HPS India (P) Ltd. v. Srei International Finance Ltd.
2004-08-09
AMITAVA ROY
body2004
DigiLaw.ai
JUDGMENT Amitava Roy, J. 1. This petition under Article 226 of the Constitution of India witnesses a challenge to the maintainability and continuance of a criminal proceeding being complaint case No. C/804/02 pending in the Court of the Metropolitan Magistrate 11th Court, Kolkata under Section 138 read with the Section 141 of the Negotiable Instruments Act, 1881 (for short hereafter referred to as the Act). 2. I have heard Mr. S.P. Roy, Advocate for the Petitioners and Mr. D. Das, Advocate for the opposite party No. 1. None has appeared for the State of Assam. 3. Briefly laid, the factual background leading to the present proceeding is that a Hire Purchase Agreement being No. H/3523 was entered into on 28.10.88 between the Petitioner No. 1 and the opposite party No. 1 whereunder the Petitioner No. 1 took on hire purchase basis the equipment described in the schedule to the agreement on the agreed terms and conditions contained therein. The agreement, inter alia, set out the period of hire and the amount sanctioned, i.e. the acquisition cost of the equipment. 4. A complaint was filed on 21.2.2002 by the opposite party Company in the Court aforementioned at Kolkata under the Section 138read with the Section 141 of the Act. It was contended therein that the Petitioners No. 2 to 5 were the Directors of the Petitioner company and were persons in-charge, responsible for and looking after the day to day business affairs thereof. According to the complainant opposite party, the accused persons issued 5 (five) cheques in its favour towards the discharge of their legal debts and/or liabilities arising out of the hire purchase agreement No.H/3523. The numbers of the cheques, the dates of issue, the amounts thereof and the particulars of the drawee bank were set out in the complaint. An amount of Rs. 3,10,000/- comprised the value of the cheques. The complaint alleged that on the presentation of the cheques for encashment through its banker, Vyasha Bank Ltd., 4/1 Middleton Street, Kolkata, within their validity period, those were returned being dishonoured by the drawee bank vide memo dated 21.12.2001 with the remark "insufficiency of funds". The intimation about the dishonoured cheques was transmitted to the complainant by its banker on 16.1.2002.
The intimation about the dishonoured cheques was transmitted to the complainant by its banker on 16.1.2002. A demand notice dated 17.1.2002 was thereafter issued to the accused persons by registered post with A/D demanding payment of the amount within 15 days of the receipt thereof. Though the accused persons by letter dated 30.1.2002 in their reply acknowledged the receipt of the notice, no payment of the amount of the cheques was made. The complaint in the said premises was filed. 5. The pleaded stand of the Petitioners is that the hire purchase agreement was signed only by the Petitioner No. 5 and that in terms of Article 28 thereof, the undated cheques were issued as collateral security and not for discharge of any debt or liability thereunder. As contemplated under the agreement, the parties had referred their disputes arising therefrom to arbitration and after the delivery of the award, the controversy was finally resolved. The complainant Company had, in the meantime, also approached the Calcutta High Court for an injunction restraining the Petitioner No. 1 from alienating and encumbering the equipment and for appointment of a receiver. The prayer for appointment of receiver though granted by the Calcutta High Court by its order dated 24.5.2001, the receiver could not take possession of the equipment in question in view of a proceeding pending in the Court of the Sessions Judge, Kamrup, Guwahati. Apart from contending that in view of the award in the arbitration proceeding, there was no necessity for the Petitioners to issue the cheques on 11.12.01 as claimed, it has been alleged that the date had been inserted subsequently by the complainant opposite party. It has been further pleaded that the accused No. 6, Mr. D.C. Jain was only a guarantor in the hire purchase agreement and he not having issued the cheque, the complaint against him was not maintainable. Besides denying that the Petitioner No(s) 2 to 4 had issued the cheques in question, their involvement in the day-to-day management of the affairs of the Petitioner company has also been denied. According to the Petitioners, as the hire purchase agreement was signed at Guwahati and the cheques had also been issued at this place in favour of the United Bank of India, Sibsagar Branch, where the same has been dishonoured, this Court has the territorial jurisdiction to entertain the prayer for quashing the criminal proceeding. 6.
According to the Petitioners, as the hire purchase agreement was signed at Guwahati and the cheques had also been issued at this place in favour of the United Bank of India, Sibsagar Branch, where the same has been dishonoured, this Court has the territorial jurisdiction to entertain the prayer for quashing the criminal proceeding. 6. At the initiation of the arguments, Mr. Das raised a preliminary objection with regard to the maintainability of the writ proceeding on the ground that this Court lacked territorial jurisdiction in the matter. The learned Counsel has contended that no part of the cause of action, having arisen within the territorial limits of this Court, the writ proceeding is not maintainable. Mr. Das has maintained with reference to definition of "High Court" contained in Section2(e) of the Code of Criminal Procedure 1973 (hereafter referred to as the Code) and Section 142(b) of the Act, that the cause of action for the complaint having arisen on the failure on the part of the Petitioners to meet the demand in the notice for payment which is at Kolkata, the criminal Court at Kolkata only has the jurisdiction to entertain the complaint under the Act and consequently this Court has no jurisdiction to entertain a writ petition seeking quashment of the complaint. Mr. Das argued that the agreement had been executed at Kolkata and the cheques were dishonoured there as well and therefore, the acts constituting the offence under the Act having been committed beyond the territorial limits of this Court and no cause of action having arisen here to entertain the prayer for quashing the criminal proceeding, the writ petition is liable to be dismissed in limini. As the cause of action for the writ petition namely the filing of the complaint had arisen at Kolkata, this Court would not exercise its jurisdiction under Article 226 of the Constitution to quash the same. Meeting the challenge, Mr. Roy. has maintained that the agreement having been executed at Guwahati and the cheques having been dishonoured also at Guwahati, the cause of action for the complaint, if any, as well as for the writ petition has arisen here and therefore, this Court has the jurisdiction to entertain this writ petition. In support of his contention, Mr. Roy, placed reliance on the decision of the Apex Court in Navin Chandra Majithia v. State of Maharastra and Ors.
