REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.     2021        OF 2008 [arising out of SLP (Criminal) No. 1712 of 2004]

M/S. HARMAN ELECTRONICS (P) LTD.  & ANR.      … APPELLANTS

VERSUS

M/S. NATIONAL PANASONIC INDIA LTD.    … RESPONDENT

J U D G M E N T

S.B. SINHA, J.

1. Leave granted.  

2. Territorial jurisdiction of a court to try an offence under Section 138

of the Negotiable Instruments Act, 1881 (for short, “the Act”) is in question

in this appeal.  

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The said question arose in the following circumstances.

Appellants  and  respondent  entered  into  a  business  transaction.

Appellant  is  a  resident  of  Chandigarh.  He  carries  on  business  in

Chandigarh.  The cheque in question admittedly was issued at Chandigarh.

Complainant  also  has  a  branch  office  at  Chandigarh  although  his  Head

Office is said to be at Delhi.  It is stated that the cheque was presented at

Chandigarh.  However, it is in dispute as to whether the said cheque was

sent  for  collection  to  Delhi.   The  cheque  was  dishonoured  also  at

Chandigarh.  However, the complainant – respondent issued a notice upon

the appellant asking him to pay the amount from New Delhi.  Admittedly,

the said notice was served upon the respondent at Chandigarh. On failure on

the part of the appellant to pay the amount within a period of 15 days from

the date of communication of the said letter, a complaint petition was filed

at Delhi.  In the complaint petition, it was stated:

“10. That  the  complainant  presented  aforesaid cheque  for  encashment  through  its  banker  Citi Bank NA.  The Punjab & Sind Bank, the banker of the accused returned the said cheque unpaid with an  endorsement  “Payment  stopped  by  drawer” vide their memo dated 30.12.2000.  The aforesaid memo  dated  30.12.2000  was  received  by  the complainant on 3.1.2001.   

11. Upon  dishonour  of  the  above  mentioned cheque, the complainant sent notice dt. 11.1.2001

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in terms of section 138 of Negotiable Instruments Act to the accused persons demanding payment of aforesaid  cheque amount  at  Delhi.   The accused persons were served with said notice by registered A/D.

12. By the said notice the accused persons were called upon to pay to the complainant the sum of Rs.5,00,000/- within 15 days of the receipt of said notice.  

13. Despite the service of notice dt.  11.1.2001 the accused persons have failed and/or neglected to  pay  amount  of  aforesaid  cheque  within  the stipulated period of 15 days after the service of the notice.

14. Accused  persons  clandestinely/deliberately and with malafide intention and by failing to make the payment of the said dishonoured cheque within the stipulated period have committed the offence under  Section  138  read  with  Section  141  of  the Negotiable Instruments Act, 1881.

15. The  complainant  further  submit  that  the complaint is being filed within 1 month from the date of expiring of the 15 days grace time given under the notice for payment of said amount.

16. This  Hon’ble  Court  has  jurisdiction  to entertain  the  present  complaint  as  complainant carries on its business at Delhi. The demand notice dt.  11.1.2001  was  issued  from  Delhi  and  the amount  of  cheque  was  payable  at  Delhi  and because  accused  failed  to  make  the  payment  of amount of said cheque within statutory period of 15 days from receipt of notice.”

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3. Cognizance  of  the  offence  was  taken  against  the  appellant  by the

learned judge.   

Questioning  the  jurisdiction  of  the  court  of  Additional  Sessions

Judge, New Delhi, an application was filed which was disposed of by the

learned Additional Sessions Judge, New Delhi in terms of an order dated

3.2.2003 stating:

“2. The main grievance  of  the  accused is  that the  accused  persons,  as  well  as  the  complainant are  carrying  their  business  at  Chandigarh.   The cheque in question was given by the accused to the complainant in Chandigarh, and it was present to their banker at Chandigarh.  Only notice was given by the complainant  to  the accused persons,  from Delhi.  That  the same was served on the accused admittedly, at Chandigarh and that both the parties are carrying out their business also at Chandigarh. Therefore, it is contended that it would amount to absurdity  if  the  complaint  of  the  complainant  is entertained,  in  Delhi,  in  view  of  the  case  law reported  in  AIR  1999  Supreme  Court  3782,  K. Bhaskaran  Vs.  Sankaran  Vaidyyan  Balan  and Another.

