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REPORTABLE

IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.   2287  OF 2009   

Dashrath Rupsingh Rathod …..Appellant

Versus

State of Maharashtra & Anr. …..Respondents

W I T H

CRIMINAL APPEAL NO. 1593   OF 2014 [Arising out of S.L.P.(Crl.)No.2077 of 2009];  

CRIMINAL APPEAL NO. 1594   OF 2014 [Arising out of S.L.P.(Crl.)No.2112 of 2009];

CRIMINAL APPEAL NO. 1595  OF 2014 [Arising out of S.L.P.(Crl.)No.2117 of 2009];  

CRIMINAL APPEAL NOS. 1596-1600   OF 2014 [Arising out of S.L.P.(Crl.)Nos.1308-1312 of 2009];  

CRIMINAL APPEAL NO.1601   OF 2014 [Arising out of S.L.P.(Crl.)No.3762 of 2012];

CRIMINAL APPEAL NO. 1602  OF 2014 [Arising out of S.L.P.(Crl.)No.3943 of 2012];  

CRIMINAL APPEAL NO.1603   OF 2014 [Arising out of S.L.P.(Crl.)No.3944 of 2012]; AND

CRIMINAL APPEAL NO. 1604  OF 2014 [Arising out of S.L.P.(Crl.)No.59 of 2013].

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J U D G M E N T

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  is  amply  adumbrated  by  the  Orders  dated  

3.11.2009  in  I.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 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

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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 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 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  

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

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cheque by giving a notice in writing to the drawer thereof.  

While doing so, the 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, 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  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  but  it  

issued  the  Section  138  notice  from  Delhi.   In  those  

circumstances,  this  Court  had  observed  that  the  only

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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  that  the  proviso  to  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  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 Act is being rampantly misused so far as territorial  

jurisdiction for trial of the Complaint is concerned.  With the  

passage of time equities have therefore transferred from one  

end of the pendulum to the other.  It is now not 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

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Accused or with any facet of the transaction between the  

parties,  leave aside the place where the dishonour of  the  

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  

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 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  place  of  suing  is  

concerned.   These  are  the  circumstances  which  have

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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  Bench  in  Shri  Ishar  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 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 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

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amount to the payee in a civil action initiated under the law.  

A combined reading of Sections 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 'accused-centric’.   This decision clarifies that the  

place  where  a  complainant  may  present  the  cheque  for  

encashment  would  not  confer  or  create  territorial  

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.  

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  compelling.   However,  once  a  decision  of  a  

larger  Bench has  been delivered it  is  that  decision  which

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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 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 Ishar Alloy.  In our opinion,  

it  is  imperative  for  the Court  to  diligently  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  Ishar  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  

prescribed  period,  Bhaskaran has  been  significantly  

whittled down if not overruled.  Bhaskaran has also been  

drastically  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.

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6. In  Prem  Chand Vijay  Kumar  v.  Yashpal  Singh  

(2005) 4 SCC 417, another two-Judge Bench held that upon a  

notice  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  efficacy.   SIL  Import,  USA v.  Exim  

Aides Silk Exporters (1999) 4 SCC 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 Section 138 Complaint expired on 26.7.1996.  What is  

interesting  is  the  observation  that  “four  constituents  of  

Section  138  are  required  to  be  proved  to  successfully  

prosecute the drawer of an offence under Section 138 of the  

NI  Act”  (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.  

The  commission  of  a  crime  was  distinguished  from  its

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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,  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 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 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,  Birbhum  at  Suri,  West  

Bengal for the dishonour of a number of cheques issued by

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the  accused-company  which  had  its  headquarters  in  

Ernakulam,  Kerala  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 cheque unpaid by the drawee bank,  

was  not  reflected  upon.   Inasmuch  as  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 Ishar 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  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  Bench  of  a  previously

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expressed  view  that,  “where  the  territorial  jurisdiction  is  

concerned  the  main  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)  

1 SCC 617, in the context of Sections 177 to 180 CrPC that  

“for jurisdiction emphasis 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  

conflicting ratios, 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.  Bhaskaran was followed and Ishar  

