Section 138 - Territorial Jurisdiction – Core Banking Solutions (CBS) - dishonour of cheque

Case Referred:
1. Dashrath Rupsingh Rathod vs. State of Maharashtra and Another, 2014 (9) Supreme Court Cases 129.

Facility to en cash cheque at any bank branch - Held: Mere presentation of cheque in a CBS branch does not give rise a cause of action and confirm territorial jurisdiction to Court of that area - . On bare reading of provisions contained in Section 138 read with Section 142 of NI Act and the view taken by the Apex Court in Dashrath Rupsingh Rathod (supra), there is no scope of confusion that complaint under Section 138 of NI Act will be maintainable only at the place where the cheque stands dishonoured. In other words, the prosecution for the offence under Section 138 of NI Act would only lie at the place where the drawee bank is situated.

2015 STPL(Web) 482 DEL

[2015 (1) DCR 169]

DELHI HIGH COURT

(MR. VED PRAKASH VAISH, J.)

GOYAL MG GASES PVT. LTD.

Petitioner

VERSUS

STATE & ORS.

Respondent

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7. Learned counsel for the petitioner contended that now a day, almost all the branches of the bank are covered under Core Banking Solutions (CBS) and in terms of guidelines issued by Reserve Bank of India vide circular No.RBI/2012-13/163 DPSS.CO.CHD. No.271/03.01.02/2012-13 dated 10.08.2012 (Annexure-F), all CBS enabled banks have been asked to issue only payable at par/ multicity CTS 2010 standard cheques to all eligible customers. It has been argued on behalf of the petitioner that one of the essential features of multi-city/ cheques payable at par is that the holder of cheque can present the same at any CBS enabled branch of the drawee bank in order to encash the said cheque. That being so, the complainant is well within its right to initiate prosecution for the offence under Section 138 of the NI Act at the place where the branch in which the cheque in question was presented for its encashment irrespective of the fact that such branch was not the home branch of the drawee bank where the accused was having the bank account in the said bank. In other words, the main thrust of argument raised on behalf of the petitioner/ complainant is that the complaint under Section 138 of NI Act can be instituted even at that branch of a bank wherein the cheques in question were deposited and got dishonoured, in addition to the home branch of the drawee bank wherein the accused has bank account. When the accused issued such a cheque payable at par there was an express authority to the complainant under the aforesaid condition to present the cheque in any branch of Bank of India. 

8. Per contra, learned counsel for respondents/ accused urged that territorial jurisdiction to entertain and try cases filed under Section 138 of NI Act, would lie with Courts within whose jurisdiction the home branch of the drawee bank in which the accused has a bank account from which cheques in question have been issued, is situated and at no other place. In support of their submission, they have placed heavy reliance upon the judgment of Dashrath Rupsingh Rathod vs. State of Maharashtra and Another, 2014 (9) Supreme Court Cases 129

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14. On bare reading of provisions contained in Section 138 read with Section 142 of NI Act and the view taken by the Apex Court in Dashrath Rupsingh Rathod (supra), there is no scope of confusion that complaint under Section 138 of NI Act will be maintainable only at the place where the cheque stands dishonoured. In other words, the prosecution for the offence under Section 138 of NI Act would only lie at the place where the drawee bank is situated. 

15. No doubt, a cheque which is made payable at par/ multi-city cheque can be presented at any of the branches of bank, which has been nominated as CBS branch of the drawee bank in terms of the recent guidelines issued by Reserve Bank of India vide circular dated 10.08.2012 (Annexure-F with the petition). However, it is to be noticed that the said guidelines had been issued by Reserve Bank of India with altogether different object. The said object is to facilitate speedy encashment of amount against cheques more particularly in cases of out stationed cheques. It is a matter of common knowledge that in the past, there used to be considerable delay in collection of out stationed cheques which led to number of complaints from customers and members of public at large. The average time consumed in the out stationed cheque used to be somewhere between seven days to one month. In order to improve the service with regard to collection of out stationed cheques, facility of cheques which are payable at par/ multi-city cheques was introduced in the banking system. In order to regulate the same, Reserve Bank of India also issued policy which is known as Policy on Multi-city/payable at par CTS 2010 Standard Cheques (Annexure-G to the petition). The perusal of the said policy would reveal that certain limit has been prescribed on payment of multi-city cheques at non-home branches as mentioned therein. 

16. According to the said policy, in case cheque account of multicity cheque to be presented at non-home branch in case of saving bank account, is more than Rs.10,00,000/- (Rupees Ten lakhs) then same would not be accepted by non-home branch of the drawee bank and thus, it has to be presented at the home branch of the drawee bank for its encashment. Same is the position with regard to other types of bank accounts like current account, cash credits, etc. 

17. One important aspect which also needs to be highlighted at this stage are the words like, inter alia subject to connectivity written on bottom of the cheque No.901942 dated 01.09.2012 drawn on bank of India, Rajgarh Branch, Chhattisgarh, which is the subject matter of Crl. M.C. No.4407/2014. The aforesaid endorsement conveys an important message and said message is that encashment of cheque at non-home branch would be subject to connectivity of computer system installed at non-home branch of drawee branch with the computer system installed at home branch of the same bank. Whenever there is no connectivity either due to technical fault or for any other reason, nonhome branch cannot be made responsible for the delay caused in encashing the proceeds of the cheques presented in such branch.

18. There is another reason due to which the contention raised on behalf of petitioner/ complainant cannot be sustained. The cheque amount is supposed to be paid from the account of accused/respondents maintained at home branch of drawee bank. It is merely as a result of computerization of all the branches of bank, facility has been provided for encashment of cheques payable at par at any branch irrespective of the fact that account holder was not having bank account in the branch where the cheque is presented. Merely because the cheque has been presented at non-home of drawee bank, it does not in any manner, become the drawee bank for the obvious reason that before encashing the cheque payable at par, the nonhome branch is still required to verify from home branch of the drawee branch as to whether or not there was any impediment in encashment of the cheque drawn at home branch. Even otherwise, in the event of encashment, the amount of cheque would be required to be debited in the account of the accused maintained at home branch as the amount was only payable by the home branch of drawee bank.

Therefore, the presentation of cheque at non-home branch of drawee bank being the cheque which is payable at par/ multi-city cheque, will not change the character of drawee bank and would not confer territorial jurisdiction on Delhi Courts. 

19. The sequitur of the above discussion is that Delhi Courts have no territorial jurisdiction to entertain and try the complaint(s) which are subject matter of the present petition. Accordingly, all the petitions are hereby dismissed and the impugned order dated 30.08.2014 and 08.09.2014 passed by the learned trial court are maintained.