Territorial Jurisdiction for Trial of Dishonour of Cheques

The questions on Jurisdiction of Court in cases pertaining to dishonour of cheques has been affirmly answered by the Apex Court in the recent decided case of Nishant Aggarwal V. Kailash Kumar Sharma as reported in (2013) 10 SCC wherein the court categorically held in context of Section 138 of the Negotiable Instruments Act that failure to pay said amount can be the place where payee resides or the drawer resides. The court held that the amplitude of territorial jurisdiction of a Criminal court under Sections 178 and 179 of Criminal Procedure Code 1973 in respect to complaints under Negotiable Instrument Act is very wide and expansive and thus, the Courts within whose local limits, payee resides, can have the territorial jurisdiction to try the complaint for dishonour of cheque.

The Court observed in the said case the complaint was filed by the Complainant in the court within whose jurisdiction the cheque was presented and was returned unpaid. The court also observed that the appellant had also failed to make the payment despite notice issued by the complainant from the said place i.e. Bhiwani thereby bestowing territorial jurisdiction on the courts of Bhiwani to try the complaint.

The dispute in the case arose from the decision of the Trial Court of Bhiwani returning the complaint filed by the complainant – respondent for presentation of the complaint to proper court having jurisdiction on the same with the observation that the Court in Bhiwani had no jurisdiction to try the complaint. The complainant had then filed Criminal Revision Petition against this decision before the Session Court which set aside the order and allowed the revision and this was later challenged by the Appellant - drawer in the High Court and then was being challenged in the Apex Court by way of Special Leave to Supreme Court of India.

The Apex Court relying upon the ratio as laid down in K Bhaskaran v. Sankaran Raidhyan Balan as reported in (1999) 7 SCC 510 settled the legal position as to which court shall have the jurisdiction to inquire or try the complaint filed by complainant in respect to dishonour of cheque i.e. whether the court, where the cheque is deposited for collection, would have territorial jurisdiction to try the accused for an offence punishable under Section 138 of Negotiable Instruments Act, 1881 or would it only the court exercising territorial jurisdiction over the drawee bank or the bank on which the cheque is drawn? The Appellant – drawer drawee bank was in Assam and the collecting bank of the respondent - complainant was in Bhiwani, Haryana.

The Apex court had in K Bhaskaran v. Sankaran Raidhyan Balan as reported in (1999) 7 SCC 510 had held that offence under section 138 of the Act can be completed only with the concatenation of a number of acts.

• The Drawing of cheque
• The presentation of cheque to the bank
• The returning of the cheque unpaid by the drawee bank
• The giving notice in writing to the drawer of the cheque demanding payment of the cheque amount
• The failure of the drawer to make within 15 days of the receipt of the notice

These are all the components that make the offence of dishonour of cheques.

The Court observed in respect of same that it was not necessary that all these above five acts should have perpetrated at the same locality. But a concatenation of all five is sine qua non for the completion of the offence under Sect. 138 of the code. The Court said that thereby under the principles of law on procedure of administration of substantive criminal law, the complainant can choose any one of the courts having jurisdiction over any one of local areas within the territorial limits of which anyone of those five acts was done. The court further held that the court having jurisdiction over the place of residence of the payer and the payee can have territorial jurisdiction to inquire and try the complaint.

The court thence held in Nishant Aggarwal case that ‘the place of failure to pay the amount’ is the place where the drawer resides or the place where the payee resides. Hence the complaint can be instituted in the court where payee resides and where he presented the cheque for collection is maintainable. The court further held that the commission of the offence stands completed only after there is services of notice by complainant to the accused and there is failure on part of the accused to pay the demanded money within the period of 15 days and thence issuance of notice would not just give rise to cause of action but communication of notice would.

Thus, the court in view of the above ratio held that court within whose jurisdiction payee of the cheques resides and presents the cheque for encashment and does not receive the payment as assured under cheque in spite of issuance of notice can have the jurisdiction to enquire and try the complaint.