Alloy and  Harman  were  explained.   In  Nishant the  

Appellant  issued  a  post-dated  cheque  drawn on  Standard  

Chartered  Bank,  Guwahati  in  favour  of  complainant-

respondent.  It appears that the Appellant had endeavoured

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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  

missing  and  hence  payment  should  be  stopped.’   The  

Respondent-drawer  was  a  resident  of  District  Bhiwani,  

Haryana;  he  presented  the  cheque  for  encashment  at  

Canara  Bank,  Bhiwani  but  it  was  returned  unpaid.   The  

holder then issued a legal notice which failed to elicit  the  

demanded  sum  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 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  it  were  

reproduced by this Court.  Nishant also did not follow Ishar  

Alloy which,  as already analysed,  has concluded that  the

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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 Ishar Alloy  

on the predication that the question of territorial jurisdiction  

had not been raised in that case.  It is axiomatic that when a  

Court  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  

Ishar Alloy is very relevant and conclusive to the discussion  

in hand.  It also justifies emphasis that  Ishar Alloy is the  

only  case  before  us  which  was  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 we have  

arrived at in the present Appeals.  There is also a discussion  

of Harman to reiterate that the offence under Section 138 is

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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  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.

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 decide the subject  Complaint  under  Section  

138 of the NI Act.  Importantly, in a subsequent order, in FIL  

Industries Ltd. v. Imtiyaz 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  jurisdiction  upon  that  place.

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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 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 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 action wholly or in part arises.  The  

Explanation to that Section is important; it prescribes that a  

corporation shall be deemed to carry on business at its sole  

or  principal  office,  or,  in  respect  of  any  cause  of  action

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arising at any place where it has also a subordinate office, at  

such  place.   Since  this  provision  primarily  keeps  the  

Defendant in perspective, the corporation spoken of in the  

Explanation,  obviously  refers  to  the  Defendant.   A  plain  

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 Section 20 are to be interpreted disjunctively from  

sub-section (c), as the use of the word ‘or’ appears to permit  

the 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’ 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

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constitute  a  forum  non  conveniens.   This  Court  has  

harmonised the various hues of the conundrum of the place  

of  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  

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  

postulated in Section 20 of the CPC.  We need not dilate on  

this  point  beyond  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  

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

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envisages  the  place  where  a  crime  has  been  committed  

empowers  the  Court  at  that  place  with  jurisdiction.   In  

Navinchandra N. Majithia 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  events  central  to  the  

investigation  of  the  alleged  crime  asseverated  in  the  

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  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

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used  as  a  device  for  harassment,  even  of  an  apparent  

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  

concerned.   

RELEVANT PROVISIONS

12. The provisions which will have to be examined and  

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 by a person on an ac-

count maintained by him with a banker for payment of any amount  

of money to another person from out of that account for the dis-

charge, in whole or in part, of any debt or other liability, is re-

turned by the bank unpaid, either because of the amount of money  

standing to the credit of that account is insufficient to honour the  

cheque or that it exceeds the amount arranged to be paid from that  

account by an agreement made with that bank, such person shall  

be deemed to have committed an offence and shall, without preju-

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dice to any other provisions of this Act, be punished with impris-

onment for a term which may be extended to two years, or with  

fine which may extend to twice the amount of the cheque, or with  

both:

Provided that nothing contained in this section shall apply  

unless-

(a) the cheque has been presented to the bank within a pe-

riod of six months from the date on which it is drawn or  

within the period of its validity, whichever is earlier.

(b) the payee or the holder in due course of the cheque, as  

the case may be, makes a demand for the payment of the  

said amount of money by giving a notice in writing, to  

the drawer of the cheque, within thirty days of the re-

ceipt of information by him from the bank regarding the  

return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of  

the said amount of money to the payee or, as the case  

may  be,  to  the  holder  in  due  course  of  the  cheque,  

within fifteen days of the receipt of the said notice.