In support of his contention, Mr. Roy, placed reliance on the decision of the Apex Court in Navin Chandra Majithia v. State of Maharastra and Ors. (2000) 7 SCC 640 . Mr. Das assertively contended that the ratio of the decision in Navin Chandra Majithia was not applicable in the facts of the present case as it was not a case under Section 138 of the Act and instead involved consideration under Article 221 of the Constitution of India 7. Mr. Roy, elaborating the stand taken in the pleadings has strenuously argued that the Court at Kolkata has no jurisdiction to entertain the complaint as no part of the alleged offence had been committed within its territorial jurisdiction. According to him, the agreement was executed at Guwahati and the undated cheques were also issued at the same place. The cheques having been dishonoured at Sibsagar in the State of Assam by a drawee bank, the complaint before the learned Court below was misconceived. In any view of the matter, the learned Counsel urged that the Section 138 and/or 141of the Act was not attracted in the facts and circumstances of the case inasmuch as the cheques at the time of the issue were undated and had been offered only as collateral security under the agreement and not for discharging any liability or debt arising out of the same. He argued that the cheques having been issued by the Petitioner No. 5 alone, cognizance of the offence under the Act taken against all the Petitioners exhibit total non application of mind. Similarly the agreement was signed only by the Petitioner No. 5 and in view of the stipulation contained thereunder outlining the consequences of any default or breach thereof, the complaint was ex-facie not maintainable in law. According to learned Counsel, the undated cheques were only bills of exchange to which Section 138 of the Act had no application and the complaint, has been filed malafide by the complainant opposite party after inserting the dates in the cheques only for harassing and intimidating the Petitioners. He was particularly critical about the complaint and submitted that the same was silent as to the date on which the complainant's banker had informed it about the dishonoured cheques or the date of service of notice of demand on the Petitioners. Mr.
He was particularly critical about the complaint and submitted that the same was silent as to the date on which the complainant's banker had informed it about the dishonoured cheques or the date of service of notice of demand on the Petitioners. Mr. Roy contended that the complaint having been filed after over 60 days of the return memo dated 21.12.01 of the Petitioner's bank, it was beyond time and on that ground alone the same is liable to be quashed. Moreover, in absence of any statement in the complaint with regard to the date(s) of presentation of the cheques, dishonour thereof and intimation of the above fact to the complainant, the essential preconditions enumerated in Section 138 of the Act remained uncompiled warranting quashing of the impugned criminal proceeding. The maintainability of the complaint was also questioned on the ground that the same was not filed by a Director of the complainant Company. It was contended that the impugned proceeding was ill motivated inasmuch as the hire purchase agreement had been terminated in the year 1999 following which the disputes between the parties were referred to arbitration, which ended in an award. Moreover, the complainant opposite party on the same issue had approached the Calcutta High Court for appointment of a receiver in respect of the same equipment as well as for injunction and the criminal proceeding was being pursued only to harass the Petitioners. Mr. Roy strongly urged that the criminal proceeding is a lame prosecution and if allowed to continue, would result in abuse of the process of Court. Without prejudice to the above, the learned Counsel also contended that the dispute between the parties being out and out of civil nature, the complaint was not maintainable in law. In support of his submissions, the learned Counsel has placed reliance on the following authorities. Trilok Singh and Ors. v. Satya Deo Tripathi AIR (1979) SC 850; Ashok Yeshwant Badeve v. Surendra Madhavrao Nighojakar and Anr. (2001) CriLJ 1674; Sri Ishar Alloys Steels Ltd. v. Jayaswals NECO Ltd. (2001) CriLJ 1250 ; M/s Adithya Alkalods Ltd. and Ors. v. M/s NCC Finance Ltd. and Anr. (2001) CriL.J. 1585; M/s Pawan Enterprises v. Satish H. Verma (2003) CriL.J. 2146; SN Banur and Ors. v. M/s Klen and Marshalls Mrfs and Exporters Pvt. Ltd. (2002) CriL.J 4155; Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd. and Ors.
v. M/s NCC Finance Ltd. and Anr. (2001) CriL.J. 1585; M/s Pawan Enterprises v. Satish H. Verma (2003) CriL.J. 2146; SN Banur and Ors. v. M/s Klen and Marshalls Mrfs and Exporters Pvt. Ltd. (2002) CriL.J 4155; Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd. and Ors. (2001) 6 SCC 463 ; Amal Chandra Lahkar and Anr. v. Binu Sharma and Ors. (2000) 2 GLT 322; Uma Maheshwar Reddy v. R. Srinivasa Rao and Anr. 2003 CriL.J. 142. 8. Controverting the points raised against the maintainability of the complaint, Mr. Das emphatically urged that as is apparent from the complaint, the same had been filed on behalf of the complainant opposite party by its duly authorised representative in terms of a resolution of its Board of Directors. The Company, a juristic person, was in the case in hand, represented by its authorised representative and therefore, the complaint did not suffer from any defect in law, he argued. According to Mr. Das, the cheques had been admittedly issued under the hire purchase agreement by the Petitioner No. 5 on behalf of the Petitioner Company and in view of Section 141 of the Act, all the Petitioners, as the cheques were dishonoured, are presumed to have committed the offence under Section 138 of the Act. The very stand that the cheques had been issued by way of collateral security under the agreement, according to the learned Counsel establishes that the same were issued on behalf of the Petitioner company therefore, belying the stand to the contrary. He, however, stoutly refuted the contention that the cheque had been issued as collateral security and to that effect referred to schedule 1 of the hire purchase agreement to point out that there was nothing therein in support of such stand. Mr. Das additionally argued that as admittedly the cheques had been issued, this Court, at this stage would not dilate in details on the reasons therefore more particularly, in face of the legal presumption available under Section 139 of the Act. With regard to the contention that the undated cheques were only bills of exchange not attracting the alleged offence learned Counsel maintained that in absence of a factual finding that the cheques in fact were undated at the time of issue, this Court would not proceed to examine the complaint on such presupposition.
