear  where  the

Complainant presented the cheque for encashment but it  issued  the  Section

138 notice from Delhi.  In those  circumstances,  this  Court  had  observed

that the only question for consideration  was  “whether  sending  of  notice

from Delhi  itself  would  give  rise  to  a  cause  of  action  for  taking

cognizance under the NI Act.”  It then went on to opine that the proviso  to

this Section “imposes certain further conditions which are  required  to  be

fulfilled before cognizance of the offence can be taken.”   We  respectfully

agree  with  this  statement  of  law  and  underscore  that   in   criminal

jurisprudence there is  a  discernibly  demarcated  difference  between  the

commission of an offence and its  cognizance  leading  to  prosecution.  The

Harman  approach  is  significant  and  sounds  a  discordant  note  to  the

Bhaskaran ratio.  Harman also highlights the reality  that  Section  138  of

the NI Act is being rampantly misused so  far  as  territorial  jurisdiction

for trial of the Complaint is concerned.  With the passage of time  equities

have therefore transferred from one end of the pendulum to  the  other.   It

is now not uncommon for the Courts to encounter the issuance of a notice  in

compliance with clause (b) of the proviso to Section 138 of the NI Act  from

a situs which bears no connection with the Accused or with any facet of  the

transaction between the parties, leave aside the place where  the  dishonour

of the cheque has taken place.  This is also the  position  as  regards  the

presentation of the cheque, dishonour  of  which  is  then  pleaded  as  the

territorial platform of the Complaint under  Section  138  of  the  NI  Act.

Harman, in fact,  duly  heeds  the  absurd  and  stressful  situation,  fast

becoming common-place where several cheques signed by the  same  drawer  are

presented  for  encashment  and  requisite  notices  of  demand   are   also

despatched from different places.  It appears to us that justifiably  so  at

that time, the conclusion in Bhaskaran was influenced in  large  measure  by

curial compassion towards the unpaid payee/holder, whereas with the  passage

of two decades  the  manipulative  abuse  of  territorial  jurisdiction  has

become a recurring and piquant factor.  The liberal  approach  preferred  in

Bhaskaran now calls for a stricter interpretation of the statute,  precisely

because of its  misemployment  so  far  as  choice  of  place  of  suing  is

concerned.  These are the circumstances which have propelled us to  minutely

consider the decisions rendered by two-Judge Benches of this Court.

It is noteworthy that the interpretation to be imparted to  Section  138  of

the NI Act also arose before a three-Judge Bench in Shri Ishar Alloy  Steels

Ltd. v. Jayaswals Neco  Ltd.  (2001)  3  SCC  609  close  on  the  heels  of

Bhaskaran.  So far as the  factual  matrix  is  concerned,  the  dishonoured

cheque had been presented for encashment by the  Complainant/holder  in  his

bank within the statutory period of six months but by the  time  it  reached

the drawer’s bank the aforementioned period of limitation had expired.   The

question before the Court was whether the bank  within  the  postulation  of

Section 138 read with Sections 3 and 72 of the NI Act was  the  drawee  bank

or the collecting bank and this Court held that it was the former.   It  was

observed that “non-presentation of the cheque to the drawee bank within  the

period specified in the Section would absolve the person issuing the  cheque

of his criminal liability under Section 138 of the  NI  Act,  who  otherwise

may be liable to pay the cheque amount  to  the  payee  in  a  civil  action

initiated under the law.  A combined reading of Sections 3, 72  and  138  of

the NI 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.”   Clearly,  and  in  our  considered  opinion

rightly, the Section had been  rendered  'accused-centric’.   This  decision

clarifies that the place where a complainant  may  present  the  cheque  for

encashment would not confer or create territorial jurisdiction, and in  this

respect runs counter to the essence of  Bhaskaran  which  paradoxically,  in

our opinion, makes actions  of  the  Complainant  an  integral  nay  nuclear

constituent of the crime itself.

The principle of precedence should promptly and  precisely  be  paraphrased.

A co-ordinate Bench is bound to follow the previously published view; it  is

certainly competent to add  to  the  precedent  to  make  it  logically  and

dialectically compelling.  However, once a decision of a  larger  Bench  has

been delivered it is that decision which  mandatorily  has  to  be  applied;

whereas a Co-ordinate Bench, in the event that it  finds  itself  unable  to

agree with an existing ratio, is competent to recommend  the  precedent  for

reconsideration by referring the case to the Chief Justice for  constitution

of a larger Bench.  Indubitably, there are a number  of  decisions  by  two-

Judge Benches on Section 138 of the NI Act,  the  majority  of  which  apply

Bhaskaran without noting or distinguishing on facts  Ishar  Alloy.   In  our

opinion, it is imperative for the  Court  to  diligently  distill  and  then

apply the ratio of a decision; and the view of a larger Bench ought  not  to

be disregarded.   Inasmuch as the  three-Judge  Bench  in  Ishar  Alloy  has

categorically stated that  for  criminal  liability  to  be  attracted,  the

subject cheque has to be presented to the bank on which it is  drawn  within

the prescribed period, Bhaskaran has been  significantly  whittled  down  if

not overruled.  Bhaskaran  has  also  been  drastically  diluted  by  Harman

inasmuch as it has given primacy to the service of a notice on  the  Accused

instead of its mere issuance by the Complainant.

In Prem Chand Vijay Kumar v. Yashpal Singh (2005) 4 SCC  417,  another  two-

Judge Bench held that upon a notice under Section 138 of the  NI  Act  being

issued, a subsequent presentation of a cheque and its  dishonour  would  not

create another ‘cause of action’ which could set the Section  138  machinery

in motion.  In that view, if the period of limitation had run out,  a  fresh

notice of demand was bereft of any legal efficacy.  SIL Import, USA v.  Exim

Aides  Silk  Exporters  (1999)  4  SCC  567  was  applied   in   which   the

determination was that since the requisite notice  had  been  despatched  by

FAX on 26.6.1996  the  limitation  for  filing  the  Section  138  Complaint

expired on 26.7.1996.  What is interesting is  the  observation  that  “four

constituents of Section 138  are  required  to  be  proved  to  successfully

prosecute the drawer of  an  offence  under  Section  138  of  the  NI  Act”

(emphasis supplied).  It  is  also  noteworthy  that  instead  of  the  five

Bhaskaran concomitants, only four have been  spelt  out  in  the  subsequent

judgment in Prem Chand.  The commission of a crime  was  distinguished  from

its  prosecution  which,  in  our  considered  opinion,   is   the   correct

interpretation of the law.  In other words, the four  or  five  concomitants

of the Section have to be in existence for the initiation  as  well  as  the

successful prosecution of the offence,  which  offence  however  comes  into

existence as soon as subject cheque  is  dishonoured  by  the  drawee  bank.

Another two-Judge Bench in Shamshad Begum v. B. Mohammed (2008)  13  SCC  77

speaking through Pasayat J this time around applied Bhaskaran and  concluded

that since the Section 138 notice was issued from and replied to  Mangalore,

Courts in that city possessed territorial jurisdiction.   As  already  noted

above, this view is not reconcilable with the later decision of Harman.

The two-Judge Bench decision in Mosaraf Hossain Khan v.  Bhagheeratha  Engg.

Ltd. (2006) 3 SCC 658 requires to be discussed in some detail.  A  Complaint

under Section 138 of the NI Act was filed and cognizance was  taken  by  the

Chief Judicial Magistrate, Birbhum at Suri, West Bengal  for  the  dishonour

of a  number  of  cheques  issued  by  the  accused-company  which  had  its

headquarters in Ernakulam, Kerala where significantly the  accused-company’s

bank on whom the dishonoured cheques had been drawn  was  located.   Several

judgments were referred to, but not  Bhaskaran.   The  third  ingredient  in

Bhaskaran, i.e. the returning of the cheque unpaid by the drawee  bank,  was

not reflected upon.  Inasmuch as Mosaraf Hossain  refers  copiously  to  the

cause of action having arisen in West Bengal without  adverting  at  all  to

Bhaskaran, leave aside the three-Judge Bench decision in Ishar  Alloy,   the

decision may be seen as per incuriam.  Moreover, the concept  of  forum  non

conveniens has no role to  play  under  Section  138  of  the  NI  Act,  and

furthermore that it can certainly be contended by the  accused-company  that

it was justifiable/convenient for it to initiate  litigation  in  Ernakulam.

If Bhaskaran was followed,  Courts  in  Ernakulam  unquestionably  possessed

territorial jurisdiction.   It is,  however,  important  to  italicize  that

there was an unequivocal endorsement of the Bench of a previously  expressed

view that, “where the territorial jurisdiction is concerned the main  factor

to be considered is the place where the alleged offence was committed”.   In

similar vein, this Court has opined in Om Hemrajani v. State of U.P.  (2005)

1  SCC  617,  in  the  context  of  Sections  177  to  180  CrPC  that  “for

jurisdiction emphasis is on the place where the offence is committed.”

The territorial jurisdiction conundrum which, candidly is currently  in  the

cauldron owing to varying if not  conflicting  ratios,  has  been  cogitated

upon very recently by a two-Judge Bench in Criminal Appeal  No.808  of  2013

titled Nishant Aggarwal v. Kailash Kumar  Sharma  decided  on  1.7.2013  and

again by the same Bench in Criminal Appeal No.1457 of  2013  titled  Escorts

Limited v. Rama Mukherjee decided on  17.09.2013.   Bhaskaran  was  followed

and Ishar Alloy and Harman were explained.  In Nishant the Appellant  issued

a post-dated cheque drawn on Standard Chartered Bank, Guwahati in favour  of

complainant-respondent.  It appears that the Appellant  had  endeavoured  to

create a case or rather a defence by reporting to his bank  in  Guwahati  as

well as to the local police station that ‘one cheque (corresponding  to  the

cheque in question) was missing and hence payment should be  stopped.’   The

Respondent-drawer was a resident of District Bhiwani, Haryana; he  presented

the cheque for encashment at  Canara  Bank,  Bhiwani  but  it  was  returned

unpaid.  The holder then issued a legal notice which failed  to  elicit  the

demanded sum of money corresponding  to  the  cheque  value,  and  thereupon

followed it by the filing of a criminal complaint  under  Sections  138  and

141 of the NI Act at Bhiwani.  The Judicial Magistrate, Bhiwani, vide  order

dated 5.3.2011,  concluded  that  the  court  in  Bhiwani  did  not  possess

territorial jurisdiction and  he  accordingly  returned  the  complaint  for

presentation before the proper Court. The five concomitants of  Section  138

extracted in Bhaskaran, were reiterated and various paragraphs from it  were

reproduced by this Court.  Nishant also did not follow  Ishar  Alloy  which,

as already analysed, has concluded that the  second  Bhaskaran  concomitant,

namely, presentation of cheque to the bank refers to  the  drawee  bank  and

not the holder’s bank, is not primarily relevant for  the  determination  of

territorial  jurisdiction.   Nishant  distinguished  Ishar  Alloy   on   the

predication that the question  of  territorial  jurisdiction  had  not  been

raised in that case.  It is axiomatic  that  when  a  Court  interprets  any

statutory provision, its opinion must apply to and  be  determinate  in  all

factual and legal permutations and situations.  We think that the dictum  in

Ishar Alloy is very relevant and conclusive to the discussion in  hand.   It

also justifies emphasis that Ishar Alloy is the only case  before  us  which

was decided by a three-Judge  Bench  and,  therefore,  was  binding  on  all

smaller Benches.  We ingeminate that it is  the  drawee  Bank  and  not  the

Complainant’s Bank which is postulated in the so-called  second  constituent

of Section 138 of the NI Act,  and  it  is  this  postulate  that  spurs  us

towards the conclusion that we have  arrived  at  in  the  present  Appeals.