Explanation. For the purposes of this section, “debt or  

other liability” means a legally enforceable debt or other lia-

bility.

142.  Cognizance  of  offences.-Notwithstanding  anything  

contained in the Code of Criminal Procedure, 1973 (2 of 1974)-

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(a) no court shall take cognizance of any offence punishable  

under section 138 except upon a 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 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,  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 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 whose local  

jurisdiction it was committed.

178. Place of inquiry or trial.- (a) When it is uncertain in which  

of several local areas an offence was committed, or

(b) where an offence is committed partly in one local area  

and partly in another, or

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(c) where an offence is a continuing one, and continues to be  

committed in more local areas than one, or

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

areas,  

it may be inquired into or tried by a Court having jurisdiction over  

any of such local areas.  

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  

inquired into or tried by a Court within whose local jurisdiction  

such thing has been done or such consequence has ensued.”

PARLIAMENTARY DEBATES

13. The XVIIth 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, submitted in 1975, which suggested, inter alia,  

penalizing the issuance of cheque without sufficient funds.  

The  Minister  of  Finance  had  assuaged  apprehensions  by

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arguing  that  safeguards  for  honest  persons  had  been  

incorporated in the provisions, viz.,   (i)  the cheque should  

have been issued in  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 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  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,  namely,  cheating,  fraud,  criminal  

breach of trust etc.  Therefore, there was no justification to  

make the dishonour of cheques a criminal offence, ignoring  

factors  like  illiteracy,  indispensable  necessities,

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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 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  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  in  Parliament  that  the  drawer  was  also  allowed  

sufficient opportunity to say whether the dishonour was by  

mistake.  It must be borne in mind that in the U.K. deception  

and dishonesty are key elements which require to be proved.

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In  the  USA,  some  States  have  their  own  laws,  requiring  

fraudulent  intent  or  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  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.  What  

is palpably clear is that Parliament was aware that they were  

converting civil liability into criminal content inter alia by 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.

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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 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 confined to the place of  

its  occurrence.   Blackstone opines that  crime is  local  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 determination 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

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or protection of the rights of the initiator of the proceedings.  

“Action, generally means a litigation in a civil Court for the  

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  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  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 offence; not being  

a  police  report.   Prosecution  ensues  from a  Complaint  or

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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 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  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 that Section 178 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  jurisdiction of criminal  Trials.   Section 178,  CrPC

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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.  

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 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  for  taking  cognizance,  but  inappropriate  and  

irrelevant for determining commission of the subject offence.  

There are 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

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Act 1988.  Similar situation is statutorily created by Section  

19 of the Environmental Protection Act 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  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 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 insufficiency, etc., of funds in the account.  Of  

course, the headings, captions or opening words of a piece

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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  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 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,  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

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under Section 138 but also 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 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  

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  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

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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 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  it  does form a  

constituent of  the crime itself, it modulates or regulates the  

crime  in  circumstances  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 required  

for prosecution to be successful.  In this aspect Section 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

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concatenation  of  all  these  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, 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  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  finds  it  advantageous  or  

convenient  to  proceed  under  that  provision.   An  

interpretation should not be imparted to Section 138 which

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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) 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 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  inundated  with  

prosecutions under Section 138 NI Act, so much so that the  

burden  is  becoming  unbearable  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

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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 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 in establishing that the inducement for  

accepting  a  cheque  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  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.

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19. The  interpretation  of  Section  138  of  the  NI  Act  

which  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  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 though non-compliance  

thereof will inexorably lead to the 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 that we

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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 jurisdiction the offence was committed, which in  

the present context 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  

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, keep-

ing in perspective the hardship that this will continue to bear  

on 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

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not commend itself to us.  Consequent on considerable  con-

sideration  we  think  it  expedient  to  direct  that  only  those  

cases where, post the summoning and appearance of the al-

leged 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,  

regardless of whether evidence has been led before the Mag-

istrate 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 Com-

plaint 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 territo-

rial  jurisdiction,  as  now  clarified,  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 Court, in consonance with our exposition of the law.  If

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such Complaints are filed/refiled within thirty days of their re-

turn, they shall be deemed to have been filed within the time  

prescribed by law, unless the initial or prior filing was itself  

time barred.  

