Supreme Court of India
DASHRATH RUPSINGH RATHODversusSTATE OF MAHARASHTRA & ANR.
- Citation
- 2014 INSC 514
- Decided
- 1 August 2014
- Disposal
- Disposed off
- Bench
- T S THAKUR
Holding
Territorial jurisdiction for a Section 138 complaint is limited to the court within whose local jurisdiction the cheque is dishonoured by the drawee bank.
Summary
The Supreme Court examined the proper territorial jurisdiction for criminal complaints filed under Section 138 of the Negotiable Instruments Act. It held that the offence is completed when a cheque is dishonoured by the drawee bank, and therefore the court having jurisdiction over the place where the cheque is dishonoured is the only competent forum. The complainant cannot choose the venue based on where the notice was issued or where the cheque was presented for encashment. The Court applied the general rule of Section 177 CrPC, rejecting the earlier view that any of the five acts constituting the offence could confer jurisdiction. Consequently, complaints filed outside the jurisdiction of the bank where the cheque bounced must be returned to the complainant, and only those already at the pre‑summoning stage may continue in the court where they are pending. The appeals were disposed of, with some dismissed and others allowed with directions to re‑file in the proper court.
Issues considered
- The appropriate territorial jurisdiction for offences under Section 138 of the Negotiable Instruments Act.
- Whether the complainant's choice of venue based on notice issuance or cheque presentation is permissible.
- The relevance of the 'cause of action' concept under Section 142 NI Act to criminal jurisdiction.
- The interpretation of the proviso to Section 138 as an ingredient of the offence or as a condition precedent.
Legislation cited
- Code of Civil Procedure, 1908s. 20
- Code of Criminal Procedure, 1973s. 177, s. 178, s. 179, s. 182, s. 184, s. 220
- Negotiable Instruments Act, 1881s. 138, s. 142, s. 177, s. 178, s. 179
Subjects
territorial jurisdictionSection 138Negotiable Instruments Actcheque bouncecause of actionproviso interpretationCrPC Section 177criminal complaintoffence completionjudicial precedent
Judgment
• [2014] 11 S.C.R. 921
DASHRATH RUPSINGH RATHOD A
v.
STATE OF MAHARASHTRA & ANR.
(Criminal Appeal No. 2287 of 2009 Etc.)
AUGUST 01, 2014
B
[T.S. THAKUR, VIKRAMAJIT SEN AND
C. NAGAPPAN, JJ.]
Jurisdiction: • . ---
c
Territorial jurisdiction - Of criminal complaint filed under
Chapter XVII of Negotiable Instruments Act - Held: General
rule stipulated u/s. 177 Cr.P.C. applies to case uls. 138 of
Negotiable Instruments Act - Thus, the place or situs where
the complaint uls. 138 is to be filed, cannot be of the choice 0
of the complainant - The territorial jurisdiction is restricted to
the Court within whose local jurisdiction the offence was
committed i.e. where the cheque is dishonored by the Bank
on which it is drawn- The place of issuance or delivery of the
statutory notice or where the complainant chooses to present E
the cheque for encashment are not relevant for the purpose
of territorial jurisdiction - Negotiable Instruments Act, 1881
- Chapter XVII, s. 138 - Code of Criminal Procedure, 1973
- s. 177.
Territorial Jurisdiction - Determination of - In Civil and F
Criminal cases - Criteria for - Discussed.
Interpretation of Statutes:
Heading, Captions or opening words of a piece of·
legislation - Interpretative value of - Held: Per Vikramajlt G
Sen, J. - They are normally not determinative of the sweep
of the actual p_rovision, but they do presage its intendment.
Interpretation of penal statutes - Held:_Per T.S. Thakur,
921 H
922 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A J.~- While interpreting a penal statute, courts should hesitate
to ascribe a meaning broader than what the phrase would
ordinarily bear.
Words and Phrases:
B 'Prosecution' - Meaning of.
I
Disposing of the appeals, the Court
HELD: Per Vikramajit Sen, J.;
C 1.1. Section 178 Cr. P.C. admits of no debate that in
criminal prosecution, the concept of "cause of action",
being the bundle of facts required to be proved in a suit
and accordingly also being relevant for the place of suing,
is not pertinent or germane for determining territorial
D jurisdiction of criminal trials.1 Section 178 CrPC explicitly
states that every offence shall ordinarily be inquired into
and tried by a Court within whose local jurisdiction it was
committed. Section 179 is of similar tenor. No provision
of the Negotiable Instruments Act (NI Act) indicates or
E enumerates the extraordinary circumstances which
would justify a departure from the stipulation that the
place where the offence is committed is where the
prosecution has to be conducted. The employment of the
phrase "cause of action" in Section 142 of the NI Act is
F apposite for taking cognizance, but inappropriate and
irrelevant for determining commission of the subject
offence. [Para 14] [946-E-H; 947-A]
1.2. The place of the issuance or delivery of the
statutory notice or where the Complainant chooses to
G present the cheque for encashment by his Bank are not
relevant for purposes of territorial jurisdiction of the
Complaints even though non-compliance thereof will
inexorably lead to the dismissal of the complaint. The
Complainant is statutorily bound to comply with Section
H ' I
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA
923
177 etc. of the CrPC and therefore the place or situs where A
Section 138 Complaint is to be filed is not of his
choosing. The territorial jurisdiction is restricted to the
Court within whose local jurisdiction the offence was
committed, which in the present context is where the
cheque is dishonoured by the Bank on which it is drawn. B
[Para 19] [950-H; 951-A-C]
1.3. An interpretation should not be imparted to
Section 138 which will render it as a device of
harassment i.e. by sending notices from a place which
has no casual connection with the transaction itself, and/ C
or by presenting the cheque{s) at any of the banks where
the payee may have an account. Courts are enjoined to
interpret the law so as to eradicate ambiguity or
nebulousness, and tp ensure that legal proceedings are
not used as a device for harassment, even of an apparent D
transgressor of the law. Law's endeavour is to bring the
culprit to book and to provide succour for the aggrieved
party but not to harass the former through vexatious
proceedings. Therefore, precision and exactitude are
necessary especially where the location of a litigation is E
concerned. [Paras 11 and 17] [949-E, F; 940-E-F]
1.4. Regardless of whether evidence has been led
before the Magistrate at the pre-summoning stage, either
by affidavit or by oral statement, the Complaint will be F
maintainable only at the place where the cheque stands
dishonoured. To obviate and eradicate any legal
complications, the category of Complaint cases where
proceedings have gone to the stage of Section 145(2) or
beyond, shall be deemed to have been transferred by this G
Court from the Court ordinarily possessing territorial
jurisdiction to the Court where it is presently pending. All
other Complaints {obviously including those where the
accused/respondent has not been properly served) shall
be returned to the Complainant for filing in the proper H
924 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A Court, in consonance with the present exposition of the
law. If such Complaints are filed/refiled within thirty days
of their return, they shall be deemed to have been filed
within the time prescribed by law, unless the initial or
prior filing was itself time barred. [Para 20) [951-G-H;952-
B A-CJ
Mosaraf Hossain Khan v. Bhagheeiatha Engg. Ltd. 2006
=
(2) SCR 595 (2006) 3 SCC 658 - held per incuriam.
Frick India Ltd. v. Union of India 1989 (2)
C Suppl. SCR 570 =
(1990) 1 SCC 400; Forage & Co. v.
Municipal Corpor~tion of Greater Bombay 1999 (4)
=
Suppl. SCR 184 (1999) 8 SCC 577 - referred to.
K. Bhaskaran v. Sankaran Vaidhyan Ba/an 1999
D (3) Suppl. SCR 271 = (1999) 7 SCC 51 O; Harman
Electronics (P) Ltd. v. National Panasonic India (P) Ltd. 2008
(17) SCR 487 = (2009) 1 SCC 720; Shri lshar Alloy Steels .
Ltd. v. Jayaswals Neco Ltd. 2001 (2) SCR 36 = (2001) 3 SCC
609; Prem Chand Vijay Kumar v. Yashpal Singh 2005 (3)
E SCR 1029 = (2005) 4 SCC 417; SIL Import, USA v. Exim
Aides Silk Exporters 1999 (2) SCR 958 = 1999 (4) SCC
567; Shamshad Begum v. B. Mohammed 20108 (15)
SCR 188 = (2008) 13 SCC 77; Om Hemrajani v. State of
U.P. 2004 (6) Suppl. SCR 365 = (2005) 1 SCC 617; Nishant
Aggarwal v. Kai/ash Kumar Sharma 2013 (7) SCR 165 =
F (2013) 10 SCC 72; Escorts Ltd. v. Rama Mukherjee (2014)
2 SCC 255; FIL Industries Ltd. v. lmtiyaz Ahmad Bhat (2014)
. 2 SCC 266; Patel Roadways Limited; Bombay v. Prasad
Trading Company, 1991 ( 3 ) SCR 391 =AIR 1992 SC
1514 == (1991) 4 SCC 270; ONGC v. Utpal Kumar Basu 1994
G (1) Suppl. SCR 252 = (1994) 4 SCC 711; South East Asia
Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. 1996
(3) SCR 405 = (1996) 3 SCC 443; Navinchandra N. Majithia
=
v. State of Maharashtra 2000 (3) Suppl. SCR 82 (2000) 7
.sec 640 - referred to.
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA
925
Bradlaugh v. Clarke 8 Appeal Cas_es 354 p.361- A
referred to.
Per T.S. Thakur, J (Concurring)
1. Dishonour of the cheque would be localised at the
place where the drawee bank is situated. Presentation of B
the cheque at any place cannot confer jurisdiction upon
the Court within whose territorial limits such presentation
may have taken place. [para 3] [959-E·F]
Shri lshar Alloy Steels Ltd. v. Jayaswals Neco Ltd. (2001) c·
3 SCC 609: 2001 (2) SCR 36 - relied on.
2. Section 138 is a penal provision that prescribes
imprisonment and fine. It must, therefore, be interpreted
strictly, for it is one of the accepted rules of interpretation
that in a penal statute, the Courts would hesitate to D
ascribe a meaning, broader than what the phrase would
ordinarily bear. [para 10] [962-D, E]
3. An offence within the contemplation of Section 138
is complete with the dishonour of the cheque but taking E
cognizance of the same by any Court is forbidden so
long as the complainant does not have the cause of
action to file a complaint in terms of clause (c) of the
proviso read with Section 142. [para 10] [963-B, C]
4. The scheme of Section 138 not only saves the F
honest drawer but gives a chance to even the dishonest
ones to make amends· and escape prosecution .
.Compliance with the provision· is, in that view, a
mandatory requirement. [para 13] [965-B]
G
Harman Electronics (P) Ltd. v. National Panasonic India
(P) Ltd. (2009) 1 sec 720=2008 (17) SCR 487 - relied on.
C.C. Alavi Haji v. Palapetty Muhammed and Another
(2007) 6 SCC 555=2007 (7) SCR 326 - referred to.
H
926 SUPREME COURT REPORTS . [2014) 11 S.C.R. •
A 5. The legislature has made a clear distinction
between what would constitute an offence and what
would give to the complainant the cause of action to file
a complaint for the court competent to take cognizance.
A proviso is an exception to the general rule. A proviso
B is added to an enactment to qualify or create an exception
to what is contained in the e_nactment. It does not by itself
state a general rule. It simply .qualifies the generality of
the main enactment, a portion which but·tor the proviso
would fall within the main enactment. [para 14] [965-E-G]
C K. Bhaskaran v. Sankaran Vaidhyan Ba/an 1999
(3) Suppl. SCR 271 = (1999) 7 'sec 510 - explained and
disapproved.
Kedarnath Jute Manufacturing Co.· v. Commercial Tax
D Officer, Calcutta and Ors. AIR 1966 SC 12 =1965 SCR 626;
Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC 128
= 1976 (1) SCR 277; Sreenivasa '
General Traders & Ors. ·~v.