With regard to the contention that the undated cheques were only bills of exchange not attracting the alleged offence learned Counsel maintained that in absence of a factual finding that the cheques in fact were undated at the time of issue, this Court would not proceed to examine the complaint on such presupposition. Referring to the complaint, it was contended that the notice of demand had been issued on 17.1.2002 reply whereto was made by the Petitioners on 30.1.2002 and the complaint having been filed within 30 days therefrom, it was well within time. The learned Counsel rested his submissions on the following decisions. Sadanandan Bhadran v. Madhavan Sunil Kumar AIR 1998 SC 3043 ; Navin Chandra N. Majithia v. State of Maharashtra and Ors. (2000) 7 SCC 640 ; CBI Anti Corruption Branch, Mumbai v. Narayan Diwakar (1999) 4 SCC 656 ; MMTC Ltd. and Anr. v. Medchl Chemicals And Pharma (P) Ltd. and Anr. (2002) 1 SCC 234 ; Drugs Inspector, Palace Road, Bangalore v. Dr. B.K. Krishnaiah and Anr. (1981) 2 SCC 454 ; Raj Lakshmi Mills v. Shakti Bhakoo (2002) 8 SCC 236 ; Union of India and Ors. v. Adani Export Ltd. and Anr. (2002) 1 SCC 567 . 9. The preliminary objection pertaining to the maintainability of the writ petition for want of jurisdiction of this Court commends for immediate attention. The source of power of the High Court to exercise its writ jurisdiction and its scope and amplitude is traceable to clause (1) and (2) of Article226 of the Constitution of India. As the rival contentions of the parties revolve around the spread of this power, it would be apposite to initiate the narration by quoting the aforementioned two clauses. (1) Notwithstanding anything in Article 322, every High Court shall have power, throughout the territories in relation to which it exercise jurisdiction, to issue to any persons or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of their rights conferred by Part III and for any other purpose.
(2) The power conferred by Clause (1) to issue directions, orders or writs to any Government authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. 10. Clause 2 of Article 226 of the Constitution of India was preceded by clause (1A) introduced by the Constitution (15th Amendment) Act, 1963. Clause (2) came to be incorporated by the Constitution (42nd Amendment) Act, 1976. The principal objective of the amendments was to mitigate the hardship of the litigants who before the amendments had to approach the Punjab High Court under the said Article to seek reliefs in matters relating to the Central Govt. With the insertion of Clause (2) in addition to the power available in Clause (1), any High Court can exercise its writ jurisdiction in relation to its territories within which, the cause of action, wholly or in part, arises for exercise of such powers (emphasis supplied) notwithstanding that the seat of a Govt. or authority or the residence of a person to whom directions, orders or writ may be issued is not within those territories. A conjoint reading of Clause (1) and (2) of Article 226, therefore, postulates that every High Court shall have power throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority including any Govt. within those territories, directions orders or writs as mentioned therein for the enforcement of any of the rights conferred by part HI and for any other purpose. Further, this power can be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such powers, even if, the seat of the Govt. or authority or residence of the persons concerned, is not within those territories. 11.
Further, this power can be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such powers, even if, the seat of the Govt. or authority or residence of the persons concerned, is not within those territories. 11. In other words, the restriction under the un-amended article, namely that the writs issued by a High Court cannot extend beyond the territories subject to its jurisdiction and that such writs to be effective, the person or authority or the seat of Government must be located within such territories was relaxed with the incorporation of Clause (2). Any High Court, within the territories of which, the cause of action, wholly or in part arises for the exercise of its writ jurisdiction, can invoke its powers under the said article and issue a writ, direction or order against any Govt. or authority or person even if the seat of such Govt. or authority or the residence of the person is not within those territories. 12. Noticing the implications of the amendments their Lordships of the Allahabad High Court in Daya Shankar Bhardwaj, (supra), had observed that a right of action arises if there is an invasion of right but cause of action and right of action are not synonymous or interchangeable. It held that a right of action is the right to enforce a cause of action and that a person residing anywhere in the country being aggrieved by an order of the Govt. Central or State or authority or any person may have a right of action at law but he can enforce such right under Article 226 within whose territorial limits the cause of action, wholly or in part arises. The contours of writ jurisdiction under Article 226 as stand presently are, therefore, clearly delineated. 13. Before reverting to the facts, it is desirable to survey the law on this facet of the controversy as contained in the authorities relied upon by the parties. 14. In Navin Chandra Majithia, (supra), a complaint was filed against the Appellant at Shillong in the State of Meghalaya by M/s J.B. Holdings Limited relating to a transaction of purchase of shares of M/s India Farmers Private Limited of which the Appellant was the Managing Director.