DISPOSAL OF PRESENT APPEALS  

Crl. Appeal No.2287 of 2009

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  First  Class,  Digras,  District  Yavatmal  had  no  

jurisdiction to entertain the Complaint.  It is pertinent to note  

that  the  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  the  Complaint  itself

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should be dismissed; instead he ordered that it be returned  

to the complainant for filing in the appropriate Court.   

The Appeal is accordingly dismissed.

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  

purchased  electronic  items  from  the  Appellant-company,  

issued the cheque in question drawn on UCO Bank, Tangi,  

Orissa 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  

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 JMFC, Ahmednagar that the receipt of notice and non-

payment  of  the  demanded  amount  are  factors  which  will

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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  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.

Crl. Appeal Nos. 1594, 1595  & 1601 to 1603    of 2014 [Arising  out  of  S.L.P.(Crl.)Nos.2112  of  2009  and  2117  of  2009;  3762 of 2012; 3943 of 2012; 3944 of 2012]

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 [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

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carrying on their business.  The cheques in question were  

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  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  Magistrate  First  

Class, Nagpur who heard the 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  the  

acquittal  of  the  Respondent  No.2-accused  was  concerned  

and it was ordered that the Complaints be returned for filing

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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 [Arising out of S.L.P.(Crl.)No.59 of 2013]

25. The cheque in question was drawn by the Respondent-

accused on State Bank of Travancore, Delhi. However, it was  

presented by the Appellant-complainant at Aurangabad.  A  

Complaint  was  filed  before  JMFC,  Aurangabad  who  issued  

process.   Respondent-accused  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  

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  noted  that  the  objection  pertained  to  the  

territorial  jurisdiction  of  the  JMFC,  Aurangabad,  a  feature

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which had not been comprehensively grasped by the latter.  

The  High  Court  noted  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  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  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 underscore that the  

Accused had clarified that the subject transaction took place  

at Delhi where 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

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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  

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 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  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.

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.......................................................J. [T.S. THAKUR]

.......................................................J. [VIKRAMAJIT SEN]

…………......…………….........…………J. [C. NAGAPPAN]

New Delhi   August 1, 2014.  

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               REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.2287 OF 2009

DASHRATH RUPSINGH RATHOD …Appellant

Versus

STATE OF MAHARASHTRA & ANR. …Respondents

WITH

CRIMINAL APPEAL NO.  1593   OF 2014 (Arising out of S.L.P. (Crl.) No.2077 of 2009)

CRIMINAL APPEAL NO. 1594   OF 2014 (Arising out of S.L.P. (Crl.) No.2112 of 2009)

CRIMINAL APPEAL NO. 1595  OF 2014 (Arising out of S.L.P. (Crl.) No.2117 of 2009) CRIMINAL APPEAL NO. 1596-1600  OF 2014

(Arising out of S.L.P. (Crl.) Nos.1308-1312 of 2009) CRIMINAL APPEAL NO. 1601   OF 2014

(Arising out of S.L.P. (Crl.) No.3762 of 2012) CRIMINAL APPEAL NO. 1602   OF 2014

(Arising out of S.L.P. (Crl.) No.3943 of 2012) CRIMINAL APPEAL NO. 1603  OF 2014

(Arising out of S.L.P. (Crl.) No.3944 of 2012) AND

CRIMINAL APPEAL NO. 1604  OF 2014 (Arising out of S.L.P. (Crl.) No.59 of 2013)

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J U D G M E N T

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 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 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  

to make. Of   these decisions Bhaskaran’s   case   stands out as  

the earliest in which this Court examined the vexed question of

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territorial  jurisdiction  of  the  Courts  to  try  offences  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 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  

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 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

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concatenation of five acts that constituted the components of the  

offence any Court within whose jurisdiction any one of those acts  

was committed would 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 follow- ing 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  cheque demanding payment of the cheque amount, (5) fail- ure of the drawer to make 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 locali- ties. But a concatenation of all the above five is a 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) * * * (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.”