-
State of Andhra Pradesh & Ors.' (1983) 4 SCC 353= 1983 (3)
SCR 843; Tribhovandas .Haribhai Tamboli v. Gujarat
E Revenue Tribunal and others (1991) 3 SCC 442= 1991 (2)
. SCR 802; A.N. Sehgal and Ors. v. Raje Ram Sheoram and
Ors. 1992 Supp (1) sec 304 ::= 1991 (2) .SCR 198; Kera/a
State Housing Board and Ors.' v. Ramapriya Hotels (P) Ltd.
and Ors. 1994 (5) SCC 672=1994. (2) Suppl. SCR 338;
Kush Sahgal & Ors. v. M.C. Mitter~ Ors. (2000) 4 SCC 526
F = 2000 (2) SCR 648; Ali M.K. and Ors. v. State of Kera/a
and Ors. (2003) 11 SCC 632 = 2003 (3) SCR 826; StefJ/
Authority of India Ltd. v~ S.U. T.N.I Sangam & Ors. (2009) 16
SCC 1= 2009 (12) SCR 929 -.relied on. · ,_ 1 1
G R v. Dimbdin (1910); Lloyds' ahd Scottish Finance Ltd
v. Modern Cars and Canavans (Kingston) Ltd.(1966); Re
Tabrisky v. Board of Trade (1947) - refe~red to. ,·
P. Ramanatha Aiyar, Law .Lexicon, 2nd Edition,
Wadhwa & Co. at page 1552; "Interpretation of Statutes'by
H Maxwell Edn. 12, 1969, on P. 189-190·- referred to·. '' ·
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA
927
6. The cause of action to file a complaint accrues to A
a complainant/payee/ holder of a cheque in due course
if (a)the dishonoured cheque is presented to the drawee
bank within a period of six months from the date of its
issue; (b) If the complainant has demanded payment of
cheque amount within thirty days of receipt of B
information by him from the bank regarding the
dishonour of the cheque and (c) If the drawer has failed
to pay the cheque amount within fifteen days of receipt
of such notice.The facts constituting cause of action do
not constitute the ingredients of the offence under c
Section· 138 of the Act. [para 31J [978-E-H]
7. The proviso to Section 138 simply postpones/
defers institution of criminal proceedings and taking of
cognizance by the Court till such time cause of action in
terms of clause (c) of proviso accrues to the complainant. D
Once the cause of action accrues to the complainant, the
jurisdiction of the Court to try the case will be determined
by reference to the place where the cheque is
dishonoured. [para 31] [979~A. BJ
E
-
8. In the commercial world a party who is cheated and
induced to deliver property on the basis of a cheque
which is dishonoured has the remedy of instituting
prosecution not only at the place where the cheque was
dishonoured which at times may be a place other than F
the place where the inducement or cheating takes place
but also at the place where the offence of cheating was
committed. To that extent the provisions of Chapter XIII
Cr.P.C. will bear relevance and help determine the place
where the offences can be tried. [para 27J [973-8, CJ
G.
MSR Leathers v. S. Palaniappan & Anr. (2013) 1 SCC
177= 2012 (9) SCR 165 - held inapplicable.
MSR Leathers v. S. Pa/aniappan & Anr. (2013) 1 SCC
177= 2012 (9) SCR 165 - referred to. H
928 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A Sadanandan Bhadran v. Madhavan Sunil Kumar (1998)
6 SCC 514=1998 (1) Suppl. SCR 178 Referred to. Kairali
Marketing & Processing Cooperative Society Ltd. V.
Pullengadi SeNice Cooperative Ltd. (2007) 1 KLT 287 -
approved.
B
9. The general rule stipulated under Section 177 of
Cr.P .C applies to cases un'der Section 138 of the
Negotiable Instruments Act. Prosecution in such cases
can, therefore, be launched against the drawer of the
cheque only before the Court within whose juri!idiction
c the dishonour takes place except in situations where the
offence of dishonour of the cheque punishable under
Section 138 is committed along with other offences in a ·
single transaction. within the meaning of Section 220(1)
read with Section 184 of the Code of Criminal Procedure
D or is covered by the provisions of Section 182(1) read
with Sections 184 and 220 th!Jreof. [para 31] [9"i'9·C·E]
10. The unilateral acts of a complainant in presenting
a cheque at a place of his choice or issuing a notice for
E payment of the dishonoured amount cannot arm the
complainant with the power to choose the place of trial.
Suffice it to say, that not only on the Principles of.
Interpretation of Statutes but also the potential mischief
which an erroneous interpretation can cause in terms of
F injustice and harassment to the accused. [para 32] {980-
F-G]
Nishant Aggarwal v. Kai/ash Kumar Sharma (2013) 10
SCC 72 = 2013 (7) SCR 165; FIL Industries Ltd. v. imtiyaz
Ahmad Bhat (2014) 2 SCC 266; Escorts Ltd. v. Rama
G Mukherjee (2014) 2 SCC 255 - referred to.
Case Law Reference:
In the judgment of Vikramajit Sen, J.
H 1999 (3) Suppl. SCR 271 Referred to Para 2
• SANJAY VERMA v. HARYANA ROADWAYS 929
2008 (17) SCR 487 Referred to Para 3 A
2001 (2) SCR 36 Referred to Para 4
2005 (3) SCR 1029 Referred to Para 6
1999 ( 2) SCR 958 Referred to Para 6 B
2008 (15) SCR 188 Referred to Para 6
2006 (2) SCR 595 held per incuriam Para 7
2004 (6 ) Suppl. SCR 365Referred to Para 7
c
2013 (7) SCR 165 Referred to
Para 8
1991 (3) SCR 391 Referred to Para 10
1994 (1) Suppl. SCR 252Referred to Para 10 o
2000 (3) Suppl. SCR 82 Referred to Para 11
1996 (3) SCR 405 Referred to Para 10
8 Appeal Cases 354 p.361 Referred to Para 14
E
1989 (2) Suppl.SCR 570 Relied on Para 15
2008 (17) SCR 487 Relied on Para 15
In the judgment of T.S. Thakur, J.
F
2001 (2) SCR 36 Relied on Para 2 ·
2008 (17) SCR 487 Referred to Para 4
2013 (7) SCR 165 Referred to Para 8
(2014) 2 sec 266 Referred to Para 8 G
(2014) 2 sec 255 Referred to Para 8
2007 (7) SCR 326 Referred to Para 13
1965 SCR 626 Relied on Para 17 H
930 SUPREME COURT REPORTS [2014] 11 S.Q.R. •
A 1976 (1) SCR 277 Relied on Para 18
1983 (3) SCR 843 Relied on Para 19
1991 (2) SCR 802 Relied on Para 20
1991 (2) SCR 198 Relied on Para 21
B
1994 (2) Suppl. SCR 338 Relied on Para 22
2000 (2) SCR 648 Relied on Para 23
2003 (3) SCR 826 Relied on Para 24
c
2009 (12) SCR 929 Relied on Para 24
1999 (3) Suppl. SCR 271 explained Para 26
and disapproved
D 1998 (1) Suppl. SCR 178 Referred to Para 28
2012 (9) SCR 165 held Para 28
·inapplicable
(2007) 1 KLT 287 approved Para 30
E CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 2287 of 2009.
From the Judgment and Order dated 04.09.2006 of the
High Court of Judicature at Bombay, Nagpur Bench at Nagpur
F in Criminal Application No. 2932 of 2005.
WITH
Crl. A. Nos. 1596-1600, 1593, 1594, 1595, 1601, 1602, 1603.
1604 of 2014.
G
.Jayant Bhushan, Sanjeev Kumar, Shabyashachi Patra (for
Khaitan & Co.), Satyajit A. Desai, Somanath Padhan, Anagha
S. Desai, Shivaji M. Jadhav, Prity Kuriwar, Uday B. Dube, Arup
Banerjee, Kamini Jaiswal, Krishna Tiwari, Sehar Mufti, Manish
H Pitale, Wasi Haider, Chander Shekher Ashri, Sanjay Kharde,
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA
931
Asha Gopalan Nair, Parmanand Gaur, M. P. Siddiqui, Shaikh A
Chaand, Vijendra Kumar, Amit Chawla, Mushtaq Ahmad,
Anitha Shenoy, Abhisth Kumar, Rutwik Panda, Jayanth Muth
Raj, Malavika J., Sureshan P., for the appearing parties.
The Judgments of the Court were delivered by B
VIKRAMAJIT SEN, J. 1. Leave granted in Special Leave
Petitions. These Appeals raise a legal nodus of substantial
public importance pertaining to Court's territorial jurisdiction
concerning criminal complaints filed under Chapter XVII of the
Negotiable Instruments Act, 1881 (for short, 'the NI Act'). This C
is amply adumbrated by the Orders dated 3.11.2009 in 1.A.No.1
in CC 15974/2009 of the three-Judge Bench presided over by
· the then Hon'ble the Chief Justice of India, Hon'ble Mr. Justice
V.S. Sirpurkar and Hon'ble Mr. Justice P. Sathasivam which
SLP is also concerned with the interpretation of Section 138 D
of the NI Act, and wherein the Bench after issuing notice on the
petition directed that· it be posted before the three-Judge
Bench.
PRECEDENTS
E
2. The earliest and the most often quoted decision of this
Court relevant to the present conundrum is K. Bhaskaran v.
Sankaran Vaidhyan Balan (1999) 7 SCC 510 wherein a two-
Judge Bench has, inter alia, interpreted Section 138 of the NI
Act to indicate that, "the offence under Section 138 can be F
completed only with the concatenation of a number of acts.
Following are the acts which are components of the said
offence: (1) Drawing of the cheque, (2) Presentation of the
cheque to the bank, (3) Returning the cheque unpaid by the
drawee bank, (4) Giving notice in writing to the drawer of the G
cheque demanding payment of the cheque amount, (5) Failure
of the drawer to make payment within 15 days of the receipt of
the notice." The provisions of Sections 177 to 179 of the Code
of Criminal Procedure, 1973 (for short, 'CrPC') have also been
dealt with in detail. Furthermore, Bhaskaran in terms draws a H
932 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A distinction between 'giving of notice' and 'receiving of notice'.
This is for the reason that clause (b) of proviso to Section 138
of the NI Act postulates a demand being made by the payee
or the holder in due course of the dishonoured cheque by giving
a notice in writing to the drawer thereof. While doing so, the
B question of the receipt of the notice has also been cogitated
upon.
3. The issuance and the receipt of the notice is significant
because in a subsequent judgment of a Coordinate Bench,
C namely, Harman Electronics Pvt. Ltd. v. National Panasonic
India Pvt. Ltd. (2009) 1 SCC 720 emphasis has been laid on
the receipt of the notice, inter alia, holding that the cause of
action cannot arise by any act of omission or commission on
the part of the 'accused', which on a holistic reading has to be
read as 'complainant'. It appears that Harman transacted
D business out of Chandigarh only, where the Complainant also
maintained an office, although its Head Office was in Delhi.
Harman issued the cheque to the Complainant at Chandigarh;
Harman had its bank account in Chandigarh alone. It is unclear
where the Complainant presented the cheque for encashment
E but it issued the Section 138 notice from Delhi. In those
circumstances, this Court had observed that the only question
for consideration was "whether sending of notice from Delhi
itself would give rise to a cause of action for taking cognizance
under the NI Act." It then went on to opine th;;it the proviso to
F this Section "imposes certain further conditions which are
required to be-fulfilled before cognizance of the offence can be
taken." We respectfully agree with this statement of law and
underscore that in criminal jurisprudence there is a discernibly
demarcated difference between the commission of an offence
G and its cognizance leading to prosecution .. The Harman
approach is significant and sounds a discordant note to the ·
Bhaskaran ratio. Harman also highlights the reality that
Section 138 of the NI Ac$ is being rampantly misused so far
as territorial jurisdiction for trial of the Complaint is concerned.
H With the passage of time equities have therefore transferred
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
933
from one end of the pendulum to the other. It is now not A
uncommon for the Courts to encounter the issuance of a notice
in compliance with clause (b) of the proviso to Section 138 of
the NI Act from a situs which bears no connection with the
Accused or with any facet of the transaction between the
parties, leave aside the place where the dishonour of the B
cheque has taken place. This is also the position as regards
the presentation of the cheque, dishonour of which is then
pleaded as the territorial platform of the Complaint under
Section 138 of the NI Act. Harman, in fact, duly heeds the
absurd and stressful situation, fast becoming common-place c
where several cheques signed by the same drawer are
presented for encashment and requisite notices of demand are
also despatched from different places. It appears to us that
justifiably so at that time, the conclusion in Bhaskaran was
influenced in large measure by curial compassion towards the
0
unpaid payee/holder, whereas with the passage of two decades
the manipulative abuse of territorial jurisdiction has become a
recurring and piquant factor. The liberal approach preferred in
Bhaskaran now calls for a stricter interpretation of the statute,
precisely because of its misemployment so far as choice of E
place of suing is concerned. These are the circumstances which
have propelled us to minutely consider the decisions rendered
by two-Judge Benches of this Court.
4. It is noteworthy that the interpretation to be imparted to
Section 138 of the NI Act also arose before a three-Judge F
Bench in Shri lshar Alloy Steels Ltd. v. Jayaswals Neco Ltd.
(2001) 3 SCC 609 close on the heels of Bhaskaran. So far
as the factual matrix is concerned, the dishonoured cheque had
been presented for encashment by the Complainant/holder in
his bank within the statutory period of six months but by the time G
it reached the drawer's bank the aforementioned period of
limitation had expired. The question before the Court was
whether the bank within the postulation of Section 138 read with .
Sections 3 and 72 of the NI Act was the drawee bank or the
collecting bank and this Court held that it was the former. It was H
934 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A observed that "non~presentation of the cheque to the drawee·
bank within the period specified in the Section would absolve
the person. issuing the cheque of his criminal liability under
Section 138 of the NI Act, who otherwise may be liable to pay
''
the cheque amount to the payee in a civil action initiated under
B the law. A combined reading of Se.ctions 3, 72 and 138 of the
NI Act would leave no doubt in our mind that the law mandates
the cheque to be presented at the bank on which it is drawn if
the drawer is to be held criminally liable." Clearly, and in our
considered opinion rightly, :the Section had been rendered
c 'accused-centric'. This deci~ion clarifies that.the piace where
a complainant may present t~e cheque for encashrnent would
not confer or create territori~I jurisdiction, and in this respect
runs counter to the essence of Bhaskaran which paradoxically,
in our opinion, makes actions of the Complainant an integral
nay nuclear constituent of the crime itself.· ·
D , I
5. The principle of precedence should promptly and
precisely be paraphrased. A co-ordinate Bench is bound to
follow the previously published view; it is certainly competent
to add to the. precedent to make it logically and dialectically
E compelling. However, once a decision of a larger Bench has
been delivered it is that decision which mandatorily has to be
applied; whereas a Co-ordinate Bench, in the event that it finds
itself unable to agree with an existing ratio, is competent to
recommend the precedent for reconsideration by referring the
. F case to the Chief Justice for constitution of a larger Bench.
