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Vinod S/O Shri Laxman Das Kinger-vs-M/S. Sbi Global Factors Ltd., ( on 22 March, 2011

Bombay High Court Vinod S/O Shri Laxman Das Kinger-vs-M/S. Sbi Global Factors Ltd., ( on 22 March, 2011
Bench: J. H. Bhatia

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CRIMINAL APPELLATE JURISDICTION

Mhi

CRIMINAL APPLICATION NO. 5700 OF 2010

Vinod S/o Shri Laxman Das Kinger )

Adult, aged about 54 years, occupation: )

business, Indian Inhabitant, proprietor )

of M/s.Kinger India, having his office at )

J-200, 2nd floor, Saket, New Delhi 110 017 ).. Petitioner vs.

1. M/s. SBI Global Factors Ltd., (

previously known as Global Trade )

Finance Ltd., a company registered )

under the Companies Act, 1956, )

having its office at Metropolitan )

Building, 6th floor, Bandra Kurla )

Complex, Bandra (E), )

Mumbai 400 051. )

2. State of Maharashtra ).. Respondents Mr. S.S.Dubey, Advocate, for the petitioner

Mr.Yashpal Thakur, i/b. Paras Kuhad & Associates,Advocate for the respondent No.1.

Mr. Rajesh More, APP, for the respondent No.2.

CORAM: J.H.BHATIA,J.

DATE : 22nd March, 2011.

JUDGMENT :

1. Heard the learned Counsel for the parties. 2 Cri-A-5700-10.sxw

2. This Application is filed by the applicant under Section 482 Cr. P.C. to quash and set aside the proceedings in Criminal Case No.882/SS/10 pending before the learned Metropolitan Magistrate, 12th Court at Bandra, for the offence under Sec. 138 of Negotiable Instruments Act registered on the basis of the complaint lodged by the complainant-respondent No.1.

3. The complainant is a non-banking financial company registered under the Companies Act with its head office at Mumbai. It has also network to provide financial aid and loan. The applicant is a proprietor of M/s. Kinger India having its office at New Delhi. According to the complainant, the accused as proprietor of M/s. Kinger India approached the complainant for trade financial facilities. The complainant agreed to provide and sanction trade financial facilities to the accused upto maximum limit of Rs.4 crore vide sanction letter dated 26.9.2005. On the basis of that, agreements were entered into between the complainant and the accused on 26.9.2005 and 19.12.2007. Pursuant to the same, from October 2005, the complainant started disbursing funds to the accused. In discharge of his liability for repayment of the amounts, the accused issued in all 11 cheques dated 15.10.2009 for different amounts. Two cheques were drawn against the account of the accused maintained with Indian Bank, South Extension Branch, New Delhi, while remaining 9 cheques were issued against his account maintained with 3 Cri-A-5700-10.sxw

YES Bank Ltd., New Delhi Branch. The said cheques were presented for encashment through Axix Bank Ltd., BKC Branch, Mumbai. Out of them, two cheques were returned unpaid with endorsment “funds insufficient” by the drawee Bank, i.e. Indian Bank and remaining 9 cheques were returned by the drawee bank i.e. Yes Bank Ltd., New Delhi Branch with an endorsement “account closed”. Inspite of service of the statutory notice, the accused failed to make the payment of the cheque amount within the stipulated period. Therefore, the complainant filed the complaint under Sec. 138 of Negotiable Instruments Act before the Metropolitan Magistrate, 12th Court at Bandra, Mumbai. The learned Magistrate recorded verification statement of one Pragati B.Malle a senior officer of the complainant company. In that verification statement, he gave all the details. Relevant documents were also produced along with the complaint. The learned Magistrate issued process against the accused.

4. After appearance, the accused made an application under Sec. 201 Cr.P.C. contending that the accused is situated outside the local limits of the Magistrate and, therefore, the enquiry under Sec. 202 Cr.P.C. is mandatory and as it was not held, the complaint was liable to be dismissed. It was also further contended that in view of the facts and circumstances, the Magistrate has no jurisdiction. After hearing the parties, the application made by the accused came 4 Cri-A-5700-10.sxw

to be rejected.

5. On perusal of the record, it appears that after issuance of process the accused appeared on 4.9.2010 and on the same day, his plea was recorded. The matter was adjourned for evidence. On 15.10.2010 affidavit in lieu of examination in chief was filed on behalf of the complainant. Thereafter, on 12.11.2010, the above referred application under Sec. 201 Cr.P.C. was filed by the complainant. According to the learned Counsel for the complainant-respondent, as the trial has already commenced and it is not proper for this Court to interfere and the case should be allowed to proceed to its logical end.

