In the intricate landscape of legal jurisdiction, the interpretation of Section 138 of the Negotiable Instruments Act, 1881, concerning territorial jurisdiction, has sparked debate and differing judicial opinions. This article delves into the nuances of this legal provision, examining the precedents set by the Supreme Court of India and their implications on where a complaint under this section can be tried. We will explore the contrasting judgments and the principles that govern the binding nature of Supreme Court decisions on co-ordinate benches.
Section 138 of the Negotiable Instruments Act, 1881, addresses the offense of dishonor of a cheque due to insufficient funds or if it exceeds the amount arranged to be paid from that account. The provision aims to instill confidence in the efficacy of banking operations and to discourage the issuance of cheques without sufficient funds.
The crux of the debate lies in determining the appropriate court with the territorial jurisdiction to try offenses under Section 138. This issue was brought to light in the case of Surjeet Singh Vs M/s G.E. Capital Transport Financial Services & Anr, where the Delhi High Court ruled that it did not have the jurisdiction to try the complaint, citing two Supreme Court judgments as the basis for its decision.
The Supreme Court's judgments in question are Harman Electronics Private Limited Vs. National Panasonic India Private Limited and Shri Ishar Alloy Steels Ltd. Vs. Jayaswals Neco Ltd. In Harman Electronics, the Court held that the mere act of sending a notice from Delhi to Raipur does not confer jurisdiction to Delhi courts if the cheque is presented to a bank outside Delhi. Similarly, in Shri Ishar Alloy Steels Ltd., the Court emphasized that the cheque must be presented to the bank on which it is drawn for the drawer to be held criminally liable.
A significant legal principle is that a co-ordinate bench of the Supreme Court cannot overrule the decision of a prior bench of equal strength; it can only refer the matter to a larger bench. This was affirmed in the case of Union of India & Others Vs S.K. Kapoor. However, the directions issued by the Supreme Court under Article 142 of the Constitution do not constitute a binding precedent, as observed in several cases, including State of U.P. Vs Neeraj Awasthi & Others.
The Delhi High Court's reliance on the aforementioned Supreme Court judgments to conclude that it lacked territorial jurisdiction is contested. Critics argue that the High Court misinterpreted the Supreme Court's rulings, particularly in the context of the Harman Electronics case, where the Supreme Court's directions were specific to the facts of that case and did not set a general precedent.
The debate over territorial jurisdiction in Section 138 of the Negotiable Instruments Act underscores the need for clarity and consistency in legal interpretations. While the Supreme Court's judgments provide guidance, their application to specific cases requires careful consideration to ensure that justice is served in the appropriate jurisdiction.
For a more detailed analysis of the territorial jurisdiction under Section 138 of the Negotiable Instruments Act, readers can refer to authoritative sources such as Supreme Court Cases and legal journals.
Contract Act Articles
This has reference to the observations of hon’ble Single Judge bench of Delhi HC in Eider PW1 Paging Limited and Eider PW1 Communications Ltd. Vs. Union of India and Ors. {2010 (115) DRJ 263- Delhi HC}, which has been referred to a larger bench of Delhi HC.
Constitution of India Articles
“Section 142(a) of the Negotiable Instruments Act, 1881 requires that no Court shall take cognizance of any offence punishable under section 138 except upon a complaint made in writing by the payee. Thus the two requirements are that (a) the complaint should be made in writing (in contradistinction from an oral complaint); and (b) the complainant should be the payee (or the holder in due course, where the payee has endorsed the cheque in favour of someone else). The payee, as noticed above, is M/s Shankar Finance & Investments. Once the complaint is in the name of the `payee' and is in writing, the requirements of section 142 are fulfilled.
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