6. I  have considered  the arguments  advanced at the bar, and I am of the considered opinion that this  court  has  jurisdiction  to  entertain  this complaint, as admittedly the notice was sent by the complainant  to  the  accused  persons  from Delhi, and the complainant is having its registered office at  Delhi,  and  that  they  are  carrying  out  the business at  Delhi.   Admittedly, it  is  also evident from the  record  that  accused  allegedly  failed  to make  the  payment  at  Delhi,  as  the  demand  was

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made from Delhi and the payment was to be made to the complainant at Delhi.”

4. By  reason  of  the  impugned  judgment,  Criminal  Miscellaneous

Petition filed by the appellant has been dismissed.  

5. Mr. Ashok Grover, learned Senior Counsel appearing on behalf of the

appellant would submit that as the entire cause of action arose within the

jurisdiction  of  the  courts  at  Chandigarh,  the  learned Additional  Sessions

Judge, New Delhi had no jurisdiction to take cognizance of the offence.

6. Mr.  Sakesh  Kumar,  learned  counsel  appearing  on  behalf  of  the

respondent, on the other hand, would contend:

i. The cheque although was deposited at Chandigarh,  the same

having been sent by Citi Bank NA for collection at Delhi, the

amount became payable at Delhi.   

ii. Giving  of  a  notice  being  a  condition  precedent  for  filing  a

complaint  petition  under  Section  138  of  the  Negotiable

Instruments Act, a notice having been issued from Delhi, the

Delhi  Court  had  the  requisite  jurisdiction,  particularly  when

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demand was made upon the appellant to pay the complainant at

Delhi.  

7. Section 138 of the Negotiable Instruments Act reads as under:

“138.  Dishonour  of  cheque  for  insufficiency, etc., of funds in the account. - 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 from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to  be  paid  from  that  account  by  an  agreement made with that bank, such person shall be deemed to have committed an offence and shall,  without prejudice to any other  provisions  of this  Act,  be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:  

Provided  that  nothing  contained  in  this section shall apply unless--

(a)  the  cheque  has  been  presented  to  the bank within a period of six months from the date on which  it  is  drawn or within  the period of  its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving  a  notice  in  writing,  to  the  drawer  of  the cheque,  within  thirty  days  of  the  receipt  of information  by him from the bank regarding the return of the cheque as unpaid; and

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(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course  of  the  cheque,  within  fifteen  days  of  the receipt of the said notice.

Explanation.--  For  the  purposes  of  this  section, "debt  or  other  liability"  means  a  legally enforceable debt or other liability.”

8. The  proviso  appended  thereto  imposes  certain  conditions  before  a

complaint petition can be entertained.  

9. Reliance  has  been placed  by both  the  learned  Additional  Sessions

Judge as also the High Court on a decision of this Court in K. Bhaskaran v.

Sankaran Vaidhyan Balan and Anr. [(1999) 7 SCC 510].  This Court opined

that the  offence under Section 138 of the Act can be completed only with

the concatenation of a number of acts, namely, (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.  It was opined that if

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

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place  of  trial  for  the  offence  under  Section  138  of  the  Act  and  the

complainant would be at liberty to file a complaint petition at any of those

places.   As  regards  the  requirements  of  giving  a  notice  as  also  receipt

thereof by the accused, it was stated:   

