M.S. Santoshkumar v. K.G. Mohanan and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE R.BASANT THURSDAY, THE 10TH JULY 2008 / 19TH ASHADHA 1930 Tr.P(Crl.).No. 50 of 2003(A) ---------------------------CC.667/2002 of CHIEF JUDL.MAGISTRATE, ERNAKULAM .................... PETITIONER: ACCUSED: -------------------- M.S. SANTHOSHKUMAR, S/O. SOMAN, MUTHUVELIL HOUSE, BIOSONVALLEY P.O., IDUKKY DISTRICT. BY ADV. SRI.GRASHIOUS KURIAKOSE ## RESPONDENTS: COMPLAINANT AND STATE: ----------------------------------- 1. K.G. MOHANAN, KADAVUNKAL HOUSE, VATTAPPARA P.O., SANTHANPARA (VIA.) IDUKKI DISTRICT. 2. STATE OF KERALA, REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY PUBLIC PROSECUTOR SRI.GIKKU JACOB ADV. SRI.P.R.RAMACHANDRA MENON FOR R1 THIS TRANSFER PETITION (CRIMINAL) HAVING BEEN FINALLY HEARD ON 10/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ## R.BASANT, J -----------------------------------Tr.P.(Crl.). No.50 of 2003 ------------------------------------Dated this the 11[th] day of July, 2008 ## ORDER Which court has territorial jurisdiction to try the accused for an offence under Section 138 of the Negotiable Instruments Act ? Can the complainant present the cheque for collection at any bank anywhere in India and on that ground alone compel the drawer to contest the indictment at such place ? Which is the bank referred to as venue No.2 in **Bhaskaran v. Balan [1999(3) KLT 440]** ? Is it the drawee bank only or any bank anywhere in India where the cheque is presented by the payee or the holder in due course for collection ? How is the expression “the bank” appearing in **Bhaskaran** (Supra) to be understood and interpreted in the light of the decision in **Ishar Alloy Steels Ltd. v. Jayaswants Neco Ltd [2001(2) KLT 148 (SC)] ?** These interesting questions have been raised for consideration in this case by the learned counsel for the petitioner though in the petition, transfer has been claimed only to cater to the interests of the convenience of the parties. ## Tr.P.(Crl.). No.50 of 2003 2 2. An oppressive practice appears to have come to stay following the decision in **Bhaskaran** (Supra). These questions are raised cognisant of the inconvenience, prejudice and injustice which drawers of cheques are compelled to face and endure as a result of such a practice. The practice is this. Cheques are presented for collection at distant places, at times in other States. Some complainants like companies having their principal places of business in far away places conveniently present the cheques for collection in the accounts maintained by the head office in such distant territories and drag the drawers to such places to face prosecutions under Section 138 of the Negotiable Instruments Act. In short, the jurisdiction is manipulated conveniently by complainants by presenting cheques for collection in their accounts (either existing already or at times opened only for such specific purpose of vexation) at distant places. The presentation for collection is at such places where the parties at the time of issue, even in their wildest imagination, would not have contemplated the presentation of such cheque. When dishonour takes place Tr.P.(Crl.). No.50 of 2003 3 at the drawer banks, complaints are filed at such distant territories with the only explanation that the cheque was presented for collection there and that is the venue permitted as venue No.2 by **Bhaskaran** (supra). Is this just ? Is this permissible? Can this be tolerated? Did **Bhaskaran** (supra) contemplate this situation or give its stamp of approval to such a course. ? The learned counsel for the petitioner contends that virtually the right of an accused to reasonable opportunity to defend himself is effectively frustrated and drawers of cheques are at the mercy of the powerful complainants who have the resources, infrastructure and the wherewithal to institute prosecutions at such distant places. Out of fear of the inconvenience, on being obliged to face trial at such distant places, drawers surrender to the inevitable cursing their fate. The counsel prays that it may be clarified that law does not permit this course at all. 3. It is unnecessary to search for the law on the point as according to me **Bhaskaran** holds the field in supersession of the decisions rendered by the High Courts Tr.P.(Crl.). No.50 of 2003 4 prior to that pronouncement in 1999. In **Bhaskaran** the question received detailed consideration. I am hence not adverting in detail to the decisions of various High Courts including this Court prior to 1999 when different and conflicting views appear to have been taken by the High Courts on the question of territorial jurisdiction for the purpose of Section 138 of the Negotiable Instruments Act. 4. The question arose for consideration in **Bhaskaran** as to which Court can entertain jurisdiction in a prosecution under Section 138 of the Negotiable Instruments Act. After adverting to Section 177, 178 (d) and 179 Cr.P.C, conclusions were expressed in para.14 and 16. Before adverting to the conclusions, I feel that it is only proper and apposite that I extract Section 177, 178 (d) and 179 of the Code of Criminal Procedure which form the basis for the decision in **Bhaskaran v. Balan.