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Issues: (i) Whether the Delhi courts had territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act, 1881. (ii) Whether the complaint was liable to be quashed or the summoning order recalled on the ground that only some directors were responsible for the company's affairs. (iii) Whether the cheque, being allegedly collateral security or followed by part payment, did not represent a legally enforceable debt or liability so as to exclude the offence under Section 138.
Issue (i): Whether the Delhi courts had territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act, 1881.
Analysis: The offence under Section 138 is complete only on the concatenation of the acts constituting the offence, and Section 178(d) of the Code of Criminal Procedure, 1973 permits inquiry or trial by a court having jurisdiction over any local area where one of the constituent acts occurred. Presentation of the cheque at Delhi, dishonour at Delhi, issuance of notice from Delhi, and failure to pay at Delhi showed that part of the cause of action arose within Delhi.
Conclusion: The Delhi courts had territorial jurisdiction, and the objection failed.
Issue (ii): Whether the complaint was liable to be quashed or the summoning order recalled on the ground that only some directors were responsible for the company's affairs.
Analysis: The complaint contained a specific assertion that the accused persons were in charge of and responsible for the conduct of the company's day-to-day business, and the company's annual report was also relied upon. Whether particular directors were not in control of the business was a factual matter to be tested in evidence, and the statutory scheme under Section 141 of the Negotiable Instruments Act, 1881 placed the burden on the accused to establish absence of responsibility.
Conclusion: The challenge based on non-involvement of certain directors was rejected.
Issue (iii): Whether the cheque, being allegedly collateral security or followed by part payment, did not represent a legally enforceable debt or liability so as to exclude the offence under Section 138.
Analysis: Section 139 of the Negotiable Instruments Act, 1881 creates a presumption that the cheque was issued for the discharge of a debt or liability, and the complainant was not required at this stage to prove the subsistence of liability. The alleged part payment did not extinguish the liability on the cheque in question, and whether the accused could rebut the presumption was a matter for trial.
Conclusion: The contention that the cheque was not issued towards a debt or liability was rejected.
Final Conclusion: The petition failed on all substantive grounds, and the summoning order was left undisturbed while the trial was directed to proceed expeditiously.
Ratio Decidendi: In a prosecution under Section 138 of the Negotiable Instruments Act, 1881, territorial jurisdiction exists where any component act of the offence occurs, and the statutory presumption under Section 139 operates unless rebutted by the accused at trial.
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