Indubitably, there are a number of decisions by two-Judge
. Benches on Section 138 of the NI Act, the majority of which
apply Bhaskaran without noting or distinguishing on facts /shar
Alloy. In our opinion, it is imperative for the Court to diligently
G distill and then apply .the ratio of a decision; and the view of a
larger Bench ought not to be disregarded. Inasmuch as the '''
three-Judge Bench in /shar Alloy has categorically stated that
for criminal liability to be attracted, the subject cheque has to
be presented to the bank on which it is drawn within the
H · prescribed period, Bhaskaf<!n has been significantly whittled .. ,:·
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
935
down if not overruled. Bhaskaran has also been drastically A
diluted by Harman inasmuch as it has given primacy to the
service of a notice on the Accused instead of its mere issuance
by the Complainant.
6. In Prem Chand Vijay Kumar v. Yashpal Singh (2005)
4 SCC 417, another two-Judge Bench held that upon a notice B
under Section 138 of the NI Act being issued, a subsequent
presentation of a cheque and its dishonour would not create
another 'cause of action' which could set the Section 138
machinery in motion. In that view, if the period of limitation had
run out, a fresh notice of demand was bereft of any legal C
efficacy. SIL Import, USA v. Exim Aides Silk Exporters (1999)
4 sec 567 was applied in which the determination was that
since the requisite notice had been despatched by FAX on
26.6.1996 the limitation for filing the Sectio!J 138 Complaint
expired on 26.7.1996. What is interesting is the observation that D
"four constituents of Section 138 are required to be proved to
successfully prosecute the drawer of an offence under Section
138 of the NI Acr (emphasis supplied). It is also noteworthy that
instead of the five Bhaskaran concomitants, only four have
been spelt out in the subsequent judgment in Prem Chand. E
The commission of a crime was distinguished from its
prosecution which, in our considered opinion, is the correct
interpretation of the law. In other words, the four or five·
concomitants· of the Section have to be in existence for the
initiation as well as the successful prosecution of the offence, F
which offence however comes into existence as soon as
subject cheque is dishonoured by the drawee bank. Another
two-Judge Bench in Shamshad Begum v. B. Mohammed
(2008) 13 SCC 77 speaking through Pasayat J this time around
applied Bhaskaran and concluded that since the Section 138 G
notice was issued from and replied to Mangalore, Courts in that
city possessed territorial jurisdiction. As already noted above,
this view is not reconcilable with the later decision of Harman.
7. The two-Judge Bench decision in Mosaraf Hossain
Khan v. Bhagheeratha Engg. Ltd. (2006) 3 SCC 658 requires
H-
936 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A to be discussed in some detail. A Complaint under Section 138
of the NI Act was filed and cognizance was taken by the Chief
Judicial Magistrate, Hirbhum at Suri, West Bengal for the
dishonour of a number of cheques issued by the accused-
company which had its headquarters in Ernakulam, Kerala
B where significantly the accused-company's bank on whom the
dishonoured cheques had been drawn was located. Several
judgments were referred to, but not Bhaskaran. The third
ingredient in Bhaskaran;. i.e. the returning of the chequ·e unpaid
by the drawee bank, was not reflected upon. Inasmuch as
c Mosaraf Hossain refers copiously to the cause of action
having arisen in West Bengal without adverting at all to
Bhaskaran, leave aside the three-Judge Bench decision in
lshar Alloy, the decision may be seen as per incuriam.
Moreover,.the concept of forum non conveniens has no role
to play under Section 138 of the NI Act, and furthermore that it
0
can certainly be contended by the accused-company that it was
justifiable/convenient for it to initiate litigation in Ernakulam. If
Bhaskaran was followed, Courts in Ernakulam unquestionably
possessed territorial jurisdiction. It is, however, important to
italicize that there was an unequivocal endorsement of the
E Bench of a previously expressed view that, "where the territorial
jurisdiction is concerned the niain factor to be considered is
the place where the alleged offence was committed". In similar
·vein, this Court has opined in Om Hemrajani v. State of U.P.
(2005) 1SCC617, in the context of Sections 177 to 180 CrPC
F that "for jurisdiction eniphasis is on the place where the offence
is committed."
8. The territorial jurisdiction conundrum which, candidly is
currently in the cauldron owing to varying if not conflictfng ratios,
G has been cogitated upon very recently by a two-Judge Bench
in Criminal Appeal No.808 of 2013 titled Nishant Aggarwal v.
Kailash Kumar Sharma decided on 1.7.2013 and again by the
same Bench in Criminal Appeal No.1457 of 2013 titled
Escorts Limited v. Rama Mukherjee decided on 17.09.2013.
H Bhaskaran was followed and lshar Alloy and Harman were ·
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
937
explained. In Nishant the Appellant issued a post-dated cheque A
drawn on Standard Chartered Bank, Guwahati in favour of
complainant-respondent. It appears that the Appellant had
endeavoured to create a case or rather a defence by reporting
to his bank in Guwahati as well as to the local police station
that 'one cheque (corresponding to the cheque in question) was B
missing and hence payment should be stopped.' The
Respondent-drawer was a resident of District Bhiwani,
Haryana; he presented the cheque for encashment at Cana~a
Bank, Bhiwani but it was returned unpaid. The holder then
issued a legal notice which failed to elicit the demanded sum c
of money corresponding to the cheque value, and thereupon
followed it by the filing of a criminal complaint under Sections
138 and 141 of the NI Act at Bhiwani. The Judicial Magistrate,
Bhiwani, vide order dated 5.3.2011, concluded that the court
in Bhiwani did not possess territorial jurisdiction and he D
accordingly returned the complaint for presentation before the
proper Court. The five concomitants of Section 138 extracted
in Bhaskaran, were reiterated and various paragraphs from if
were reproduced by this Court. Nishant also did not follow
lshar Alloy which, as already analysed, has concluded that the E
second Bhaskaran concomitant, namely, presentation. of
cheque to the bank refers to the drawee bank and not the
holder's bank; is not primarily relevant for the determination of
territorial jurisdiction. Nishant distinguished lshar Alloy on the
predication that the question of territorial jurisdiction had not
been raised in that case. It is axiomatic that when a Court F
interprets any statutory provision, its opinion must apply to and
be determinate in all factual and legal permutations and
situations. We think that the dictum in lshar Alloy is very
relevant and conclusive to the discussion in hand. It also justifies
·emphasis that lshar Alloy is the only case before us which was G
decided by a three-Judge Bench and, therefore, was binding
on all smaller Benches. We ingeminate that it is the drawee
Bank and not the Complainant's Bank which is postulated in
the so-called second constituent of Section 138 of the NI Act,
and it is this postulate that spurs us towards the conclusion that H
938 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A we have arrived at in the present Appeals. There is also a
discussion of Harman to reiterate that the offence under
Section 138 is complete only when the five factors are present.
It is our considered view, which we shall expound upon, that the
offence in the contemplation of Section 138 of the NI Act is the
B dishonour of the cheque alone, and it is the concatenation of
.the five concomitants of that Section that enable the prosecution
of the offence in contradistinction to the completion/commission
of the offence.
C 9. We have also painstakingly perused Escorts Limited
which was also decided by the Nishant two-Judge Bench.
Previous decisions were considered, eventually leading to the
conclusion that since the concerned cheque had been
presented for encashment at New Delhi, its Metropolitan
. Magistrate possessed territorial jurisdiction to entertain and
D decide the subject Complaint under Section 138 of the NI Act.
Importantly, in a subsequent order, in FIL Industries Ltd. v.
lmtiyaz Ahmed Bhat passed on 12th August 2013, it was
decided that the place from where the statutory notice had
emanated would not of its own have the consequence of vesting
E jurisdiction upon that place. Accordingly, it bears repetition that
the ratio in Bhaskaran has been drastically ·diluted in that the
situs of the notice, one of the so-called five ingredients of
Section 138, has now been held not to clothe that Court with
territorial competency. The conflicting or incongruent opinions
F need to be resolved.
JUDICIAL APPROACH ON JURISDICTION
10. We shall take a short digression in terms of brief
discussion of the approach preferred by this Court in the context
G of Section 20 of the Code of Civil Procedure, 1908 (hereinafter
referred to as, 'CPC'), which inter alia, enjoins that a suit must
be instituted in a court within the local limits of whose jurisdiction
the Defendant actually and voluntarily resides, or carries on
business, or personally works for gain, or where the cause of
H action wholly or in· part arises. The Explanation to that Section .
'
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
939
is important; it prescribes that a corporation shall be deemed · A
to carry on business at its sole or principal office, or, in respect
of any cause of action arising at any place where it has also a
subordinate office, at sue~ place. Since this provision primarily
keeps the Defendant in perspective, the corporation spoken of
in the Explanation, obviously refers to the Defendant. A plain B
reading of Section 20 of the CPC arguably allows the Plaintiff
a multitude of choices in regard to where it may institute its lis,
suit or action. Corporations and partnership firms, and even
sole proprietorship concerns, could well be transacting business
simultaneously in several cities. If sub-sections (a) and (b) of c
Section 20 are to be interpreted disjunctively from sub-section
(c), as the use of the word 'or' appears to permitthe Plaintiff
to file the suit at any of the places where the cause of action
may have arisen regardless of whether the Defendant has even
a subordinate office at that place. However, if the Defendants' D
location is to form the fulcrum of jurisdiction, and it has an office
also at the place where the cause of action has occurred, it has
been held that the Plaintiff is precluded from instituting the suit
anywhere else. Obviously, this is also because every other place
would constitute a forum non conveniens. This Court has
harmonised the various hues of the conundrum of the place of E
suing in several cases and has gone to the extent of laying
down that it should be courts endeavour to locate the place
where the cause of action has substantially arisen and reject
others where it may have incidentally arisen. Patel Roadways
Limited, Bombay v. Prasad Trading Company, AIR 1992 SC F
=
1514 (1991) 4 SCC 270 prescribes that if the Defendant-
corporation has a subordinate office in the place where the
cause of action arises, litigation must be instituted at that place
alone, regardless of the amplitude of options pl:>stulated in
Section 20 of the CPC. We need not dilate on this point beyond G
making a reference to ONGC v: Utpal Kumar Basu (1994) 4
SCC 711 and South East Asia Shipping Co. Ltd. v. Nav Bharat
Enterprises Pvt. Ltd. (1996) 3 SCC 443.
11. We are alive to the possible incongruities that are H
940 SUPREME COURT REPORTS (2014] 11 S.C.R. •
A · fraught in extrapolating decisions relating to civil·law onto
criminal law, which includes importing the civil law concept of
"cause of action" to criminal law which essentially envisages
the place where a crime has been ·committed empowers the
Court at that place with jurisdiction. In Navinchandra N. Majithia
B v. State of Maharashtra (2000) 7 SCC 640 this Court had to
consider the powers of High Courts under Article 226(2) of the
Constitution of India. Noting the presence of the phrase "cause
of action" therein it was clarified that since some ev~nts central
to the investigation of the alleged crime asseverated in the
c Complaint had taken place in Mumbai and especially because
the fundamental grievance was the falsity of the Complaint filed
in Shillong, the writ jurisdiction of the Bombay High Court was
unquestionably available. The infusion of the concept of 'cause
of action' into the criminal dispensation has led to subsequent
confusion countenanced in High Courts. It seems to us that
0
Bhaskaran allows multiple venues to the Complainant which
runs counter to this Court's preference for simplifying the law.
Courts are enjoined to interpret the law so as to eradicate
ambiguity or nebulousness, and to ensure that legal
proceedings are not used as a device for harassment, even of .
E an apparent transgressor of the law. Law's erideavour is. to.
bring the culprit to book and to provide succo,ur for the
aggrieved party but not to harass the former through vexatious
proceedings. Therefore, precision and exactitude are
necessary especially where the location of a litigation is
F concerned.
RELEVANT PROVISIONS
12. Th~ provisions which will have to be examined and
G analysed are reproduced for facility of reference :
Negotiable Instruments Act. 1881
"138. Dishonour of cheque for insufficiency,
etc., of funds in the account-Where any cheque drawn
H by a person on an account maintained by him with a
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
941
banker for payment of any amount of money to another A
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 B
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 c
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 D
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, E
as the case may be, makes a demand for the
payment of the said amount of money liy 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 F
(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 G
the said notice.
Explanation. For the purposes of this section, "debt
or other liability" means a legally enforceable debt or other
liability.