** “177 Cr.P.C: 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. Tr.P.(Crl.). No.50 of 2003 5 178 Cr.P.C: Place of inquiry or trial:- (a) When it is uncertain in which of several local areas an offence was committed, 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 Cr.P.C:- 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.” 5. After an exhaustive survey of the various provisions, the two Judge Bench of the Supreme Court had this to say about the territorial jurisdiction for entertainment of a complaint under Section 138 of the Negotiable Instruments Act in para.14 and 16. “Para.14 : The offence under S.138 of the Act 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, 6 ## Tr.P.(Crl.). No.50 of 2003 (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.” (emphasis supplied) “Para.16: Thus it is clear, if the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under S.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 as widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under S.138 of the Act.” The law relating to jurisdiction is thus clearly stated. The difficulty if any can only be in correctly understanding the dictum and in applying the same to the given facts. 6. This Court found that the venue stipulated as Venue No.4 of para.14 had led to abuse of the dictum in para.14. When there was no jurisdiction otherwise at all, notices of demand were got issued through counsel at different venues and jurisdiction was claimed at such venues on the ground that the counsel had made the Tr.P.(Crl.). No.50 of 2003 7 demand within such jurisdiction where his office is situated or he resides. This Court twice earlier was hence obliged to consider the ambit of the expression “give notice in writing to the drawer of the cheque demanding payment of the cheque amount”. In **Harihara Puthra Sarma v. State of Kerala** [2007(1) KLT S.N 43 Case No.60] and **Ahammedkutty Haji v. State of Kerala** [2007(1) KLT 68] it was held that merely because the notice was put into post by the Lawyer who has his residence or place of practice at a different centre, such place cannot claim jurisdiction as venue No.4 as per **Bhaskaran v. Balan** . 7. Now the contention is that the cheque can be presented at any place in India and that must be reckoned as the place where the cheque is presented to attract jurisdiction as venue No.2 of **Bhaskaran v. Balan** which states that the courts at the venue where “presentation of cheque to the bank takes place” can have jurisdiction. 8. It therefore becomes necessary to ascertain the true import of the words “presentation of the cheque to the bank” appearing as venue No.2 in **Bhaskaran v. Balan.** Tr.P.(Crl.). No.50 of 2003 8 9. The question is no more open to doubt. A three Judge Bench of the Supreme Court in the later decision of **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** (supra) was called upon to consider this specific question as to which is “the bank” of presentation – whether it is the drawee bank or the collecting bank. The learned Judges were considering the question for resolution of an identical dispute as to how the period of 6 months as stipulated in clause (a) of proviso to Section 138 is to construed. Their Lordships in the larger Bench unequivocally held that the bank referred to in proviso (a) cannot be the collecting bank; it must be held to be the drawee bank only. The rationale clearly is that “presentation to the bank” contemplated under Section 138 of the Negotiable Instruments Act is not and cannot be presentation of the cheque by the complainant to his bank for collection. 10. Courts are bound by the dictum in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** under Article 141 of the Constitution of India and it cannot therefore be held that the bank referred to as venue 2 in **Bhaskaran v.** Tr.P.(Crl.). No.50 of 2003 9 **Balan** refers to the collecting bank and not the drawee bank. That subsequent pronouncement of the larger Bench must influence and bind the Courts while subsequently understanding and interpreting the law whether statutory or precedential. In principle also, no other stand appears to be possible as the collecting bank under law can be reckoned only as the agent of the complainant to present the cheque before the drawee bank. Handing over of the cheque by the complainant to the agent of the complainant, the “collecting bank” cannot in law be reckoned as presentation of the cheque for encashment as to confer jurisdiction on the court at that venue to try the drawer of the cheque. It can in law be reckoned as only the conduct of the principal entrusting the cheque to his agent to present the same before the drawee bank. By such handing over of the cheque to his agent at whatever place it pleases the complainant, law cannot oblige the drawer of the cheque to go to distant places to defend the indictment against him. If venue No.2 mentioned in **Bhaskaran v. Balan** were given such a wide and expansive meaning, it will certainly amount to denial of Tr.P.