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MANU/SC/0597/2013

Equivalent Citation: 2013(2)ACR2156, 2013VIII AD (S.C.) 218,


AIR2013SC2634, 2013 (83) ALLCC 174, 2013(2)ALT(Cri)509,
III(2013)BC391(SC),
2013(3)BomCR(Cri)307,
(2013)3CompLJ264(SC),
2013CriLJ3771,
201(2013)DLT573,
2013(3)JCC158, JT2013(9)SC188, 2013 (3) KHC 62, 2013(3)KLJ322,
2013(3)KLT231,
2013-5-LW889,
2013-2-LW(Crl)406,
2013(3)MLJ(Crl)570,
2013(2)N.C.C.297,
(2013)172PLR224,
2013(3)RCR(Civil)685, 2013(3)RCR(Criminal)697, 2013(3)RLW2338,
2013(7)SCALE753, (2013)10SCC72, 2013(2)UC1261
IN THE SUPREME COURT OF INDIA
Criminal Appeal No. 808 of 2013 (Arising out of S.L.P. (Crl.) No. 9434
of 2011)
Decided On: 01.07.2013
Appellants: Nishant AggarwalVs.Respondent: Kailash Kumar Sharma
Hon'ble Judges/Coram:P. Sathasivam and J.S. Khehar, JJ.
Counsels: For Appellant/Petitioner/Plaintiff: Huzefa Ahmadi, Sr. Adv.,
Raka B. Phookan, Neha Tandon Phookan, Shailesh Madiyal and
Rohan Sharma, Advs.
For Respondents/Defendant: Mahabir Singh, Sr. Adv., Rakesh Dahiya,
Gagandeep Sharma, Preeti Singh and Nikhil Jain, Advs.
Subject: Criminal
Catch Words
Mentioned IN
Acts/Rules/Orders: Negotiable Instruments Act, 1881 - Section 138,
Negotiable Instruments Act, 1881 - Section 141; Code of Criminal
Procedure, 1973 (CrPC) - Section 177, Code of Criminal Procedure,
1973 (CrPC) - Section 178, Code of Criminal Procedure, 1973 (CrPC)
- Section 179, Code of Criminal Procedure, 1973 (CrPC) - Section
190, Code of Criminal Procedure, 1973 (CrPC) - Section 482, Code of
Criminal Procedure, 1973 (CrPC) - Section 138 ; Indian Penal Code
1860, (IPC) - Section 379, Indian Penal Code 1860, (IPC) - Section
381, Indian Penal Code 1860, (IPC) - Section 411, Indian Penal Code
1860, (IPC) - Section 420
Cases Referred: K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr.
MANU/SC/0625/1999 : (1999) 7 SCC 510; Shri Ishar Alloy Steels Ltd.
v. Jayaswals Neco Ltd. MANU/SC/0121/2001 : (2001) 3 SCC 609;
Mrs. Preetha S. Babu v. Voltas Limited and Anr. 2010 (3) MLJ 234;
Harman Electronics Private Limited and Anr. v. National Panasonic
India Private Limited MANU/SC/8405/2008 : (2009) 1 SCC 720

Prior History: From the Judgment and Order dated 31.10.2011 of the
High Court of Punjab and Haryana at Chandigarh in Crl. Misc. No. M32542 of 2011 (O and M)
Disposition: Appeal dismissed
Citing Reference:
Distinguished
1
Mentioned
1
Relied On
1
Case Note:Criminal - Jurisdiction - Section 138 of Negotiable
Instruments Act, 1881 (N.I. Act); Section 482 of Code of Criminal
Procedure, 1973 (CrPC) - Appeal was filed against order passed by
High Court of Punjab & Haryana, whereby High Court dismissed
Petition filed by Appellant on ground that it was not a fit case for
invoking Section 482 of CrPC - Whether Court, where a cheque was
deposited for collection, would have territorial jurisdiction to try
Accused for an offence punishable under Section 138 of N.I. Act, or
would it be only Court exercising territorial jurisdiction over drawee
bank or bank on which cheque was drawn - Held, issue in question
was directly considered by present Court in case of K. Bhaskaran vs.
Sankaran Vaidhyan Balan and Another - In said case present Court
laid down that Section 138 of N.I. Act, had five components, and
then concluded that complainant could choose any one of five
places to file a complaint - Place of failure to pay amount had been
clearly qualified by present Court as place where drawer resided or
place where payee resided - Ratio in case of K. Bhaskaran provided
jurisdiction at place of residence of payer and payee - Hence,
Magistrate at Bhiwani had territorial jurisdiction to try complaint
filed by Respondent as Respondent was a resident of Bhiwani - Ratio
laid down in case of K.Bhaskaran squarely applied to present case Said principle was correctly applied by Sessions Judge as well as
High Court - In facts and circumstances and even on merits, High
Court rightly refused to exercise its extraordinary jurisdiction under
Section 482 of CrPC, dismissed Petition filed by Appellant-Accused Appeal was dismissed
JUDGMENT
P. Sathasivam, J.
1. Leave granted.
2. The question which has to be decided in this appeal is whether
the Court, where a cheque is deposited for collection, would have