There is also a discussion of Harman to reiterate  that  the  offence  under

Section 138 is complete only when the five factors are present.  It  is  our

considered view, which we shall  expound  upon,  that  the  offence  in  the

contemplation of Section 138 of the NI Act is the dishonour  of  the  cheque

alone, and it is the concatenation of the five concomitants of that  Section

that enable the prosecution of  the  offence  in  contradistinction  to  the

completion/commission of the offence.

We have also painstakingly perused Escorts Limited which  was  also  decided

by  the  Nishant  two-Judge  Bench.   Previous  decisions  were  considered,

eventually leading to the conclusion that since  the  concerned  cheque  had

been presented for encashment at  New  Delhi,  its  Metropolitan  Magistrate

possessed territorial jurisdiction  to  entertain  and  decide  the  subject

Complaint under Section 138 of the NI Act.   Importantly,  in  a  subsequent

order, in FIL Industries Ltd. v. Imtiyaz Ahmed Bhat passed  on  12th  August

2013, it was decided that the place from  where  the  statutory  notice  had

emanated would not of its own have the consequence of  vesting  jurisdiction

upon that place.   Accordingly,  it  bears  repetition  that  the  ratio  in

Bhaskaran has been drastically diluted in that the situs of the notice,  one

of the so-called five ingredients of Section 138, has now been held  not  to

clothe  that  Court  with  territorial  competency.   The   conflicting   or

incongruent opinions need to be resolved.

                      JUDICIAL APPROACH ON JURISDICTION

We shall take a short  digression  in  terms  of  brief  discussion  of  the

approach preferred by this Court in the context of Section 20  of  the  Code

of Civil Procedure, 1908 (hereinafter referred to as,  ‘CPC’),  which  inter

alia, enjoins that a suit must be instituted in a  court  within  the  local

limits  of  whose  jurisdiction  the  Defendant  actually  and   voluntarily

resides, or carries on business, or personally works for gain, or where  the

cause of action wholly or in part arises.  The Explanation to  that  Section

is important; it prescribes that a corporation shall be deemed to  carry  on

business at its sole or principal office, or, in respect  of  any  cause  of

action arising at any place where it has also a subordinate office, at  such

place.  Since this provision primarily keeps the Defendant  in  perspective,

the corporation spoken of  in  the  Explanation,  obviously  refers  to  the

Defendant.  A plain reading of Section 20 of the  CPC  arguably  allows  the

Plaintiff a multitude of choices in regard to where  it  may  institute  its

lis, suit or action.  Corporations and  partnership  firms,  and  even  sole

proprietorship concerns, could well be transacting  business  simultaneously

in several cities.  If sub-sections (a) and (b) of  Section  20  are  to  be

interpreted disjunctively from sub-section (c), as the use of the word  ‘or’

appears to permit the Plaintiff to file the suit at any of the places  where

the cause of action may have arisen regardless of whether the Defendant  has

even a subordinate office  at  that  place.   However,  if  the  Defendants’

location is to form the fulcrum of jurisdiction, and it has an  office  also

at the place where the cause of action has occurred, it has been  held  that

the  Plaintiff  is  precluded  from  instituting  the  suit  anywhere  else.

Obviously, this is also because every other place would constitute  a  forum

non  conveniens.   This  Court  has  harmonised  the  various  hues  of  the

conundrum of the place of suing in several cases and has gone to the  extent

of laying down that it should be courts endeavour to locate the place  where

the cause of action has substantially arisen and reject others where it  may

have incidentally arisen.  Patel Roadways Limited, Bombay v. Prasad  Trading

Company, AIR 1992 SC 1514  =  (1991)  4  SCC  270  prescribes  that  if  the

Defendant-corporation has a subordinate office in the place where the  cause

of action arises,  litigation  must  be  instituted  at  that  place  alone,

regardless of the amplitude of options postulated in Section 20 of the  CPC.

 We need not dilate on this point beyond  making  a  reference  to  ONGC  v.

Utpal Kumar Basu (1994) 4 SCC 711 and South East Asia Shipping Co.  Ltd.  v.

Nav Bharat Enterprises Pvt. Ltd. (1996) 3 SCC 443.

We  are  alive  to  the  possible  incongruities   that   are   fraught   in

extrapolating decisions relating to  civil  law  onto  criminal  law,  which

includes importing the civil law concept of “cause of  action”  to  criminal

law which essentially envisages the place where a crime has  been  committed

empowers the Court at that place  with  jurisdiction.   In  Navinchandra  N.

Majithia v. State of  Maharashtra  (2000)  7  SCC  640  this  Court  had  to

consider the powers of High Courts under Article 226(2) of the  Constitution

of India.  Noting the presence of the phrase “cause of  action”  therein  it

was clarified that since some events central to  the  investigation  of  the

alleged crime asseverated in the Complaint had taken  place  in  Mumbai  and

especially  because  the  fundamental  grievance  was  the  falsity  of  the

Complaint filed in Shillong, the writ jurisdiction of the Bombay High  Court

was unquestionably available.  The infusion of  the  concept  of  ‘cause  of

action’ into the criminal  dispensation  has  led  to  subsequent  confusion

countenanced in High Courts.  It seems to us that Bhaskaran allows  multiple

venues to the Complainant which runs counter to this Court’s preference  for

simplifying the law.  Courts are enjoined to interpret  the  law  so  as  to

eradicate ambiguity or nebulousness, and to ensure  that  legal  proceedings

are not used as a device for harassment, even of  an  apparent  transgressor

of the law.  Law’s endeavour is to bring the culprit to book and to  provide

succour for the aggrieved  party  but  not  to  harass  the  former  through

vexatious proceedings.  Therefore, precision and  exactitude  are  necessary

especially where the location of a litigation is concerned.

                             RELEVANT PROVISIONS

The provisions which will have to be examined and  analysed  are  reproduced

for facility of reference :

                     1 Negotiable Instruments Act, 1881

2

“138. Dishonour of cheque for insufficiency, etc., of funds in the account.-

Where any cheque drawn by a person on an account maintained by  him  with  a

banker for 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 the bank unpaid, either because of the  amount  of

money standing to the credit of that account is insufficient to  honour  the

cheque or that it exceeds the amount arranged 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  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 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, within fifteen days of the receipt of the said notice.

Explanation. For the purposes of this section,  “debt  or  other  liability”

means a legally enforceable debt or other liability.

142. Cognizance of offences.-Notwithstanding anything contained in the  Code

of Criminal Procedure, 1973 (2 of 1974)-

(a) no court shall take cognizance of any offence punishable  under  section

138 except upon a complaint, in writing, made by the payee or, as  the  case

may be, the holder in due course of the cheque;

(b)  such complaint is made within one month of the date on which the  cause

of action arises under clause (c) of the proviso to section 138;

      Provided that the cognizance of a complaint may be taken by the  Court

after the prescribed period, if the complainant satisfies the Court that  he

had sufficient cause for not making a complaint within such period.

(c)  no court inferior to that of a Metropolitan Magistrate  or  a  Judicial

Magistrate of the  first  class  shall  try  any  offence  punishable  under

section 138.”

                      Code of Criminal Procedure, 1973

“177. Ordinary place of inquiry and trial.- Every offence  shall  ordinarily

be inquired into and tried by a Court within  whose  local  jurisdiction  it

was committed.

178. Place of inquiry or trial.- (a)  When  it  is  uncertain  in  which  of

several local areas an offence was committed, or

(b) where an offence is committed partly in one local  area  and  partly  in

another, or

(c) where an offence is a continuing one, and continues to be  committed  in

more local areas than one, or

(d) where it consists of several acts done in different local areas,

it may be inquired into or tried by a Court having jurisdiction over any  of

such local areas.

179. Offence triable where act is done or consequence ensues.- When  an  act

is an  offence  by  reason  of  anything  which  has  been  done  and  of  a

consequence which has ensued, the offence may be inquired into or  tried  by

a Court within whose local jurisdiction such thing has  been  done  or  such

consequence has ensued.”

                            PARLIAMENTARY DEBATES

The XVIIth fasciculus of the Negotiable Instruments Act containing  Sections

138 to 142 was introduced into the statute in 1988.  The  avowed  intendment

of the amendment was to enhance the acceptability of cheques.  It was  based

on the Report of the Committee on Banking Laws by Dr. Rajamannar,  submitted

in 1975, which suggested, inter alia,  penalizing  the  issuance  of  cheque

without  sufficient  funds.   The   Minister   of   Finance   had   assuaged

apprehensions by  arguing  that  safeguards  for  honest  persons  had  been

incorporated in the provisions, viz.,   (i)  the  cheque  should  have  been

issued in discharge of  liability;  (ii)  the  cheque  should  be  presented

within its validity period; (iii) a Notice had  to  be  sent  by  the  Payee

demanding payment within 15 days of receiving notice of dishonour; (iv)  the

drawer was allowed to make payment within 15 days from the date  of  receipt

of notice; (v) Complaint was to be made within one month  of  the  cause  of

action arising; (vi) no Court inferior to that of MM or JMFC was to try  the

offence.   The  Finance  Minister  had  also  stated  that  the  Court   had

discretion  whether  the  Drawer   would   be   imprisoned   or/and   fined.