H
942 SUPREME COURT REPORTS (2014] 11 S.C.R.
••
A 142. Cognizance of offences.-Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of
1974)-
(a) no court shall take cognizance of any offence
punishable under section 138 except upon a
8
complaint, in writing, made by the payee or, as the
case may be, the holder in due course of the
cheque;
{b) such complaint is made within one month of the
c date on which the cause of action arises under
clause (c) of the proviso to section 138;
Provided that the cognizance of a complaint may
be taken by the Court after the prescribed period,
D if the complainant 'satisfies the Court that he had
sufficient cause for not making a complaint within
such period.
(c) no court inferior to that of a Metropolitan Magistrate
or a Judicial Magistrate of the first class shall try any
E offence punishable under section 138."
Code of Criminal Procedure. 1973
"177. Ordinary place of inquiry and trial.- Every offence
shall ordinarily be inquired into and tried by a Court within
F
whose local jurisdiction it was committed.
178. Place of inquiry or trial.- (a) When it is uncertain in
which of several [ocal areas an offence was committed,
or
G
(b) where an offence is committed partly in one local
area and partly in another, or ·
(c) where an offence is a continuing one, and
continues to be committed in more local areas than one,
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
943
or A
(d) where it consists of several acts done in different
local areas,
it may be inquired into or tried by a Court having
jurisdiction over any of such local areas. B
179. Offence triable where .act is done or
consequence ensues.- When an act is an offence by
reason. of anything which has been done and of a
consequence which has ensued, the offence may be c
inquired into or tried by a Court within whose local
jurisdiction such thing has been done or such
consequence has ensued."
PARLIAMENTARY DEBATES
D
13. The XVll!h fasciculus of the Negotiable Instruments Act
containing Sections 138 to 142 was introduced into the statute
in 1988. The avowed intendment of the amendment was to
enhance the acceptability of cheques. It was based on the
Report of the Committee on Banking Laws by Dr. Rajamannar, E
submitted in 1975, which suggested, inter a/ia, penalizing the
issuance of cheque without sufficient funds. The Minister of
Finance had assuaged apprehensions by arguing that
safeguards for honest persons had been incorporated in the
provisions, viz., (i) the cheque should have been issued in F
discharge of liability; (ii) the cheque should be presented within
its validity period; (iii) a Notice had to be sent by the Payee
demanding payment within 15 days of receiving notice of
dishonour; (iv) the drawer was allowed to make payment within
15 days from the date of receipt of notice; (v) Complaint was G
to be made within one month of the cause of action arising; (vi)
no Court inferior to that of MM or JMFC was to try the offence.
The Finance Minister had also stated that the Court had
discretion whether the Drawer would be imprisoned or/and
H
944 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
'
A fined. Detractors, however, pointed out that the IPC already
envisioned criminal liability for cheque-bouncing where
dishonest or fraudulent intention or mens rea on part of the
Drawer was evident, nameiy, cheating, fraud, criminal breach
of trust etc. Therefore, there was no justification to make the
B dishonour ofcheques a criminai'offence, ignoring factors like
illiteracy, indispensable necessities, honest/innocent mistake,
_bank frauds, bona fide belief, and/or unexpected attachment ·
or freezing of account in any judicial proceedings as it would
bring even honest persons within the ambit of Section 138 NI
c Act. The possibility of abusing the provision as a tool of
harassment could also not be ruled out. Critics also decried the
punishment for being harsh; that civil liability can never be
converted into criminal liability; that singling out cheques out of
all other negotiable instruments would be violative of Article 14
of Constitution of India. Critics contended that there was
D insufficient empirical enquiry into statutes or legislation in
foreign jurisdictions criminalizing the dishonour of cheques and
statistics had not been made available bearing out that
criminalization would increase the acceptability of cheque. The
Minister of Finance was not entirely forthright when he stated
E in Parliament that the drawer was also allowed sufficient
opportunity to say whether the dishonour was by mistake. It must
be borne ih mind that in the U.K. deception and dishonesty are
key elements which require to be proved. In the USA, some
States have their own laws, requiring fraudulent intent or
F knowledge of insufficient funds to be made good. France has
criminalized and subsequently decriminalized the dishonour
except in limited circumstances. Instead, it provides for
disqualification from issuing cheques, a practice which had
been adopted in Italy and Spain also. We have undertaken this
G succinct study mindful of the fact that Parliamentary debates
have a limited part to play in interpretation of statutes, the
presumption being that Legislators have the experience,
expertise and language skills to draft laws which unambiguously
convey their intentions and expectations for the enactments:·
H What is palpably clear is that Parliament was aware that they
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [V1KRAMAJIT SEN, J.]
945
were converting civil liability into criminal content inter alia by A
the deeming fiction of culpability in terms of the pandect
comprising Section 138 and the succeeding Sections, which
severely curtail defences to prosecution. Parliament was also
aware .that the offence of cheating etc., already envisaged in
the IPC, continued to be available. B
CIVIL LAW CONCEPTS NOT STRICTLY APPLICABLE
14. We have already cautioned against the extrapolation
of civil law concepts such as "cause of action" onto criminal law.
Section 177 of the CrPC unambiguously states that every C
offence shall ordinarily be inquired into and tried by a Court ·
within whose local jurisdiction it was committed. "Offence", by
virtue of the definition ascribed to the word by Section 2(n) of ·
the CrPC means any act or omission made punishable by any
law. Halsbury states that the venue for the trial of a crime is D
confined to the place of its occurrence. Blackstone opines that
crime is lqcal and jurisdiction over it vests in the Court and
Country where the crime is committed. This is obviously the
raison d'etre for the CrPC making a departure from the CPC
in not making the "cause of action" routinely relevant for the E
detenmination of territoriality of criminal courts. The word "action"
has traditionally been understood to be synonymous ..to."'suit",
or as ordinary proceedings in a Court of justice for enforcement ·
or protection of the rights of the initiator of the proceedings.
"Action, generally means a litigation in a civil Court for the F
recovery of individual right or redress of individual wrong,
inclusive, in its proper legal sense, of suits by the Crown" -
[Bradlaugh v. Clarke 8 Appeal Cases 354 p.361]. Unlike civil
actions, where the Plaintiff has the burden of filing and proving
its case, the responsibility of investigating a crime, marshalling G
· evidence and witnesses, rests with the State. Therefore, while
the convenience of the Defendant in a civil action may be
relevant, the convenience of the so called complainant/victim
has little or ·no role to play in criminal prosecution. Keeping in
perspective the presence of the word "ordinarily" in Section 177 H
946 SUPREME COURT REPORTS [2014) 11 S.C.R. •
A of CrPC, we hasten to adumbrate that the exceptions to it are
contained in the CrPC itself, that is, in the contents of the
·succeeding Section 178. The CrPC also contains an
explication of "complaint" as any allegation to a Magistrate with
a view to his taking action in respect of the commission of an
B offence; not being a police report. Prosecution ensues from a
Complaint or police report for the purpose of determining the
culpability of a 'person accused of the commission of a crime;
and unlike a civil action or suit is carried out (or 'prosecuted')
by the State or its nominated agency. The principal definition
c of "prosecution" imparted by Black's Law Dictionary 5th Edition
is "a criminal action; the proceeding instituted and carried on
by due process of law, before a competent Tribunal, for the
purpose of determining the guilt or innocence of a person
charged with crime." These reflections are necessary because·
Section 142(b) of the NI Act contains the words, "the cause of
0
action arises under the proviso to Section 138", resulting
arguably, but in our opinion irrelevantly, to the blind borrowing
of essentially civil law attributes onto criminal proceedings. We
reiterate thatSection 178 admits of no debate that in criminal
E prosecution, the concept of "cause of action", being the bundle
of facts required to be proved in a suit and accordingly also
being relevant for the place of suing, is not pertinent or germane
for determining territorial jurisdiction of criminal Trials. Section
178, CrPC explicitly states that every offence shall ordinarily be
inquired into and tried by a Court within whose local jurisdiction
F it was committed. Section 179 is of similar tenor. We are also
unable to locate any provision of the NI Act which indicates or
enumerates the extraordinary circumstances which would justify
a departure from the stipulation that the place where the offence
is committed is where the prosecution has to be conducted. In
G fact,· since cognizance of the offence is subject to the five
Bhaskaran components or concomitants the concatenation of
which ripens the already committed offence under Section 138
NI Act into a prosecutable offence, the employment of the
phrase "cause of action" in Section 142 of the NI Act is apposite
H for taking cognizance, but inappropriate and irrelevant for
•• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
947
determining commission of the subject offence. There are A
myriad examples of the commission of a crime the prosecution
of which is dependent on extraneous contingencies such as
obtainment of sanction for prosecution under Section 19 of the
Prevention of Corruption Act 1988. Similar situation is statutorily
created by Section 19 of the Environmental Protection Act B
1986, Section 11 of the Central Sales Tax Act 1956, Section
279 of the Income Tax Act, Sections 132 and 308, CrPC,
Section 137 of the Customs Act etc. It would be idle to contend
that the offence comes into existence only on the grant of
permission for prosecution, or that this permission constitutes c
an integral part of the offence itself. It would also be futile to
argue that the place where the permission is granted would
provide the venue for the trial. If sanction is not granted the
offence does not vanish. Equally, if sanction is granted from a
place other than where the crime is committed, it is the latter
0
which will remain the place for its prosecution.
SECTION 138 NI ACT
15. The marginal note of Section 138 of the NI Act explicitly
defines the offence as being the dishonour of cheques. for E
insufficiency, etc., of funds in the account. Of course, the
headings, captions or opening words of a piece of legislation
are normally not strictly or comprehensively determinative of the
sweep of the actual Section itself, but it does presage its
intendment. See: Frick India Ltd. v. Union of India (1990) 1 SCC F
400 and Forage & Co. v. Municipal Corporation of Greater
Bombay (1999) 8 SCC 577. Accordingly, unless the provisions
of the Section clearly point to the contrary, the offence is
concerned with the dishonour of a cheque; and in the conundrum
before us the body of this provision speaks in the same timbre G
since it refers to a cheque being "returned by the bank unpaid".
None of the provisions of the IPC have been rendered nugatory
by Section 138 of the NI Act and both operate on their own. It
is trite that mens rea is the quintessential of every crime. The
objective of Parliament was to strengthen the use of cheques,
H
948 SUPREME COURT REPORTS (2014) 11 S.C.R.
•
A distinct from other negotiable instruments, as mercantile tender
and therefore it became essential for the Section 138 NI Act
offence to be freed from the requirement of proving mens rea.
This has been achieved by deeming the commission of an.
offence de hors mens rea not only under Section 138 but also
s by virtue of the succeeding two Sections. Section 139 carves
out the presumption that the holder of a cheque has received
it for the discharge of any liability. Section 140 clarifies that it
will not be available as a defence to the drawer that he had no
reason to believe, when he issued the cheque, that it would be
C dishonoured. Section 138 unequivocally states that the offence
is committed no sooner the drawee bank returns the cheque
unpaid.
16: Section 138 NI Act is structured in. two parts - the
primary and the provisory. It must be kept in mind that the
D Legislature does not ordain with one hand and immediately
negate it with the other. The proviso often carves out a minor
detraction or diminution of the main provision of which it is an
appendix or addendum or auxiliary. Black Law Dictionary states
in the context of a proviso that it is - "a limitation or exception
E to a grant made or authority conferred, the effect of which is to ·
declare that the one shall not operate, or the other be
exercised, unless in the case provided ..... A clause or part of
a clause in a statute, the office of which. is either to except
something from the enacting clause, or to qualify or restrain its
F generality, or to exclude some possible ground of
misinterpretation of its extent." It should also be kept in
perspective that a proviso or a condition are synonymous. In
our perception in the case in hand the contents of the proviso
place conditions on the operation of the main provision, while
G it does form a constituent of the crime itself, it modulates or
regulates the crime in circu·mstances where, unless its
provisions are complied with, the already committed crime
remains impervious to prosecution. The proviso to Section 138
of the NI Act features three factors which are additionally
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
949
required for prosecution to be successful. In this aspect Section A
142 correctly employs the term "cause of action" as compliance
with the three factors contained in the proviso are essential for
the cognizance of the offence, even though they are not part of
the action constituting the crime. To this extent we respectfully
concur with Bhaskaran in that the concatenation of all these B
concomitants, constituents or ingredients of Section 138 NI Act,
is essential for the successful initiation or launch of the
prosecution. We, however, are of the view that so far as the
offence itself the proviso has no role to play. Accordingly a
reading of Section 138 NI Act in conjunction with Section 177, C
CrPC leaves no manner of doubt that the return of the cheque
by the drawee bank alone constitutes the commission of the
offence and indicates the place where the offence is
committed.
17. In this analysis we hold that the place, situs or venue D
of judicial inquiry and trial of the offence must logically be
restricted to where the drawee bank, is located. The law should
not be warped for commercial exigencies. As it is Section 138
of the NI Act has introduced a deeming fiction of culpability,
even though, Section 420 is still available in case the payee E
finds it advantageous or convenient to proceed under that
provision. An interpretation should not be imparted to Section
138 which will render it as a device of harassment i.e. by
sending notices from a place which has no casual connection
with the transaction itself, and/or by presenting the cheque(s) F
at any of the banks where the payee may have an account. In
our discernment, it is also now manifest that traders and.
businessmen have become reckless and incautious in
extending credit where they would heretofore have been
extremely hesitant, solely because of the availability of redress G
by way of criminal proceedings. It is always open to the creditor
to insist that the cheques in question be made payable at a
place of the creditor's convenience. Today's reality is that the
every Magistracy is inundate(l with prosecutions under Section
138 NI Act, so much so that the burden is becoming unbearable
H
950 SUPREME COURT REPORTS [2014) 11 S.C.R.
A and detrimental to the disposal of other equally pressing
•
litigation. We think that Courts are not required to twist the law
to give relief to incautious or impetuous persons; beyond
Section 138 of the NI Act.