territorial jurisdiction to try the accused for an offence punishable


Under Section 138 of the Negotiable Instruments Act, 1881 (in short
"the N.I. Act") or would it be only the Court exercising territorial
jurisdiction over the drawee bank or the bank on which the cheque
is drawn?
3. This appeal is directed against the final judgment and order dated
31.10.2011 passed by the High Court of Punjab & Haryana at
Chandigarh in Criminal Misc. No. M-32542 of 2011 whereby the High
Court dismissed the petition filed by the Appellant herein on the
ground that it is not a fit case for invoking Section 482 of the Code
of Criminal Procedure, 1973 (hereinafter referred to as "the Code").
4. Brief facts:
a) The Appellant herein is the Director of M/s Byrni Steel Private
Limited and his father Mr. B.L. Aggarwal is the Managing Director of
M/s Mechfeb Engineering Industries Private Limited situated at
Meghalaya and Guwahati. The Respondent was associated with both
the abovementioned firms as he used to bring business from various
private firms and Government Departments on commission basis.
b) During the course of business, the Appellant herein issued a postdated cheque bearing No. 925504 dated 01.08.2009 drawn on
Standard Chartered Bank, Guwahati, for Rs. 28,62,700/- in favour of
the complainant-Respondent herein in order to discharge his legal
enforceable liabilities. Vide letter dated 21.01.2006, the Appellant
informed the Branch Manager, Standard Chartered Bank, Guwahati,
as well as the officer in-charge, Dispur Police Station, Guwahati
regarding missing of the said cheque. Thereafter, on 28.03.2008,
the Appellant wrote a letter to the Standard Chartered Bank for stop
payment of the said cheque as the same was missing.
c) According to the Respondent, on 13.08.2009, when he presented
the same for collection through its bankers, viz., Canara Bank,
Bhiwani, Haryana, it was returned unpaid on 11.09.2009 due to stop
payment by the Appellant. When the Respondent approached the
Appellant about dishonour of the same, he was told to present the
same again for collection after one month. On 15.10.2009, the
Respondent again presented the cheque for collection but the same
was again returned unpaid on 14.12.2009.
d) On 11.01.2010, the Respondent sent a legal notice to the
Appellant asking him to pay Rs. 28,62,700/- within a period of 15
days from the date of the receipt of the notice along with the
interest, failing which, he shall be liable to be prosecuted Under
Section 138(b) of the N.I. Act.
e) On 05.02.2010, the Appellant herein filed a complaint petition
being C.R. No. 340 of 2010 in the Court of Addl. Chief Judicial
Magistrate, Kamrup at Guwahati Under Sections 379, 381, 411 and
420 of the Indian Penal Code, 1860 (in short "the Indian Penal
Code") against the Respondent. On 05.03.2010, the Respondent
filed a complaint being C.R. No. 9 of 2010 before the Court of
J.M.I.C., Bhiwani Under Section 190 of the Code for taking