Detractors, however, pointed out that the IPC  already  envisioned  criminal

liability for cheque-bouncing where dishonest  or  fraudulent  intention  or

mens rea on part  of  the  Drawer  was  evident,  namely,  cheating,  fraud,

criminal breach of trust etc.  Therefore,  there  was  no  justification  to

make the dishonour of cheques a  criminal  offence,  ignoring  factors  like

illiteracy,  indispensable  necessities,   honest/innocent   mistake,   bank

frauds, bona fide  belief,  and/or  unexpected  attachment  or  freezing  of

account in any judicial proceedings as it would bring  even  honest  persons

within the ambit of Section 138 NI Act.   The  possibility  of  abusing  the

provision as a tool of harassment could also  not  be  ruled  out.   Critics

also decried the punishment for being harsh; that civil liability can  never

be converted into criminal liability; that singling out cheques out  of  all

other  negotiable  instruments  would  be  violative  of   Article   14   of

Constitution of India.    Critics  contended  that  there  was  insufficient

empirical enquiry into statutes  or  legislation  in  foreign  jurisdictions

criminalizing the dishonour of cheques and  statistics  had  not  been  made

available bearing out that criminalization would increase the  acceptability

of cheque.  The Minister of Finance was  not  entirely  forthright  when  he

stated  in  Parliament  that  the  drawer  was   also   allowed   sufficient

opportunity to say whether the dishonour was by mistake.  It must  be  borne

in mind that in the U.K. deception and dishonesty  are  key  elements  which

require to be proved.   In  the  USA,  some  States  have  their  own  laws,

requiring fraudulent intent or knowledge of insufficient funds  to  be  made

good. France has criminalized and subsequently decriminalized the  dishonour

except in limited circumstances.  Instead, it provides for  disqualification

from issuing cheques, a practice which had been adopted in Italy  and  Spain

also.  We have undertaken this succinct  study  mindful  of  the  fact  that

Parliamentary debates have a limited  part  to  play  in  interpretation  of

statutes, the  presumption  being  that  Legislators  have  the  experience,

expertise and language skills  to  draft  laws  which  unambiguously  convey

their intentions and expectations for  the  enactments.   What  is  palpably

clear  is  that  Parliament  was  aware  that  they  were  converting  civil

liability into criminal  content  inter  alia  by  the  deeming  fiction  of

culpability  in  terms  of  the  pandect  comprising  Section  138  and  the

succeeding  Sections,  which  severely  curtail  defences  to   prosecution.

Parliament was also  aware  that  the  offence  of  cheating  etc.,  already

envisaged in the IPC, continued to be available.

                 CIVIL LAW CONCEPTS NOT STRICTLY APPLICABLE

We have already cautioned against the extrapolation of  civil  law  concepts

such as “cause of action” onto  criminal  law.   Section  177  of  the  CrPC

unambiguously states that every offence shall ordinarily  be  inquired  into

and tried by a Court within  whose  local  jurisdiction  it  was  committed.

“Offence”, by virtue of the definition ascribed to the word by Section  2(n)

of the CrPC means any act or omission made punishable by any law.   Halsbury

states that the venue for the trial of a crime is confined to the  place  of

its occurrence.  Blackstone opines that  crime  is  local  and  jurisdiction

over it vests in the Court and Country where the crime is  committed.   This

is obviously the raison d’etre for the CrPC making a departure from the  CPC

in  not  making  the  “cause  of  action”   routinely   relevant   for   the

determination of territoriality of criminal courts.  The word  “action”  has

traditionally been understood to be synonymous to  “suit”,  or  as  ordinary

proceedings in a Court of justice  for  enforcement  or  protection  of  the

rights of the initiator of the  proceedings.   “Action,  generally  means  a

litigation in a civil Court for the recovery of individual right or  redress

of individual wrong, inclusive, in its proper legal sense, of suits  by  the

Crown” - [Bradlaugh v. Clarke 8  Appeal  Cases  354  p.361].   Unlike  civil

actions, where the Plaintiff has the burden of filing and proving its  case,

the responsibility  of  investigating  a  crime,  marshalling  evidence  and

witnesses, rests with the State.  Therefore, while the  convenience  of  the

Defendant in a civil action may be  relevant,  the  convenience  of  the  so

called complainant/victim  has  little  or  no  role  to  play  in  criminal

prosecution.  Keeping in perspective the presence of the  word  “ordinarily”

in Section 177 of CrPC, we hasten to adumbrate that  the  exceptions  to  it

are contained  in  the  CrPC  itself,  that  is,  in  the  contents  of  the

succeeding  Section  178.   The  CrPC  also  contains  an   explication   of

“complaint” as any allegation to a Magistrate with  a  view  to  his  taking

action in respect of the commission of  an  offence;  not  being   a  police

report.  Prosecution ensues from  a  Complaint  or  police  report  for  the

purpose  of  determining  the  culpability  of  a  person  accused  of   the

commission of a crime; and unlike a civil action or suit is carried out  (or

‘prosecuted’)  by  the  State  or  its  nominated  agency.   The   principal

definition of “prosecution” imparted by Black’s Law Dictionary  5th  Edition

is “a criminal action; the proceeding  instituted  and  carried  on  by  due

process of law, before a competent Tribunal, for the purpose of  determining

the guilt or innocence of a person charged with crime.”   These  reflections

are necessary because Section 142(b) of the NI Act contains the words,  “the

cause of  action  arises  under  the  proviso  to  Section  138”,  resulting

arguably, but in  our  opinion  irrelevantly,  to  the  blind  borrowing  of

essentially civil law attributes onto criminal  proceedings.   We  reiterate

that Section 178 admits of no  debate  that  in  criminal  prosecution,  the

concept of “cause of action”, being the  bundle  of  facts  required  to  be

proved in a suit and accordingly  also  being  relevant  for  the  place  of

suing, is not pertinent or germane for determining territorial  jurisdiction

of criminal Trials.  Section 178, CrPC explicitly states that every  offence

shall ordinarily be inquired into and tried by a Court  within  whose  local

jurisdiction it was committed.  Section 179 is of  similar  tenor.   We  are

also unable to locate any  provision  of  the  NI  Act  which  indicates  or

enumerates the extraordinary circumstances which would justify  a  departure

from the stipulation that the place where the offence is committed is  where

the prosecution has to be conducted.   In  fact,  since  cognizance  of  the

offence is subject to the five  Bhaskaran  components  or  concomitants  the

concatenation of which ripens the already committed  offence  under  Section

138 NI Act into a prosecutable offence, the employment of the phrase  “cause

of action” in Section 142 of the NI Act is apposite for  taking  cognizance,

but inappropriate and irrelevant for determining commission of  the  subject

offence.  There are myriad  examples  of  the  commission  of  a  crime  the

prosecution of which  is  dependent  on  extraneous  contingencies  such  as

obtainment of sanction for prosecution under Section 19  of  the  Prevention

of Corruption  Act  1988.   Similar  situation  is  statutorily  created  by

Section 19 of the Environmental Protection  Act  1986,  Section  11  of  the

Central Sales Tax Act 1956, Section 279 of the Income Tax Act, Sections  132

and 308, CrPC, Section 137 of the Customs Act etc.   It  would  be  idle  to

contend that  the  offence  comes  into  existence  only  on  the  grant  of

permission for prosecution, or that this permission constitutes an  integral

part of the offence itself.  It would also  be  futile  to  argue  that  the

place where the permission is  granted  would  provide  the  venue  for  the

trial.  If sanction is not granted the offence does  not  vanish.   Equally,

if sanction  is  granted  from  a  place  other  than  where  the  crime  is

committed,  it  is  the  latter  which  will  remain  the  place   for   its

prosecution.

                             SECTION 138 NI ACT

The marginal note of Section 138  of  the  NI  Act  explicitly  defines  the

offence as being the dishonour of cheques for insufficiency, etc., of  funds

in the account.  Of course, the headings, captions or  opening  words  of  a

piece  of  legislation  are  normally  not   strictly   or   comprehensively

determinative of the sweep  of  the  actual  Section  itself,  but  it  does

presage its intendment.  See: Frick India Ltd. v. Union of  India  (1990)  1

SCC 400 and Forage & Co. v. Municipal Corporation of Greater  Bombay  (1999)

8 SCC 577.  Accordingly, unless the provisions of the Section clearly  point

to the contrary, the offence is concerned with the dishonour  of  a  cheque;

and in the conundrum before us the body of  this  provision  speaks  in  the

same timbre since it  refers  to  a  cheque  being  “returned  by  the  bank

unpaid”.  None of the provisions of the IPC have been rendered  nugatory  by

Section 138 of the NI Act and both operate on their own.  It is  trite  that

mens rea is the quintessential of every crime. The objective  of  Parliament

was to strengthen  the  use  of  cheques,  distinct  from  other  negotiable

instruments, as mercantile tender and therefore it became essential for  the

Section 138 NI Act offence to be freed from the requirement of proving  mens

rea.  This has been achieved by deeming the  commission  of  an  offence  de

hors mens rea not  only  under  Section  138  but  also  by  virtue  of  the

succeeding two Sections.  Section 139 carves out the  presumption  that  the

holder of a cheque has received it  for  the  discharge  of  any  liability.

Section 140 clarifies that it will not be available  as  a  defence  to  the

drawer that he had no reason to believe, when he issued the cheque, that  it

would be dishonoured.  Section 138 unequivocally states that the offence  is

committed no sooner the drawee bank returns the cheque unpaid.

Section 138 NI Act is  structured  in  two  parts  –  the  primary  and  the

provisory.  It must be kept in mind that the  Legislature  does  not  ordain

with one hand and immediately negate it with the other.  The  proviso  often

carves out a minor detraction or diminution of the main provision  of  which

it is an appendix or addendum or auxiliary.  Black Law Dictionary states  in

the context of a proviso that it is – “a limitation or exception to a  grant

made or authority conferred, the effect of which is to declare that the  one

shall not operate, or the other be exercised, unless in the  case  provided.

…. A clause or part of a clause in a statute, the office of which is  either

to except something from the enacting clause, or to qualify or restrain  its

generality, or to exclude some possible ground of misinterpretation  of  its

extent.”  It should also  be  kept  in  perspective  that  a  proviso  or  a

condition are synonymous.   In our  perception  in  the  case  in  hand  the

contents of the proviso place  conditions  on  the  operation  of  the  main

provision, while it does  form  a  constituent  of   the  crime  itself,  it

modulates  or  regulates  the  crime  in  circumstances  where,  unless  its

provisions  are  complied  with,  the  already   committed   crime   remains

impervious to prosecution.  The  proviso  to  Section  138  of  the  NI  Act

features three factors which are additionally required  for  prosecution  to

be successful.  In this  aspect  Section  142  correctly  employs  the  term

“cause of action” as compliance with the  three  factors  contained  in  the

proviso are essential for the cognizance of the offence,  even  though  they

are not part of the action constituting  the  crime.    To  this  extent  we

respectfully concur with Bhaskaran in that the concatenation  of  all  these

concomitants,  constituents  or  ingredients  of  Section  138  NI  Act,  is

essential for the successful initiation or launch of the  prosecution.   We,

however, are of the view that so far as the offence itself the  proviso  has

no  role  to  play.   Accordingly  a  reading  of  Section  138  NI  Act  in

conjunction with Section 177, CrPC  leaves  no  manner  of  doubt  that  the

return of the cheque by the drawee bank alone constitutes the commission  of

the offence and indicates the place where the offence is committed.

In this analysis we hold that the place, situs or venue of judicial  inquiry

and trial of the offence must logically be restricted to  where  the  drawee

bank, is located.  The law should not be warped for  commercial  exigencies.