18. We feel compelled to reiterate our empathy with a
8 payee who has been duped or deluded by a swindler into
accepting a cheque as consideration for delivery of any of his
property; or because of the receipt of a cheque has induced
the payee to omit to do anything resulting in some damage.to
the payee. The relief introduced by Section 138 of the NI Act
C is in addition to the contemplations in the IPC. It is still open to
such a payee recipient of a dishonoured cheque to lodge a
First Information Report with the Police or file a Complaint
directly before the concerned Magistrate. If the payee succeeds
irt establishing that the inducement for accepting a cheque
D which subsequently bounced had occurred where he resides
or ordinarily transacts business, he will not have to suffer the
travails of journeying to the place where the cheque has been
dishonoured. All remedies under the IPC and CrPC are
·available to such a payee if he chooses to pursue this course
E of action, rather than a Complaint under Section 138 of the NI
Act. And of course, he can always file a suit for recovery
wherever the cause of action arises dependent on his choosing.
19. The interpretation of Section 138 of the NI Act which
F commends itself to us is that the offence contemplated therein
stands committed on the dishonour of the cheque, and
accordingly the JMFC at the place where this occurs is
ordinarily where the Complaint must be filed, entertained and
tried. The cognizance of the crime by the JMFC at that place
however, can be taken only when the concomitants or
G constituents contemplated by the Section concatenate with
each other. We clarify that the place of the issuance or delivery
of the statutory notice or where the Complainant chooses to
present the cheque for encashment' by his bank are not relevant
for purposes of territorial jurisdiction of the Complaints even
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
951
though non-compliance thereof will inexorably lead Ip the A
dismissal of the complaint. It cannot be contested that
considerable confusion prevails on the interpretation of Section
138 in particular and Chapter XVII in general of the NI Act. The
vindication of this view is duly manifested by the decisions and
conclusion arrived at by the High Courts even in the few cases B
that we shall decide by this Judgment. We clarify that the
Complainant is statutorily bound to comply with Section 177
etc. of the CrPC and therefore the place or situs where the
Section 138 Complaint is to be filed is not of his choosing. The
territorial jurisdiction is restricted to the Court within whose local c
jurisdiction the offence was committed, which in the present
con.text is where the cheque is dishonoured by the bank on
which it is drawn.
20. We are quite alive to the magnitude of the impact that
the present decision shall have to possibly lakhs of cases D
pending in various Courts spanning across the country. One
approach could be to declare that this judgment will have only
prospective pertinence, i.e. applicability to Complaints that may
be filed after this pronouncement. However, keeping in
perspective the hardship that this will continue to bear on E
alleged accused/respondents who may have to travel long
distances in conducting their defence, and also mindful of the
legal implications of proceedings being permitted to continue
in a Court devoid of jurisdiction, this recourse in entirety does
not commend itself to us. Consequent on considerable F
consideration we think it expedient to direct that only those
cases where, post the summoning and appearance of th'e
alleged Accused, the recording of evidence has commenced
as envisaged in Section 145(2) of the Negotiable Instruments
Act, 1881, will proceeding continue at that place. To clarify, G
regardless of whether evidence has been led before the
Magistrate at the pre··summoning stage, either by affidavit or
by oral statement, the Complaint will be maintainable only at
the place where the cheque stands dishonoured. To obviate and
eradicate any legal complications, the category of Complaint H
952 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A cases where proceedings have gone to the stage of Section
145(2) or beyond shall be deemed to have been transferred
by us from the Court ordinarily possessing territorial jurisdiction,
as now clarified; to the Court where it is presently pending. All
other Complaints (obviously ineluding those where the accused/
B respondent has not been properly served) shall be returned to
the Complainant for filing in the proper Court, in consonance
with our exposition of the law. If such Complaints are filed/refiled
within thirty days of their return, they shall be deemed to have
been filed within the time prescribed by law, unless the initial
c or prior filing Was itself time barred. ·
- ' '
DISPOSAL OF PRESENT APPEALS
I
Crl. Appeal No.2287 of 2009
D 21. A learned Single Judge of the High Court of Judicature
at Bombay, Nagpur Bench-has, pursuant to a threadbare
discussion of Bhaskaran concluded that since the concerned
cheque was drawn on the Bank of India, Bhandara Branch,
Maharashtra where it was dishonoured, the Judicial Magistrate
E First Class, Digras, District Yavatmal had no jurisdiction to
entertain the Complaint. It is pertinent to note that th_e subject
cheque was presented at Digras, District Yavatmal where the
Complainant had a bank account although he was a resident
of District Washim, Maharashtra. The learned Single Judge, in
the impugned judgment, had rightly rejected the argument that
F the Complaint itself should be dismissed; instead he ordered
that it be returned to the complainant for filing in the appropriate
Court. · ·
The Appeal is accordingly dismissed.
G
Crl. Appeal No. 1593 of 2014
[Arising out of S.L.P.(Crl.)No.2077 of 2009
- .
22. In this Appeal the Respondent-accused, having
H purchased electronic items' from the Appellant-company, issued
l
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
953
the cheque in question drawn on UCO Bank, Tangi, Orissa A
which was presented by the Complainant-company at State
Bank of India, Ahmednagar Branch, Maharashtra as its branch
office was located at Ahmednagar. The cheque was
dishonoured by UCO Bank, Tangi, · Orissa. A Complaint was
filed before JMFC, Ahmednagar. An application was filed by B
the Respondent-accused under Section 177 CrPC questioning
the jurisdiction of the JMFC Ahmednagar, who held that since
the demand notice was issued from and the payment was
claimed at Ahmednagar, he possessed jurisdiction to try the
Complaint. The High Court disagreed with the conclusion of the c
JMFC, Ahmednagar that the receipt of notice and non-payment
of the demanded amount are factors which will have
prominence over the place wherefrom the notice of demand
was issued and held that JMFC, Ahmednagar did not have the
territorial jurisdiction·to entertain the Complaint. In view of the D
foregoing discussion on the issue above, the place where the
concerned cheque had been dishonoured, which in the case
. in hand was Tangi, Orissa, the Appeal is allowed with the
direction that the Complaint be returned to the Complainant for
further action in accordance with law.
E
Crl. Appeal Nos. 1594. 1595. 1601. 1602 &1603 of 2014
[Arising out of S.L.P.(Crl.)Nos.2112 of 2009 an(j 2117 of 2009;
3762 of 2012; 3943 of 2012; 3944 of 2012]
F
23. The facts being identical to Criminal Appeal arising out
of S.L.P.(Crl.)No.2077 of 2009, these Appeals stand
dismissed.
Crl. Appeal Nos. 1596-1600 of 2014 G
[Arising out of S.L.P.(Crl:)Nos.1308-1312 of 2009]
24. The Appellant-complainant herein has its Registered
Office in Delhi from where the Respondents-accused are also
carrying on their business. The cheques in question were H
954 SUPREME COURT REPORTS [2014) 11 S.C.R.
•
A issued by the Respondent No.2-accused drawn on Indian
Overseas Bank, Connaught Place, New Delhi. However, the
same were presented and dishonoured at Nagpur, Maharashtra
where the Complainant states it also has an office. There is no
clarification why the cheques had not been presented in Delhi
B where the Complainant had its Registered Office, a choice
which we think is capricious and perfidious, intended to cause
harassment. Upon cheques having been dishonoured by the
concerned bank at Delhi, five Complaints were filed before
Judicial Magjstrate First Class, Nagpur who heard the
c Complaints, and also recorded the evidence led by both the
parties. However, the JMFC, Nagpur acquitted the Respondent
No.2-accused on the ground of not having territorial jurisdiction.
On appeals being filed before the High Court of Bombay, the
judgment of the JMFC, Nagpur was partly set aside so far as
D the acquittal of the Respondent No.2-accused was concerned
and it was ordered that the Complaints be returned for filing
before the proper Court. In view of the conclusion arrived at by
us above, these Appeals are also dismissed.
Crl. Appeal No. 1604 of 2014
E
[Arising out of S.L.P.(Crl.)No.59 of 2013)
I
25. The cheque in question was drawn by the Respondent-
accused on State Bank of Travancore, Delhi. However, it was
F presented by the Appellant-complainant at Aurangabad. A
Complaint was filed before JMFC, Aurangabad who issued
process. Respondent-accw;;ed filed an application under
Section 203 of CrPC seeking dismissal of the Complaint. The
application was dismissed on the predication that once
process had been initiated, the Complaint could not be
G dismissed. On a writ petition being filed before the High Court
of Bombay, Aurangabad Bench, the order of issuance of
process was set aside and the Complaint was ordered to be
returned for being presented before a competent court having
jurisdiction to entertain the same. The High Court had correctly
H noted that the objection pertained to the territorial jurisdiction
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [VIKRAMAJIT SEN, J.]
955
of the JMFC, -Aurangabad, a feature which· had not been A
comprehensively grasped by the latter. The High Court no"ted
that the Registered Office of the Complainant was at Chitegaon,
Tehsil Paithan, District Aurangabad whereas the Accused was
transacting business from Delhi. The High Court pithily
underscored that in paragraph 4 of the Complaint it had been B
specifically contended that credit facility was given to the
Accused in Delhi, where the Complainant-company also had
its branch office. The statutory notice had also emanated from
Aurangabad, and it had been demanded that payment should
be made in that city within the specified time. It was also the c
Complainant's case that the Invoice, in case of disputes,
restricted jurisdiction to Aurangabad courts; that intimation of
the bouncing of the cheques was received at Aurangabad. It
is however necessary to um;!erscore that the Accused had
clarified that the subject transaction took place at Delhi where D
the goods were supplied and the offending cheque was handed
over to the Complainant. It appears that a Civil Suit in respect
of the recovery of the cheque amount has already been filed in
Delhi. We may immediately reiterate that the principles
pertaining to the cause of action as perceived in civil law are
not relevant in criminal prosecution. Whilst the clause restricting E
jurisdiction to courts at Aurangabad may have efficacy for civil
proceedings, provided any part of the cause of action had
arisen in Aurangabad, it has no bearing on the situs in criminal
prosecutions. Since a Civil Suit is pending, we hasten to clarify
that we are not expressing any opinion on the question of F
whether the courts at Delhi enjoy jurisdiction to .try the Suit for
recovery. In the impugned judgment, the High Court duly noted
. Bhaskaran and Harman. However, it committed an error in
analyzing the cause of action as well as the covenant restricting
jurisdiction to Aurangabad as these are relevant only for civil G
disputes. However, the impugned judgment is beyond
interference inasmuch as it concludes that the JMFC,
Aurangabad has no jurisdiction over the offence described in
the Complaint. The Appeal is accordingly dismissed.
H
956 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A T.S. THAKUR, J. 1. I have had the advantage of going
through the draft order proposed by my esteemed brother
Vikramajit Sen, J. I entirely agree with the conclusions which
my erudite brother has drawn based on a remarkably articulate
process of reasoning that illumines the draft judgment authored
B by him. I would all the same like to add a few lines of my own
not because the order as proposed leaves any rough edges
to be ironed out but only because the question of law that arises
for determination is not only substantial but of considerable
interest and importance for the commercial world. The fact that
c the view being taken by us strikes a discordant note on certain
aspects which have for long been considered settled by earlier
decisions of this Court being only an additional reason for the
modest addition that I propose 1o make. Of these decisions
Bhaskaran's case stands out _as the earliest in which this
Court examined the vexed question of territorial jurisdiction of
0
the Courts to try offence~ punishable _under Section 138 of the
Negotiable Instruments Act, 1881 (hereinafter called "NI Act").
Bhaskaran's case was heard by a two-judge Bench of this
Court who took the. view that the jurisdiction to try an offence
under Section 138 could not be determined only by reference
E to the place where the cheque was dishonoured. That is
because dishonour of the cheque was not by itself an offence
under Section 138 of The Negotiable Instruments Act, 1881,
observed the Court. The offence is complete only when the
drawer fails to pay the cheque amount within the period of
F fifteen days stipulated under clause (c) of the proviso to Section
138 of the Act. Having said that the Court recognised the
difficulty in fixing a place where such failure could be said to
have taken place. It could, said the Court, be the place where
the drawer resides or the place where the payee resides or the
G place where either of them carries on business. To resolve this
uncertainty the Court turned to Sections 178 and 179 of the
Cr.P.C. to hold that since an offence under Section 138 can
be completed only with the .concatenation of five acts that
constituted the components of the offence any Court within
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
957
whose jurisdiction any one of those acts was committed would A
have the jurisdiction to try the offence. The Court held:
"The offence under Section 138 of the Act can be
completed only with the concatenation of a number of
acts. The following are the acts which are components of B
the said offence: (1) drawing of the cheque, (2)"
presentation of the cheque to the bank, (3) returning the
cheque unpaid by the drawee bank, (4) giving notice in
writing to the drawer of the cheque demanding payment
of the cheque amount, (5) failure of the drawer to make C
payment within 15 days of the receipt of the notice.
