Sec.138 of N.I.Act - Territorial Jurisdiction -where the cheque was dishonored- Bhaskaran judgment was overruled - 3 bench judges held that 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. - 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. and further held that - 1. this judgment will have only prospective pertinence, i.e. applicability to Complaints that may be filed after this pronouncement.- 2.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.- 3.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. - 4.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. - 5.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. - 6. 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.= CRIMINAL APPEAL NO. 2287 OF 2009 Dashrath Rupsingh Rathod …..Appellant Versus State of Maharashtra & Anr. …..Respondents = 2014 - Aug - Part - http://judis.nic.in/supremecourt/filename=41801

Sec.138 of N.I.Act - Territorial Jurisdiction -where the cheque was dishonored -   Bhaskaran judgment was overruled - 3 bench judges held that 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.- 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.  and further held that -
1. this  judgment will have only prospective  pertinence,  i.e.  applicability  to  Complaints that  may  be  filed  after  this  pronouncement.-
2.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.-
3.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. - 
4.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. - 
5.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.  -
6.  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.=

 Court’s  territorial
jurisdiction concerning criminal complaints filed under Chapter XVII of  the
Negotiable Instruments Act, 1881 (for short, ‘the NI Act’)=

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.

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.”

 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.

Conclusion

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.
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.

Apex court held that

1. 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.
2. 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.
3. 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.
4. 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, 1881will proceeding continue  at  that  place.
5.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.    
6To   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.
 7. 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.  
8. 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.=

Further held that  :-
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.
  2014 - Aug - Part - http://judis.nic.in/supremecourt/filename=41801

T.S. THAKUR, VIKRAMAJIT SEN, C. NAGAPPAN

                                                                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

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