Case Law Details

Case Name : Dashrath Rupsingh Rathod Vs State of Maharashtra & Anr. (Supreme Court of India)
Appeal Number : Criminal Appeal no. 2287 of 2009
Date of Judgement/Order : 01/08/2014
Related Assessment Year :
Courts : Supreme Court of India (897)

Honourable Supreme Court  has held in the case of  Dashrath Rupsingh Rathod Vs. State of Maharashtra & Anr. that all the pending cases of cheque bouncing under Negotiable Instrument Act to be transferred to the place from the cheque is issued. The Court in the case has held as under-

31. To Sum up

(i)  An offence under Section 138 of the Negotiable Instruments Act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency of funds or for the reason that the amount exceeds the arrangement made with the bank.

(ii)  Cognizance of any such offence is however forbidden under Section 142 of the Act except upon a complaint in writing made by the payee or holder of the cheque in due course within a period of one month from the date the cause of action accrues to such payee or holder under clause (c) of proviso to Section 138.

(iii)  The cause of action to file a complaint accrues to a complainant/payee/holder of a cheque in due course if

(a) the dishonoured cheque is presented to the drawee bank within a period of six months from the date of its issue.

(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.

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(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 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 213th 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 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 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.

The decision of the Honourable Supreme Court in above case  may cause undue hardship and the decision needs to be reviewed by  Honourable Supreme Court for the following reasons :-

1.  discomfort and unnecessary pain which could be avoided if the consent of the applicant or plaintiff is taken before shifting it. As it is he suffering because of no fault of his and now add to his woes this new order by  the Honourable Court has passed .

2.  the plaintiff who has already paid to a lawyer while hiring him at the of filing the case now will pay again to hire a new lawyer at a new place.

3.  A new place to which the poor plaintiff is not known to will struggle hard to find a suitable lawyer or seeking help of others who may not understand his need and urgency.

4. where the case is already  proceeding will be shifted to a new court and will start from the beginning again proving to a long litigation starting afresh. Instead of shifting, suggestible would have been early decision in all these cases at negotiation level.

5. where courts are full of other cases  shifting of these cases will add  to their lists making it longer.

6. at times transactions are so small which can be sorted at negotiation level now will be burdened with the high fee charged by the new lawyers and other litigation charges.

7. the poor plaintiff who is already in loss of money, interest loss on that money, loss in business due to non payment by the defaulter will have to go through now these troubles of  going to a new place ;bearing travelling , boarding and lodging charges to stay to attend to the hearings.

Requesting the Honourable Court to reconsider this shifting of cheque bouncing to the new place.

(Compiled by Advocate Sargun Babuta and CA Sandeep Kanoi)

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0 responses to “Sec.138 of N.I.Act – Prosecution to be launched in Jurisdiction of court where cheque was dishonored- SC”

  1. M.D.Gupta-Advocate says:

    order of Stay about case of Dashrath Rupsingh Rathod Vs. State of Maharashtra & Anr.

  2. Ashok says:

    This judgment should be reviewed. As the same is totally in favour of the Accused as they have already committed the offence by cheating the Complainant and as such the Complainant is at loss and suffering, they have to suffer more by giving the fees to the lawyers once again after filing the case at different state or court. This case simply favor the Accused who can steal the hard earned money of innocent creditors and enjoy it at there place because most of the small creditors will not go for litigation at it will again a total waste of time and money.

  3. BRIJ MOHAN says:

    IN INDIA EVERY THING IS SO CONFUSE AND JUSTICE SYSTEM IS TOTALLY CORRUPT
    JUDGES GOT THE GOOD SALARY WITH LUXURY CARS AND LOT OF HOLIDAYS AND THE ALLOWANCES OF HIGH COURT JUDGES ARE ALSO TAX FREE EVEN IN SOME CASES JUDGEMENTS ARE SO CONFUSED THAT CREATE MORE LITIGATION
    LET ORDINARY MEN SUFFER IS THE BASIC PRINCIPLE OF INDIAN JUDICIARY SYSTEM AND INDIAN BUREAUCRACY
    INDIA WILL DIE IT OWN DEATH NO NEED FOR ISIS TO INTERFERE POPULATION AND CORRUPTION WILL BE REAL CAUSE OF ITS DEATH
    MORE SUFFERINGS FOR POOR AND COMMON MAN IS WAITING

  4. shekar says:

    The judgement is not favourable to Business community. It is a punishment to complainants and blessing for defaulters. (Looks like law supports defaulters). It is highly painful that even cases of 138 under NI act are dragged for years. Honourable Court must reconsider this judgement.Let us hope there will be interference from government to put the things right.

  5. Rajesh, Mumbai says:

    with high respects for Hon.Supreme court,It seems that judgement has been issued without considering ground reality. The judgement is not favourable to Business community.It is a punishment to complainants and blessing for defaulters.It is highly painful that even cases of 138 under NI act are dragged for years. This will lead to deficit of trust amongst business community and there will be instances that even post dated cheques by reputed companies will not serve purpose for getting material on credit terms.In fact, Laws should discourage and tend to punish defaulters but in instant case it is vice versa. Let us hope there will be interference from government to put the things right otherwise there will be chaos everywhere.

  6. CA Sarvesh Kumar says:

    Agreed with the suggestions provided by Advocate Sargun Babuta and CA Sandeep Kanoi. Its a clear case of injustice on the part of the aggrieved person.He is already suffering from the loss due to non payment ,interests ,mental trauma for others dues to paid out of money to be recovered.Further he has no clue where to find a better lawyer,cost of litigation,and most importantly when and what will be outcome.Its simply a hardship and immediate action is required to remove such decision.This case simply favor the law breaker who can steal the hard earned money of innocent creditors and enjoy it at there place because most of the small creditors will not go for litigation at it will again a total waste of time and money.
    This decision is acceptable only at one circumstance where a dead line is enforced,fast track court make such decisions and total compensation including penalty is paid.But, alas!! the system of judiciary is over burdened and we could not expect such thing to happen in near future unless our pending decisions are resolved and chances of early decision occurred.

  7. CA Sarvesh Kumar says:

    Agreed with the suggestions provided by Advocate Sargun Babuta and CA Sandeep Kanoi. Its a clear case of injustice on the part of the aggrieved person.He is already suffering from the loss due to non payment ,interests ,mental trauma for others dues to paid out of money to be recovered.Further he has no clue where to find a better lawyer,cost of litigation,and most importantly when and what will be outcome.Its simply a hardship and immediate action is required to remove such decision.This case simply favor the law breaker who can steal the hard earned money of innocent creditors and enjoy it at there place because most of the small creditors will not go for litigation at it will again a total waste of time and money.
    This decision is acceptable only at one circumstance where a dead line is enforced,fast track court make such decisions and total compensation including penalty is paid.But, alas!! the system of judiciary is over burdened and we could not expect such thing to happen in near future unless our pending decisions are resolved and chances of early decision occurred.

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