14. In Navin Chandra Majithia, (supra), a complaint was filed against the Appellant at Shillong in the State of Meghalaya by M/s J.B. Holdings Limited relating to a transaction of purchase of shares of M/s India Farmers Private Limited of which the Appellant was the Managing Director. A writ petition was laid in the Bombay High Court praying, inter alia, for a writ to quash the complaint or in the alternative to issue a writ of Mandamus directing transfer of the investigation of the case to Mumbai. According to the Appellant, as the entire transaction upon which the complaint was based had taken place at Mumbai and not at any other place much less at Shillong or any other place in the State of Meghalaya, the complaint could not have been filed and/or entertained at Shillong. The writ petition was dismissed by the Bombay High Court on the ground that it could not entertain the same as the Appellant had prayed for quashing of a complaint lodged at Shillong in the State of Meghalaya. After an exhaustive discussion on the purport of "cause of action" and the judicial interpretation thereof, as well as the settled legal principles in dealing with objections regarding lack of territorial jurisdiction, the Apex Court reversed the impugned decision of the Bombay High Court. It held by recalling its observations in its decision in ONGC v. Utpal Kumar Basu (1999) 4 SCC 711 that in determining the objection of lack of territorial jurisdiction, the Court must take all facts pleaded in support of the cause of action into consideration without embarking upon an enquiry as to the correctness or otherwise thereof. While observing that the question of territorial jurisdiction with reference to a criminal offence has to be answered keeping in mind the place where the alleged offence had been committed, the Apex Court referred to its remarks in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510 which was also a case under the Act, that the offence thereunder attains completion only on the failure of the drawer of a cheque to pay the cheque amount within the expiry of 15 days mentioned under Section 138(C). It held that where the offence is committed partly in one local area and partly in another, the Court in either of the localities can exercise jurisdiction to try the case.
It held that where the offence is committed partly in one local area and partly in another, the Court in either of the localities can exercise jurisdiction to try the case. It ruled that on the averments made in the writ petition, it could not be said that no part of the cause of action for it had arisen within the territorial jurisdiction of the Bombay High Court. In his supplementing judgment, Hon'ble Thomas J. reiterated the caution sounded in ONGC, (supra) against transgressing into the jurisdiction of other High Courts merely on the ground of some insignificant events connected with the cause of action taking place within the territorial limits of a High Court, which a litigant may approach at his own choice or convenience. It was held that though registration of an FIR in a particular state would not be the sole criterion to decide that no cause of action had arisen even partly within the territorial limits of jurisdiction of another state, it would not be permissible for any person to create a vague cause of action or concoct one by jutting into the territorial limits of another state or by making a sojourn or even a permanent residence therein. The High Court before which the writ petition is filed must ascertain whether any part of the cause of action had arisen within the territorial limits of its jurisdiction and that it would depend upon the facts of each case. The Respondents in Union of India v. Adani Exports Limited and Anr. had filed special civil applications before the Gujarat High Court claiming the benefits of Pass Book Scheme under the Export Import Policy in relation to certain credits in export of shrimps. The private Appellants were not stationed at Ahmedabad and the passbook in question on which the Respondents sought relief had been issued by the concerned authority at Chennai. The material transaction in the deal was also under taken at Chennai. The territorial jurisdiction of the High Court was questioned but the objection was turned down. The Apex Court noticed that the complete facts in support of the cause of action were in no way connected with the relief sought for in the Civil Applications so as to constitute any cause of action at Ahmedabad.
The territorial jurisdiction of the High Court was questioned but the objection was turned down. The Apex Court noticed that the complete facts in support of the cause of action were in no way connected with the relief sought for in the Civil Applications so as to constitute any cause of action at Ahmedabad. Reciting its observations in ONGC (supra) it concluded that in order to confer on a High Court, the jurisdiction to entertain an application or a civil application it must be satisfied from the entire facts pleaded in support of the cause of action, that those constitute a cause so as to empower the Court to decide the dispute which has atleast in part arisen within its jurisdiction. It held that each and every fact pleaded does not, ipso facto, lead to the conclusion that these give rise to a cause of action within the Court's territorial jurisdiction unless the facts pleaded are such which have a nexus or relevance with the lis involved in the case (emphasis supplied). Facts which have no bearing with the lis or the dispute involved in the case do not give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned, it observed. The Respondent in CBI Anti Corruption Branch, Mumbai (supra) had approached this Court under Article 226 of the Constitution of India, for a writ to quash the first information reports lodged against him with the CBI. The reports had been lodged while the Respondent was officiating as Collector, Daman and before his transfer to Arunachal Pradesh. The immediate cause for filing the writ petition was receipt of a wireless message issued by the Superintendent of Police, C.B.I., Bombay advising him to report to the investigating agency at Bombay. This Court having entertained the petition inspite of the objection raised with regard to its maintainability, the CBI approached the Apex Court. Though the controversy got resolved following a concession on the part of the Respondent, the Apex Court considering the materials on record held that the writ petition filed before this Court was not maintainable for want of territorial jurisdiction.
Though the controversy got resolved following a concession on the part of the Respondent, the Apex Court considering the materials on record held that the writ petition filed before this Court was not maintainable for want of territorial jurisdiction. The Apex Court in M/s Kusum Ingots and Alloys Ltd. (supra) had ruled that keeping in view the expression "cause of action" used in Clause (2) of Article 226 of the Constitution of India, even if a small fraction of a cause of action accrues within the jurisdiction of the Court, it would have jurisdiction in the matter. 15. The legal principles thus decipherable from the aforementioned authorities are that for this Court to exercise its powers under Article 226 of the Constitution of India the cause of action wholly or in part for the exercise of such power has to arise within its territorial limits. To decide where such a cause of action has arisen wholly or in part, the entire pleaded facts have to be taken note of. In doing so, however, the facts having a perceptible nexus with the transaction culminating in the lis would only be relevant. Any fact unrelated to the dispute or activities associated therewith would be insignificant and inconsequential. Moreover, such facts would have to constitute a cause, giving rise to a right of action. In such a fact or/an ensemble of facts rise(s) a cause for legal action within the territorial limits of a High Court, it would be permissible for it to exercise its writ jurisdiction. 16. It is unnecessary to burden this judgment with the plethora of decisions interpreting the expression "cause of action". The oft quoted passage in Read v. Brown (1888) 22 QBD 128 would suffice: ...every fact which it would be necessary for the Plaintiff to prove it traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved. To determine, therefore, the cause of action for any proceeding, every fact, which needs to be taken note of to examine whether the person approaching the Court is entitled to the relief claimed, has to be considered without, however, at that stage, indulging in any exercise to ascertain the correctness thereof. 17.