It is not necessary that all the above five acts should have
been perpetrated at the same locality. It is possible that
each of those five acts could be done at five different
localities. But a concatenation of all the above five is a D
sine qua non for the completion of the offence under
Section 138 of the Code. In this context a reference to
Section 178(d) of the Code is useful. It is extracted below:
"178. (a)-(c) • • •
E
(d) where the offence consists of several acts done
in different local areas, it may be enquired into or
tried by a court having jurisdiction over any of such
local areas."
F
Thus it.is clear, if the five different acts were done in five
different localities any one of the courts exercising
jurisdiction in one of the five local areas can become the
place of trial for the offence under Section 138 of the Act.
In other words, the complainant can choose any one of G
those courts having jurisdiction over any one of the local
areas within the territorial limits of which any one of those
five acts was done. As the amplitude stands so widened
and so expansive it is an idle exercise to raise
H
958 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
'"
A jurisdictional question regarding the offence under
Section 138 of the Act."
2. Bhaskaran held the field for two years. The first blow
to the view taken by this Court in Bhaskaran's case was dealt ·
B py a three-Judge Bench decision in Shri lshar Alloy Steels
Ltd. v. Jayaswals Neco Ltd. (2001) 3 SCC 609. The
question that arose in that case was whether the limitation of
six months for presentation of a cheque for encashment was
applicable viz-a-viz presentation to the bank of the payee or
c that of the drawer. High Courts in this country had expressed
conflicting opinions on the subject. This Court resolved the
cleavage in those pronouncements by holding that the cheque
ought to be presented to the drawee bank for its dishonour to
provide a basis for prosecution under Section 138. The Court
observed:
0
"The use of the words •a bank" and "the bank".in the
section are an indicator of the intention of the legislature.
"The bank" referred to in proviso (a) to the proviso to
Section 138 of the Act would mea17 the drawee bank on
E which the cheque is drawn and not all banks where the
cheque is presented for collection including the bank of
the payee, in· whose favour the cheque is issued.
It, however, does not mean that the cheque is always to
F be presented to the drawer's bank on which the cheque
. is issued. However, a combined reading of Sections 3,
72 and 138 of the Act would clearly show that the law
mandates the cheque to be presented at the· bank on
which it is drawn if the drawer is to be held criminally
liable. Such presentation is necessarily to be made within
G six months at the bank on which the cheque is drawn,
whether presented personally or through·another bank,
namely, the collecting bank.of the payee.•
3. lshar Alloy's case (supra) did not deal with the
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
959
question of jurisdiction of the Courts nor was Bhaskaran A
noticed by the Court while holding that the presentation of the
cheque ought to be within six months to the drawee bank. But
that does not, in our view, materially affect the logic underlying
the pronouncement, Which pronouncement coming as it is from
a bench of coordinate jurisdiction binds us. When logically B
extended to the question of jurisdiction of the Court to take
cognizance, we find it difficult to appreciate how a payee of the
cheque can by presentation of the cheque to his own bank
confer jurisdiction upon the Court where such bank is situate.
If presentation referred to in Section 138 means presentation c
to the "drawee bank", there is no gainsaying that dishonour
would be localised and confined to the place wbere s1ich bank
is situated. The question is not whether or not the payee can
deposit his cheque in any bank of his choice at any place. The
question is whether by. such deposit can the payee confer D
jurisdiction on a Court of his choice? Our answer is in the
negative. The payee may and indeed can present the cheque
to any bank for collection from the drawee bank, but such
presentation will be valid only if the drawee bank receives the
cheque for payment within the period of six months from the E
date of issue. Dishonour of the cheque would be localised at ·
the place where the drawee bank is situated. Presentation of
the cheque at any place, we have no manner of doubt, cannot
confer jurisdiction upon the Court within whose territorial limits '
such presentation may have taken place. ·
F
4. Then came Harman Electronics (P) Ltd. v. National
Panasonic India (P) Ltd. (2009) 1 SCC 720. That was a case
where the complaint under Section 138 was filed in a Delhi
Court, only because the statutory notice required to be issued
under the proviso to Section 138 was issued from Delhi. If G
Bhaskaran was correctly decided, Harman should not have
interfered with the exercise of jurisdiction by the Delhi Court for
issue of a notice was in terms of Bhaskaran, one of the factors
that clothed the Court in Delhi to take cognizance and try the
case. Harman did not do so. Jn Harman's case this Court, H
960 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A emphasized three distinct aspects. Firstly, it said that there was
a world of difference between issue of a notice, on ttie one
·hand, and receipt, thereof, on the other. Issue of notice did not
give rise to a cause of action while receipt did, declared the
Court. ·
B
5. Secondly,· the Court held that the main provision of
Section 138 stated what would constitute an offence. The
proviso appended thereto simply imposed certain further
conditions which must be fulfilled for taking cognizance of the
C offence. The following passage deals with both these aspects:
«Jt is one thing to say that sending of a notice is qne 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
D case that the accused had committed an offence under
Section 138 of the Negotiable Instruments Act, the
ingredients thereof are required to be proved. What would ,
constitute an offence is stated in the main provision. The ·
proviso appended thereto,. however, imposes· certain
E· 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 provisosJa),
(b) and (c) appended to Section 138 of the Negotiable -
Instruments Act are intended to be applied in favour.of
F 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 ·
that the accused at his own peril may refuse to pay the _
amount. Clauses (b) and (c) orthe proviso to Section 138. _
therefore must be read together. Issuance of notice would: ;
G not by itself give rise to a cause of action b'ut
communication of the notice would," "
6. Thirdly, the Court held that if presentation of the cheque -·
or _issue of notice was to constitute a good reason for vesting ··
H courts with jurisdiction to try offences under Section 138,' it '
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
961
would lead to harassment of the drawer of the cheques thereby A
calling for the need to strike a balance between the rights .of
the parties to the transaction. The Court said: ·
·we cannot, as things stand today, be oblivious of the
fact that a banking institution holding several cheques 8
signed by the same borrower can not 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 C
accused. It is, therefore, necessary in a case of this nature
to strike a balance between the right of the complainant
and the right of an accused vis-a-vis the provisions of the
Code of Criminal Procedure."
7. Bhaskaranwas, in the wake of the above, considerably D
· diluted arid the logic behind vesting of jurisdiction based on the
place from where the notice was issued questioned. Even
presentation of the· cheque as a reason for assumption of
jurisdiction to take cognizance was doubted for a unilateral act
of the complainanUpayee of the cheque could without any E
further or supporting reason confer jurisdiction on a Court within
whose territorial limits nothing except the presentation of the
cheque had happened.
8. Three recent decisions need be mentioned at this stage
F
which have followed Bhaskaran and attempted to reconcile the
ratio of that case with the subsequent decisions in /shar Alloy
Steels and Harman Electronics. In Nishant Aggarwal v.
Kai/ash Kumar Sharma (2013) 10 SCC 72 this Court was
once again dealing with a case where the complaint had been
filed in Court at Bhiwani in Haryana within whose territorial G
jurisdiction the complainant had presented the cheque for
encashment, although the cheque was drawn on a bank at
Gauhati in Assam. Relying upon the view taken in Bhaskaran ·
this Court held that the Bhiwani Court had jurisdiction to deal
.· with the matter. While saying so, the Court tried to distinguish H
962 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A the three-Judge Bench decision in lshar Alloy Steels (supra)
and that rendered in Harman Electronics case (supra) to hold
that the ratio of those decisions did not dilute the principle
· stated in Bhaskaran case. That exercise was repeated by this
Court.in FIL Industries Ltd. v. lmtiyaz Ahmad Bhat (2014)
B 2 SCC 266 and in Escorts Ltd. v. Rama Mukherjee (2014)
2 SCC 255 which too followed Bhaskaran and held that
complaint under Section 138 Negotiable Instrument Act could
be instituted at any one of the five places referred to in
Bhaskaran's case. '
c 9. We have, with utmost respect to the Judges comprising
the Bench that heard the above cases, found it difficult to follow
suit and subscribe to the view stated in Bhasakaran. The
reasons are not far too seek and may be stated right away.
D 10. Section 138 is a penal provision that prescribes
imprisonment upto two years and fine upto twice the cheque
amount. It must, therefore, be interpreted strictly, for it is one of
the accepted rules of interpretation that iri a penal statute, the
Courts would hesitate to ascribe a meaning, broader than what
E the phrase would ordinarily bear. Section 138 is in two parts.
The enacting part of the provision .makes it abundantly clear that
what constitutes an offence punishable with imprisonment and/
or fine is the dishonour of a ctieque for insufficiency of funds .. ~
etc. in the account maintained by the drawer with a bank for
F discharge of a debt or other liability whether in full or part. The
language used in the provision is unambiguous and the
ingredients of the offence clearly discernible viz. (a) Cheque
is drawn by the accused on an account maintained by him with
a banker. (b) The cheque amount is in discharge of a debt or
G liability and (c) The cheque is returned unpaid for insufficiency
of funds or that the amount exeeeds the arrangement made with
ttie bank. But for the proviso that comprises the second part of
the provision, any dishonour falling within the four corners of the
enacting provision would be punishable without much ado: The
proviso, however, draws an exception to the generality of the
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [t.S. THAKUR, J.]
963
enacting part of the provision, by stipulating two steps that ought A
to be taken by the complainant holder of the cheque before the
failure of the drawer gives to the former the cause of action to
file a complaint and the competent Court to take cognizance
of the offence. These steps -are distinct from the ingredients of
the offence which the enacting provision creates and makes B
punishable. It follows that an offence within the contemplation
of Section 138 is complete with the dishonour of the cheque
but taking cognizance of the same by any Court is forbidden
so long as the complainant does not have the cause of action
to file a complaint in terms of clause (c) of the proviso read with C
Section 142 which runs as under:
"Section 142:
Cognizance of offences. -Notwithstanding anything D
contained in the Code of Criminal Procedure, 1973 (2 of
1974)-
(a) no court shall take cognizance of any offence
punishable under section {38 except upon a complaint,
in writing, made by the payee or, as the case may be, E
the holder in due course of the cheque;
(b) such complaint is made within one month of the date
on which the cause of action arises under clause (c) of
the proviso to section 138: [Provided that the cognizance F
of a complaint may be taken by the Court after the
prescribed period, if the complainant satisfies the Court
that he had sufficient cause for not making a complaint
within such period.]
(c) no court inferior to that of a Metropolitan Magistrate G
or a Judicial Magistrate of the first class shall try any
offence punishable under section 138. •
11. The following would constitute 'cause of action' referred
to in sub clause (b) above: H
964 SUPREME COURT REPORTS [2014) 11 S.C.R.
•
A (a) The complainant has presented the cheque for
payment within the period of six months from the
date of the· issue thereof.
(b) The complainant has demanded the payment of the
cheque amount from the· drawer by issuing a written
B
notice within thirty days of receipt of information by
him from the bank regarding the dishonour.
(c) The drawer has failed to pay the cheque amount
within fifteen days of the receipt of the notice.
c
12. A proper understanding of the scheme underlying the
provision would thus make it abundantly clear that while the
offence is complete upon dishon.our, prosecution for such
offence is deferred till the time the. cause of action for such
0 prosecution accrues to the complainant. The proviso in that
sense, simply postpones the actual prosecution of the offender
till such time he fails to pay 'the amount within the statutory
period prescribed for such payment. There is, in our opinion,
a plausible reason why this was done. The Parliament in its
E wisdom considered it just and proper to give to the dtawer of
a dishonoured cheque an opportunity to pay up the amount,
before permitting his prosecution no matter the offence is
complete, the moment the cheque was dishonoured. The law
has to that extent granted a concession and prescribed a
scheme under which dishonour need not necessarily lead to
F penal consequence if the drawer makes amends by making
payment within the time stipulated once the dishonour is notified
to him. Payment of the cheque amount within tre stipulated
period will in such cases diffuse the element of criminality that
Section 138 attributes to dishonour by way of a legal fiction
G implicit in the use of the words "shall be deemed to have
committed an offence". The drawer would by such payment
stand absolved by the penal consequences of dishonour. This
scheme may be unique to Section 138 NI Act, but there is hardly
any doubt that'the Parliament is competent to legislate so to
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
965
provide for situations_ where a cheque is dishonoured even A
without any criminal intention on the part of the drawer.
13. The scheme of Section 138 thus not only saves the
· honest drawer but gives a chance to even the dishonest ones
to make amends and escape prosecution. Compliance with the
B.
provision is, in that view, a mandatory requirement. (See C.C.
Alavi Haji v. Palapetty Muhammed and Another (2007) "6
sec 555).
14. Harman in that view correctly held that "what would
· constitute an offence is stated in the main provision. The C
proviso appended thereto however imposes certain further ·
conditions which are required to be fulfilled before cognizance
of the offence can be taken." If the Parliament intended to make
the conditions stipulated in the proviso, also as ingredients of
the offence, the provision would have read differently. It would D
then have specifically added the words "and the drawer has
despite receipt of a notice demanding the payment of the
amount, failed to pay the same within a period of fifteen days
from the date of such demand made in writing by a notice".