As it is Section 138 of the NI Act  has  introduced  a  deeming  fiction  of

culpability, even though, Section 420 is still available in case  the  payee

finds it advantageous or convenient to proceed  under  that  provision.   An

interpretation should not be imparted to Section 138 which  will  render  it

as a device of harassment i.e. by sending notices from a place which has  no

casual connection with the transaction  itself,  and/or  by  presenting  the

cheque(s) at any of the banks where the payee may have an account.   In  our

discernment, it is also now  manifest  that  traders  and  businessmen  have

become  reckless  and  incautious  in  extending  credit  where  they  would

heretofore have been extremely hesitant, solely because of the  availability

of redress by way of  criminal  proceedings.   It  is  always  open  to  the

creditor to insist that the cheques in question be made payable at  a  place

of  the  creditor’s  convenience.   Today’s  reality  is  that   the   every

Magistracy is inundated with prosecutions under Section 138 NI Act, so  much

so that the burden is becoming unbearable and detrimental  to  the  disposal

of other  equally  pressing  litigation.   We  think  that  Courts  are  not

required to twist  the  law  to  give  relief  to  incautious  or  impetuous

persons; beyond Section 138 of the NI Act.

We feel compelled to reiterate our empathy with a payee who has  been  duped

or deluded by a swindler  into  accepting  a  cheque  as  consideration  for

delivery of any of his property; or because of the receipt of a  cheque  has

induced the payee to omit to do anything resulting in  some  damage  to  the

payee.  The relief introduced by Section 138 of the NI Act  is  in  addition

to the contemplations in the  IPC.   It  is  still  open  to  such  a  payee

recipient of a dishonoured cheque to lodge a First Information  Report  with

the Police or file a Complaint directly  before  the  concerned  Magistrate.

If the payee succeeds in establishing that the inducement  for  accepting  a

cheque  which  subsequently  bounced  had  occurred  where  he  resides   or

ordinarily transacts business, he will not have to suffer  the  travails  of

journeying to  the  place  where  the  cheque  has  been  dishonoured.   All

remedies under the IPC and CrPC are available to such a payee if he  chooses

to pursue this course of action, rather than a Complaint under  Section  138

of the NI Act.  And of course, he  can  always  file  a  suit  for  recovery

wherever the cause of action arises dependent on his choosing.

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.

We are quite alive to the magnitude of the impact that the present  decision

shall have to possibly lakhs of cases pending  in  various  Courts  spanning

across the country.   One approach could be to declare  that  this  judgment

will have only prospective  pertinence,  i.e.  applicability  to  Complaints

that  may  be  filed  after  this  pronouncement.    However,   keeping   in

perspective the  hardship  that  this  will  continue  to  bear  on  alleged

accused/respondents who may have to  travel  long  distances  in  conducting

their defence, and also mindful of the  legal  implications  of  proceedings

being permitted  to  continue  in  a  Court  devoid  of  jurisdiction,  this

recourse  in  entirety  does  not  commend  itself  to  us.   Consequent  on

considerable  consideration we think it expedient to direct that only  those

cases where, post the summoning and appearance of the alleged  Accused,  the

recording of evidence has commenced as envisaged in Section  145(2)  of  the

Negotiable Instruments Act, 1881, will proceeding continue  at  that  place.

To  clarify,  regardless  of  whether  evidence  has  been  led  before  the

Magistrate at the pre-summoning  stage,  either  by  affidavit  or  by  oral

statement, the Complaint will be maintainable only at the  place  where  the

cheque  stands  dishonoured.    To   obviate   and   eradicate   any   legal

complications, the category of Complaint cases where proceedings  have  gone

to the stage of Section 145(2) or  beyond  shall  be  deemed  to  have  been

transferred  by  us  from  the  Court  ordinarily   possessing   territorial

jurisdiction, as now clarified, to the Court where it is presently  pending.

    All   other   Complaints   (obviously   including   those   where    the

accused/respondent has not been properly served) shall be  returned  to  the

Complainant  for  filing  in  the  proper  Court,  in  consonance  with  our

exposition of the law.  If such Complaints are filed/refiled  within  thirty

days of their return, they shall be deemed to have  been  filed  within  the

time prescribed by law, unless the initial or prior filing was  itself  time

barred.

                         DISPOSAL OF PRESENT APPEALS

Crl. Appeal No.2287 of 2009

21.   A learned Single Judge of the High  Court  of  Judicature  at  Bombay,

Nagpur  Bench  has,  pursuant  to  a  threadbare  discussion  of   Bhaskaran

concluded that since the concerned cheque was drawn on the  Bank  of  India,

Bhandara  Branch,  Maharashtra  where  it  was  dishonoured,  the   Judicial

Magistrate First Class, Digras, District Yavatmal  had  no  jurisdiction  to

entertain the Complaint.  It is pertinent to note that  the  subject  cheque

was presented at Digras, District Yavatmal where the Complainant had a  bank

account although he was a resident of  District  Washim,  Maharashtra.   The

learned Single Judge, in the impugned judgment,  had  rightly  rejected  the

argument that the Complaint itself should be dismissed; instead  he  ordered

that it be returned to the complainant for filing in the appropriate  Court.

The Appeal is accordingly dismissed.

Crl. Appeal No.  1593   of 2014

[Arising out of S.L.P.(Crl.)No.2077 of 2009

22.   In this Appeal the  Respondent-accused,  having  purchased  electronic

items from the Appellant-company, issued the cheque  in  question  drawn  on

UCO Bank, Tangi, Orissa which was presented by  the  Complainant-company  at

State Bank of India, Ahmednagar Branch, Maharashtra  as  its  branch  office

was located at Ahmednagar.  The cheque was dishonoured by UCO  Bank,  Tangi,

Orissa.  A Complaint was filed before JMFC, Ahmednagar.  An application  was

filed by the Respondent-accused  under  Section  177  CrPC  questioning  the

jurisdiction of the JMFC Ahmednagar, who held that since the  demand  notice

was issued from and the payment was  claimed  at  Ahmednagar,  he  possessed

jurisdiction to try the  Complaint.   The  High  Court  disagreed  with  the

conclusion of the JMFC, Ahmednagar that  the  receipt  of  notice  and  non-

payment of the demanded amount are factors which will have  prominence  over

the place wherefrom the notice of demand was  issued  and  held  that  JMFC,

Ahmednagar did not  have  the  territorial  jurisdiction  to  entertain  the

Complaint.  In view of the foregoing discussion  on  the  issue  above,  the

place where the concerned cheque had been dishonoured, which in the case  in

hand was Tangi, Orissa, the Appeal is allowed with the  direction  that  the

Complaint be returned to the Complainant for further  action  in  accordance

with law.

Crl. Appeal Nos. 1594, 1595  & 1601 to 1603    of 2014

[Arising out of S.L.P.(Crl.)Nos.2112 of 2009 and 2117 of 2009;

 3762 of 2012; 3943 of 2012; 3944 of 2012]

23.    The  facts  being  identical  to  Criminal  Appeal  arising  out   of

S.L.P.(Crl.)No.2077 of 2009, these Appeals stand dismissed.

Crl. Appeal Nos.1596-1600   of 2014

[Arising out of S.L.P.(Crl.)Nos.1308-1312 of 2009]

24.   The Appellant-complainant herein has its Registered  Office  in  Delhi

from where the Respondents-accused are  also  carrying  on  their  business.

The cheques in question were issued by the Respondent No.2-accused drawn  on

Indian Overseas Bank, Connaught Place, New Delhi.  However,  the  same  were

presented and dishonoured  at  Nagpur,  Maharashtra  where  the  Complainant

states it also has an office. There is no clarification why the cheques  had

not been presented  in  Delhi  where  the  Complainant  had  its  Registered

Office, a choice which we think is capricious and  perfidious,  intended  to

cause harassment.  Upon cheques having been  dishonoured  by  the  concerned

bank at Delhi, five Complaints were filed before Judicial  Magistrate  First

Class, Nagpur who heard the Complaints, and also recorded the  evidence  led

by both the parties.  However, the JMFC,  Nagpur  acquitted  the  Respondent

No.2-accused on the ground  of  not  having  territorial  jurisdiction.   On

appeals being filed before the High Court of Bombay,  the  judgment  of  the

JMFC, Nagpur was partly set aside so far as the acquittal of the  Respondent

No.2-accused was concerned  and  it  was  ordered  that  the  Complaints  be

returned for filing before the proper Court.   In  view  of  the  conclusion

arrived at by us above, these Appeals are also dismissed.

Crl. Appeal No. 1604   of 2014

[Arising out of S.L.P.(Crl.)No.59 of 2013]

25.   The cheque in question was drawn by the  Respondent-accused  on  State

Bank of Travancore, Delhi. However,  it  was  presented  by  the  Appellant-

complainant at Aurangabad.  A Complaint was filed  before  JMFC,  Aurangabad

who issued process.  Respondent-accused filed an application  under  Section

203 of CrPC  seeking  dismissal  of  the  Complaint.   The  application  was

dismissed on the predication that  once  process  had  been  initiated,  the

Complaint could not be dismissed.  On a writ  petition  being  filed  before

the High Court of  Bombay,  Aurangabad  Bench,  the  order  of  issuance  of

process was set aside and the Complaint  was  ordered  to  be  returned  for

being presented before a competent court having  jurisdiction  to  entertain

the same.  The High Court had correctly noted that the  objection  pertained

to the territorial jurisdiction of the JMFC,  Aurangabad,  a  feature  which

had not been comprehensively grasped by the latter.  The  High  Court  noted

that the Registered Office of  the  Complainant  was  at  Chitegaon,  Tehsil

Paithan, District Aurangabad whereas the Accused  was  transacting  business

from Delhi.  The High Court pithily underscored that in paragraph 4  of  the

Complaint it had been specifically contended that credit facility was  given

to the Accused in Delhi, where the Complainant-company also had  its  branch

office.  The statutory notice had also emanated from Aurangabad, and it  had

been demanded that payment should be made in that city within the  specified

time.  It was also the Complainant’s case  that  the  Invoice,  in  case  of

disputes, restricted jurisdiction to Aurangabad courts; that  intimation  of

the bouncing of the cheques was  received  at  Aurangabad.   It  is  however

necessary to underscore that the Accused  had  clarified  that  the  subject

transaction took place at Delhi  where  the  goods  were  supplied  and  the

offending cheque was handed over to the  Complainant.   It  appears  that  a

Civil Suit in respect of the recovery of the cheque amount has already  been

filed  in  Delhi.   We  may  immediately  reiterate  that   the   principles

pertaining to the cause  of  action  as  perceived  in  civil  law  are  not

relevant  in  criminal   prosecution.    Whilst   the   clause   restricting

jurisdiction  to  courts  at  Aurangabad  may  have   efficacy   for   civil

proceedings, provided any  part  of  the  cause  of  action  had  arisen  in

Aurangabad, it has no bearing on the situs in criminal prosecutions.   Since

a Civil Suit is pending, we hasten to clarify that  we  are  not  expressing

any  opinion  on  the  question  of  whether  the  courts  at  Delhi   enjoy

jurisdiction to try the Suit for recovery.  In the  impugned  judgment,  the

High Court duly noted Bhaskaran   and  Harman.   However,  it  committed  an

error in analyzing the cause of action as well as the  covenant  restricting

jurisdiction to Aurangabad as these are relevant only  for  civil  disputes.

However, the  impugned  judgment  is  beyond  interference  inasmuch  as  it

concludes that the JMFC, Aurangabad has no  jurisdiction  over  the  offence

described in the Complaint.  The Appeal is accordingly dismissed.

