Cheque Dishonour under Section 138 of Negotiable Instruments Act, 1881 and Place of Filing Complaints

Cheque Dishonour under Section 138 of Negotiable Instruments Act, 1881 and Place of Filing Complaints 

Section 138 - Issuance of Process - Held, that the provision of Section 202 of Code of Criminal Procedure, 1973 is directory in nature and merely because Magistrate has not recorded statements of several witnesses before issuing process, process can not be quashed - When complainant had produced relevant documents including original cheques , documents about return of the same as dishonoured by the drawee bank, notices issued by the complainant to the accused, documents showing receipt of the same by the accused and the verification statement to the effect that payment was not made in spite of notice then it can be stated that there was sufficient material for the learned Magistrate to issue process - Issuance of process cannot be faulted on that score. - ASR Systems Pvt Ltd v. Kimberly Clark Hygiene Products Pvt Ltd [2011] GCtR 6481 (Bombay)

Section 138 - Liability and Stage of Deciding - "Inchoate Cheque" - Held, Whether there was infact any liability of accused or not will have to be examined and scrutinised at the time of recording of evidence - In the trial, if it is found that on that date, there was no such liability and the cheques were misused by the complainant, the trial Court will have to acquit the accused persons but if it is found that there was existing liability on that day and, therefore, accused had asked the complainant to complete inchoate cheques and to present to the drawee bank, accused may be held guilty under Section 138 of the Negotiable Instruments Act, 1881 on his failure to make the payment in spite of notice demanding payment after the cheques were dishonoured - Such issues had to be decided in trial and not in a criminal writ petition. - ASR Systems Pvt Ltd v. Kimberly Clark Hygiene Products Pvt Ltd [2011] GCtR 6481 (Bombay)

Section 138 - "Territorial Jurisdiction" - Place of Filing Complaint - In the present case, cheque was issued by the accused at Delhi against their accounts maintained with the banks at Delhi and, therefore, it was expected that cheques would be presented to those banks at Delhi, where the accounts were maintained, for the purpose of encashment. Merely because cheques were deposited by the complainant with its bankers at Pune for presentation to the drawee bank at Delhi, the complainant’s banker at Pune does not become banker to whom the cheque was presented. Naturally, it must be held that cheques were presented with the drawee bank at Delhi and cheques were also dishonoured at Delhi - In this case, drawing of the cheque, presentation of the cheque to the drawee bank and returning the cheque unpaid by the drawee bank had taken place at Delhi - Remaining two acts, which also form components of the offence under Section 138 of the Negotiable Instruments Act had taken place at Pune-  Notice was issued by the complainant from Pune making demand of the money of the bounced cheques - Held, Accused was expected to make the payment to he complainant at Pune. His failure to make the payment within 15 days after the receipt of notice to the complainant at Pune gives jurisdiction to the Court at Pune  - Held, "issuance of notice is one of the components of section 138 and if the complainant has issued notice from office or place of its work, Court within whose jurisdiction the office or place of residence or work is situated, has jurisdiction" - "If the complainant is company or financial institution having number of branches besides head office and the whole of the cause of action take place at its branch office, it can not issue notice from its head office giving jurisdiction to the Court within whose territorial jurisdiction head office is situated" - "If complainant is running his business or residing at particular place and has no branches, he could issue notice to the accused for making payment of the cheque amount after its dishonour from the place of his business or residence It will appear that when the cheque is issued and presented to the drawee bank, cheque is expected to be encashed at the place where the drawee bank is situated. Till that time complainant is expected to approach drawee bank for encashment. However, once cheque has been dishonoured, complainant can not be expected to run after the accused. After the cheque is dishonoured, the complainant has to issue notice demanding the payment of the cheque amount. Then the accused is expected to make the payment to the complainant at the place of his work or at the place of his residence."  - ASR Systems Pvt Ltd v. Kimberly Clark Hygiene Products Pvt Ltd [2011] GCtR 6481 (Bombay)