cognizance of the offence committed by the Appellant Under


Sections 138 and 141 of the N.I. Act.
f) The Additional Chief Judicial Magistrate, Kamrup, by order dated
15.06.2010, in C.R. No. 340 of 2010, issued bailable warrants
against the Respondent. Thereafter, on 06.08.2010, the Respondent
filed an application for recall of the bailable warrants issued against
him. Ultimately, learned Judicial Magistrate, Bhiwani, vide order
dated 05.03.2011, accepted the application with the observation
that the Court at Bhiwani has no jurisdiction and the complaint was
returned for presentation before the proper Court having
jurisdiction.
g) Dissatisfied with the order dated 05.03.2011, the Respondent
filed Criminal Revision Petition being No. 35 of 2011 before the
Court of Additional Sessions Judge IV, Bihwani. By order dated
12.05.2011, the Additional Sessions Judge set aside the order of the
Judicial Magistrate, Bhiwani and allowed the revision.
h) Aggrieved by the said order, the Appellant herein filed Crl. Misc.
No. M-32542 of 2011 before the High Court. The High Court, by
impugned order dated 31.10.2011, dismissed the petition.
i) Against the said order, the Appellant has preferred this appeal by
way of special leave before this Court.
5. Heard Mr. Huzefa Ahmadi, learned senior counsel for the
Appellant-accused and Mr. Mahabir Singh, learned senior counsel for
the Respondent-the complainant.
6. It is the claim of the Appellant that the present case is not
covered by the judgment of this Court in K. Bhaskaran v. Sankaran
Vaidhyan Balan and Anr. MANU/SC/0625/1999 : (1999) 7 SCC 510.
On the other hand, it is the specific claim of the Respondent that
insofar as territorial jurisdiction of the case on hand, namely,
complaint filed Under Section 138 of the N.I. Act is concerned, the
decision of this Court in K. Bhasaran (supra) squarely applies,
accordingly, the Court at Bhiwani is competent to try and dispose of
the complaint filed by him. It is also pointed out that the said issue
was rightly considered and accepted by the Additional Sessions
Judge, Bhiwani as well as by the High Court.
7. We have already narrated the case of both the parties in the
pleadings portion. In order to answer the only question, it is relevant
to note that the undisputed facts in the context of territorial
jurisdiction of the learned Magistrate at Bhiwani are that the drawee
of the cheque i.e., the Respondent/complainant is a resident of
Bhiwani. The native village of the Respondent, namely, village
Barsana is situated in District Bhiwani. The Respondent owns
ancestral agricultural land at village Barsana, District Bhiwani. It is
also asserted that the Respondent is running his bank account with
Canara Bank, Bhiwani and is also residing at the present address for
the last about two decades. In view of the same, it is the claim of
the Respondent that he bonafidely presented the cheque in his bank
at Bhiwani which was further presented to the drawer's Bank at
Guwahati. The cheque was returned uncashed to the Respondent's

bank at Bhiwani with the endorsement "payment stopped by


drawer". The Respondent received the bounced cheque back from
his bank at Bhiwani. Thereafter, the Respondent sent a legal notice
Under Section 138 of the N.I. Act to the Appellant from Bhiwani. In
turn, the Appellant sent a reply to the said notice which the
Respondent received at Bhiwani. In view of non-payment of the
cheque amount, the Respondent filed a complaint Under Sections
138 and 141 of the N.I. Act before the learned Magistrate at
Bhiwani.
8. Inasmuch as the issue in question is directly considered by this
Court in K. Bhaskaran (supra), before going into the applicability of
other decisions, it is useful to refer the relevant portion of the
judgment in paras 10 and 11 of the said case which reads thus:
10. Learned Counsel for the Appellant first contended that the trial
court has no jurisdiction to try this case and hence the High Court
should not have converted the acquittal into conviction on the
strength of the evidence collected in such a trial. Of course, the trial
court had upheld the pleas of the accused that it had no jurisdiction
to try the case.
11. We fail to comprehend as to how the trial court could have found
so regarding the jurisdiction question. Under Section 177 of the
Code "every offence shall ordinarily be enquired into and tried in a
court within whose jurisdiction it was committed". The locality where
the Bank (which dishonoured the cheque) is situated cannot be
regarded as the sole criterion to determine the place of offence. It
must be remembered that offence Under Section 138 would not be
completed with the dishonour of the cheque. It attains completion
only with the failure of the drawer of the cheque to pay the cheque
amount within the expiry of 15 days mentioned in Clause (c) of the
proviso to Section 138 of the Act. It is normally difficult to fix up a
particular locality as the place of failure to pay the amount covered
by the cheque. A place, for that purpose, would depend upon a
variety of factors. It can either be at the place where the drawer
resides or at the place where the payee resides or at the place
where either of them carries on business. Hence, the difficulty to fix
up any particular locality as the place of occurrence for the offence
Under Section 138 of the Act.
It is clear that this Court also discussed the relevant provisions of
the Code, particularly, Sections 177, 178 and 179 and in the light of
the language used, interpreted Section 138 of the N.I. Act and laid
down that Section 138 has five components, namely,
i) drawing of the cheque;
ii) presentation of the cheque to the bank;
iii) returning the cheque unpaid by the drawee bank;
iv) giving notice in writing to the drawer of the cheque demanding
payment of the cheque amount; and
v) failure of the drawer to make payment within 15 days of the
receipt of the notice.