.......................................................J.

                       [T.S. THAKUR]

.......................................................J.

                       [VIKRAMAJIT SEN]

                       …………......…………….........…………J.

                       [C. NAGAPPAN]

New Delhi

August 1, 2014.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.2287 OF 2009

DASHRATH RUPSINGH RATHOD                          …Appellant

Versus

STATE OF MAHARASHTRA & ANR.                  …Respondents

                                    WITH

                     CRIMINAL APPEAL NO.  1593   OF 2014

               (Arising out of S.L.P. (Crl.) No.2077 of 2009)

                     CRIMINAL APPEAL NO. 1594   OF 2014

               (Arising out of S.L.P. (Crl.) No.2112 of 2009)

                      CRIMINAL APPEAL NO. 1595  OF 2014

               (Arising out of S.L.P. (Crl.) No.2117 of 2009)

                   CRIMINAL APPEAL NO. 1596-1600  OF 2014

            (Arising out of S.L.P. (Crl.) Nos.1308-1312 of 2009)

                     CRIMINAL APPEAL NO. 1601   OF 2014

               (Arising out of S.L.P. (Crl.) No.3762 of 2012)

                     CRIMINAL APPEAL NO. 1602   OF 2014

               (Arising out of S.L.P. (Crl.) No.3943 of 2012)

                      CRIMINAL APPEAL NO. 1603  OF 2014

               (Arising out of S.L.P. (Crl.) No.3944 of 2012)

                                     AND

                      CRIMINAL APPEAL NO. 1604  OF 2014

                (Arising out of S.L.P. (Crl.) No.59 of 2013)

                               J U D G M E N T

T.S. Thakur, J.

1.    I have had the advantage of going through the draft order proposed  by

my  esteemed  brother  Vikramajit  Sen,  J.  I  entirely  agree   with   the

conclusions which my  erudite  brother  has  drawn  based  on  a  remarkably

articulate process of reasoning that illumines the draft  judgment  authored

by him. I would all the same like to add a few lines of my own  not  because

the order as proposed leaves any rough edges  to  be  ironed  out  but  only

because the question of law  that  arises  for  determination  is  not  only

substantial but of considerable interest and importance for  the  commercial

world.  The fact that the view being taken by us strikes a  discordant  note

on certain aspects which have for long been considered  settled  by  earlier

decisions of this Court being     only  an  additional    reason  for    the

modest  addition     that  I     propose  to  make.  Of    these   decisions

Bhaskaran’s   case    stands  out  as  the  earliest  in  which  this  Court

examined the vexed question of territorial jurisdiction  of  the  Courts  to

try offences punishable under Section  138  of  the  Negotiable  Instruments

Act, 1881 (hereinafter called “NI Act”).  Bhaskaran’s case was  heard  by  a

two-judge Bench of this Court who took the view  that  the  jurisdiction  to

try an offence under Section 138 could not be determined only  by  reference

to the place where the cheque was dishonoured. That is because dishonour  of

the cheque was not by itself an offence under Section 138 of The  Negotiable

Instruments Act, 1881, observed the Court.  The  offence  is  complete  only

when the drawer fails to pay the cheque amount within the period of  fifteen

days stipulated under clause (c) of the proviso to Section 138 of  the  Act.

Having said that the Court recognised  the  difficulty  in  fixing  a  place

where such failure could be said to have taken place.  It  could,  said  the

Court, be the place where the drawer resides or the place  where  the  payee

resides or the place where either of them carries on  business.  To  resolve

this uncertainty the Court turned to Sections 178 and 179 of the Cr.P.C.  to

hold that since an offence under Section 138 can be completed only with  the

concatenation of five acts that constituted the components  of  the  offence

any Court within whose jurisdiction any one  of  those  acts  was  committed

would have the jurisdiction to try the offence.  The Court held:

“The offence under Section 138 of the Act can be  completed  only  with  the

concatenation of a number of acts. The following  are  the  acts  which  are

components of the said offence: (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 is  not  necessary  that  all  the  above  five  acts  should  have  been

perpetrated at the same locality. It is possible that  each  of  those  five

acts could be done at five different localities. But a concatenation of  all

the above five is a sine qua non for the completion  of  the  offence  under

Section 138 of the Code. In this context a reference to  Section  178(d)  of

the Code is useful. It is extracted below:

“178. (a)-(c)    *     *    *

(d) where the offence consists of  several  acts  done  in  different  local

areas, it may be enquired into or tried by a court having jurisdiction  over

any of such local areas.”

Thus it is clear, if the five different acts 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 under Section  138

of the Act. In other words, the complainant can  choose  any  one  of  those

courts having jurisdiction over any  one  of  the  local  areas  within  the

territorial limits of which any one of those five  acts  was  done.  As  the

amplitude stands so widened and so expansive  it  is  an  idle  exercise  to

raise jurisdictional question regarding the offence  under  Section  138  of

the Act.”

2.    Bhaskaran held the field for two years. The first  blow  to  the  view

taken by this Court in Bhaskaran’s case was dealt  by  a  three-Judge  Bench

decision in Shri Ishar Alloy Steels Ltd. v. Jayaswals  Neco  Ltd.  (2001)  3

SCC 609. The question that arose in that case was whether the limitation  of

six months for presentation of a cheque for encashment was applicable viz-a-

viz presentation to the bank of the  payee  or  that  of  the  drawer.  High

Courts in this country had expressed conflicting opinions  on  the  subject.

This Court resolved the cleavage in those  pronouncements  by  holding  that

the cheque ought to be presented to the drawee bank  for  its  dishonour  to

provide a basis for prosecution under Section 138. The Court observed:

“The use of the words “a  bank”  and  “the  bank”  in  the  section  are  an

indicator of the intention of the legislature.  “The bank”  referred  to  in

proviso (a) to the proviso to Section 138 of the Act would mean  the  drawee

bank on which the cheque is drawn and not all  banks  where  the  cheque  is

presented for collection including the bank of the payee,  in  whose  favour

the cheque is issued.

It, however, does not mean that the cheque is always to be presented to  the

drawer’s bank on which the cheque is issued. However, a combined reading  of

Sections 3, 72 and 138 of the Act would clearly show 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. Such  presentation  is  necessarily  to  be

made within six months at the bank on which the  cheque  is  drawn,  whether

presented personally or through another bank, namely,  the  collecting  bank

of the payee.”

3.    Ishar  Alloy’s  case  (supra)  did  not  deal  with  the  question  of

jurisdiction of the Courts nor was Bhaskaran  noticed  by  the  Court  while

holding that the presentation of the cheque ought to be  within  six  months

to the drawee bank. But that does not, in our view,  materially  affect  the

logic underlying the pronouncement, which  pronouncement  coming  as  it  is

from a bench of coordinate jurisdiction binds us.  When  logically  extended

to the question of jurisdiction of the Court to take cognizance, we find  it

difficult to appreciate how a payee of the cheque  can  by  presentation  of

the cheque to his own bank confer jurisdiction upon  the  Court  where  such

bank  is  situate.   If  presentation  referred  to  in  Section  138  means

presentation to the “drawee bank”, there is  no  gainsaying  that  dishonour

would be localised and confined to the place where such  bank  is  situated.

The question is not whether or not the payee can deposit his cheque  in  any

bank of his choice at any place.  The question is whether  by  such  deposit

can the payee confer jurisdiction on a Court of his choice?  Our  answer  is

in the negative. The payee may and indeed can  present  the  cheque  to  any

bank for collection from the drawee bank,  but  such  presentation  will  be

valid only if the drawee bank receives the cheque  for  payment  within  the

period of six months from the date of issue.  Dishonour of the cheque  would

be localised at the place where the drawee bank  is  situated.  Presentation

of the cheque at any place, we  have  no  manner  of  doubt,  cannot  confer

jurisdiction  upon  the  Court  within   whose   territorial   limits   such

presentation may have taken place.

4.    Then came Harman Electronics (P) Ltd. v. National Panasonic India  (P)

Ltd. (2009) 1 SCC 720. That was a case where  the  complaint  under  Section

138 was filed in a Delhi Court, only because the statutory  notice  required

to be issued under the proviso to Section 138 was  issued  from  Delhi.   If

Bhaskaran was correctly decided, Harman should not have interfered with  the

exercise of jurisdiction by the Delhi Court for issue of  a  notice  was  in

terms of Bhaskaran, one of the factors that clothed the Court  in  Delhi  to

take cognizance and try the case. Harman did not do  so.  In  Harman’s  case

this Court, emphasized three distinct aspects.  Firstly, it said that  there

was a world of difference between issue of a notice, on the  one  hand,  and

receipt, thereof, on the other.  Issue of notice did  not  give  rise  to  a

cause of action while receipt did, declared the Court.

5.    Secondly, the Court held  that  the  main  provision  of  Section  138

stated what would  constitute  an  offence.  The  proviso  appended  thereto

simply imposed certain  further  conditions  which  must  be  fulfilled  for

taking cognizance of the offence. The  following  passage  deals  with  both

these aspects:

“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  dishonour

of a cheque by itself constitutes an offence. For  the  purpose  of  proving

its case that the accused had committed an offence under Section 138 of  the

Negotiable Instruments Act, the  ingredients  thereof  are  required  to  be

proved. What would constitute an offence is stated in  the  main  provision.

The proviso appended thereto, however, imposes  certain  further  conditions

which are required to be fulfilled before cognizance of the offence  can  be

taken. If the ingredients for constitution  of  the  offence  laid  down  in

provisos (a), (b)  and  (c)  appended  to  Section  138  of  the  Negotiable

Instruments Act are intended to be applied in favour of the  accused,  there

cannot be any doubt that receipt [pic]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 that the 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.”

6.    Thirdly, the Court held that if presentation of the  cheque  or  issue

of  notice  was  to  constitute  a  good  reason  for  vesting  courts  with

jurisdiction to try offences under Section 138, it would lead to  harassment

of the drawer of the cheques thereby  calling  for  the  need  to  strike  a

balance between the rights of the parties  to  the  transaction.  The  Court

said:

“We cannot, as things stand today, be oblivious of the fact that  a  banking

institution holding several cheques signed by  the  same  borrower  can  not

only present the cheque for its encashment  at  four  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  complainant  and  the

right of an accused  vis-à-vis  the  provisions  of  the  Code  of  Criminal

Procedure.”

7.    Bhaskaran was, in the wake of the above, considerably diluted and  the

logic behind vesting of jurisdiction based  on  the  place  from  where  the

notice was issued questioned. Even presentation of the cheque  as  a  reason

for assumption  of  jurisdiction  to  take  cognizance  was  doubted  for  a

unilateral act of the complainant/payee of  the  cheque  could  without  any

further or supporting reason confer jurisdiction on  a  Court  within  whose

territorial limits  nothing  except  the  presentation  of  the  cheque  had

happened.