Thus it is clear, if the five different acts were done in five   different localities any one of the courts exercising jurisdic- tion 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 those courts   having jurisdiction over any one of the local areas within the   territorial  limits  of  which  any  one of  those  five  acts  was  

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done. As the amplitude stands so widened and so expansive   it is an idle exercise to raise 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  by  a  

three-Judge Bench decision in  Shri Ishar 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 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:

“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 mean the drawee bank on which the   cheque is drawn and not all banks where the cheque is pre- sented  for  collection  including  the  bank  of  the  payee,  in   whose favour the cheque is issued.

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It, however, does not mean that the cheque is always to be   presented to the drawer’s bank on which the cheque is is- sued. 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 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. Ishar Alloy’s case (supra) did not deal with the question of  

jurisdiction of the Courts nor was Bhaskaran 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 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 to the “drawee bank”, there is no gainsaying  

that dishonour would be localised and confined to the place where

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such 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 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 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.  

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 Bhaskaran was

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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.  

In  Harman’s case this Court, emphasized three distinct aspects.  

Firstly, it said that there was a world of difference between issue of  

a notice, on the 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.

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 offence. The following  

passage deals with both these aspects:

“It is one thing to say that sending of a notice is one of the   ingredients for maintaining the complaint but it is another   thing to say that dishonour of a cheque by itself constitutes   an offence. For the purpose of proving its case that the ac- cused had committed an offence under Section 138 of the   Negotiable Instruments Act, the ingredients thereof are re- quired to be proved. What would constitute an offence is   stated in the main provision. The proviso appended thereto,   however,  imposes certain further conditions which are re-

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quired to be fulfilled before cognizance of the offence can be   taken. If the ingredients for constitution of the offence laid   down in provisos (a), (b) and (c) appended to Section 138  of the Negotiable Instruments Act are intended to be applied   in favour of the accused, there cannot be any doubt that re- ceipt  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) of the proviso to Section  138  therefore  must  be  read  together.  Issuance  of  notice   would not by itself give rise to a cause of action but commu- nication 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 courts  

with jurisdiction to try offences under Section 138, it would lead to  

harassment of the drawer of the cheques thereby 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 signed by   the same borrower can not only present the cheque for its   encashment at four different places but also may serve no- tices from four different places so as to enable it to file four   complaint  cases at four different places.  This  only causes   grave harassment to the accused. It is, therefore, necessary   in a case of this nature to strike a balance between the right   of the complainant and the right of an accused vis-à-vis the   provisions of the Code of Criminal Procedure.”

7. Bhaskaran was,  in  the  wake  of  the  above,  considerably

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diluted and 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 complainant/payee of the cheque could without any 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 which  

have followed Bhaskaran and attempted to reconcile the ratio of  

that case with the subsequent decisions in Ishar Alloy Steels and  

Harman Electronics. In  Nishant Aggarwal v. Kailash 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 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

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jurisdiction to deal with the matter. While saying so, the Court tried  

to  distinguish  the  three-Judge  Bench  decision  in  Ishar  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.  Imtiyaz  Ahmad  Bhat   

(2014) 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.

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.         

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

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of interpretation that in a penal statute, the Courts would hesitate  

to  ascribe  a  meaning,  broader  than  what  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  cheque  for  insufficiency  of  funds  etc.  in  the  account  

maintained by the drawer with a bank for 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  liability  and  (c) The cheque is  returned  

unpaid for insufficiency of funds or that the amount exceeds the  

arrangement  made  with  the  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 enacting part of the provision, by

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stipulating two steps that ought 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 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 Section 142 which runs as under:

”Section 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 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 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, 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 offence

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punishable under section 138.“

11. The following would constitute ‘cause of action’ referred to in  

sub clause (b) above:

(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  

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.

