My Dear Advocates friends, I pose the following question to you for your valuable comments, in view of the recent Judgement dated 1-8-2014 of the Hon’ble Supreme Court of India on the point that the cheque bouncing cases can be filed only & only in the court where the Bank of the Accused is situated. In case the cheque received by you from your client based in a different DISTRICT or STATE is bounced, then would you waste your valuable time to prosecute that client-drawer in a Court situated in a far off place in another district or state where the Bank of the Accused is situated ? A Bench of three Judges of the Hon’ble Supreme Court of India vide its recent Judgement passed on 1st August, 2014 CRIMINAL APPEAL NO. 2287 OF 2009 in the case of Dashrath Rupsingh Rathod V/s State of Maharashtra & Anr and other batch of Appeals, held that if the cheque received from your creditor is bounced, then you need to file the case under section 138 of negotiable instruments act, 1881 ONLY in the Court, where the bank of the drawer of cheque (creditor) is situated. Under this Judgement, Hon’ble Supreme Court directed that all the cheque bouncing matters wherein trial is not yet begun, pending in various criminal courts across India, must be returned by the Courts to the Complainants for lodging it in the court in the place where the Bank of the Accused-drawer is situated within 30 days of return of the said Complaints. However this Judgement does not state the fate of such complaints, if not filed within the said 30 days. This Judgement is going to cause tremendous mental and financial hardships, inconveniences and harassment to all the persons want to initiate criminal case against the drawer of the cheques, who are situated outside your district or State. For example if you are practicing in a Court in Kanyakumari/ Trivandrum and if you receive a cheque for the service rendered to the client from Jammu/ Delhi and in case that Cheque bounced, then for recovery of this cheque amount, you need to travel all the way upto Jammu/ Delhi and hire another lawyer and file the case. Ofcourse no lawyer will leave aside his regular daily matters in your local court and travel all the way to Jammu /Delhi to chaise the cheater client, wasting money and time just to come back with a date. This Judgement will very badly affect small investors who are already duped by the Financiers, who in order to dodge the repayment may issue cheque for repayment of their hard earned amount from the Bank account situated in a different State or District. Of Course the poor investor will not be able to pursue his/her remedy under the criminal law (Section 138 of NI Act), in another State/District. Same will be the case with small time businessman or suppliers who supply their services or products for credit and against the receipt of post dated cheque. This Judgement can be grossly misued by the unscrupulous business people who do business on availing credit. If the Supplier is based in Kanyakumari and receive a cheque from Purchaser /creditor also situated in Kanyakumari, but if the Purchaser’s cheque issued from his bank account situated in Jammu, where the Purchaser may have a branch office, is bounced, the Supplier still need to file the case only in the Court in Jammu. Before the above recent Judgment, earlier the Hon’ble Supreme Court of India in the year 1999 in the case of K.Bhaskaran V/s Sankaran Vaidhyan Balan (1999 (7) SCC 510), had held that in case the cheque is bounced, then the holder or payee of the cheque can initiate the criminal proceedings under Section 138 of Negotiable Instruments Act, 1888 in any of the following courts where (1) Drawer’s Bank is situated (2) Drawee Bank is situated, (3) Complainant /Payee/holder in due course is residing or carries on business (4) Drawer of the cheque is residing or carries on business. (5) Demand notice is issued demanding payment of the cheque amount, Interestingly, this Judgement in Bhaskaran was also widely misused by the Complainants/ Payees by issuing demand notices from a distant places other than the address of Drawer of the cheque and then file the criminal case in that distant court, in order to cause maximum hardships to the Accused-Drawer of cheques. Ironically, out of compulsion this Judgement has sub-served to a great extent in forcing the Accused to settle the matter out of court so as to avoid the hardships in attending the court hearings on every date in a distant court. Thus this Judgment has helped in achieving the legislative intent in enacting this criminal provision making cheque bouncing not only a punishable criminal offence against the drawer, but also against all those who are in charge of the affairs of the business in the case of company or firm. Later in the year 2009 the Hon’ble Supreme Court of India after taking note of misuse of the Judgement in Bhaskaran, held in the case of Harman Electronics (P) Ltd V/s National Panasonic India Ltd, (2009 (1) SCC 720) that since the cheque was issued at Chandigarh by Accused and cheque was presented for encashment by Complainant also in Chandigarh and since the complainant is also having branch office in Chandigarh, then based on the demand notice issued from Delhi, the case filed in Delhi Court is not maintainable and only Court in Chandigarh will have jurisdiction. This Judgement thus took away the cause of action to file the case in a place merely on the basis of the demand notice issued from a place, where no other cause of action has arisen, except sending demand notice. This Judgement thus removed the anomaly crept in the Bhaskaran Judgement. This Judgement dated 1-8-2014 of the Hon’ble Supreme Court of India in CRIMINAL APPEAL NO. 2287 OF 2009 will run counter to the intent and object for which Section 138 was brought into the Negotiable Instrument Act. In the following two Judgements, Hon’ble Surpeme Court has clarified the object and purpose for which the said Section 138 was enacted. The Hon’ble Supreme Court in Electronics Trade & Technology Development Corporation Ltd., Secunderabad v. Indian Technologists & Engineers (Electronics) (P) Ltd. and Another (1996) 2 SCC 739, discussed about the object and purpose of Section 138 as follows: “6.…..The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite civil remedy, Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a book and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cueque has been drawn and issued to the payee and the payee has presented the cheque and thereafter, if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138….” The Hon’ble Supreme Court in Goa Plast (P) Ltd. v. Chico Ursula D’Souza (2004) 2 SCC 235, while dealing with the objects and ingredients of Sections 138 and 139 of the Act, observed as follows :- “The object and the ingredients under the provisions, in particular, Sections 138 and 139 of the Act cannot be ignored. Proper and smooth functioning of all business transactions, particularly, of cheques as instruments, primarily depends upon the integrity and honesty of the parties. In our country, in a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but even to defraud the creditors. The sanctity and credibility of issuance of cheques in commercial transactions was eroded to a large extent. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment enacted the aforesaid provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee.” The Hon’ble Supreme Court in its Judgement dated 1st August, 2014 held that the Principle, that, debtor must seek creditor has no application in criminal case, as jurisdiction to try criminal case is governed by provisions of Cr.P.C. not on common law principle. This Judgement in my humble view will not help to restore the faith and confidence of the business and professional community in dealing through the cheques. I think, unless the said Judgement dated 1st August, 2014 is reviewed by the Hon’ble Hon’ble Supreme Court to make it complainant friendly or balance between the two, then this is the area where Parliament must step into amend the Negotiable Instrument Act, 1881 to provide the jurisdiction of the court wherein the criminal proceedings under section 138 of NI Act, 1881 can be instituted at the choice of the Complainant/Payee either at the place where he resides or normally carries on business, or at the place where his bank is situated or at the place where the Accused’s Bank is situated or at the place where the Accused is residing or carrying on business. This is only way to get out of the clutches of Section 177/178 of Criminal Procedure code, 1973 prescribing the general principles of jurisdiction. AUTHOR IS ADVOCATE AJAY PANICKER, OF AJAY LAW ASSOCIATES, ADVOCATES PRACTICING IN BOMBAY HIGH COURT & SUPREME COURT * ajay@ajaylaw
Posted on: Thu, 14 Aug 2014 08:17:01 +0000
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