After saying so, this Court concluded that the complainant can
choose any one of the five places to file a complaint. The further
discussion in the said judgment is extracted hereunder:
14. 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.
15. 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.
16. 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.
9. Para 11 of K. Bhaskaran (supra), as quoted above, clarified the
place in the context of territorial jurisdiction as per the fifth
component, namely, "failure of the drawer to make payment within
15 days of the receipt." As rightly pointed out by learned senior
counsel for the Respondent, the place of failure to pay the amount
has been clearly qualified by this Court as the place where the
drawer resides or the place where the payee resides. In view of the
same and in the light of the law laid down by this Court in K.
Bhaskaran (supra), we are of the view that the learned Magistrate at
Bhiwani has territorial jurisdiction to try the complaint filed by the
Respondent as the Respondent is undisputedly a resident of
Bhiwani. Further, in K. Bhaskaran (supra), while considering the
territorial jurisdiction at great length, this Court has concluded that
the amplitude of territorial jurisdiction pertaining to a complaint
under the N.I. Act is very wide and expansive and we are in entire
agreement with the same.
10. Mr. Ahmadi, learned senior counsel for the Appellant in support
of his claim that the Court at Bhiwani has no jurisdiction heavily

relied on the decision of this Court in Shri Ishar Alloy Steels Ltd. v.
Jayaswals Neco Ltd. MANU/SC/0121/2001 : (2001) 3 SCC 609. We
were taken through the entire judgment. Though the case is also
related to N.I. Act, the issue of territorial jurisdiction was not the
subject-matter thereof. In Ishar Alloy Steels (supra), a three-Judge
Bench of this Court defined the term "the bank" appearing in Clause
(a) of Section 138 of the N.I. Act as the drawer's bank. It was defined
in the context of the statutory period of six months as mentioned in
Clause (a), hence, this Court held that the date of presentation of
the cheque for calculating the statutory time period of six months
will be the date of presentation of the cheque to the drawer's bank
i.e. Payee bank and not the drawee's bank i.e. Collecting bank. This
Court has correctly applied the principle of strict interpretation
appreciating that Section 138 of the N.I. Act creates an offence as
the drawer of the cheque cannot be expected or saddled with the
liability to hold the cheque amount in his account beyond six
months. The reading of the entire decision in Isher Alloy Steel
(supra) shows that jurisdiction of the Court to take cognizance arises
only where cheque is presented to the bank of drawer either by
drawee's bank or the drawee/payee personally within six months. In
other words, the analysis of the said decision, the ratio of Isher Alloy
Steel (supra) deals with such a situation where the cheque has been
presented within six months to the drawer's bank by the payee in
any manner. Inasmuch as the interpretation relates to filing of
complaint within the statutory time period of six months, we are of
the view that the reliance on the law laid down in Isher Alloy Steel
(supra) has no relevance as far as the present case is concerned. In
fact, that is the reason that in Isher Alloy Steel (supra), the
judgment in K. Bhaskaran (supra) was not discussed since territorial
jurisdiction was not the issue in that case. In view of the same, the
definition of the term "the bank" envisaged in Isher Alloy Steel
(supra) cannot be employed to decide the jurisdictional aspect and
dilute the ratio of the judgment in K. Bhaskaran (supra). Hence, we
are of the view that on the strength of the judgment in Isher Alloy
Steel (supra) defining the term "the bank", it cannot be said that
jurisdiction to file a complaint Under Section 138 of the N.I. Act does
not lie at the place of drawee's bank. To put it clearly, the judgment
in Isher Alloy Steel (supra) does not affect the ratio of the judgment
in K. Bhaskaran (supra) which provides for jurisdiction at the place
of residence of the payer and the payee. In such circumstances, we
are of the view that the judgment in Isher Alloy Steel (supra) as well
as judgments of various High Courts relied on by the Appellant
cannot be read against the Respondent to hold that the Magistrate
at Bhiwani does not have the jurisdiction to try the complaint.
11. Though several decisions of various High Courts were cited
before us, we deem it appropriate to refer only one Division Bench
decision of the Bombay High Court rendered in Criminal Writ Petition
No. 3158 of 2009, Mrs. Preetha S. Babu v. Voltas Limited and Anr.
reported in 2010 (3) MLJ 234. The Division Bench, after analyzing