(Crl.). No.50 of 2003 10 the inalienable right of an indictee guaranteed under Article 21 of the Constitution to reasonable opportunity to defend himself. 11. It is not the law that only the Courts at the place where the cheque is dishonoured shall have jurisdiction. Of **-** course in **Kairali Marketing and Processing Co - op.Society Ltd. v. Pullengadi Service Co op. Society Ltd.** [2007 (1) KLT 287] the question was considered as to what precisely is the offence under Section 138 of the Negotiable Instruments Act. That was done in an attempt to identify the precise date of the offence for the purpose of a proper understanding and application of the provisions of Section 141 of the Negotiable Instruments Act. It was opined that the body of Section 138 of the Act defines and declares the deemed offence and its provisos only specify the conditions precedent for initiation of a valid prosecution giving the drawer a last opportunity to avoid a prosecution. The precise offence is committed when the cheque is returned by the drawee bank it was held. It is certainly not the law that only the courts at the venue where the drawee Tr.P.(Crl.). No.50 of 2003 11 bank is situated shall have jurisdiction to try the offence. There can be no doubt on that aspect in view of the decision in **Bhaskaran v. Balan** in which their Lordships had pressed into service the stipulations of Section 177, 178 (d) and 179 Cr.P.C to contend that the courts at all the 5 venues specified in **Bhaskaran v. Balan** shall have jurisdiction. 12. It is true that the purpose of Section 138 of the Negotiable Instruments Act is to ensure that respectability is given to cheques. It has to be ensured that transactions in cheques are equivalent to transactions in cash in a growing economy where plastic money will be more and more in use. The cheque, as an instrument, is negotiable undoubtedly. But all these cannot persuade this Court to expand the territorial jurisdiction to courts at the venue where the complainant merely hands over the cheque to his agent, the collecting bank to take it to the drawee bank for presentation. Such widening of the concept of “presentation” is rendered impermissible by the decision in . **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** From the point of view of justice also, I am certainly of the Tr.P.(Crl.). No.50 of 2003 12 opinion that the accused should not be compelled to undertake such a wild chase to reach places where the complainant may either honestly or with mischievous intent choose to present the cheque and drag the drawers/accused to such distant courts to defend the indictment. When the cheque is not drawn, issued, delivered or negotiated at such venue it would be unjust to permit a complainant to compel an indictee to travel to such a venue to defend the indictment merely because the complainant has chosen to entrust the cheque for collection to his agent at such venue. 13. I have taken note particularly of an earlier decision of this Court in **Ponnappan v. Sibi** [1998 (1) KLT 673] where the Hon'ble Justice K.A.Mohamed Shafi had this to say in para.9: “Para9: The argument advanced by the counsel for the petitioner that if it is held that the drawee or the holder in due course of the cheque can file complaint at any place where he presents the cheque for encashment, it will lead to untold miseries to the drawer of the cheque as it will necessitate to defend the case anywhere in India where the drawee or the holder in due course presents the cheque for encashment and it will be against the provisions of the Cr.P.C. But it has to be noted that the provisions of S.138 of the Tr.P.(Crl.). No.50 of 2003 13 Negotiable Instruments Act are enacted by the Parliament in order to maintain the credibility of commercial transactions and to avoid bouncing of cheques which will impede commercial transactions. If the drawee or the holder in due course of the cheque is compelled to file complaint under S.138 of the Negotiable Instruments Act, either at the place where the cheque was issued or the place where the drawer of the cheque failed to make payment of money, it will result in very grave prejudice to the drawee or holder in due course of the cheque, which is a negotiable instrument changing hands. If the contention of the petitioner is accepted the hardships and disadvantages caused to the drawee or the holder in due course will be much graver and outweigh the hardship that may be caused to the drawer of the cheque in repelling this contention. Hence the above contention raised by the counsel for the petitioner is not sustainable.” 