Territorial jurisdiction and security cheque liability under Section 138 were upheld where constituent acts occurred at Gurgaon.

Territorial jurisdiction for a Section 138 Negotiable Instruments Act complaint lies where any constituent act of the offence occurs, including presentation of the cheque and issuance of notice from that ation; on these facts, the Gurgaon court had jurisdiction. A cheque described as a security cheque is not outside Section 138 merely because of that label; where it is issued in relation to an existing or enforceable liability and is presented under the transaction, its dishonour may attract statutory liability. The territorial objection and the argument of immunity for a security cheque were both rejected, and the complaint and summoning proceedings were allowed to continue.

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Issues: (i) whether the criminal court at Gurgaon had territorial jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act, 1881; (ii) whether dishonour of a security cheque could attract liability under Section 138 of the Negotiable Instruments Act, 1881.

Issue (i): whether the criminal court at Gurgaon had territorial jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: Jurisdiction under Section 138 is determined by the places where the constituent acts of the offence occur. Section 178(d) of the Code of Criminal Procedure, 1973 applies where an offence consists of several acts done in different local areas. On the facts, the cheque was presented at Gurgaon and notice demanding payment was issued from Gurgaon. Those acts formed part of the offence and were sufficient to confer jurisdiction on the Gurgaon court.

Conclusion: The complaint was maintainable before the criminal court at Gurgaon and the territorial objection failed.

Issue (ii): whether dishonour of a security cheque could attract liability under Section 138 of the Negotiable Instruments Act, 1881.

Analysis: A security cheque issued in the course of a commercial transaction is not outside the ambit of Section 138 merely because it was described as a security instrument. Where the cheque is issued towards an existing or enforceable liability and is later presented in accordance with the transaction, dishonour may still found liability under the statute.

Conclusion: The plea that a security cheque cannot attract Section 138 liability was rejected.

Final Conclusion: The petition for quashing failed both on jurisdiction and on the alleged immunity of a security cheque, and the complaint and summoning proceedings were allowed to stand.

Ratio Decidendi: For an offence under Section 138 of the Negotiable Instruments Act, 1881, territorial jurisdiction lies in any court within whose local limits any constituent act of the offence occurs, and a cheque described as a security cheque may still attract liability if issued in relation to an enforceable obligation.

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