“18. On the part of the payee he has to make a demand by “giving  a notice” in  writing.   If  that was the only requirement to complete the offence on  the  failure  of  the  drawer  to  pay  the  cheque amount  within  15  days  from  the  date  of  such “giving”,  the  travails  of  the  prosecution  would have been very much lessened.  But the legislature says that failure on the part of the drawer to pay the  amount  should  be  within  15  days  “of  the receipt” of the said notice.  It  is,  therefore, clear that “giving notice” in the context is not the same as receipt of notice.  Giving is a process of which receipt is the accomplishment.  It is for the payee to  perform  the  former  process  by  sending  the notice to the drawer at the correct address. ”

10. The court, however, refused to give a strict interpretation to the said

provisions  despite  noticing  Black’s  Law  Dictionary  in  regard  to  the

meaning of the terms ‘giving of notice’ and ‘receiving of the notice’ in the

following terms:

“19. In Black's Law Dictionary, 'giving of notice' is  distinguished  from  'receiving  of  the  notice.' (vide page 621) "A person notifies or gives notice

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to  another  by  taking  such  steps  as  may  be reasonably  required  to  inform  the  other  in  the ordinary course, whether or not such other actually comes to know of it." A person 'receives' a notice when it is duly delivered to him or at the place of his business.

20. If a strict interpretation is given that the drawer should  have  actually  received  the  notice  for  the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid  receiving  the notice  by different  strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that Court should not adopt in interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure.”

11. For the said purpose, a presumption was drawn as regards refusal to

accept a notice.  We may, before proceeding to advert  to the contentions

raised by the parties hereto, refer to another decision of this Court in  M/s

Dalmia Cement (Bharat) Ltd.  vs.  M/s Galaxy Traders & Agencies Ltd. &

ors. [AIR 2001 SC 676], wherein this Court categorically held:  

“6.  Section  27 of  the General  Clauses  Act  deals with the presumption of service of a letter sent by post.  The dispatcher of a notice has,  therefore, a right to insist upon and claim the benefit of such a presumption. But as the presumption is rebuttable one,  he  has  two  options  before  him.  One  is  to concede to the stand of the sendee that as a matter

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of fact he did not receive the notice, and the other is to contest the sendee's stand and take the risk for proving  that  he  in  fact  received the notice.  It  is open  to  the  despatcher  to  adopt  either  of  the options. If he opts the former, he can afford to take appropriate steps for the effective service of notice upon the addressee. Such a course appears to have been  adopted  by  the  appellant-company  in  this case  and  the  complaint  filed,  admittedly,  within limitation  from the date  of  the  notice  of  service conceded  to  have  been  served  upon  the respondents.”

(Underlying is mine)

It was furthermore held:

“The payee or holder of the cheque may, therefore, without taking peremptory action in exercise of his right under clause (b) of Section 138 of the Act, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity  of  the  cheque.  But  once  a  notice  under clause (b) of Section 138 of the Act is 'received' by the drawer of the cheque, the payee or the holder of the cheque forfeits his right to again present the cheque as cause of action has accrued when there was  failure  to  pay  the  amount  within  the prescribed  period  and  the  period  of  limitation starts  to  run  which  cannot  be  stopped  on  any account.  This Court  emphasised that ‘needless to say  the  period  of  one  month  from  filing  the complaint  will  be  reckoned  from  the  date immediately falling the day on which the period of 15 days from the date of the receipt of the notice by the drawer expires’.

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12. Indisputably, the parties had been carrying on business at Chandigarh.

The Head Office of the complainant – respondent may be at Delhi but it has

a branch office at Chandigarh.  It is not in dispute that the transactions were

carried on only from Chandigarh.  It is furthermore not in dispute that the

cheque was issued and presented at Chandigarh.  The complaint petition is

totally  silent  as  to  whether  the  said  cheque was  presented  at  Delhi.   As

indicated  hereinbefore,  the  learned  counsel  appearing  on  behalf  of  the

complainant  – respondent contended that in fact  the cheque was put  in a

drop box but as the payment was to be obtained from the Delhi Bank, it was

sent  to  Delhi.   In  support  of  the  said  contention,  a  purported  certificate

issued by the Citi Bank NA has been enclosed with the counter affidavit,

which reads as under:  

“This  is  to  confirm that  M/s  National  Panasonic India  Pvt.  Ltd.  (NPI)  having  registered  office  at AB- 11, Community Centre, Safdarjung Enclave, New Delhi  –  110029  are  maintaining  a  Current Account  No.  2431009  with  our  Bank  at  Jeevan Bharti Building, 3, Parliament Street, New Delhi- 110001 only and not  at  any other  place in  India including Chandigarh.   