12. A  proper  understanding  of  the  scheme  underlying  the  

provision  would  thus  make  it  abundantly  clear  that  while  the  

offence is complete upon dishonour, prosecution for such offence is  

deferred  till  the  time  the  cause  of  action  for  such  prosecution  

accrues  to  the  complainant.  The  proviso  in  that  sense,  simply  

postpones the actual prosecution of the offender till such time he

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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 wisdom considered it just and  

proper  to  give  to  the  drawer  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  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  

the  stipulated  period  will  in  such  cases  diffuse  the  element  of  

criminality that Section 138 attributes to dishonour by way of a  

legal fiction 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

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provide for situations where a cheque is dishonoured even 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 provision is,  

in that view, a mandatory requirement. (See  C.C. Alavi Haji v.  

Palapetty Muhammed and Another (2007) 6 SCC 555).           

14. Harman in that view correctly held that “what would consti-

tute an offence is stated in the main provision.  The proviso ap-

pended 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 stipu-

lated in the proviso, also as ingredients of the offence, the provi-

sion would have read differently.  It would 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

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provision of Section 138 reads. The legislature has, it is obvious,  

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.  That a  

proviso is an exception to the general rule is well settled.  A pro-

viso 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 main enact-

ment, a portion which but for the proviso would fall within the main  

enactment.           

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 clause   the first words of which are “provided that” inserted in deeds   and  instruments  generally.  And  containing  a  condition  or   stipulation on the performance or non-performance of which,   as the case maybe. The effect of a proceeding clause or of   the deed depends.  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 depends [ S. 105, Indian Evidence Act]. 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...”

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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 under the restriction of the saving clause or proviso, the   

same is not to be held void for repugnancy.”

17. One 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 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 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 rules of construction, is to except   out of the preceding portion 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 Court in  

Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC 128 where  

this Court was examining whether a cinema theatre equipped with

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projectors and other fittings ready to be launched as entertainment  

house was covered under the definition of ‘accommodation’ as de-

fined in Section 2 (1) (d) of Uttar Pradesh (Temporary) Control of  

Rent and Eviction Act, 1947. The proviso provided for some excep-

tion 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 cin-

ema hall:  

“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 de- pendent 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 enacting clause, the   stand we have taken is sound. To expand the enacting clause, inflated  by the proviso, sins against the fundamental rule of construction that a   proviso must be considered in relation to the principal matter to which it   stands as a proviso. A proviso ordinarily 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 har- monious construction.

The proper  course is  to  apply the broad general  rule of  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 enacting clause, saving clause,   and proviso, taken and construed together is to prevail. (Maxwell on In- terpretation of Statutes, 10th Edn. p. 162)”

(emphasis supplied)

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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.  

“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 added to   qualify or create an exception.”

20. Reference  may  also  be  made  to  Tribhovandas  Haribhai  

Tamboli v. Gujarat Revenue Tribunal and others (1991) 3  

SCC 442 wherein this Court clearly held that when 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 particular provision   of a statute only embraces the field, which is covered by the main provision. It   carves out an 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 fall within the general language of the   main enactment, and its effect is to confine to that case. 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, by implication what clearly falls within its express terms. The scope of  the proviso, therefore, is to 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 torn apart from the main enactment nor can it be   used  to  nullify  by  implication  what  the  enactment  clearly  says  nor  set  at  

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naught the real object of the main enactment, unless the words of the proviso   are such that it is its necessary effect.”

      (emphasis supplied)

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 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  Kerala State Housing Board and Ors. v. Ramapriya   

Hotels (P) Ltd. and Ors. 1994 (5) SCC 672  this Court was ex-

amining whether the period of 4 years envisaged in proviso to Sec-

tion 16(i) under Kerala Land Acquisition Act, 1961 could be reck-

oned from date when agreement was executed or from date of  

publication of notification under Section 3(1) of the Act after the  

agreement was executed. After relying on  Tribhovandas Harib-

hai Tamboli (supra) and A.N. Sehgal (supra) this Court held that

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Jute  Manufacturing  Co.  Ltd.  v. Commercial  Tax  Office  [1965]3SCR626). Since the natural 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 make the exceptions 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 v. Hormusji Manekji (AIR 1947 PC 200) as also 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 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 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 opera-

tion to the ambit of the section which it qualifies” [Lloyds and Scot-

tish  Finance  Ltd  v.  Modern  Cars  and  Canavans  (Kingston)  Ltd.