the factual position of both sides, correctly applied the ratio laid
down in K. Bhaskaran (supra) finding that the Mumbai Court has
jurisdiction to entertain the complaint, dismissed the said writ
petition.
12. Mr. Ahmadi, learned senior counsel for the Appellant has also
relied on a decision of this Court in Harman Electronics Private
Limited and Anr. v. National Panasonic India Private Limited
MANU/SC/8405/2008 : (2009) 1 SCC 720. In Harman Electronics
(supra), the complainant and the accused entered into a business
transaction. The accused was a resident of Chandigarh. He carried
on the business in Chandigarh and issued a cheque in question at
Chandigarh. The complainant had a Branch Office at Chandigarh
although his Head Office was at Delhi. He presented the cheque
given by the accused at Chandigarh. The cheque was dishonoured
at Chandigarh. The complainant issued a notice upon the accused
asking him to pay the amount from New Delhi. The said notice was
served on the accused at Chandigarh. On failure on the part of the
accused to pay the amount within 15 days from the date of the
communication of the said letter, the complainant filed a complaint
at Delhi. In the complaint, it was stated that the Delhi Court has
jurisdiction to try the case because the complainant was carrying on
business at Delhi, the demand notice was issued from Delhi, the
amount of cheque was payable at Delhi and the accused failed to
make the payment of the said cheque within the statutory period of
15 days from the date of receipt of notice. It is further seen that the
cognizance of the offence was taken by the learned Magistrate at
Delhi. The accused questioned the jurisdiction of the Magistrate at
Delhi before the Addl. Sessions Judge, New Delhi. The Sessions
Judge held that the Magistrate at Delhi had jurisdiction to entertain
the complaint as, admittedly, the notice was sent by the
complainant to the accused from Delhi and the complainant was
having its Registered Office at Delhi and was carrying on business at
Delhi. The learned Judge has also observed that the accused failed
to make payment at Delhi as the demand was made from Delhi and
the payment was to be made to the complainant at Delhi. The Delhi
High Court dismissed the petition filed by the accused. Thereafter,
the accused approached this Court. This Court considered Section
138 of the N.I. Act and also referred to K. Bhaskaran's case (supra)
and quoted the five components of offence Under Section 138 which
have been noted in paragraph supra. This Court reiterated that the
five different acts which are the components of offence Under
Section 138 of the N.I. Act 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 N.I. Act and the complainant would be at liberty to file a
complaint at any of those places. Ultimately, this Court held that the
Chandigarh Court had jurisdiction to entertain the complaint
because the parties were carrying on business at Chandigarh,
Branch Office of the complainant was also in Chandigarh, the