6. On the other hand, the learned Counsel for the accused contended that the provisions of Sec. 202 Cr.P.C. have been held to be mandatory when it relates to the accused situated outside the territorial jurisdiction of the Magistrate. For this purpose, the learned Counsel for the applicant relied upon Capt. S.C.Mathur vs. Elektronik Lab. & Ors. 2010 (2) Bom.C.R. (Cri.) 385 wherein Mr.Justice S.C.Dharmadhikari had held that the enquiry under Sec.202(1) is mandatory. The learned Counsel also relied upon Satish @ Rajendra Harbans Tiwari & Ors. vs. State of Maharashtra & Anr. 2010 (2) Bom. (Cri.)523. That was a case under Sec. 498A of IPC and under the provisions of the Dowry Prohibition Act. As in 5 Cri-A-5700-10.sxw

such cases, there was always possibility of roping in as many as relatives of the husband as possible, it was held necessary that the enquiry under Sec. 202 is mandatory, particularly when the accused are residing outside the jurisdiction. The Judgment in Capt. S.C. Mathgur (supra) was considered by another learned Single Judge (Kanade, J.) in Bansilal S.Kabra vs. Global Trade Finance Ltd. 2010 (2) Bom.C.R. Cri.754. After referring to several judgments of the different Courts, the learned Single Judge in Bansilal Kabra held that even though sub- section (1) of Section 202 provides that when the accused is residing at a place beyond the territorial jurisdiction,the Magistrate shall postpone the issue of process against the accused and either enquire the case himself or direct investigation, the provision is directory and not mandatory. The learned Judge observed thus in para 12 :

“12. In my view, though the word “shall” has been used in the amended provision of section 202(1) and it is followed after the word “may” which is used, that would not be the only criteria for the purpose of determining that the said provision as mandatory or directory. The purpose behind incorporating the said provision in the amended section was to ensure that the learned Magistrate does not mechanically issue the process but applies his mind to the facts of the case to the averments made in the complaint to the statement made by the

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complainant and his witness under section 202 and,thereafter, if a doubt still remains in his mind, he can himself consider this by holding an inquiry in order to ascertain whether a prima facie case is made out or not against the accused who are residing beyond the jurisdiction of the Magistrate. The intention of the legislature appears to be to ensure that if the Magistrate feels it necessary some further home work should be done by him since the consequences of issuance of process in the mechanical manner can entail disastrous consequences upon the accused who is residing at a far of place. The inquiry, therefore, in my view, which has to be made in a complaint which is filed under section 138 itself is very limited to certain documents and averments in the complaint. It cannot be said that in each and every case, the Magistrate after recording the statement of the complainant and his witnesses should again postpone the issuance of process and again hold a fresh inquiry by asking the complainant to adduce further evidence. If such an interpretation is made, it would defeat the very purpose for which the provisions of section 138 have been incorporated in the Negotiable Instruments Act.”

7. I am in respectful agreement ith the above observations. The very purpose of this provision is to see that the accused who is not residing within the territorial jurisdiction of the Magistrate should not unnecessarily be harassed by 7 Cri-A-5700-10.sxw

unscrupulous complainant by filing false, flimsy or frivolous complaints and therefore before the process is issued, enquiry should be held. However, in the present case, the complainant had filed the complaint supported by the agreements, the cheques issued by the accused, the document about deposit of said cheques by the complainant with its banker and presentation of the same to the drawee bank and the return of the same by the drawee bank either on the grund that funds were insufficient or that account was closed. These facts were duly supported by the verification statement of the officer of the complainant. The statement gave all the details of the matter. This material was sufficient for the Magistrate to come to conclusion that the case was fit for issuance of process. It cannot be expected that when all such material is produced to make out a prima facie case for issuance of process, the Magistrate may still be required to examine all the witnesses who may be examined by the complainant during trial even before issuance of process. In view of the facts and circumstances, I am not inclined to accept the contention of the accused-applicant that the issuance of process was bad in law for want of enquiry under Sec. 202 Cr.P.C.

8. Next question is about territorial jurisdiction of the Metropolitan Magistrate, Mumbai. The complaint clearly shows that the accused-applicant had approached the complainant for trade finance facility and the complainant had 8 Cri-A-5700-10.sxw