That, however, is not how the enacting provision of Section 138 E
reads. The legislature has, it is obvious, made a cle;:ir
distinction between what would constitute an offence and what
would give to the complainant the cause of action to file a
complaint for the court competent to take cognizance. That a
proviso is an exception to the general rule is well settled. A F
proviso is added to an enactment to qualify or create an
exception to what is contained in the enactment. It does not by
itself state a general rule. It simply qualifies the generality of
the mairi enactment, a-portion which but for the proviso would
fall within the main enactment.
G
15. The P. Ramanatha Aiyar, Law Lexicon, 2nd Edition,
Wadhwa & Co. at page 1552 defines proviso as follows:
"The word "proviso" is used frequently to denote the
H
966 SUPREME COURT REPORTS [2014) 11 S.C.R.
•
A clause the first words of which are "provided thar inserted
in deeds and instruments generally. And containing a
condition oi stipulation on the performance or non-
performance of which, as the case maybe.· The effect of
a proceeding clause or of the deed depends.
B
A Clause inserted in a legal or formal document, making
some condition, stipulation, exception or limitation or
upon the observance of which the operation or validity of
the instrument depend.s [ S. 105, Indian Evidence Act].
c A proviso is generally intended to restrain the enacting
clause and to except something which would have
otherwise been within it or in some measure to modify the
enacting clause ... "
0 16. To quote "Craies on Statute Law~ 7th Edn., Sweet&
Maxwell at page 220 "If the principal object of the Act can be
accomplished and stand u,nder. the restriction of the saving
clause or proviso, the same is not to be held void for
repugnancy."
E 17. on·e of the earliest judgments on the subject is a three
Judge Bench decision in Kedarnath Jute Manufacturing Co.
v. Commercial Tax Officer, Calcutta and Ors. AIR 1966 SC
12. The Court was in that case examining the effect of a proviso
which imposed a condition on getting exemption from tax and
F observed: ·
"... The substantive clause gives the exemption.and the
proviso qualifies the substantive clause. In effect the
proviso says that part of the turnover of the selling dealer
covered by the terms of sub-cl. (ii) will be exempted
G
provided a declaration in the from prescribed is furnished.
To put it in other words: a dealer cannot get the
exemption unless he furnishes the declaration in the
prescribed form. It is well settled that "the effect of an
excepting or qualifying proviso, according to the ordinary
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.)
967
rules of construction, is to except out of the preceding A
porlion of the enactment, or to qualify something enacted .
therein, which but for the proviso would be within it": see
"Craies on Statute Law'', 6th Edn., p. 217."
18. Also pertinent is a four"Judge Bench decision of this B
Court in Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC
128 where this Court was examining whether a cinema theatre
equipped with projectors and other fittings ready to be launched
as entertainment house was covered under the definition of
'accommodation' as defined in Section 2 (1) (d) of Uttar
Pradesh (Temporary) Control of Rent and Eviction Act, 1947. C
The proviso provided for some exception for factories and
business carried in a building. It was held that sometimes
draftsmen include proviso by way of over caution to remove any
doubts and accommodation would include this cinema hall:
D
"18. A proviso must be limited to the subject-matter of the
enacting clause. It is a settled rule of construction that a
proviso must prima facie be read and considered in
relation to the principal matter to which it is a proviso. It
is not a separate or independent enactment. 'Words are E
dependent on the principal enacting words, to which they
are tacked as a proviso. They cannot be read as divorced
from their context' 1912 A. C. 544. If the rule of
construction is that prima facie a proviso should be
limited in its operation to the subject-matter of the F
enacting clause, the stand we have taken is sound. To
expand the enacting clause, inflated bv the proviso. sins
against the fundamental rule of construction that a
proviso must be considered in relation to the principal
matte:- to which it stands as a proviso. A proviso ordinarily G
is but a proviso, although the golden rule is to read the
whole section, inclusive of the proviso, in such manner
that they mutually throw light on each other and result in
a harmonious construction.
The proper course is to apply the broad general rule of H
968 SUPREME COURT REPORTS [2014] 11 S.C.R. •
A construction which is that a section or enactment must
be construed as a whole, each portion throwing light if
need be on the rest.
The true principle undoubtedly is. that the sound
interpretation and meaning of the statute. on a view of the
B
enacting clause. saving clause. and proviso. taken and
construed together is to prevail. (Maxwell on Interpretation
of Statutes, 1Oth Edn. p. 162)"
(emphasis supplied)
c
19. In Sreenivasa General Traders & Ors. v. State of
Andhra Pradesh & Ors. (1983) 4 SCC 353 another three-
Judge bench of this Court examined the role of a proviso while
interpreting Rule 74(1) of the Andhra Pradesh (Agricultural
Produce & Livestock) Markets Rules, 1969. ·
0
"The normal function of a proviso is to except something
out of the main enacting part or to qualify something .
enacted therein which but for the proviso would be within
the purview of the enactment. Proviso to Rule 74(1) is
E added to qualify or create an exception." '·
20. Reference may also be made to Tribhovandas
Haribhal Tainboli v. Gujarat Revenue Tribunal and others
(1991) 3 SCC .442 wherein this Court clearly held that when
F the language of the main enactment is clear, the proviso can
have no effect on the interpretation of the main clause.
7. It is a cardinal rule of interpretation that a proviso to a
particqlar provision of a statute only embraces the field,
which'is covered by the main provision. It carves out an
G exception to the main provision to which it has been
enacted by the proviso and to no other. The proper
function of a proviso is to except and deal with a case
· which would otherwise faff within the general langu,age of
the main enactment, and its effect is to confine to that
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
969
case. Where the language of the main enactment is A
explicit and unambiguous, the proviso can have no
repercussion on the interpretation of the main enactment,
so as to exclude from it, by implication what clearly falls
within its express terms. The scope of the proviso.
therefore. is to carve out an exception to the main B
enactment and it excludes something which otherwise
would have been within the rule. It has to operate in the ·
same field and if the language of the main enactment is
clear. the proviso cannot be torn apart from the main
enactment nor can it be used to nullify by implication what c
the enactment clearly says nor set at naught the real
object of the main enactment. unless the words of the
proviso are such that it is its necessarv effect.•
(emphasis supplied)
D
21. The same line of reasoning was followed in A.N.
Sehgal and Ors. v. Raje Ram Sheoram and Ors. 1992 Supp
(1) SCC 304 while interpreting a proviso in the Haryana Service
of Engineers Rules, 1960 where the Court held that the proviso
to Rule 5{2)(a) cannot be applied to confer the benefit of regular . E
appointment on every promotee appointed in excess of 50%
quota. This Court harmoniously read the main provision and the
proviso and gave effect to the rule.
22. In Kera/a State Housing Board and Ors. v.
Ramapriya Hotels (P) Ltd. and Ors. 1994 (5) sec 672 this
F
Court was examining whether the period of 4 years envisaged
in proviso to Section 16(i) under Kerala Land Acquisition Act,
1961 could be reckoned from date when agreernent was
executed or from tlate of publication of notification under
Section 3(1) of the Act after the agreement was executed. After G
relying on Tribhovandas Haribhai Tamboli (supra) and A.N.
Sehgal (supra) this Court held that the proviso should· be
harmoniously read with the section. To quote Tribhovandas
(supra) as followed in this judgment:
H
970 SUPREME COURT REPORTS [2014) 11 S.C.R.
•
A "In Tribhovandas Haribhai Tamboli v. Gujarat Revenue
Tribunal this Court held that the proper function of a
proviso is to except and deal with a case which would
otherwise fall within the general language of the main
enactment and its effect is to be confined to that case.
B Where the language of the main enactment is explicit
and unambiguous. the proviso can have no repercussion
on the interpretation of the main enactment. so as to
exclude from it. bv implication what clear/v falls within its
express terms. The scope of the proviso, therefore, is to
c carve out an exception to the main enactment and it
excludes something which otherwise would have been
within the rule. It has to operate in the same field and if
the language of the main enactment is clear, the proviso
cannot be tom apart from the main e,nactment nor can it
be used to nullify ·by implication what the enactment
D
clearly says, nor set at naught the real object of the main
enactment, unless the words ofthe proviso are such that
it is its necessary effect. In that case it was held that by
reading the proviso consistent with the provisions of
Section 88 of the Bombay Tenancy and Agricultural Act,
E the object of the main provision was sustained."
+ (emphasis supplied)
23. In Kush Sahgal & Ors. v. M.C. Mitter & Ors. (2000)
F 4 sec 526 a landlady made an application for eviction of the
tenant on the basis that she wanted the place for business
purposes which was not allowed as per the proviso to Section
21 (2) U.P. Urban Buildings (Regulation of Letting, Rent and
· Eviction) Act, 1972. The Court examined the role and purport
G of the proviso and observed :
"This we say because the normal function of a proviso is ·
to except something out of the enactment or to qualify
something enacted therein which but for the proviso
would be within the purview of the enactment. (See :
H Kedamath Jute Manufacturing Co. Ltd. v. Commercial
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
971
Tax Office [1965]3SCR626). Since the natural A
presumption is that but for the proviso, the enacting part
of the section would have included the subject-matter of
the proviso, the enacting part has to be given such a
construction which would make the exceptions carved out
by the proviso necessary and a construction which would 8
make the expeptions unnecessary and redundant should
be avoided (See: Justice G. P. Singh's "Principles of
Statutory Interpretation" Seventh Edition 1999, p-163).
This principle has been deduced from the decision of the
Privy Council in Govt. of the Province of Bombay C
v. Hormusji Manekji (AIR 1947 PC 200) as a/so the
decision of this Court in Durga Dutt Sharma v.Navaratna
Pharmaceutical Laboratories (AIR 1965 SC 980)."
24. To the same effect are the decisions of this· Court in
Ali M.K. and Ors. v. State of Kerala and Ors. (2003) 11 SCC D
632, Nagar Palika (supra) and in Steel Authority of India Ltd.
v. S.U.T.N.I Sangam & Ors. (2009) 16 SCC 1.
25. In conclusion, we may refer to Maxwell, "Interpretation
of Statutes" Edn. 12, 1969, on P. 189-190 which states that it E
is a general finding and practice "that inconsistencies can be
avoided by applying the. general rule that the words of a
proviso are not to be taken "absolutely in their strict literal
sense" [R v. Dimbdin (1910)] but that a proviso is "of necessity
... limited in its operation to the ambit of the section which it F
qualifies" [Lloyds and Scottish Finance Ltd v. Modern Cars
and Canavans (Kingston) Ltd. (1966)]. And, so far as that
section itself is concerned, the proviso receives a restricted
construction: where the section confers powers, "it would be
contrary to the ordinary operation of a proviso to give it an G
effect which would cut down those powers beyond what
compliance with the proviso renders necessary." [Re Tabrisky
v. Board of Trade (1947)]"
26. Bhaskaran, in our view, reads the proviso as
H
972 SUPREME COURT REPORTS . [2014) 11 S.C.R. •
A prescribing the ingredients of the offence instead of~treating it
as an exception to the generality of the enacting part by
stipulating further conditions before a competent Court may
take cognizance of the same. Seen in the light of the provisions
of Section 142 of the Act, ·the proviso simply defers prosecution·
8 of the offender till the conditions prescribed therein are
satisfied. Bhaskaran does not view the matter in that
perspective whHe Harman (supra) does. We find ourselves in
respectful agreement with the view in Harman's cas1~ on this
aspect.
C 27. In Bhaskaran, this Court resolved the confusion.as to
the place of commission of the offence by relying upon Sections
177 to 179 of the Cr.P.C. But the confusion arises only if one
were to treat the proviso as stipulating the ingredients of the
offence." Once it is held that the conditions precedent for taking
D cognizance are ·not the ingredients constituting the offence of
dishonour of the cheque, there is no room for any such
confusion or vagueness about the place where the offence is
committed. Applying the general rule recognised under Section
177 of the Cr.P.C. that all offences are local, the place where
E the dishonour occurs is the place for commission of the! offence
vesting the Court exercising territorial jurisdiction over the area _
with the ·power to try the offences. Having said that we must
hasten to add, that in cases where the offence under Section
138 is out of the offences committed in a single transaction
F within the meaning of Section 220 (1) of the Cr.P.C. then the
offender may be charged with and tried at one trial for every
such offence and any such inquiry or trial may be conducted
by any Court competent to enquire into or try any of the offences
as provided by Section 184 of the' Code. So also, if an offence
G punishable under Section 138 of the Act is committed as a part .
of single transaction with the offence of cheating and
dishonestly inducing delivery of property then in terms of
Section 182 (1) read with Sections 184 and 220 of the Cr.P .C.
such offence may be tried either at the place where the
H inducement took place or where the cheque forming part of the
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
973
same transaction was dishonoured or at the place where the · A
property which the person cheated was dishonestly induced to
deliver or at the place where the accused received such
property. These provisions make it clear that in the commercial
world a party who is cheated and induced to deliver property
on the basis of a cheque which is dishonoured has the remedy B ·
of instituting prosecution not only at the place where the cheque
was dishonoured which at times may be a place other than the
place where the inducement or cheating takes place but also
at the place where the offence of cheating was committed. To
that extent the provisions of Chapter XIII of the Code will bearc
relevance and help determine the place where the offences can
. be tried.