transactions were carried on only from Chandigarh and the cheque


was issued and presented at Chandigarh. This Court pointed out
that the complaint did not show that the cheque was presented at
Delhi, because it was absolutely silent in that regard and, therefore,
there was no option but to presume that the cheque was presented
at Chandigarh. It is not in dispute that the dishonour of the cheque
also took place at Chandigarh and, therefore, the only question
which arose before this Court for consideration was whether the
sending of notice from Delhi itself would give rise to a cause of
action in taking cognizance under the N.I. Act. In such
circumstances, we are of the view that Harman Electronics (supra) is
only an authority on the question where a court will have jurisdiction
because only notice is issued from the place which falls within its
jurisdiction and it does not deviate from the other principles laid
down in K. Bhaskaran (supra). This Court has accepted that the
place where the cheque was presented and dishonoured has
jurisdiction to try the complaint. In this way, this Court concluded
that issuance of notice would not by itself give rise to a cause of
action but communication of the notice would. In other words, the
court clarified only on the service in such notice and failure on the
part of the accused to pay the demanded amount within a period of
15 days, thereafter, the commission of an offence completes. We
are of the view that this Court in Harman Electronics (supra)
affirmed what it had said in K. Bhaskaran (supra) that court within
whose jurisdiction the cheque is presented and in whose jurisdiction
there is failure to make payment within 15 days of the receipt of
notice can have jurisdiction to try the offence Under Section 138 of
the N.I. Act. It is also relevant to point out that while holding that the
Chandigarh Court has jurisdiction, this Court in Harman Electronics
(supra) observed that in the case before it, the complaint was silent
as to whether the said cheque was presented at Delhi. In the case
on hand, it is categorically stated that the cheque was presented at
Bhiwani whereas in Harman Electronics (supra) the dishonour had
taken place at Chandigarh and this fact was taken into account
while holding that Chandigarh court has jurisdiction. In the
complaint in question, it is specifically stated that the dishonour
took place at Bhiwani. We are also satisfied that nothing said in
Harman Electronics (supra) had adverse impact on the
complainant's case in the present case.
13. As observed earlier, we must note that in K. Bhaskaran (supra),
this Court has held that Section 178 of the Code has widened the
scope of jurisdiction of a criminal court and Section 179 of the Code
has stretched it to still a wider horizon. Further, for the sake of
repetition, we reiterate that the judgment in Ishar Alloy (supra) does
not affect the ratio in K. Bhaskaran (supra) which provides
jurisdiction at the place of residence of the payer and the payee. We
are satisfied that in the facts and circumstances and even on merits,
the High Court rightly refused to exercise its extraordinary

jurisdiction Under Section 482 of the Code and dismissed the


petition filed by the Appellant-accused.
14. In the light of the above discussion, we hold that the ratio laid
down in K. Bhaskaran (supra) squarely applies to the case on hand.
The said principle was correctly applied by the learned Sessions
Judge as well as the High Court. Consequently, the appeal fails and
the same is dismissed. In view of the dismissal of the appeal, the
interim order granted by this Court on 09.12.2011 shall stand
vacated.
Manupatra Information Solutions Pvt. Ltd.
.

MANU/SC/0121/2001MANU/SC/0121/2001

Equivalent
Citation:
2001(1)ACR796(SC),
2001IIAD(SC)330,
AIR2001SC1161,
2001ALLMR(Cri)578(SC),
2001(1)ALT(Cri)239,
2001(1)CGLJ464, [2001]105 CompCas1 (SC), 2001CriLJ1250,
JT2001(3)SC114,
2001(2)KLT148(SC),
2001(3)MhLJ1(SC),
2001(2)MPJR(SC)1,
2001MPLJ272(SC),
2001(1)OLR423,
RLW2001(1)SC161,
2001(2)SCALE173,
(2001)3SCC609,
[2001]2SCR36, 2001(1)UC455, 2001(2)UJ1093
IN THE SUPREME COURT OF INDIA
Decided On: 22.02.2001
Appellants:Shri Ishar Alloy Steels Ltd.
vs.
Respondent:Jayaswals NECO Ltd.
Hon'ble Judges/Coram:
K.T. Thomas, R.P. Sethi and B.N. Agrawal, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: A.K. Chitale, Sr. Adv., Niraj Sharma
and Ms. Shilpa Chitale, Advs
For Respondents/Defendant: Rana Mukherjee, N. Dubey and Ms.
Indra Sawhney, Advs.
Subject: Criminal
Subject: Banking

Catch Words
Mentioned IN
Acts/Rules/Orders:
Negotiable Instruments Act, 1881 - Section 2, Negotiable
Instruments Act, 1881 - Section 3, Negotiable Instruments Act, 1881
- Section 72, Negotiable Instruments Act, 1881 - Section 138
Cases Referred:
Om Prakash v. Gurcharan Singh 1997 (3) Cri 433 ; Arunbhai
Nilkantharai Nanavti v. Jayaben Prahladbhai through Her Power of
Attorney & Anr. 1999 (3) Cri 252 ;
Cases Overruled / Reversed:
A.B.K. Publications Ltd. & Ors. v. Tamil Nadu Newsprint & Papers
Ltd., MANU/TN/0594/1999MANU/TN/0594/1999 1999 (3) Cri 97 ;
Jayaswals NECO Limited Vs. Isher Alloy Steels Ltd. and Anr.,
MANU/MP/0396/2000MANU/MP/0396/2000