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(1966)]. And, so far as that section itself is concerned, the proviso   

receives a restricted construction: where the section confers pow-

ers, “it would be contrary to the ordinary operation of a proviso to   

give it an 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 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 of the offender till  the conditions pre-

scribed therein are satisfied. Bhaskaran does not view the matter  

in that perspective while Harman (supra) does.  We find ourselves  

in respectful agreement with the view in  Harman’s case on this  

aspect.  

27. In  Bhaskaran,  this   Court   resolved the confusion as to the  

place of commission of the offence by relying upon Sections 177 to

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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 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 lo-

cal, the place where the dishonour occurs is the place for commis-

sion of the offence vesting the Court exercising territorial jurisdic-

tion 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  

within the meaning of Section 220 (1) of the Cr.P.C. then the of-

fender 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 pro-

vided by Section 184 of the Code.  So also, if an offence punishable  

under Section 138 of the Act is committed as a part of single trans-

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action with the offence of cheating and dishonestly inducing deliv-

ery 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 inducement took place or where the cheque form-

ing part of the same transaction was dishonoured or at the place  

where the property which the person cheated was dishonestly in-

duced 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 of insti-

tuting prosecution not only at the place where the cheque was dis-

honoured 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 bear 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

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determination.  In  Sadanandan  Bhadran  v.  Madhavan  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 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 cheque 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 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 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

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can  be  launched  for  an  offence  under  Section  138.  This  Court  

observed:

“  On a careful analysis of the above section, it is seen that its    main part creates an offence when a cheque is returned by   the bank unpaid for any of the reasons 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 pre- sented to the bank within 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 no- tice after the cheque is returned unpaid; and (iii) that the  drawer should have failed to pay the amount within 15 days   of the receipt of the notice. It is only when all the  above  three  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 Sec- tion 138 does not put any embargo upon the payee to suc- cessively present a dishonoured cheque during the period of   its validity. This apart, in the course of business transactions   it is not uncommon for a cheque being returned due to in- sufficient funds 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 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 compul- sion and not choice. For the above reasons it must be held   that a cheque can be presented 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 Kerala High Court in Kumaresan1 which struck a dis- cordant note with the observation that for the first dishon- our of the cheque, only a prosecution can be launched for   there cannot be more than one cause of action for prosecu- tion.”

(emphasis supplied)

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30. MSR Leathers (supra) also looked at Section 138 and 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 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 followed by statutory notices and failure 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 law and successive failure  

of  the  drawer  to  make  the  payment.  MSR  Leathers cannot,  

therefore, be taken as an authority for determining whether the

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(b)  If  the  complainant  has  demanded  payment  of  cheque  

amount within thirty days of  receipt  of  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.

(iv) The facts constituting cause of action do not constitute the  

ingredients of the offence under Section 138 of the Act.

(v) 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.

(vi) 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.

(vii)  The  general  rule  stipulated  under  Section  177  of  Cr.P.C  

applies to cases under 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

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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 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.

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 of India in its 213 th  

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 in criminal courts in Delhi alone as of 1st  

June 2008.  The position is no different in other cities where large

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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 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 to  justify  institution of  such  

cases far away from where the transaction forming basis of the  

dishonoured cheque had taken place. It 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 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

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in Bhaskaran’s case permitting prosecution 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  

resulted 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 dishonoured despite 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 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 to the accused the  

view taken in the  Bhaskaran’s case needs to be revisited as we  

have done in foregoing paragraphs.

33. With  the  above  observations,  I  concur  with  the  order

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proposed by my noble Brother, Vikramajit Sen, J.

……………….……….…..…J.       (T.S. Thakur)

New Delhi August 1, 2014