Cheque dishonor complaint to be filed before the Court within whose territorial jurisdiction cheque drawn was dishonored
Which Court should hold the trial for offence of dishonor of cheque made punishable under the provisions of Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’)? This question has been the subject matter of debate and judicial interpretation since long. The three judge bench of the Apex Court has finally in the present matter given its opinion to settle the above position of law.
While doing so, the Court referred Section 138 of the NI Act alongwith Sections 177 and 178 of the Code of Criminal Procedure, 1973 (CrPC) providing for provisions relating to ordinary place of inquiry and trial and the place of inquiry or trial, respectively. The Court also took reference of Section 179 of the CrPC relating to offences triable where act is done or consequence that ensues.
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. Making reference to civil procedure, the Court observed that 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. The Complainant is statutorily bound to comply with Section 177 etc. of the CrPC and therefore the place where the Section 138 Complaint is to be filed should not be of his choosing.
The territorial jurisdiction is restricted to the Court within whose local jurisdiction the offence was committed, which in the present context would be where the cheque was dishonoured by the bank on which it was drawn.
The Court drawn following conclusion:
(i) An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed when cheque drawn by the accused on an account 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 taken when a written complaint is 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.
(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 (now three 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 does 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 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 CrPC or as covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof.
[Dashrath Rupsingh Rathod vs. State of Maharashtra & Anr.]