Citing Reference:
Mentioned
2
Case Note:
Negotiable Instruments Act, 1881-- Section 138--Dishonour of
cheque-- Collecting bank obliged to present the cheque in payee
bank within six months from the date on which it issued-- Cheque
not presented within statutory period--Criminal Court has no
jurisdiction to issue process against accused. (Para--9 and 11)

Industry: Metals
JUDGMENT
Sethi, J.
1. Leave granted.
(a) What is meant by, "the bank" as mentioned in Clause (a) of the
proviso to Section 138 of the Negotiable Instruments Act, 1881?

(b) Does such bank mean the bank of the drawer of the cheque or
covers within its ambit any bank including the collecting bank of the
Payee of the cheque?
(c) To which bank the cheque is to be presented for the purposes of
attracting the penal provisions of Section 138 of the Act?,
are the questions to be determined by this Court in this appeal.
2. Punjab and Haryana High Court in the case of Om Prakash v.
Gurcharan Singh 1997 (3) Cri 433 and Gujarat High Court in
Arunbhai Nilkantharai Nanavti v. Jayaben Prahladbhai through Her
Power of Attorney & Anr. 1999 (3) Cri 252 have held that a cheque
must be presented to the bank on which it is drawn within six
months from the date of issue of the cheque. However, Madras High
Court in A.B.K. Publications Ltd. & Ors. v. Tamil Nadu Newsprint &
Papers Ltd. 1999 (3) Cri 97 has taken the view that cheque can be
presented either in the payee's bank or in the drawer bank and the
date of presentation in respective banks will be reckoned for
calculating period of six months from the date it was drawn.
3. In the present case the High Court of Madhya Pradesh has
endorsed the view of Madras High Court and disagreed with the
views of Punjab and Haryana and Gujarat High Courts.
4. The admitted facts of the case are that the appellant issued
Cheque No.2477086 dated 21st July, 1997 for Rs. 10 lakhs drawn on
the State Bank of Indore, Industrial Estate Branch, Indore in favour
of the respondent. The respondent presented the cheque for
payment on 26th September, 1997 which was returned unpaid.
Again on 20th January, 1998, the respondent presented the cheque
to its bank i.e. State Bank of India at Raipur. The cheque reached the
drawer bank on 24th January, 1998, admittedly after six months
from the date it became payable. The cheque was returned unpaid
by the bank of the respondent on 3.2.1998. A notice as required
under proviso (b) of Section 138 of the Negotiable Instruments Act
was issued on 10.2.1998 which was received by the appellant on
16.2.1998. A criminal complaint under Section 138 of the Negotiable
Instruments Act was filed in the Court of Judicial Magistrate, First
Class, Raipur against the appellant in which notice was issued for
appearing in the court on 23rd September, 1998. The appellant filed
Criminal Revision No. 190 of 1998 in the Court of Sessions Judge,
Raipur contending that as the cheque was presented for payment
beyond the period of six months as prescribed under Proviso (a) to
Section 138 of the Negotiable Instruments Act, 1881 (hereinafter
referred to as "the Act"), no offence was made out, to be taken
cognizance of. The revision was allowed by the Sessions Court on
3rd July, 1999. The respondent filed a further revision in the High