8.    Three recent decisions need be mentioned  at  this  stage  which  have

followed Bhaskaran and attempted to reconcile the ratio of  that  case  with

the subsequent decisions in Ishar Alloy Steels and  Harman  Electronics.  In

Nishant Aggarwal v. Kailash Kumar Sharma (2013) 10 SCC  72  this  Court  was

once again dealing with a case where the complaint had been filed  in  Court

at Bhiwani in Haryana within whose territorial jurisdiction the  complainant

had presented the cheque for encashment, although the cheque was drawn on  a

bank at Gauhati in Assam. Relying upon the  view  taken  in  Bhaskaran  this

Court held that the Bhiwani Court had jurisdiction to deal with the  matter.

While saying so, the  Court  tried  to  distinguish  the  three-Judge  Bench

decision  in  Ishar  Alloy  Steels  (supra)  and  that  rendered  in  Harman

Electronics case (supra) to hold that the ratio of those decisions  did  not

dilute the principle stated in Bhaskaran case. That  exercise  was  repeated

by this Court in FIL Industries Ltd. v. Imtiyaz Ahmad Bhat (2014) 2 SCC  266

and in Escorts Ltd. v. Rama Mukherjee (2014) 2 SCC 255  which  too  followed

Bhaskaran and held that complaint under Section  138  Negotiable  Instrument

Act could be instituted at any  one  of  the  five  places  referred  to  in

Bhaskaran’s case.

9.    We have, with utmost respect to the Judges comprising the  Bench  that

heard the above cases, found it difficult to follow suit  and  subscribe  to

the view stated in Bhasakaran.  The reasons are not far too seek and may  be

stated right away.

10.   Section 138 is a penal provision  that  prescribes  imprisonment  upto

two years and fine upto twice the cheque  amount.  It  must,  therefore,  be

interpreted strictly, for it is one of the accepted rules of  interpretation

that in a penal statute, the Courts would hesitate  to  ascribe  a  meaning,

broader than what the phrase would ordinarily bear.  Section 138 is  in  two

parts. The enacting part of the provision makes  it  abundantly  clear  that

what constitutes an offence punishable with imprisonment and/or fine is  the

dishonour of a cheque  for  insufficiency  of  funds  etc.  in  the  account

maintained by the drawer with a bank  for  discharge  of  a  debt  or  other

liability whether in full or part. The language used  in  the  provision  is

unambiguous and the ingredients of the offence clearly discernible viz.  (a)

Cheque is drawn by the accused on  an  account  maintained  by  him  with  a

banker. (b) The cheque amount is in discharge of a  debt  or  liability  and

(c) The cheque is returned unpaid for insufficiency of  funds  or  that  the

amount exceeds the arrangement made with the bank. But for the proviso  that

comprises the second part of the provision,  any  dishonour  falling  within

the four corners of the enacting provision would be punishable without  much

ado. The proviso, however, draws an  exception  to  the  generality  of  the

enacting part of the provision, by stipulating two steps that  ought  to  be

taken by the complainant holder of the cheque  before  the  failure  of  the

drawer gives to the former the cause of action to file a complaint  and  the

competent Court to take cognizance of the offence. These steps are  distinct

from the ingredients of the offence which  the  enacting  provision  creates

and makes punishable. It follows that an offence  within  the  contemplation

of Section 138 is complete with the  dishonour  of  the  cheque  but  taking

cognizance of the same by any Court is forbidden so long as the  complainant

does not have the cause of action to file a complaint  in  terms  of  clause

(c) of the proviso read with Section 142 which runs as under:

”Section 142:

Cognizance of offences. —Notwithstanding anything contained in the  Code  of

Criminal Procedure, 1973 (2 of 1974)—

(a) no court shall take cognizance of any offence punishable  under  section

138 except upon a complaint, in writing, made by the payee or, as  the  case

may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which  the  cause

of action arises under clause (c) of the proviso to  section  138: [Provided

that the cognizance of a complaint may be  taken  by  the  Court  after  the

prescribed period, if the  complainant  satisfies  the  Court  that  he  had

sufficient cause for not making a complaint within such period.]

(c) no court inferior to that of a Metropolitan  Magistrate  or  a  Judicial

Magistrate of the  first  class  shall  try  any  offence  punishable  under

section 138.“

11.   The following would constitute ‘cause of action’ referred  to  in  sub

clause (b) above:

The complainant has presented the cheque for payment within  the  period  of

six months from the date of the issue thereof.

The complainant has demanded the payment  of  the  cheque  amount  from  the

drawer by issuing  a  written  notice  within  thirty  days  of  receipt  of

information by him from the bank regarding the dishonour.

The drawer has failed to pay the cheque amount within fifteen  days  of  the

receipt of the notice.

12.   A proper understanding of the scheme underlying  the  provision  would

thus make it abundantly clear  that  while  the  offence  is  complete  upon

dishonour, prosecution for such offence is deferred till the time the  cause

of action for such prosecution accrues to the complainant.  The  proviso  in

that sense, simply postpones the actual prosecution  of  the  offender  till

such time he fails to pay the amount within the statutory period  prescribed

for such payment.  There is, in our opinion, a  plausible  reason  why  this

was done.  The Parliament in its wisdom considered it  just  and  proper  to

give to the drawer of a dishonoured cheque an  opportunity  to  pay  up  the

amount,  before  permitting  his  prosecution  no  matter  the  offence   is

complete, the moment the cheque was dishonoured. The law has to that  extent

granted a concession and prescribed a scheme under which dishonour need  not

necessarily lead to penal consequence if the drawer makes amends  by  making

payment within the time stipulated once the dishonour is  notified  to  him.

Payment of the cheque amount within  the  stipulated  period  will  in  such

cases diffuse the element of criminality  that  Section  138  attributes  to

dishonour by way of a legal fiction implicit in the use of the words  “shall

be deemed to have committed an offence”.  The drawer would by  such  payment

stand absolved by the penal consequences of dishonour.  This scheme  may  be

unique to Section 138 NI Act,  but  there  is  hardly  any  doubt  that  the

Parliament is competent to  legislate so to provide for situations  where  a

cheque is dishonoured even without any criminal intention  on  the  part  of

the drawer.

13.   The scheme of Section 138 thus not only saves the  honest  drawer  but

gives a chance to  even  the  dishonest  ones  to  make  amends  and  escape

prosecution.  Compliance with the provision is, in that  view,  a  mandatory

requirement. (See C.C. Alavi Haji v. Palapetty Muhammed and  Another  (2007)

6 SCC 555).

14.   Harman in that view correctly held  that  “what  would  constitute  an

offence is stated in the  main  provision.   The  proviso  appended  thereto

however  imposes  certain  further  conditions  which  are  required  to  be

fulfilled  before  cognizance  of  the  offence  can  be  taken.”   If   the

Parliament intended to make the conditions stipulated in the  proviso,  also

as ingredients of the offence, the provision would  have  read  differently.

It would then have specifically added the words “and the drawer has  despite

receipt of a notice demanding the payment of the amount, failed to  pay  the

same within a period of fifteen days from the date of such  demand  made  in

writing by a notice”.  That, however, is not how the enacting  provision  of

Section 138 reads.  The  legislature  has,  it  is  obvious,  made  a  clear

distinction between what would constitute an offence and what would give  to

the complainant the cause of action  to  file  a  complaint  for  the  court

competent to take cognizance.   That  a  proviso  is  an  exception  to  the

general rule is well settled.   A  proviso  is  added  to  an  enactment  to

qualify or create an exception to what is contained in  the  enactment.   It

does  not  by  itself  state  a  general  rule.   It  simply  qualifies  the

generality of the main enactment, a portion which but for the proviso  would

fall within the main enactment.

15.   The P. Ramanatha Aiyar, Law Lexicon, 2nd  Edition,  Wadhwa  &  Co.  at

page 1552 defines proviso as follows:

“The word “proviso” is used frequently to denote the clause the first  words

of which are “provided that” inserted in deeds  and  instruments  generally.

And containing a  condition  or  stipulation  on  the  performance  or  non-

performance of which, as the case maybe. The effect of a  proceeding  clause

or of the deed depends.

A Clause inserted in a legal or  formal  document,  making  some  condition,

stipulation, exception or limitation or upon the  observance  of  which  the

operation or validity of the instrument depends [ S.  105,  Indian  Evidence

Act].

A proviso is generally intended to  restrain  the  enacting  clause  and  to

except something which would have  otherwise  been  within  it  or  in  some

measure to modify the enacting clause...”

16.   To quote “Craies on Statute Law”, 7th Edn., Sweet &  Maxwell  at  page

220  “If the principal object of the  Act  can  be  accomplished  and  stand

under the restriction of the saving clause or proviso, the same  is  not  to

be held void for repugnancy.”

17.   One of the earliest judgments on the subject is a  three  Judge  Bench

decision in Kedarnath Jute Manufacturing  Co.  v.  Commercial  Tax  Officer,

Calcutta and Ors. AIR 1966 SC 12. The Court was in that case  examining  the

effect of a proviso which imposed a condition on getting exemption from  tax

and observed:

“... The substantive clause gives the exemption and  the  proviso  qualifies

the substantive clause.  In  effect  the  proviso  says  that  part  of  the

turnover of the selling dealer covered by the terms of sub-cl. (ii) will  be

exempted provided a declaration in the from prescribed is furnished. To  put

it in other words, a dealer cannot get the  exemption  unless  he  furnishes

the declaration in the prescribed form. It is well settled that "the  effect

of an excepting or qualifying proviso, according to the  ordinary  rules  of

construction, is to except out of the preceding portion  of  the  enactment,

or to qualify something enacted therein, which but for the proviso would  be

within it" : see "Craies on Statute Law", 6th Edn., p. 217.”

18.   Also pertinent is a four-Judge Bench decision of this Court in  Dwarka

Prasad v. Dwarka Das Saraf (1976) 1 SCC 128 where this Court  was  examining

whether a cinema theatre equipped with projectors and other  fittings  ready

to be launched as entertainment house was covered under  the  definition  of

‘accommodation’  as  defined  in  Section  2  (1)  (d)  of   Uttar   Pradesh

(Temporary) Control of Rent and Eviction Act,  1947.  The  proviso  provided

for some exception for factories and business carried in a building. It  was

held that sometimes draftsmen include proviso by  way  of  over  caution  to

remove any doubts and accommodation would include this cinema hall:

“18. A proviso must  be  limited  to  the  subject-matter  of  the  enacting

clause. It is a settled rule of  construction  that  a  proviso  must  prima

facie be read and considered in relation to the principal  matter  to  which

it is a proviso. It is not a separate or independent enactment.  'Words  are

dependent on the principal enacting words, to which they  are  tacked  as  a

proviso. They cannot be read as divorced from their context' 1912 A.C.  544.

If the rule of construction is that prima facie a proviso should be  limited

in its operation to the subject-matter of the enacting clause, the stand  we

have taken is  sound.  To  expand  the  enacting  clause,  inflated  by  the

proviso, sins against the fundamental rule of construction  that  a  proviso

must be considered in relation to the principal matter to  which  it  stands

as a proviso. A proviso ordinarily is but a  proviso,  although  the  golden

rule is to read the whole section, inclusive of the proviso, in such  manner

that they mutually throw light on each other  and  result  in  a  harmonious

construction.