To determine, therefore, the cause of action for any proceeding, every fact, which needs to be taken note of to examine whether the person approaching the Court is entitled to the relief claimed, has to be considered without, however, at that stage, indulging in any exercise to ascertain the correctness thereof. 17. From the pleaded facts, it appears that according to the Petitioner, the hire purchase agreement was signed by the Petitioner No. 5 at Guwahati and the cheques in question were also issued here. The cheques were dishonoured by the Petitioner's bank at Sibsagar. The complaint is silent as to the place of execution of the agreement. It, however, refers that those were presented with the banker of the Respondent complainant at Kolkata and the intimation about the same being dishonoured was also conveyed to it at Kolkata The notice of demand dated 17.1.02 was also issued from Kolkata to the Petitioners address at Guwahati. No payment was made in response thereto and therefore, the refusal by the Petitioners also occurred at Guwahati. The reply to the demand notice was send on behalf of the Petitioners also from Guwahati. 18. The essential prerequisites prescribed by Section 138 of the Act for the offence thereunder are (1) issuance of cheque for payment of any amount of money for discharging in whole or in part any debt or liability. (2) presentation of the cheque to the bank within 6 months from the date on which it is drawn or within the period of its validity for encashment. (3) the cheque is dishonoured (4) demand by the payee for payment of money by giving a notice in writing to the drawer within 15 days of the information of the cheque being dishonoured (5) failure of the drawer to make the payment of the amount to the payee or to the holder in due course within 15 days of the receipt of the notice. Under Section 142(b), a complaint has to be filed within one month from the expiry of 15 days of the receipt of the notice of demand by the drawer in case he fails to make the payment. 19.
Under Section 142(b), a complaint has to be filed within one month from the expiry of 15 days of the receipt of the notice of demand by the drawer in case he fails to make the payment. 19. Viewing the mandatory prescriptions contained in Section 138 of the Act, it is abundantly clear that the refusal or failure on the part of the drawer to make payment of the dishonoured cheque within 15 days of the receipt of the notice is the ultimate link in the chain of events to provide the cause of action for a complaint thereunder. With such failure of refusal, the offence under Section138 of the Act is complete and the immediate and proximate cause for filing the complaint arises. In the conspectus of the acts and omission of the parties, comprising the transaction leading to the filing of the complaint, the refusal/failure on the part of the Petitioner to make the payment of the cheque amount in compliance of the demand notice is an in-severable link. 20. The Apex Court in K. Bhaskaran (supra) while dealing with the question as to the places where an offence under Section 138 of the Act can be tried, held with reference to the acts constituting the same that if those are committed in different localities the Courts exercising jurisdiction in such localities can try the offence and the complainant can choose any one of the Courts. 21. As noticed herein above, one of the acts constituting the offence is the failure of the drawer to make payment within 15 days of the receipt of the notice. This indubitably would form the immediate cause for filing the complaint. In fact it is the ultimate event, empowering the complainant to file the complaint. It follows that in a proceeding questioning the maintainability of a complaint for an offence under Section 138 of the Act, the drawer's failure to make the payment in compliance to the demand notice is a preeminent fact to ascertain as to whether a cause of action has arisen within the territorial limits of a High Court for exercising its writ jurisdiction to examine the prayer for quashing of the criminal proceeding. 22.
22. This Court being called upon to decide on the maintainability of the criminal proceeding registered on the complaint, none of the essential facts having a live link with any stage in the transaction involved and the ingredients of the alleged offence can be ignored. To limit the attention exclusively to the fact of filing the complaint to determine the cause of action for the writ proceeding would amount to enervating the Constitutional provision of its essence and purpose. Such a constricted and insulated approach does not accord with the width and amplitude of writ jurisdiction of this Court as envisaged in the scheme of the Indian Constitution. The immediate and proximate cause for filing the complaint being the refusal on the part of the Petitioner to pay the amount of the cheque as demanded and the said act or omission having taken place at Guwahati within the territorial contours of this Court, it is not possible, considering the true import of the expression "cause of action" employed in Article 226 of the Constitution to uphold the preliminary objection based on want of territorial jurisdiction of this Court. The definition of 'High Court' in Section 2(e) of the Code of Criminal Procedure cannot control the frontiers of powers under Article 226 of the Constitution. Similarly, Section 136 of the Code has no relevance in the facts of the present case. As the Petitioner contends that the peremptory preconditions for attracting the liability under Section 138 of the Act are absent, I am thus not inclined to dismiss this petition only on the ground that the complaint had been filed at Kolkata a part of the cause of action for the complaint having arisen within the territorial limits of this Court. The preliminary objection, therefore, fails. 23. On merits, the principle attack against the maintainability of the criminal proceeding has been mounted on the aspect of lack of jurisdiction of the Calcutta Court to entertain the complaint inasmuch as, according to the Petitioners, the hire purchase agreement was executed at Guwahati and the cheques were issued at Guwahati. According to them, as the purported refusal to meet the demand made in the notice had been made also at Guwahati, no part of the cause of action had arisen within the territorial limits of the Calcutta Court.