28. We may at this stage refer to two other decisions of
this Court which bear some relevance to the question that falls
for our determination. In Sadanandan Bhadran v. Madhavan D
Sunil Kumar (1998) 6 SCC 514 a two-judge bench of this
Court held that clause (a) of proviso to Section 138 does not
disentitle the payee to successively present cheque for payment
during the period of its validity. On each such presentation of
the cheque and its dishonour a fresh right - and not cause of E
action - accrues in his favour. He may, therefore, without taking
pre-emptory action in exercise of such right under clause (b)
of Section 138 go on presenting the cheq·ue so long as the
cheque is valid for payment. But once he gives a notice under
clause (b) of Section 138 he forfeits such right for in case of . F
failure of the drawer to pay the money within the stipulated time
he would be liable for the offence and the cause of action for
prosecution will arise. The correctness of this view was
questioned in MSR Leathers v. S. Palaniappan & Anr.
(2013) 1 SCC 177 before a bench comprising of Markandey G
Katju and B. Sudershan Reddy, J.J. who referred the issue to
a larger bench. The larger bench in MSR Leathers's case
(supra) overruled Sadanandan Bhadran (supra) holding that
there was no reason why a fresh cause of action within the
meaning of Section 142 (b) read with section 138·should not H
974 SUPREME COURT REPORTS (2014] 11 S.C.R.
•
A be deemed to have arisen to the complainant every ti[lle the
cheque was presented but dishonoured and the drawer of
cheque failed to pay the amoun,t within the stipulated period in
terms of proviso to 138. This Court said:
. B "In the result, we overrule the decision in Sadanandan
Bhadran's case (supra) and hold that prosecution based
upon second or successive dishonour of the cheque is
also permissible so long as the same satisfies the
requirements stipulated in: the proviso to Section 138 of
the Negotiable Instruments Act. The reference is
c answered accordingly. The appeals shall now be listed
before the regular Bench for hearing and disposal in light
of the observations made above."
29. What is important is that in Sadanandan Bhadran
D (supra) this Court had, on a careful analysis of Section 138, held
that an offence is created when a cheque is returned by the
bank unpaid for any reasons mentioned therein, although the
proviso to Section 138. stipulates three conditions for the
applicability of the section. It is only upon satisfaction of the
E three conditions that prosecution can be launched for an offence
under Section 138. This Court observed:
"On a careful analvsis of the above section. it is seen that
its main part cr:eates an offence when a cheque is
[eturned bv the bank unpaid for anv of the reasons
F mentioned therein. The significant fact, however, is that
the proviso lays down three conditions precedent to the
applicability of the above section and, for that matter,•
creation of such offence and the conditions are: (i) the
cheque should have been presented to the bank within
G six months of its·issue or within the period of its validity,
whichever is earlier,· (ii) the payee should have made a
demand for payment by registered notice after the
cheque is returned unpaid; and (iii) that the drawer should
/ have failed to pay the amount within 15 days of the
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
975
receipt of the notice. It is onfy·when all the above three A
conditions are. satisfied that a prosecution can be
launched for the offence under Section· 138. So far as the
first condition is concerned, clause (a) of the proviso to
Section 138 does not put any embargo· upon the payee
to successively p~sent a dishonoured cheque during the B
period of its validity. This apart, in the course .of business
transactions it is not uncommon for a cheque being
returned due to insufficient f1,.mds or similar such reasons
and being presented again by the payee after sometime,
on his own volition or at the request of the drawer, in c
expectation that it would be encashed. Needless to say,
the primary interest of the payee is to get his money and
not prosecution of the drawer, recourse to which, normally,
is taken out of compulsion and not choice. For the above
reasons it must be held that a cheque can be presented 0
any number of times during the period of its validity.
Indeed that is also the consistent view of all the High
Courts except that of the Division Bench of the Kera/a
High Court in Kumaresan1 which struck a discordant note
with the observation that for the first dishonour of the E
cheque, only a prosecution can be launched for there
cannot be more than one cause of action for prosecution."
••
(emphasis supplied)
30. MSR Leathers (supra) also looked at Section 138 and F
held that a complaint could be filed under Section 138 after
cause of action to do so had accrued in terms of clause (c) of
the proviso to Section 138 which happens no sooner the drawer
of the cheque fails to make the payment of the cheque amount
to the payee within fifteen days in terms of clause (b) to proviso G
to Section 138. MSR Leathers was not so much concerned
with the question whether the proviso stipulated ingredients of
the offence or conditions precedent for filing a complaint. It was
primarily concerned with the question whether the second or
successive dishonour followEld by statutory notices and failure· H
976 SUPREME COURT REPORTS
r
[2014] 1f S.C.R.
•
A of the drawer to make ·payment could be made a basis for
launching prosecution against the drawer. That question, as
noticed above, was answered in the affirmative holding that
successive cause of action could arise if there were successive
dishonours followed by statutory notices as required under the
B law and successive failure of the drawer to make the payment.
MSR Leathers cannot, therefore, be taken as an authority for
determining whether the proviso stipulates conditions; precedent
for launching a prosecutio'n or ingredients of the offence
punishable under Section 138. Sadanandan Bhadran may
c have been overri;led to the extent it held that successive causes
of action cannot be made a basis for prosecutic1n, but the
distinction between the ingredient of the offence, on the one
hand, and conditions precedent for launching prosecution, on
the other, drawn in the said judgement'has not been faulted.
That distinction permeates the pronouncements of this Court
0
in Sadanandan Bhadran an~'MSR Leathers. Hi~Jh Court of
Kerala has, in our view, correctly interpreted Section 138 of the
Act in Kairali Marketing & Processing Cooperative Society
Ltd. V. Pullengadi Service Cooperative Ltd. (2007) 1 KL T
287 when it said: I
E I
"It is evident from the language of Section 13Q of t~,e N. t.
•. Act that the drawer is deemed to have committed (he
offence when a cheque issued by him of the variety
contemplated under Section 138 is dishonoured for the
F reasons contemplated in the Section. The crucial words
are "is returned by the bank unpaid". When that happens,
such person shall be deemed to have committed the
offence. With the deeming in the body of Section 138, the
offence is already committed or deemed to have been
G commit~ed. A careful' reading of the body of
Section 138 cannot lead. to any other conclusion. Proviso
to Section138 according to me only insists on certain
conditions precedent which have to be satisfied if the
person who is deemed io have committed the 6ffence
were to be prosecuted successfully. The offence is
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.j
977
already committed when the cheque is returned by the A
.bank. But the cause of action for prosecution will be
available to the complainant not when the offencf3 is
committed but only after the conditions precedent
enumerated in the proviso are satisfied. After the offence
is committed, only if the option given to avoid the B
prosecution under the proviso is not availed of by the
offender, can the aggrieved person get a right or course
of action to prosecute the offender. The offence is already
deemed and declared but the offender can be prosecuted
. only when the requirements of the proviso are satisfied. c
The cause of action for prosecution will arise only when
the period stipulated in the proviso elapses without
payment. Ingredients of the offence have got to be
distinguished from the conditions precedent for valid
initiation of prosecution." D
The stipulations in the proviso must also be proved
certainly before the offender can be successfully
prosecuted. But in the strict sense they are not ingredients
of the deemed offence under the body of Section 138 of
the N./. Act, though the said stipulations; must also be E
proved to ensure and claim conviction. It is in this sense
that it is said that the proviso does not make or unmake
the offence under Section 138 of the N.I. Act. That is
already done by the body of the Sections. This dispute
as to whether the stipulations of the proviso are conditions F
precedent or ingredients/components of the offence
under Section 138 of the N. I. Act may only be academic
in most cases. Undoubtedly the ingr.edients stricto sensu
as a/so the conditions precedent will have to be
established satisfactorily in all cases. Of course in an G
appropriate case i(may have to be considered whether
substantial compliance of the conditions precedent can
be reckoned to be sufficient to justify a conviction. Be that
as it may, the distinction between the ingredients and
conditions precedent is certainly real and existent. That H
978 SUPREME COURT REPORTS [2014) 11 S.C.R.
•
A distinction is certainly vital while ascertaining complicity
of an indictee who faces indictment in a prosecution
under Section 138 with the aid of Section 141 of the N.1.
Act. That is how the question assumes such crucial
significance here."
B
31. To sum up:
(I) An offence under Section 138 of the Negotiable
Instruments Act, 1881 is committed no sooner a cheque
drawn by the accused on an account being maintained by
c llim in a bank for discharge of debt/liability is returned
unpaid for insufficiency of funds or for the reason that the
amount exceeds the arrangement made with the bank.
(ii) Cognizance of any such offence is however forbidden
D under Section 142 of the Act except upon a complaint in
' writing made by the payee or holder of the cheque in due
course within a period of one month from the date the
cause of action accrues to such payee or holder under
clause (c) .of proviso to Section 138.
E (iii) The cause of action to file a complaint accrues to a
complainant/payee/holder of a cheque in due course if
(a) the dishonoured cheque is presented to the drawee
bank within a period of six months from the date of
F its issue.
(b) If the complainarit has demanded payment of
chequ~ amount within thirty days of receipt of
information by him from the bank regarding the
dishonour of the cheque and
G
(c) If the drawer has failed to pay t.he cheque amount
within fifteen days of receipt of sucll notice.
(iv) The facts constituting cause of action do not constitute
the ingredients of the offence under Section 138 of the Act.
H
• DASHRATH RUPSINGH RATHOD v. STATE OF
MAHARASHTRA [T.S. THAKUR, J.]
979
(v) The proviso to Section 138 simply postpones/defers A
institution of criminal proceedings and taking of cognizance
by the Court till such time cause of action in terms of
clause (c) of proviso accrues to the complainant.
(vi) Once the cause of action accrues to the complainant,
the jurisdiction of the Court to try the case will be B
determined by reference to the place where the cheque
is dishonoured.
(vii) The general rule stipulated under Section 177 of
Cr.P .C applies to cases under Section 138 of the C
·Negotiable Instruments Act. Prosecution in such cases
can, therefore, be launched against t~e drawer of the
cheque only before the Court within whose jurisdiction the
dishonour takes place except in situations where the
offence of dishonour of the cheque punishable under
Section 138 is committed along with other offences in a D
single transaction within the meaning of Section 220(1)
read with Section 184 of the Code of Criminal Procedure
or is covered by the provisions of Section 182(1) read with
· Sections 184 and 220 thereof.
E
32. Before parting with this aspect of the matter, we need
to remind ourselves that an avalanche of cases involving
dishonour of cheques has come upon the Magistracy of this
country. The number of such cases as of October 2008 were
estimated to be more than 38 lakhs by the Law Commission F
of India in its 21·3th Report. The result is that cases involving
dishonour of cheque is in all major cities choking the criminal
justice system at the Magistrate's level. Courts in the four
metropolitan cities and other commercially important centres
are particularly burdened as the filing of such cases is in very
large numbers. More than five lakh such cases were pending . G
in criminal courts in Delhi alone as of 1st June 2008. The
position is no different in other cities where large number of
complaints are filed under S.138 not necessarily because the
offence is committed in such cities but because multinational
and other companies and commercial entities and agencies H
980 SUPREME COURT REPORTS [2014] 11 S.C.R.
•
A choose these places for filing the" complaints for no better.
reason than the fact that notices demanding payment of cheque
amounts were issued from such cities or the cheques were
deposited for collection in their banks in those cities. Reliance
is often placed on Bhaskaran's case tci justify institution of such .
B cases far away from where the transaction forming basis of the
dishonoured cheque had taken place .. lt-is not uncommon to find
complaints filed in different jurisdiction for cheques dishonoured
in the same transaction and at the same place. This procedure
is more often than not intended to use such oppressive litigation
c to achieve the collateral purpose of extracting money from the
.accused by denying him a fair opportunity to contest the claim
by dragging him to· a distant place. Bhaskaran's case could
never have intended to give to the complainant/payee of the
cheque such an advantage. Even so, experience has. shown '·
that the view taken in Bhaskaran's case.permitting prosecution
0
at any one of the five different places indicated therein has
failed not only to meet the approval of other benches dealing
'with the question but also res\,llted in hardship, harassment and
inconvenience to the accused persons. While anyone issuing
a cheque is and ought to be made responsible if the same is
E dishonoured des·pite compliance with the provisions stipulated
in the proviso, the Court ought to avoid an interpretation that
can ·be used as an instrument of oppression by one of the
parties. The unilateral acts of a complainant in presenting a
cheque at a place of his choice or issuing a notice for payment
F of the dishonoured amount cannot in our view arm the
complainant with the power to choose the place of trial. Suffice
it to say, that not only on the Principles of Interpretation of
Statutes but also the potential mischief which an erroneous
interpretation can cause in terms of injustice and harassment
G to the accused the view taken in the Bhaskaran's case needs
to be revisited as we have done in foregoing paragraphs.
33. With ttie above observations, I concur with the order
proposed by my noble .Brother, Vikramajit Sen, J.
H Kalpana K. Tripathy Appeals disposed of.
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