Further confirmed that CITI bank has provided the facility for collection of  Cheques/Demand Drafts from  branches  of  NPI  located  at  various places/cities  in  India.   However,  all  amounts  of cheques/Demand Drafts so collected on behalf of National  Panasonic  India  Private  Limited  are forwarded  and  debited/credited  to  the  aforesaid

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Current  Account  No. 2431009  with  our  Bank at Jeeval Bharti Building, 3, Parliament Street, New Delhi – 110001.”

13. The complaint petition does not show that the cheque was presented

at Delhi.  It is absolutely silent in that regard.  The facility for collection of

the cheque admittedly was available at Chandigrh and the said facility was

availed of.  The certificate dated 24.6.2003, which was not produced before

the learned court taking cognizance, even if taken into consideration does

not  show that  the cheque was  presented  at  the Delhi  Branch of  the  Citi

Bank. We, therefore, have no other option but to presume that the cheque

was presented  at  Chandigarh.   Indisputably,  the dishonour  of  the cheque

also took place at Chandigarh.  The only question, therefore, which arises

for consideration is that as to whether sending of notice from Delhi itself

would  give  rise  to  a  cause  of  action  for  taking  cognizance  under  the

Negotiable Instruments Act.  

14. It is one thing to say that sending of a notice is one of the ingredients

for maintaining the complaint but it is another thing to say that dishonour of

a cheque by itself constitutes an offence.  For the purpose of proving its case

that  the  accused  had  committed  an  offence  under  Section  138  of  the

Negotiable  Instruments  Act,  the  ingredients  thereof  are  required  to  be

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proved.  What would constitute an offence is stated in the main provision.

The proviso appended thereto, however, imposes certain further conditions

which are required to be fulfilled before cognizance of the offence can be

taken.  If the ingredients for constitution of the offence laid down in the

provisos  (a),  (b)  and  (c)  appended  to  Section  138  of  the  Negotiable

Instruments  Act  intended  to  be  applied  in  favour  of  the  accused,  there

cannot be any doubt that receipt of a notice would ultimately give rise to the

cause of action for filing a complaint. As it is only on receipt of the notice

the accused at his own peril may refuse to pay the amount.  Clauses (b) and

(c) of the proviso to Section 138 therefore must be read together.  Issuance

of  notice  would  not  by  itself  give  rise  to  a  cause  of  action  but

communication of the notice would.   

15. It is  in the aforementioned situation,  the distinction  noticed by the

Bench  in  M/s  Dalmia  Cement  (Bharat)  Ltd.  (supra)  and  the  meaning  of

‘giving of  notice’  and ‘receiving  of notice’  as  contained in  Black’s Law

Dictionary assumes significant.

16. What  is  meant  by ‘communication’  albeit  in  different  context,  has

been considered by a Constitution Bench of this Court in State of Punjab vs.

Amar Singh Harika [AIR 1966 SC 1313] stating:

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“It is  plain that  the  mere passing  of  an order  of dismissal  would  not  be  effective  unless  it  is published  and  communicated  to  the  officer concerned.”  

