Complaint against dishonor of cheque payable AT PAR can be filed where the cheque was dishonored #indianlaws

By the present judgment, the Bombay High Court drawn a distinction or rather clarified that cheques payable at par if gets dishonored, the complaint filed against commission of such offence punishable under Section 138 of the NI Act can be filed before the territorial jurisdiction of such concerned Court within which the cheque was dishonored by one of the branches of the drawee’s bank.

The Bombay High Court in recently disposed instant Criminal Writ Petition No. 2362 of 2014 interpreted the finding given by Apex Court in regard to territorial jurisdiction of Courts where complaints filed against offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

The cheques in question were dishonored at Ahmedabad. The complaint which was filed before the Mumbai Court raised an argument that Mumbai Court will have no jurisdiction to entertain and try the complaint in view of the judgment of the Supreme Court in the matter of Dashrath vs. State of Maharashtra (Criminal Appeal No. 2287 of 2009).

On the contrary it was argued that the cheques were payable at all branches of respective banks and since the cheques were dishonored by the Mumbai branches of the concerned Bank situated within the jurisdiction of Mumbai Court, the complaint was rightly filed in the Court at Mumbai.

The issue that arose for determination was to decide as to which Court will have territorial jurisdiction to try the offence when the cheque payable at all branches of the drawee bank has been dishonored by one of the branches of the drawee bank.

The Apex Court in its judgment of Dasrath Singh Rathod has held that “… 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 (emphasis supplied)”.

The Supreme Court while dealing with the aspect of determining territorial jurisdiction has also 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.”
Thus, by issuing cheques payable at all branches, the drawer of the cheques had given an option to the banker of payee to get the cheques cleared from the nearest available branch of bank of the drawer. Accordingly the cheques were held to be dishonoured within the territorial jurisdiction of concerned Court of Metropolitan Magistrate at Mumbai.

[Ramanbhai Mathurbhai Patel vs. State of Maharashtra & Anr.]
(Bombay HC, 25.08.2014)