# DASHRATH RUPSINGH RATHOD v. STATE OF MAHARASHTRA & ANR

- **Citation:** [2014] 11 S.C.R. 921
- **Court:** Supreme Court of India
- **Decided:** 2014-08-01
- **Case number:** Criminal Appeal No. 2287 of 2009
- **Bench:** T.S. Thakur, Vikramajit Sen, C. Nagappan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/dashrath-rupsingh-rathod-v-state-of-maharashtra-anr-29470
- **Pages:** 60

## Headnote

Jurisdiction: •
.. ---
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
A
B
c
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
923
MAHARASHTRA
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 form

## Text

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•
[2014] 11 S.C.R. 921
DASHRATH RUPSINGH RATHOD
v.
STATE OF MAHARASHTRA & ANR.
(Criminal Appeal No. 2287 of 2009 Etc.)
AUGUST 01, 2014
[T.S. THAKUR, VIKRAMAJIT SEN AND
C. NAGAPPAN, JJ.]
Jurisdiction: •
.. ---
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
A
B
c
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
923
MAHARASHTRA
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;952B 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
925
MAHARASHTRA
Bradlaugh v. Clarke 8 Appeal Cas_es 354 p.361A
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;
F
G
Kush Sahgal & Ors. v. M.C. Mitter~ Ors. (2000) 4 SCC 526
= 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
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
927
MAHARASHTRA
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)
B
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.
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] {980F-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
2001 (2) SCR 36
2005 (3) SCR 1029
1999 ( 2) SCR 958
2008 (15) SCR 188
Referred to
Referred to
Referred to
Referred to
Referred to
Para 3
Para 4
Para 6
Para 6
Para 6
A
B
2006 (2) SCR 595
held per incuriam Para 7
2004 (6 ) Suppl. SCR 365Referred to
Para 7
2013 (7) SCR 165
Referred to
1991 (3) SCR 391
Referred to
1994 (1) Suppl. SCR 252Referred to
2000 (3) Suppl. SCR 82 Referred to
1996 (3) SCR 405
Referred to
8 Appeal Cases 354 p.361 Referred to
1989 (2) Suppl.SCR 570
Relied on
2008 (17) SCR 487
Relied on
In the judgment of T.S. Thakur, J.
2001 (2) SCR 36
2008 (17) SCR 487
2013 (7) SCR 165
(2014) 2 sec 266
(2014) 2 sec 255
2007 (7) SCR 326
1965 SCR 626
Relied on
Referred to
Referred to
Referred to
Referred to
Referred to
Relied on
Para 8
Para 10
c
Para 10
o
Para 11
Para 10
Para 14
Para 15
Para 15
Para 2 ·
Para 4
Para 8
Para 8
Para 8
Para 13
E
F
G
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
B
1991 (2) SCR 198
Relied on
Para 21
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.
G
WITH
Crl. A. Nos. 1596-1600, 1593, 1594, 1595, 1601, 1602, 1603.
1604 of 2014.
.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
931
MAHARASHTRA
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
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 twoJudge Bench has, inter alia, interpreted Section 138 of the NI
E
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
933
MAHARASHTRA [VIKRAMAJIT SEN, J.]
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
D nay nuclear constituent of the crime itself.·
·
,
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
935
MAHARASHTRA [VIKRAMAJIT SEN, J.]
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
HKhan v. Bhagheeratha Engg. Ltd. (2006) 3 SCC 658 requires
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 accusedcompany 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
0 to play under Section 138 of the NI Act, and furthermore that it
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
937
MAHARASHTRA [VIKRAMAJIT SEN, J.]
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
939
MAHARASHTRA [VIKRAMAJIT SEN, J.]
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
1514 = (1991) 4 SCC 270 prescribes that if the Defendantcorporation 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.
F
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
0
confusion countenanced in High Courts. It seems to us that
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
941
MAHARASHTRA [VIKRAMAJIT SEN, J.]
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.