Mahendra Kumar Kedarnath Modi v. State of Gujarat

NEGOTIABLE INSTRUMENTS ACT, 1881

--Dishonour of cheques--Cheque delivered in a bank at different place for collection on behalf of another bankJurisdiction of court to file complaint under section 138 of N.I. Act.----The territorial jurisdiction under section 142(2) of N.I. Act will be the court within whose local jurisdiction the bank branch of the payee (collecting bank) is situated, therefore, where cheques issued in favour of a party situated at Vadodara were presented in New Delhi under a fund collection service (FCS) facility with Corporation Bank, the territorial jurisdiction for filing complaint on cheques getting dishonoured under section 138, is a Court at Vadodara, and not New Delhi.--G company had an account with the Bank of Baroda, Vadodara Branch. M company issued various cheques drawn at New Delhi in favour of G in connection with sale transaction. As the cheques were delivered at New Delhi, G handed over those cheques to the Corporation Bank, New Delhi for collection as per the standing agreement between G and Corporation Bank for the purpose of clearance. As per the facility provided by Corporation Bank, the amount after collection was to be credited in the Vadodara Branch account of G with Bank of Baroda. The cheques, which were presented before the Corporation Bank, were sent for clearance, and the Corporation Bank informed G that all the cheques got dishonoured. G company filed a complaint under section 138 of the N.I. Act at Vadodara for dishonour of the cheques. M contended that the complaint, for dishonour of the cheques, could not have been filed in the court at Vadodara as the territorial jurisdiction to try the complaints would be with the court at New Delhi. Held: If the payee presents the cheque through the account, the territorial jurisdiction under section 142(2) of N.I. Act will be the court within whose local jurisdiction the bank branch of the payee (collecting bank) is situated. All the cheques were account payee cheques presented before the Corporation Bank at New Delhi. Corporation Bank where G did not maintain any bank account, could be called mere holder in due course (facilitating agency) and therefore depositing a cheque in any fund collection system (FCS) branch of Corporation Bank, Delhi would amount to depositing the cheques in the Central Pooling Account of Bank of Baroda, Vadodara Branch only. Hence, the Court having territorial jurisdiction over Bank of Baroda, Vadodara Branch had to be the Court that could inquire into and try the offence under section 138 of the N.I. Act. The Court at Vadodara had the territorial jurisdiction and the complaints filed by G for the offence under section 138 of the N.I. Act were maintainable. All the applications of M got failed and rejected.