According to them, as the purported refusal to meet the demand made in the notice had been made also at Guwahati, no part of the cause of action had arisen within the territorial limits of the Calcutta Court. To the contrary, the stand of the Respondents is that the cheques having been presented at Kolkata and the intimation of the same being dishonoured being conveyed to it at that place and the notice of demand having been issued from Kolkata as well, the criminal proceeding cannot be said to have been launched before a Court having no jurisdiction to entertain it. Though the complaint is silent as to the place of execution of the hire purchase agreement and that of issuance of the cheques in question, it is the categorical case of the Respondent complainant that those were presented for encashment through its banker at Kolkata and these being returned dishonoured, the information to that effect was relayed to it by its said banker at Kolkata. The notice of demand was issued from Kolkata requesting the Petitioners to make payment of the amount of the cheques. Though receipt thereof, by the Petitioners is admitted, the demand was not acceded to. Perse, the complaint discloses that the information about the cheques being dishonoured came to the knowledge of the Respondent complainant on 16.1.2002 and the demand notice was issued on 17.1.2002 which was replied to by the Petitioners on 30.1.2002. The complaint was filed on 21.2.2002. The time limits prescribed for various stages under Section 138 and 142 of the Act, thus prima facie appear to have been adhered to. 24. The Apex Court in MMTC Ltd. and Anr. (supra) which was also a case under the Act, had held that while entertaining an application for quashing of a criminal proceeding, the Court would not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the complaint. Referring to its earlier decision in Maruti Udyog Limited v. Narender (1999) 1 SCC 113 and K.N. Beena v. Muniyappan (2001) 8 SCC 458 it ruled that the Court has to draw a presumption in view of Section 139 of the Act that the holder had received the cheque(s) for discharge of a debt or liability until the contrary is proved.
As noticed herein above, the Apex Court in K. Bhaskaran, (supra), had laid down that the offence under Section 138 of the Act is a concatenation of several acts/omissions namely (1) drawing of cheque (2) presentation of the cheque to the bank (3) return of cheque unpaid by the drawee bank (4) giving of 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 notice. It was further held that if five different acts are done in five different localities any of the Courts exercising jurisdiction in one of the said area can try the offence. The complainant in such a case has the option to choose any one of those Courts having jurisdiction over any one of the local areas within the territorial limits of which any of the acts had been committed. 25. The Apex Court in Drugs Inspector, Palace Road, Bangalore (supra), had observed that in a quashing proceeding, the High Court is to see whether the allegation made in the complaint petition, if proved, make out a prima facie offence and that the accused had prima facie committed the same. It added that the extent of the liability of the accused would however be established by evidence during trial. 26. Having regard to the statements made in the complaint, vis-a-vis, the prescriptions of Section138 and 142 of the Act and keeping in view, the principles of law recorded in the aforementioned authorities in my considered view, Calcutta Court cannot be held to be lacking in jurisdiction in entertaining the complaint. 27. The contention that the cheques had been issued, as collateral security is prima facie, belied by Article 28 of the hire purchase agreement read with schedule 1 thereto, where the column "collateral security" is vacant. Had the cheques been issued as collateral security as claimed by the Petitioner, particulars thereof would have found place in schedule 1, I am therefore unable to accept this contention. 28. The plea that the cheques had been issued undated in face of a clear and categorical statement in the complaint to the contrary cannot be accepted at this stage, in absence of any proof to that effect. The complaint sets out in clear terms, the particulars of the cheques alongwith the date of their issue.
28. The plea that the cheques had been issued undated in face of a clear and categorical statement in the complaint to the contrary cannot be accepted at this stage, in absence of any proof to that effect. The complaint sets out in clear terms, the particulars of the cheques alongwith the date of their issue. The allegation that the dates had been inserted later on is also subject to proof and on the materials presently available on record, it is not possible to accept the same. 29. In Amol Ch. Lahkar and Anr. (supra), this Court had quashed the criminal proceeding on the ground that the complaint did not disclose any offence under Section 379 IPC as alleged. While there is no cavil with regard to the reasoning on which the said decision is based, it is of no assistance to the Petitioner in the instant case inasmuch as on a reading of the complaint, the same conclusion is not possible at this stage. The Andhra Pradesh High Court in Uma Maheshwar Reddy, (supra) had in facts of the case held that the post dated cheques issued towards the discharge of loan in connection with a hire purchase contract after its termination cannot be said to have been issued in discharge of any legally enforceable debt. The fact that the cheques in the instant case were post dated is not admitted and therefore, the basic premise in which the reported decision proceeds is not available in the case in hand. The decision, therefore, is not relevant. In Shri Ishar Alloys Steel Ltd. (supra) and Ashok Yaswant Badave (supra) the Apex Court had held that a post dated cheque becomes a cheque under the Act on the date inscribed on it and that till then it is only a bill of exchange. These authorities are also of no assistance to the Petitioner, as the fact that the cheques in question were post dated is not yet established in the instant case. The decision in Ms Adithya Alkalods (supra), involved an undated blank cheque issued as a security towards bill discounting facility. The clear and categorical case of the opposite party/complainant in the present case being that fully filled up cheques containing dates and other particulars had been issued by the Petitioner, the ratio of the above decision has no bearing on the controversy seeking resolution.