sanctioned that facility upto the limit of Rs.4 crore and this was communicated by the sanction letter dated 26.9.2005. On the same day, an agreement was entered into and executed by the parties. Second agreement was executed between the parties on 19.12.2007. Along with the present application, the accused has produced the copy of the agreement dated 19.12.2007 to show that agreement had taken place in Delhi. According to him, the complainant has branch office in Delhi and the transaction took place at Delhi. The accused is also situated at Delhi. He allegedly issued the cheque at Delhi against the drawee banks also located at Delhi. The cheques were expected to be honoured and were allegedly dishonoured at Delhi. According to him, no part of the transaction had taken place at Mumbai. According to him, the complainant only issued the notice for payment from Mumbai and merely because of issuance of a notice from Mumbai, the Mumbai Court will not get jurisdiction. The learned Counsel for the complainant produced the photocopy of an earlier agreement dated 26.9.2005 which was first in time. On perusal of that agreement, it appears that the said agreement was entered into and executed at Mumbai. The stamp papers used for the same were purchased at Mumbai. It appears that the accused while filing the present application under Sec. 482, had suppressed this document. From this, it appears that the original ageement to provide the trade finance facility was entered into between the parties at Mumbai and on the basis of that from the month of October 9 Cri-A-5700-10.sxw

2005, the complainant had started disbursing funds to the accused as stated in para 8 of the complaint.

9. In K. Bhaskaran vs. Sankaran Vaidhyan Balan & Anr. (1999) 7 SCC 510, the Supreme Court observed thus in paras 14 to 16 :- “14. 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.

15. 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 10 Cri-A-5700-10.sxw

Court having jurisdiction over any of such local areas.”

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 section 138 of the Act. In other words, the complainant can choose any one of those Courts having jurisdiction over any one o 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.”

In view of the above judgment, there are five acts or components of the offence under Sec. 138. They are (1) drawing of cheque, (2) presentation of the cheque to the bank, (3) return of the cheque unpaid by the drawee bank, (4) giving notice in writing to the drawer of the cheque and demanding payment of the cheque amount and (5) failure of the drawer to make payment within 15 days of the receipt of the notice. If any of these five different acts were done in five different localities, any one of the five local areas can become the place of trial under Sec. 138 of the Act.

10. The learned Counsel for the applicant placed reliance upon M/s. Harman Eelctronics (P) Ltd. and anr. vs. M/s. National Panasonic India Ltd.. 2009 (3) Mh.L.J.792. In that case, the question was if the company has head 11 Cri-A-5700-10.sxw

office at one place and branches at different places and whole of the transaction had taken place within the area where its branch is situated whether notice could be issued from the place where its head office is situated. In that case, the accused appellant was resident of Chandigarh and was carrying on business at Chandigarh. The complainant had its head office at Delhi but had a branch office at Chandigarh. The transactions between the parties had taken place at Chandigarh and the accused had issued the cheque in favour of the complainant at Chandigarh against its bankers situated at Chandigarh and thus, the bank at Chandigarh was the drawee bank. However, the complainant deposited the cheque with its banker at Delhi, which in turn presented the same to the drawee bank at Chandigarh. The cheque was dishonoured and the complainant issued notice for payment from Delhi. The complaint was filed before the Magistrate at Delhi. The Supreme Court held that a company or financial institution having several branches has to file the complaint at a place where the transaction had taken place, the cheque was drawn, presented and dishonoured. Merely because the accused company issued notice from the place where its head office is situated and where no part of transaction had taken place, it could not file the complaint before the Magistrate having jurisdiction over the area where the head office is situated. The Supreme Court observed thus in para 25 :-

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“We cannot, as things stand today, be oblivious of the fact that a banking institution holding several cheques signed by the same borrower cannot 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- a-vis the provisions of the Code of Criminal Procedure.”

11. However, the facts of the present case are different. It appears that the original agreement to provide the trade finance facility was entered into and executed by the parties at Mumbai. The funds were provided by the complainant from Mumbai. There is no document to show that any transaction had taken place between the parties at Delhi branch of the complainant, which has head office at Mumbai. It is true that the cheques were drawn by the accused against its drawee bank situated at Delhi. The cheques were isued from Delhi and they were deposited with Axis Bank by the complainant at Mumbai and finally they were presented to the drawee banks at Delhi where they were dishonored. However, the contract between the parties had taken place at Mumbai. Therefore, the complainant could issue notice for payment from Mumbai and as per the notice, the accused was required to make payment to the complainant at Mumbai. Due to failure of the accused to make payment within the period of 15 days, the 13 Cri-A-5700-10.sxw

complaint was filed at Mumbai. Thus, out of the 5 components as described by the Supreme Court in K.Bhaskaran, two last components had taken place at Mumbai. Not only that, the basic transaction and contract between the parties had also taken place at Mumbai. In these circumstances, it cannot be said that the learned Magistrate at Mumbai has no jurisdiction.

12. For the aforesaid reasons, the Application stands rejected.

13. However, it is made clear that the trial Court shall not be influenced about the observations pertaining the execution of the agreement dated 26.9.2005 as its only photocopy is produced before this Court. (J.H.BHATIA,J.)

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