17. The  distinction  between  passing  of  an  order  which  is  final  and  a

communication  thereof  is  not  necessary  has  been  noticed  by  this  Court

subsequently in State of Punjab vs. Khemi Ram  [(1969) 3 SCC 28] stating:

“In our view, once an order is issued and it is sent out to the concerned Government servant, it must be  held  to  have  been  communicated  to  him,  no matter  when  he  actually  received  it.  We  find  it difficult to persuade ourselves to accept the view that it is only from the date of the actual receipt by him that the order becomes effective. If that be the true  meaning  of  communication,  it  would  be possible  for  a Government  servant  to  effectively thwart  an order  by avoiding receipt  of  it  by one method  or  the  other  till  after  the  date  of  his retirement  even  though  such  an  order  is  passed and despatched to him before such date. An officer against  whom action is  sought to be taken, thus, may go away from the address given by him for service of such orders or may deliberately give a wrong address and thus prevent or delay its receipt and be able to defeat  its  service on him. Such a meaning of the word 'communication' ought not to be given unless the provision in question expressly so provides. Actual knowledge by him of an order where it is one of dismissal, may, perhaps, become necessary because of the consequences which the decision  in  The  State  of  Punjab  v.  Amar  Singh (AIR  1966  SC  1313)  contemplates.  But  such consequences  would  not  occur in the  case of an officer  who  has  proceeded  on  leave  and  against

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whom an order of suspension is passed because in his case there is no question of his doing any act or passing  any  order  and  such  act  or  order  being challenged as invalid.”

For  constitution  of  an  offence  under  Section  138  of  the  Act,  the

notice  must  be received by the accused.  It  may be deemed to have been

received in certain situations. The word ‘communicate’ inter alia means ‘to

make known, inform, convey, etc.’    

18. This Court in  Sultan Sadik vs.  Sanjay Raj Subba and Ors [(2004) 2

SCC 377], held:

“33.  The  decision  of  this  Court  in  Khemi  Ram [(1969) 3 SCC 28] relied upon by Mr. Bachawat is not apposite as therein an order of suspension was in question. This Court in the said decision itself referred to its decision in State of Punjab v. Amar Singh Harika [AIR 1966 SC 1313], which stated that  communication  of  an  order  dismissing  an employee  from  service  is  imperative.  If communication  of  an  order  for  terminating  the jural relationship is imperative, a fortiori it would also be imperative at the threshold.”

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19. Section  177  of  the  Code  of  Criminal  Procedure  determines  the

jurisdiction of a court trying the matter.  The court ordinarily will have the

jurisdiction only where the offence has been committed.  The provisions of

Sections 178 and 179 of the Code of Criminal Procedure are exceptions to

Section 177.   These provisions presuppose that all offences are local.

20. Therefore, the place where an offence has been committed plays an

important role.  It is one thing to say that a presumption is raised that notice

is served but it is another thing to say that service of notice may not be held

to be of any significance or may be held to be wholly unnecessary.  

21. In Mosaraf Hossain Khan vs. Bhagheeratha Engg. Ltd. [(2006) 3 SCC

658], this court held:

“30.  In  terms  of  Section  177  of  the  Code  of Criminal Procedure every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed. 178 provides for place of inquiry or trial in the following terms:

‘178.  (a) When it  is  uncertain  in which of several  local  areas  an  offence  was committed, or  

(b) where an offence is committed partly in one local area and partly in another, or  

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(c)  where  an  offence  is  a  continuing  one, and continues to be committed in more local areas than one, or  

(d) where it consists of several acts done in different local areas.

31. A bare perusal of the complaint petition would clearly  go  to  show  that  according  to  the complainant the entire cause of action arose within the jurisdiction of the district  courts  of  Birbhum and in that view of the matter it is that court which will  have jurisdiction to take congnizance of the offence.  In  fact  the  jurisdiction  of  the  court  of CJM, Suri,  Birbhum is  not  in  question.  It  is  not contended  that  the  complainant  had  suppressed material  fact  and  which  if  not  disclosed  would have demonstrated that the offence was committed outside the jurisdiction of the said court. Even if Section 178 of the Code of Criminal Procedure is attracted,  the  court  of  the  Chief  Judicial Magistrate,  Birbhum will  alone have  jurisdiction in the matter.  