The clear and categorical case of the opposite party/complainant in the present case being that fully filled up cheques containing dates and other particulars had been issued by the Petitioner, the ratio of the above decision has no bearing on the controversy seeking resolution. A post dated cheque was dishonoured in M/s. Pawan Enterprises (supra). On the completion of trial, the opposite party therein was acquitted on the ground that the same had been issued as a security for an amount lying in balance after payment of some amount in cash and not for discharging any liability. The Bombay High Court refused to interfere with the acquittal in a revision. The contention of the Petitioner that the cheques in the instant case had been issued as collateral security has been denied by the opposite party and remains to be established at the trial. In my view, therefore, the Petitioner cannot draw any strength in support of his case from the aforementioned decision. On the other hand, the Apex Court in K.N. Beena (supra), has held that in view of Section 118 of the Act, unless the contradictory is proved, it has to be presumed that an encashable instrument, including a cheque, had been made or drawn for consideration and a Court under Section 139thereof has to presume that the holder of the cheque received if for discharge in whole or in part of a debt or liability. The Apex Court, thus, was categorical in laying down that on a complaint under Section 138of the Act, the Court has to presume that the cheque had been issued for a debit or liability and the burden of proving otherwise is on the accused. In the present state of facts and considering the stage of the criminal proceeding, in view of the pronounced judicial opinion as above, the above contentions raised on behalf of the Petitioner do not commend for acceptance. 29A. The contention that a reading of the contents of para 3 of the complaint discloses admission of issuance of undated cheques, is also not tenable. A bare reading of the statements made in the aforementioned paragraph does not support such plea. Amongst others, the complaint discloses the dates of the cheques on which those were issued.
29A. The contention that a reading of the contents of para 3 of the complaint discloses admission of issuance of undated cheques, is also not tenable. A bare reading of the statements made in the aforementioned paragraph does not support such plea. Amongst others, the complaint discloses the dates of the cheques on which those were issued. In that view of the matter, the submission that the undated cheques are only bills of exchange and therefore, the criminal liability under Section 138of the Act is not attracted does not appeal to this Court. In this context, it is expedient to recall the observations of the Apex Court in MMTC Limited and Anr. (supra) to the effect that at this stage embarking upon an enquiry to ascertain the reliability or genuineness of the statements made in the complaint would not be justified. In Vijay Shekhar and Anr. v. Union of India, (2004) 4 SCC 666 , the criminal complaint was quashed as admittedly the contents thereof were not genuine and was therefore, quashed the same being a product of fraud. Such is not the situation in the case in hand. The said decision pressed into service by Mr. Roy is, therefore, is of no assistance to the Petitioner. In absence of any proof to the contrary, having regard to the statements made in the complaint, the presumption that the Respondent company as a holder of the cheques, had received the same wholly or for the discharge in whole or in part of any debt or any other liability is available. 30. With regard to the plea that the hire purchase agreement had been signed only by the Petitioner No. 5 and the cheques had been issued by him as well and thus cognizance of the offence could not have been taken against Petitioner No. 2 to 4 also cannot be entertained. In the complaint, the Petitioner No. 2 to 5 have been described as Directors of the Petitioner Company to be in charge of its business. There is no denial of this fact in the writ petition, which however, discloses that the cheques were issued by the Petitioner No. 5 under the agreement. From the hire purchase agreement, it is apparent that the Petitioner No. 5 had executed the same on behalf of the Petitioner company as its Chief Executive Director.
There is no denial of this fact in the writ petition, which however, discloses that the cheques were issued by the Petitioner No. 5 under the agreement. From the hire purchase agreement, it is apparent that the Petitioner No. 5 had executed the same on behalf of the Petitioner company as its Chief Executive Director. The agreement, therefore, was executed on behalf of the Petitioner Company and the cheques having been admittedly issued thereunder, the complaint and consequently the criminal proceeding ought not to be quashed acting on the above contention in absence of better materials on record. The Apex Court in Raj Lakshmi Mills v. Shakti Bhakoo, (2002) 8 SCC 236 had disapproved the assumption drawn by the High Court in an almost similar situation holding that the Respondent was not in charge or responsible for the conduct of the business of the accused firm. It was held that at the stage of summons when evidence was yet to be led by the parties, the High Court could not on an assumption of facts hold that the Respondent was not responsible for the conduct of its business. The concept of vicarious liability, as envisaged under Section 141 of the Act, in the existing facts also prima facie weighs against the Petitioners. 31. The maintainability of the complaint has also been questioned on the ground that the same does not disclose the date of receipt of the information about the dishonoured cheques and of the service of the notice of demand on the Petitioners. The complaint has been assailed to be barred by time as well. A bare perusal of the complaint belies the above contentions. It has been mentioned therein that the Respondent complainant had come to learn about the dishonoured cheques from its banker on 16.1.2002 and the notice of demand had been issued on 17.1.2002 to the Petitioners, which was replied to by them on 30.1.2002. The notice must have thus been received by the Petitioners before 30.1.2002 and as such, the complaint having been filed on 21.2.2002, it is prima facie within time. 32.
The notice must have thus been received by the Petitioners before 30.1.2002 and as such, the complaint having been filed on 21.2.2002, it is prima facie within time. 32. The Apex Court in Rajesh v. State NCT of Delhi and Ors., (1999) 3 SCC 259 , while underlining the necessity of restraint and circumspection in quashing a criminal proceeding, had held that it is not necessary that a complainant should verbatim reproduce all facts constituting the offence and if evidence of the offence has not been led, a Court should not hasten to quash a criminal proceeding merely on the premises that one or two ingredients have not been stated with details. The grievance that the learned Court below has mechanically taken cognizance of the offence alleged, therefore, has no substance. 33. That the arbitration proceeding between the parties relating to the hire purchase agreement had been terminated in the year 1999 does not by itself render issuance of the cheques in question an impossible event. Similarly, the proceedings involving appointment of receiver and grant of injunction qua the equipment under the hire purchase agreement are independent of the cause of action leading to the filing of the complaint. Institution of such proceedings in my view, therefore, does not have a demolishing effect on the impugned criminal proceeding. The plea with regard to harassment in absence of any evidence to that effect is also hypothetical at this stage. 34. The decision of the Apex Court in Trilok Sing and Anr. v. Satya Deo Tripathi, AIR 1979 SC 850 is not relevant in the facts of the instant case. Section138 of the Act defines an offence founded on issuance of a cheque on fulfilment of certain preconditions prescribed. This Court at this stage is to confine its attention to the complaint for ascertaining whether the prescribed contingencies exist prima facie. The complaint meets the requirements. This contention thus has to fail. The grievance that the opposite party as the complainant had not approached the learned Court below with clean hands and had suppressed the fact regarding disposal of the arbitration proceeding relating to the same transaction also is of no substance. On the face of the records, omission to mention about the arbitration proceeding does not detract from the edicts of Section 138 of the Act.