14. I am of the opinion that in the light of the subsequent decision in **Bhaskaran v. Balan** which must be understood in the light of the later decision of the larger Bench in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** it is impermissible to follow **Ponnappan v. Sibi** and hold that there shall be jurisdiction at the venue where the complainant handed over his cheque to his agent, the collecting bank for eventual presentation before the drawee Tr.P.(Crl.). No.50 of 2003 14 bank. I need only hold that the complainant cannot confer jurisdiction on any Court by merely choosing to entrust the cheque to the agent of his choice within the jurisdiction of such court. That is certainly not the venue of presentation contemplated as venue No.2 in **Bhaskaran v. Balan** in the light of **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** 15. The learned counsel for the petitioner alertly points out that this understanding of the dictum in **Bhaskaran v. Balan** in the light of the decision in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** may obliterate the distinction between venues 2 and 3 in para.14 of **Bhaskaran v. Balan** extracted above. If presentation of cheque to the drawee bank alone is reckoned as presentation, return of the cheque by the drawee bank and presentation will invariably always be at the same venue. There will hence be only 4 possible venues and not 5 as contemplated in **Bhaskaran v. Balan .** I note the said point. No possible instance of the two events - presentation as held in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** and dishonour, being at different venues occurs to my Tr.P.(Crl.). No.50 of 2003 15 mind now. But in the light of the decision of the larger Bench in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco** **Ltd.** no other explanation or interpretation appears to be possible. Even if the number of possible venues may get reduced to 4 in effect, the conclusion cannot be different. 16. I do further note that in **Mohammed Kunhi v. Abdul Kajeed** [1995 (2) KLT 900], **Muraleedharan v. Pareed** [1992(1) KLT 59] and also **Ouseph Ittira v. State of Kerala** [2002(3) KLT S.N 3 Case No.4], Judges of this Court - Justice Dinakaran, Justice K.P.B.Marar and Justice G.Sasidharan have taken the view that the courts at the venue of presentation of the cheque by the complainant to the collecting bank do also have territorial jurisdiction. In those decisions their Lordships did not have the advantage of considering the later decision of the 3 Judge Bench in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** viz.a.viz the dictum in **K.Bhaskaran v. Sankaran Vaidyan Balan.** Though the decision in **Ouseph Ittira** (supra) was rendered subsequent to the three Judge Bench decision in **Shri Ishar Alloy Steels Ltd. v. Jayaswals** Tr.P.(Crl.). No.50 of 2003 16 **Neco Ltd.** , the same was not brought to the notice of the learned Judge or considered. More over the cheque in that case was one drawn on a foreign bank and the presentation to the drawee bank was not within the territory of India. At any rate, in the light of the decision in **Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd.** [2001(3) SCC 609] which has not been considered in **Ouseph Ittira** , that decision cannot also persuade this Court to take a contra view. 17. Now coming to the specific facts of the case. Even going by the averments in the complaint, the complainant and the accused are residents of Idukki district. They are residing there and transacting their business there. The cheque was also, it is clear from the averments, handed over in Idukki district. The averments in para.4 to confer jurisdiction on the court at Ernakulam where the case is now pending is only that the complainant had presented the same for encashment before his bank, the collecting bank at Ernakulam. No other cause of action had admittedly arisen within the jurisdiction of the court at Ernakulam The cheque Tr.P.(Crl.). No.50 of 2003 17 was not admittedly drawn, issued, delivered or negotiated within the jurisdiction of the court at Ernakulam. Therefore it cannot be held that the court at Ernakulam has jurisdiction to deal with the matter. The counsel points out that transfer to the court in Idukki shall advance the interests of convenience of the parties and the interests of justice also. I am satisfied that the prayer for transfer deserves to be allowed. 18. In the result: i) This Transfer Petition is allowed; ii) C.C.No.667 of 2002 pending before the Chief Judicial Magistrate, Ernakulam is transferred to the J.M.F.C, Adimali. iii) The learned C.J.M, Ernakulam shall forthwith transmit the records to the transferee court and shall direct the parties to appear before that court on 11.08.08. The parties shall appear before that court on that day without waiting for any further orders. The records must reach that court by that date. I place on record my appreciation for the good Tr.P.(Crl.). No.50 of 2003 18 academic research and assistance rendered by the learned counsel for the petitioner Sri.George Sebastian. **(R.BASANT, JUDGE)** rtr/-