32. Sending of cheques from Ernakulam or the  respondents  having  an  office  at  that place did not form an integral part of 'cause of action'  for which the complaint  petition was filed by the appellant and cognizance of the  offence  under  Section  138  of  the Negotiable Instruments Act, 1881 was taken by the Chief Judicial Magistrate, Suri.”

22. In Y.A. Ajit. v. Sofana Ajit [AIR 2007 SC 3151), this Court held:

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“The crucial  question  is  whether  any part  of  the cause of action arose within the jurisdiction of the concerned Court.  In terms of Section 177 of the Code  it  is  the  place  where  the  offence  was committed. In essence it is the cause of action for initiation of the proceedings against the accused.

While  in  civil  cases,  normally  the  expression "cause  of  action"  is  used,  in  criminal  cases  as stated in Section 177 of the Code, reference is to the  local  jurisdiction  where  the  offence  is committed.  These  variations  in  etymological expression  do  not  really  make  the  position different.  The  expression  "cause  of  action"  is therefore not a stranger to criminal cases.”

23. Presumption raised in support of service of notice would depend upon

the facts and circumstances of each case.  Its application is on the question

of  law  or  the  fact  obtaining.  Presumption  has  to  be  raised  not  on  the

hypothesis or surmises but if the foundational facts are laid down therefor.

Only because presumption of service of notice is possible to be raised at the

trial,  the same by itself  may not  be a ground to hold that  the distinction

between giving of notice and service of notice ceases to exist.    

24. Indisputably  all  statutes  deserve  their  strict  application,  but  while

doing so the cardinal principles therefor cannot be lost sight of.  A Court

derives  a  jurisdiction  only  when  the  cause  of  action  arose  within  his

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jurisdiction.   The  same cannot  be  conferred  by  any  act  of  omission  or

commission on the part of the accused.  A distinction must also be borne in

mind between the ingredient of an offence and commission of a part of the

offence.  While issuance of a notice by the holder of a negotiable instrument

is necessary, service thereof is also imperative.  Only on a service of such

notice and failure on the part of the accused to pay the demanded amount

within a period of 15 days thereafter, commission of an completes.  Giving

of notice, therefore, cannot have any precedent over the service.  It is only

from that  view of  the  matter  in  Dalmia Cement  (Bharat)  Ltd. v.  Galaxy

Traders & Agencies Ltd., [ (2001) 6 SCC 463 ] emphasis has been laid on

service of notice.

25. 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-à-vis the provisions of the Code of Criminal Procedure.   

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26. Learned counsel for the respondent contends that the principle that

the debtor must seek the creditor should be applied in a case of this nature.   

27. We regret that such a principle cannot be applied in a criminal case.

Jurisdiction of the Court to try a criminal case is governed by the provisions

of the Criminal Procedure Code and not on common law principle.  

28. For the views we have taken it must be held that Delhi High Court

has  no  jurisdiction  to  try  the  case.   We,  however,  while  exercising  our

jurisdiction  under  Article  142  of  the  Constitution  of  India  direct  that

Complaint  Case  No.1549  pending  in  the  Court  of  Shri  N.K.  Kaushik,

Additional Sessions Judge, New Delhi,  be transferred to the Court of the

District  and  Sessions  Judge,  Chandigarh  who shall  assign  the  same to  a

court of competent jurisdiction.  The transferee court shall fix a specific date

of hearing and shall  not grant any adjournment on the date on which the

complainant  and  its  witnesses  are  present.   The  transferee  court  is

furthermore directed to dispose of the matter within a period of six months

from the date of receipt  of the records  of the case on assignment by the

learned District and Sessions Judge, Chandigarh.  

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29. The  appeal  is  allowed  with  the  aforementioned  observations  and

directions.  There shall, however, be no order as to costs.

………………………J.

             [ S.B. SINHA ]

………………………J.

           [ CYRIAC JOSEPH ]

New Delhi December 12, 2008

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