On the face of the records, omission to mention about the arbitration proceeding does not detract from the edicts of Section 138 of the Act. It may at best be a circumstance available byway of defence to the Petitioner at the trial. The contention regarding lack of bonafide as sought to be developed by Mr. Roy in course of the arguments based on such omission, in absence of convincing materials on record at this stage is in the realm of speculations, and therefore, in my view do not have any cascading effect on the case of the opposite party to justify quashment of the complaint having regard to the object of the Act which is succinctly brought out in the following passage of Dalmiya Cement (Bharat) v. Galaxy Trials Ltd. and Ors. (2001) 6 SCC 463 . 3. The At was enacted and Section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque, a negotiable instrument, is concerned. The law relating to negotiable instruments is the law of commercial world legislated to facilitate the activities in trade and commerce making provision of giving sanctity to the instruments of credit which could be deemed to be convertible into money and easily passable from one person to another. In the absence of such instruments, including a cheque, the trade and commerce activities, in the present day world, are likely to be adversely affected, as it is impracticable for the trading community to carry on with it the bulk of the currency in force. The negotiable instruments are in fact the instruments of credit being convertible on account of legality of being negotiated and are easily passable from one hand to another. To achieve the objectives of the Act, the legislature has, in its wisdom, thought it proper to make such instruments contemplated under it and provide special penalties and procedure in case the obligations under the instruments are not discharged. The law relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants.
The law relating to the Act are, therefore, required to be interpreted in the light of the objects intended to be achieved by it despite there being deviations from the general law and the procedure provided for the redressal of the grievances to the litigants. Efforts to defeat the objectives of law by resorting to innovative measures and methods are to be discouraged, lest it may affect the commercial and mercantile activities in a smooth and healthy manner, ultimately affecting the economy of the country. 4. Section 138 of the Act makes a civil transaction to be an offence by fiction of law. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person is returned by the bank unpaid either because of the amount or money standing to the credit of that person being insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account, such person, subject to the other conditions, shall be deemed to have committed an offence under the section and be punished for a term which may extend to one or with fine which may extend to twice the amount of cheque or with both. 35. The plea that the impugned criminal proceeding is not maintainable inasmuch as the complaint had not been filed by a Director of the Respondent Company needs to be mentioned only to be rejected. A plain reading of the complaint reveals that it has been filed by one Mr. Ashish Bhattacharya duly authorised for the purpose by a resolution of the Board of Directors of the said Company. 36. The Act does not prescribe any particular mode of filing a complaint by a company. It does not require that if the complainant is a company, it has to be mandatorily filed by the Director thereof. In the present case, the complaint has been filed on behalf of the Company by an officer thereof duly authorised for the purpose by its Board of Directors. In absence of better particulars on record to the contrary there is no logic to uphold the objection. The decision of the Madras High Court in S.N. Bangar and Anr. (supra), cited by Mr.
In absence of better particulars on record to the contrary there is no logic to uphold the objection. The decision of the Madras High Court in S.N. Bangar and Anr. (supra), cited by Mr. Roy deals with the contingencies where an offence is committed by a company, its directors would be deemed to be guilty thereof. This decision, therefore, is clearly besides the point in issue. 37. Following an exhaustive survey of the legal principles on the scope of Article 226 of the Constitution of India and the inherent power under Section 482 of the Code of Criminal Procedure in the matter of interference with the police investigation on an FIR or a trial based on a complaint, the Apex Court in the State of Haryana v. Choudhury Bhajan Lal, (1992) Supp 1 SCC 335 enumerated a list of contingencies permitting exercise of such powers either to prevent the abuse of the process of Court or to secure the ends of justice. The conclusions as summed up are contained in para 102 and 103 of the decision and are quoted herein below: 102. In the backdrop of the interpretation of the various relevant provisions of the Code under Chapter XIV and of the principles of law enunciated by this Court in a series of decisions relating to the exercise of the extraordinary power under Article 226 or the inherent powers under Section482 of the Code which we have extracted and reproduced above, we give the following categories of cases by way of illustration wherein such powers could be exercised either to prevent abuse of the process of any Court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised. (1) Where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused. (2) Where the allegations in the first information report and other materials, if any, accompanying, the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(l) of the Code.
(2) Where the allegations in the first information report and other materials, if any, accompanying, the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(l) of the Code. (3) Where the un-controverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party. (7) Where a criminal proceeding is manifestly attended with malafide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge. (103) We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases, that the Court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the Court to act according to its whim or caprice. 38. Applying the yardstick as above, in the facts and circumstances of the instant case, I do not consider it to be a fit case to exercise the discretionary jurisdiction of this Court to interdict the impugned criminal proceeding.
38. Applying the yardstick as above, in the facts and circumstances of the instant case, I do not consider it to be a fit case to exercise the discretionary jurisdiction of this Court to interdict the impugned criminal proceeding. The Petitioner has failed to make out a case that the complaint is either barred by law or suffers from anyone or more of the infirmities as above and that the continuance of the impugned criminal proceeding would result in the abuse of the process of Court or defeat the ends of justice. 39. The petition, therefore, is without any merit and is accordingly dismissed. No costs. Petition dismissed