Court which was allowed vide the order impugned holding, as


noticed earlier, that the cheque can be presented within the six
months before the drawer's (payee's) bank or it can be presented
before the drawer as well as the payee's bank.
5. Before adverting to the various provisions of law as applicable in
the case, it has to be kept in mind that the law relating to
Negotiable Instruments is the law of the commercial world which
was enacted to facilitate the activities in trade and commerce
making provision of giving sanctity to the instruments of credit
which could be deemed to be convertible into money and easily
passable from one person to another. In the absence of such
instruments, the trade and commerce activities were likely to be
adversely affected as it was not practicable for the trading
community to carry on with it the bulk of the currency in force. The
introduction of negotiable instruments owes its origin to the
bartering system prevalent in the primitive society. The negotiable
instruments are, in fact, the instruments of credit being convertible
on account of the legality of being negotiated and thus easily
passable from one hand to another. The source of Indian law relating
to such instruments is admittedly the English Common Law. The
main object of the Act is to legalise the system by which
instruments contemplated by it could pass from hand to hand by
negotiation like any other goods. The purpose of the Act was to
present an orderly and authoritative statement of the leading rules
of law relating to the negotiable instruments. The Act intends to
legalise the system under which claims upon mercantile instruments
could be equated with ordinary goods passing from hand to hand. To
achieve the objective of the Act, the Legislature in its wisdom
thought it proper to make provision in the Act for conferring such
privileges to the mercantile instruments contemplated under it and
provide special procedure in case the obligation under the
instrument was not discharged. It has, always to be kept in mind
that Section 138 of the Act creates an offence and the law relating
to the penal provisions has to be interpreted strictly so that non-one
can ingeniously or insidiously or guilefully or strategically be
prosecuted.
6. It has further to be noticed that to make an offence under Section
138 of the Act, it is mandatory that the cheque is 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. It is
the cheque drawn which has to be presented to "the bank" within
the period specified therein. When a post-dated cheque is written or
drawn, it is only a bill of exchange. The post-dated cheque become
a cheque under the Act on the date which is written on the said
cheque and the six months period has to be reckoned, for the
purposes of Section 138 of the Act, from the said date.

7. Section 138 provides that 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 punishable with
imprisonment as prescribed therein subject to the conditions
mentioned in clauses (a), (b) and (c) of the proviso. Section 3 of the
Act defines the "banker" to include any person acting as a banker
and any post office saving bank. Section 72 of the Act provides that
a cheque must, in order to charge the drawer, be presented at the
bank upon which it is drawn before the relations between the
drawer and his banker has been altered to the prejudice of the
drawer.
8. The use of the words "a bank" and "the bank" in the Section is
indicator of the intention of the Legislature. The former is indirect
article and the latter is pre-fixed by direct article. If the Legislature
intended to have the same meanings for "a bank" and "the bank",
there was no cause or occasion for mentioning it distinctly and
differently by using two different articles. It is worth noticing that
the word "banker" in Section 3 of the Act is pre-fixed by the
indefinite article "a" and the word "bank" where the cheque is
intended to be presented under Section 138 is pre-fixed by the
definite article "the". The same Section permits a person to issue a
cheque on an account maintained by him with "a bank" and makes
him liable for criminal prosecution if it is returned by "the bank"
unpaid. The payment of the cheque is contemplated by "the bank"
meaning thereby where the person issuing the cheque has an
account. "The" is the word used before nouns, with a specifying of
particularising effect opposed to the indefinite or generalising force
of "a" or "an". It determines what particular thing is meant; that is,
what particular thing we are to assume to be meant. "The" is always
mentioned to denote particular thing or a person. "The" would,
therefore, refer implicitly to a specified bank and not any bank. "The
bank" referred to in clause (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.
9. It, however, does not mean that the cheque is always to be
presented to the drawer's bank on which the cheque is issued. The
payee of the cheque has the option to present the cheque in any
bank including the collecting bank where he has his account but to
attract the criminal liability of the drawer of the cheque such
collecting bank is obliged to present the cheque in the drawee or

payee bank on which the cheque is drawn within the period of six
months from the date on which it is shown to have been issued. In
other words a cheque issued by (A) in favour of (B) drawn in a bank
named (C) where the drawer has an account can be presented by
the payee to the bank upon which it is drawn i.e. (c) bank within a
period of six months or present it to any other bank for collection of
the cheque amount provided such other bank including the
collecting bank presents the cheque for collection to the (C) bank.
The 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 Act, who
shall 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 2, 72 and 138 of the Act would leave no doubt in our mind
that the law mandates the cheque to be presented at the bank on
which it is drawn if the drawer is to be held criminally liable. 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.
10. We have perused the judgments of the Punjab & Haryana,
Gujarat and Madras High Courts and their conflicting views and are
of the opinion that the Madras High Court has not correctly
interpreted the provisions of law in this behalf.
11. As, admittedly, in this case the cheque was not presented before
the drawer's bank within the statutory period of six months, the
criminal court had no jurisdiction to issue the process against the
appellant. The impugned judgment of the High Court being contrary
to law is thus not sustainable. The appeal is accordingly allowed and
the impugned judgment is set side.
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