The proper course is to apply the broad general rule of  construction  which

is that a section or enactment must be construed as a  whole,  each  portion

throwing light if need be on the rest.

The true  principle  undoubtedly  is,  that  the  sound  interpretation  and

meaning of the statute, on a view of the  enacting  clause,  saving  clause,

and proviso, taken  and  construed  together  is  to  prevail.  (Maxwell  on

Interpretation of Statutes, 10th Edn. p. 162)”

                                                         (emphasis supplied)

19.   In Sreenivasa General Traders & Ors. v.  State  of  Andhra  Pradesh  &

Ors. (1983) 4 SCC 353 another three- Judge bench of this Court examined  the

role of a proviso while  interpreting  Rule  74(1)  of  the  Andhra  Pradesh

(Agricultural Produce & Livestock) Markets Rules, 1969.

“The normal function of a proviso is to except something  out  of  the  main

enacting part or to qualify something enacted  therein  which  but  for  the

proviso would be within the purview of the enactment. Proviso to Rule  74(1)

is added to qualify or create an exception.”

20.   Reference may  also  be  made  to  Tribhovandas  Haribhai  Tamboli  v.

Gujarat Revenue Tribunal and others (1991) 3  SCC  442  wherein  this  Court

clearly held that when the language of the  main  enactment  is  clear,  the

proviso can have no effect on the interpretation of the main clause.

”7. It is a cardinal rule of interpretation that a proviso to  a  particular

provision of a statute only embraces the field,  which  is  covered  by  the

main provision. It carves out an exception to the main  provision  to  which

it has been enacted by the proviso and to no other. The proper  function  of

a proviso is to except and deal with  a  case  which  would  otherwise  fall

within the general language of the main enactment,  and  its  effect  is  to

confine to that case. Where the language of the main enactment  is  explicit

and unambiguous, the proviso can have no repercussion on the  interpretation

of the main enactment, so  as  to  exclude  from  it,  by  implication  what

clearly  falls  within  its  express  terms.  The  scope  of  the   proviso,

therefore, is to carve out  an  exception  to  the  main  enactment  and  it

excludes something which otherwise would have been within the rule.  It  has

to operate in the same field and if the language of the  main  enactment  is

clear, the proviso cannot be torn apart from the main enactment nor  can  it

be used to nullify by implication what the enactment clearly  says  nor  set

at naught the real object of the main enactment, unless  the  words  of  the

proviso are such that it is its necessary effect.”

       (emphasis supplied)

21.    The  same  line  of  reasoning  was  followed  in  A.N.  Sehgal   and

Ors. v. Raje Ram Sheoram and Ors. 1992 Supp (1) SCC 304  while  interpreting

a proviso in the Haryana Service of Engineers Rules, 1960  where  the  Court

held that the proviso to Rule  5(2)(a)  cannot  be  applied  to  confer  the

benefit of regular appointment on every promotee appointed in excess of  50%

quota. This Court harmoniously read the main provision and the  proviso  and

gave effect to the rule.

22.   In Kerala State Housing Board and Ors. v. Ramapriya  Hotels  (P)  Ltd.

and Ors. 1994 (5) SCC 672  this Court was examining whether the period of  4

years envisaged in proviso to Section 16(i) under  Kerala  Land  Acquisition

Act, 1961 could be reckoned from date when agreement was  executed  or  from

date of publication of notification under Section 3(1) of the Act after  the

agreement was executed.  After  relying  on  Tribhovandas  Haribhai  Tamboli

(supra) and A.N. Sehgal (supra) this Court held that the proviso  should  be

harmoniously read  with  the  section.  To  quote  Tribhovandas  (supra)  as

followed in this judgment:

“In Tribhovandas Haribhai Tamboli v. Gujarat  Revenue  Tribunal  this  Court

held that the proper function of a proviso is to  except  and  deal  with  a

case which would otherwise fall within the  general  language  of  the  main

enactment and its effect is to be confined to that case. Where the  language

of the main enactment is explicit and unambiguous, the proviso can  have  no

repercussion on the interpretation of the main enactment, so as  to  exclude

from it, by implication what clearly falls within  its  express  terms.  The

scope of the proviso, therefore, is to carve out an exception  to  the  main

enactment and it excludes something which otherwise would have  been  within

the rule. It has to operate in the same field and if  the  language  of  the

main enactment is clear, the proviso cannot be  torn  apart  from  the  main

enactment nor can it be used to nullify by implication  what  the  enactment

clearly says, nor set at naught the  real  object  of  the  main  enactment,

unless the words of the proviso are such that it is  its  necessary  effect.

In that case it was held that by reading the  proviso  consistent  with  the

provisions of Section 88 of the Bombay Tenancy  and  Agricultural  Act,  the

object of the main provision was sustained.”

                                                         (emphasis supplied)

23.   In Kush Sahgal & Ors. v. M.C.  Mitter  &  Ors.  (2000)  4  SCC  526  a

landlady made an application for eviction of the tenant on  the  basis  that

she wanted the place for business purposes which was not allowed as per  the

proviso to Section 21(2) U.P. Urban Buildings (Regulation of  Letting,  Rent

and Eviction) Act, 1972.  The Court examined the role  and  purport  of  the

proviso and observed :

“This we say  because  the  normal  function  of  a  proviso  is  to  except

something out of the enactment  or  to  qualify  something  enacted  therein

which but for the proviso would be within  the  purview  of  the  enactment.

(See : Kedarnath  Jute  Manufacturing  Co.  Ltd.  v. Commercial  Tax  Office

[1965]3SCR626). Since the natural presumption is that but for  the  proviso,

the enacting part of the section would have included the  subject-matter  of

the proviso, the enacting part has to be given  such  a  construction  which

would make the  exceptions  carved  out  by  the  proviso  necessary  and  a

construction which would  make  the  exceptions  unnecessary  and  redundant

should be avoided (See: Justice  G.  P.  Singh's  "Principles  of  Statutory

Interpretation" Seventh  Edition  1999,  p-163).  This  principle  has  been

deduced from the decision of the Privy Council in Govt. of the  Province  of

Bombay v. Hormusji Manekji (AIR 1947 PC 200) as also the  decision  of  this

Court in Durga Dutt  Sharma  v.Navaratna  Pharmaceutical  Laboratories  (AIR

1965 SC 980).”

24.   To the same effect are the decisions of this Court  in  Ali  M.K.  and

Ors. v. State of Kerala and Ors. (2003) 11 SCC  632,  Nagar  Palika  (supra)

and in Steel Authority of India Ltd. v. S.U.T.N.I Sangam &  Ors.  (2009)  16

SCC 1.

25.   In conclusion, we may refer to Maxwell, “Interpretation  of  Statutes”

Edn. 12, 1969, on P. 189-190 which states that  it is a general finding  and

practice “that inconsistencies can be avoided by applying the  general  rule

that the words of a proviso are not to be taken “absolutely in their  strict

literal sense” [R v. Dimbdin (1910)] but that a  proviso  is  “of  necessity

... limited  in  its  operation  to  the  ambit  of  the  section  which  it

qualifies” [Lloyds and Scottish Finance Ltd  v.  Modern  Cars  and  Canavans

(Kingston) Ltd.(1966)]. And, so far as that  section  itself  is  concerned,

the proviso receives a restricted construction: where  the  section  confers

powers, “it would be contrary to the ordinary  operation  of  a  proviso  to

give it an effect which would cut down those powers beyond  what  compliance

with the  proviso  renders  necessary.”  [Re  Tabrisky  v.  Board  of  Trade

(1947)]”

26.    Bhaskaran,  in  our  view,  reads  the  proviso  as  prescribing  the

ingredients of the offence instead of treating it as  an  exception  to  the

generality of the enacting part by stipulating further conditions  before  a

competent Court may take cognizance of the same.  Seen in the light  of  the

provisions of Section 142 of the Act, the proviso simply defers  prosecution

of the offender  till  the  conditions  prescribed  therein  are  satisfied.

Bhaskaran does not view the matter in that perspective while Harman  (supra)

does.  We find ourselves in respectful agreement with the view  in  Harman’s

case on this aspect.

27.   In  Bhaskaran,  this   Court   resolved the confusion as to the  place

of commission of the offence by relying upon Sections  177  to  179  of  the

Cr.P.C.  But the confusion arises only if one were to treat the  proviso  as

stipulating the ingredients of  the  offence.  Once  it  is  held  that  the

conditions  precedent  for  taking  cognizance  are  not   the   ingredients

constituting the offence of dishonour of the cheque, there is  no  room  for

any such confusion or  vagueness  about  the  place  where  the  offence  is

committed.  Applying the general rule recognised under Section  177  of  the

Cr.P.C. that all offences are local, the place where  the  dishonour  occurs

is the place for commission of the  offence  vesting  the  Court  exercising

territorial jurisdiction over the area with the power to try  the  offences.

Having said that we must hasten to add, that  in  cases  where  the  offence

under Section 138 is out of the offences committed in a  single  transaction

within the meaning of Section 220 (1) of the Cr.P.C. then the  offender  may

be charged with and tried at one trial for every such offence and  any  such

inquiry or trial may be conducted by any Court competent to enquire into  or

try any of the offences as provided by Section 184 of the  Code.   So  also,

if an offence punishable under Section 138 of the  Act  is  committed  as  a

part of single transaction with the  offence  of  cheating  and  dishonestly

inducing delivery of property then in terms of Section  182  (1)  read  with

Sections 184 and 220 of the Cr.P.C. such offence may be tried either at  the

place where the inducement took place or where the cheque  forming  part  of

the same transaction was dishonoured or at  the  place  where  the  property

which the person cheated was dishonestly induced to deliver or at the  place

where the accused received such property.  These provisions  make  it  clear

that in the commercial world a party who is cheated and induced  to  deliver

property on the basis of a cheque which is dishonoured  has  the  remedy  of

instituting  prosecution  not  only  at  the  place  where  the  cheque  was

dishonoured which at times may be a place other than  the  place  where  the

inducement or cheating takes place but also at the place where  the  offence

of cheating was committed. To that extent the provisions of Chapter XIII  of

the Code will  bear  relevance  and  help  determine  the  place  where  the

offences can be tried.

28.   We may at this stage refer to two other decisions of this Court  which

bear some relevance to the question that falls  for  our  determination.  In

Sadanandan Bhadran v. Madhavan Sunil Kumar (1998)  6  SCC  514  a  two-judge

bench of this Court held that clause (a) of proviso to Section 138 does  not

disentitle the payee to successively present cheque for payment  during  the

period of its validity.  On each such presentation of  the  cheque  and  its

dishonour a fresh right - and not cause of action – accrues in  his  favour.

He may, therefore, without taking pre-emptory action  in  exercise  of  such

right under clause (b) of Section 138 go on presenting the  cheque  so  long

as the cheque is valid for payment. But once he gives a notice under  clause

(b) of Section 138 he forfeits such right for in  case  of  failure  of  the

drawer to pay the money within the stipulated time he would  be  liable  for

the offence and the  cause  of  action  for  prosecution  will  arise.   The

correctness of this view was questioned in MSR Leathers v. S. Palaniappan  &

Anr. (2013) 1 SCC 177 before a bench comprising of Markandey  Katju  and  B.

Sudershan Reddy, J.J. who referred the issue to a larger bench.  The  larger

bench in MSR Leathers’s case (supra) overruled  Sadanandan  Bhadran  (supra)

holding that there was no reason why a fresh  cause  of  action  within  the

meaning of Section 142 (b) read with section 138 should  not  be  deemed  to

have arisen to the complainant every  time  the  cheque  was  presented  but

dishonoured and the drawer of cheque failed to pay  the  amount  within  the

stipulated period in terms of proviso to 138. This Court said:

“In the result, we  overrule  the  decision  in  Sadanandan  Bhadran's  case

(supra) and hold that prosecution based upon second or successive  dishonour

of the cheque is  also  permissible  so  long  as  the  same  satisfies  the

requirements stipulated in the  proviso  to  Section 138 of  the  Negotiable

Instruments Act. The reference is answered accordingly.  The  appeals  shall

now be listed before the regular Bench for hearing and disposal in light  of

the observations made above.”

29.   What is important is that in Sadanandan  Bhadran  (supra)  this  Court

had, on a careful analysis of Section 138, held that an offence  is  created

when a cheque is returned by the  bank  unpaid  for  any  reasons  mentioned

therein, although the proviso to Section  138  stipulates  three  conditions

for the applicability of the section. It is only upon  satisfaction  of  the

three conditions that prosecution can  be  launched  for  an  offence  under

Section 138. This Court observed:

“On a careful analysis of the above section, it is seen that its  main  part

creates an offence when a cheque is returned by the bank unpaid for  any  of

the reasons mentioned therein. The significant fact, however,  is  that  the

proviso lays down three conditions precedent to  the  applicability  of  the

above section and, for  that  matter,  creation  of  such  offence  and  the

conditions are: (i) the cheque  should  have  been  presented  to  the  bank

within six months of its  issue  or  within  the  period  of  its  validity,

whichever is earlier; (ii) the payee should have made a demand  for  payment

by registered notice after the cheque is returned  unpaid;  and  (iii)  that

the drawer should have failed to pay  the  amount  within  15  days  of  the

receipt of the notice. It is only when all the [pic]above  three  conditions

are satisfied that a prosecution can  be  launched  for  the  offence  under

Section 138. So far as the first condition is concerned, clause (a)  of  the

proviso to  Section  138  does  not  put  any  embargo  upon  the  payee  to

successively  present  a  dishonoured  cheque  during  the  period  of   its

validity. This apart, in the course  of  business  transactions  it  is  not

uncommon for a cheque being returned due to insufficient  funds  or  similar

such reasons and being presented again by the payee after sometime,  on  his

own volition or at the request of the drawer, in expectation that  it  would

be encashed. Needless to say, the primary interest of the payee  is  to  get

his money and not prosecution of the drawer, recourse  to  which,  normally,

is taken out of compulsion and not choice. For the above reasons it must  be

held that a cheque can be presented any number of times  during  the  period

of its validity. Indeed that is also the consistent view  of  all  the  High

Courts except that of the  Division  Bench  of  the  Kerala  High  Court  in

Kumaresan1 which struck a discordant note with the observation that for  the

first dishonour of the cheque, only a prosecution can be launched for  there

cannot be more than one cause of action for prosecution.”

                                                         (emphasis supplied)

30.   MSR Leathers (supra) also looked  at  Section  138  and  held  that  a

complaint could be filed under Section 138 after cause of action  to  do  so

had accrued in terms of clause (c) of  the  proviso  to  Section  138  which

happens no sooner the drawer of the cheque fails to make the payment of  the

cheque amount to the payee within fifteen days in terms  of  clause  (b)  to

proviso to Section 138.  MSR Leathers was not so  much  concerned  with  the

question whether the  proviso  stipulated  ingredients  of  the  offence  or

conditions precedent for filing a  complaint.  It  was  primarily  concerned

with the question whether the second or  successive  dishonour  followed  by

statutory notices and failure of the drawer to make payment could be made  a

basis for launching prosecution  against  the  drawer.   That  question,  as

noticed above, was answered  in  the  affirmative  holding  that  successive

cause of action could arise if there were successive dishonours followed  by

statutory notices as required under the law and successive  failure  of  the

drawer to make the payment. MSR Leathers cannot, therefore, be taken  as  an

authority  for  determining  whether  the  proviso   stipulates   conditions

precedent  for  launching  a  prosecution  or  ingredients  of  the  offence

punishable under Section 138.  Sadanandan Bhadran may  have  been  overruled

to the extent it held that successive causes of  action  cannot  be  made  a

basis for prosecution, but the distinction between  the  ingredient  of  the

offence,  on  the  one  hand,  and  conditions   precedent   for   launching

prosecution, on the  other,  drawn  in  the  said  judgement  has  not  been

faulted. That distinction permeates the  pronouncements  of  this  Court  in

Sadanandan Bhadran and MSR Leathers.  High  Court  of  Kerala  has,  in  our

view, correctly interpreted Section 138 of the Act in  Kairali  Marketing  &

Processing Cooperative Society Ltd. V. Pullengadi Service  Cooperative  Ltd.

(2007) 1 KLT 287 when it said:

“It is evident from the language of Section 138 of the  N.I.  Act  that  the

drawer is deemed to have committed the offence when a cheque issued  by  him

of  the  variety  contemplated  under  Section 138 is  dishonoured  for  the

reasons contemplated in the Section. The crucial words are "is  returned  by

the bank unpaid". When that happens, such person shall  be  deemed  to  have

committed the offence. With the deeming in  the  body  of  Section 138,  the

offence is already committed or deemed to have  been  committed.  A  careful

reading of the body of Section 138 cannot  lead  to  any  other  conclusion.

Proviso to Section138 according to me only  insists  on  certain  conditions

precedent which have to be satisfied if the person who  is  deemed  to  have

committed the offence were to be prosecuted  successfully.  The  offence  is

already committed when the cheque is returned by the bank. But the cause  of

action for prosecution will be available to the  complainant  not  when  the

offence is committed but only after the conditions precedent  enumerated  in

the proviso are satisfied. After the  offence  is  committed,  only  if  the

option given to avoid the prosecution under the proviso is  not  availed  of

by the offender, can the aggrieved person get a right or  course  of  action

to prosecute the offender. The offence is already deemed  and  declared  but

the offender can be prosecuted only when the  requirements  of  the  proviso

are satisfied. The cause of action for prosecution will arise only when  the

period stipulated in the proviso elapses  without  payment.  Ingredients  of

the offence have got to be distinguished from the conditions  precedent  for

valid initiation of prosecution.”

The stipulations in the proviso must also be  proved  certainly  before  the

offender can be successfully prosecuted. But in the strict  sense  they  are

not ingredients of the deemed offence under the body of  Section 138 of  the

N.I. Act, though the said stipulations; must also be proved  to  ensure  and

claim conviction. It is in this sense that it is said that the proviso  does

not make or unmake the offence under Section 138 of the N.I.  Act.  That  is

already done by the body of the Sections. This dispute  as  to  whether  the

stipulations    of    the    proviso    are    conditions    precedent    or

ingredients/components of the offence under Section 138 of the N.I. Act  may

only be academic in most cases. Undoubtedly the  ingredients  stricto  sensu

as also the conditions precedent will have to be established  satisfactorily

in all cases. Of course in an appropriate case it may have to be  considered

whether substantial compliance of the conditions precedent can  be  reckoned

to  be  sufficient  to  justify  a  conviction.  Be  that  as  it  may,  the

distinction between the ingredients and conditions  precedent  is  certainly

real and existent. That distinction is certainly  vital  while  ascertaining

complicity of an indictee  who  faces  indictment  in  a  prosecution  under

Section 138 with the aid of Section 141 of the N.I. Act.  That  is  how  the

question assumes such crucial significance here.”

31.   To sum up:

(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.

32.   Before parting with this aspect of  the  matter,  we  need  to  remind

ourselves that an avalanche of cases  involving  dishonour  of  cheques  has

come upon the Magistracy of this country. The number of  such  cases  as  of

October 2008 were estimated to be more than 38 lakhs by the  Law  Commission

of India in its 213th Report. The result is that cases  involving  dishonour

of cheque is in all major cities choking the criminal justice system at  the

Magistrate’s level.  Courts  in  the  four  metropolitan  cities  and  other

commercially important centres are particularly burdened as  the  filing  of

such cases is in very large numbers. More than five  lakh  such  cases  were

pending in criminal courts  in  Delhi  alone  as  of  1st  June  2008.   The

position is no different in other cities where large  number  of  complaints

are filed under S.138 not necessarily because the offence  is  committed  in

such cities but because multinational and  other  companies  and  commercial

entities and agencies choose these places for filing the complaints  for  no

better reason than  the  fact  that  notices  demanding  payment  of  cheque

amounts were issued from such cities  or  the  cheques  were  deposited  for

collection in their banks in those  cities.  Reliance  is  often  placed  on

Bhaskaran’s case to justify institution of such cases far  away  from  where

the transaction forming basis of the dishonoured cheque had taken place.  It

is not uncommon to find  complaints  filed  in  different  jurisdiction  for

cheques dishonoured in the same transaction and  at  the  same  place.  This

procedure is more often than not intended to use such oppressive  litigation

to achieve the collateral purpose of extracting money from  the  accused  by

denying him a fair opportunity to contest the claim by  dragging  him  to  a

distant place.  Bhaskaran’s case could never have intended to  give  to  the

complainant/payee of the cheque such an advantage. Even so,  experience  has

shown that the view taken in Bhaskaran’s case permitting prosecution at  any

one of the five different places indicated therein has failed  not  only  to

meet the approval of other  benches  dealing  with  the  question  but  also

resulted in hardship, harassment and inconvenience to the  accused  persons.

While anyone issuing a cheque is and ought to be  made  responsible  if  the

same is dishonoured despite compliance with  the  provisions  stipulated  in

the proviso, the Court ought to avoid an interpretation that can be used  as

an instrument of oppression by one of the parties. The unilateral acts of  a

complainant in presenting a cheque at a place of his  choice  or  issuing  a

notice for payment of the dishonoured amount cannot  in  our  view  arm  the

complainant with the power to choose the place of trial. Suffice it to  say,

that not only on the Principles of Interpretation of Statutes but  also  the

potential mischief which an erroneous interpretation can cause in  terms  of

injustice and harassment to the accused the view taken  in  the  Bhaskaran’s

case needs to be revisited as we have done in foregoing paragraphs.

33.   With the above observations, I concur with the order  proposed  by  my

noble Brother, Vikramajit Sen, J.

                                                           ……………….……….…..…J.

                 (T.S. Thakur)

New Delhi

August 1, 2014