2023 (5) TMI 799 - HC - Indian Laws

Separate complaints upheld under section 138 NI Act: legal liability, jurisdiction, and witness rules clarified.

The court upheld the maintainability of separate complaints under section 138 of the Negotiable Instruments Act, emphasizing independent causes of action. ... Dishonour of Cheque - legally enforceable debt or not - territorial jurisdiction of the Magistrate - case already filed before same Trial Court regarding the same transaction - offence under section 138 read with section 141 of the Negotiable Instruments Act, 1881 - HELD THAT:- No provision of law or any precedent is pointed out in support of his submission that filing of complaint based on one agreement and one transaction, independent dishonour of cheque is not maintainable. Considering scheme of section 138 of the Negotiable Instruments Act, 1881, independent cause of action gives rise to filing of independent complaint. If the court is satisfied that the ingredients of section 138 are fulfilled, the learned Magistrate is entitled to issue process. Legally recoverable liability or not - submission is that initial loan was Rs. 1,50,00,000/- and the cheques issued which are subject matter of two complaints are of Rs. 1,61,48,178/- and Rs. 1,56,07,312/-, demonstrate that there is no legally recoverable liability - HELD THAT:- The said submission is in ignorance of paragraph 7 of the complaint which states that in addition to Rs. 1,50,00,000/-, amount of Rs. 50,00,000/- was sanctioned to the complainant. The factum as to whether the total amount of cheque is legally recoverable or not is purely question of facts. At the stage of issuance of process, unless there is unimpeachable document on record which shows that the amount sought to be enforced on the face of it is not legally Petitioners are residing outside territorial jurisdiction of the Magistrate or not - inquiry under section 202 is mandatory or not - HELD THAT:- Such inquiry is not held and, therefore, order of issuance process is barred. The Apex Court in Sunil Todi and Others vs. State of Gujrat and Another [2021 (12) TMI 175 - SUPREME COURT] has held that in every case under section 138 of the Negotiable Instruments Act, 1881, it is not necessary that the witnesses should be examined. If the material on record is sufficient to make out prima facie case, inquiry under section 202 can be held in absence of witnesses if complainant has given affidavit of complaint. The impugned order indicates that such order has been passed by the Court based on complaint along with affidavit of verification. The alleged defect of inquiry under section 202 can be cured during affidavit of evidence. The territorial jurisdiction of the learned Magistrate is decided as per section 142A of the Negotiable Instruments Act, 1881. It is the branch of payee bank which confers jurisdiction on the Court. Therefore, merely because two complaints are filed at two different places by itself does not raise ground for challenging order of issuance of process on the ground of lack of territorial jurisdiction. Complainant has already filed one case before same Trial Court regarding the same transaction or not - HELD THAT:- The statement made in paragraph 14 is inconsequential and has no relevance on merits of the matter and, therefore, even if such statement is incorrect, it will be of no consequence and does not affect the validity of order of issuance of process. Petition dismissed. Issues involved:Challenge to order under section 138 of the Negotiable Instruments Act, 1881 based on multiple grounds including maintainability of complaints arising from the same transaction, legality of recoverable liability, necessity of inquiry under section 202, and territorial jurisdiction of the Magistrate.Maintainability of complaints:The respondent filed two complaints for dishonour of cheques arising from the same transaction. The court held that under section 138 of the Negotiable Instruments Act, independent cause of action allows for the filing of separate complaints. The court emphasized that if the ingredients of section 138 are met, the Magistrate can issue process, regardless of complaints arising from the same agreement.Legality of recoverable liability:The petitioners argued that the cheques issued were of amounts exceeding the initial loan, suggesting no legally recoverable liability. The court pointed out that additional funds were sanctioned to the complainant, making the total amount legally recoverable a question of fact. Without clear evidence showing the amount is not legally recoverable, the court cannot accept the petitioners' submission at the stage of issuing process.Necessity of inquiry under section 202:The petitioners claimed that residing outside the Magistrate's jurisdiction required a mandatory inquiry under section 202, which was not conducted. Citing a Supreme Court ruling, the court explained that for complaints under section 138, witness examination is not always necessary. The court found that the Magistrate's prima facie satisfaction based on the complaint and affidavit of verification was sufficient, and any alleged defect in the inquiry under section 202 could be addressed during the affidavit of evidence.Territorial jurisdiction of the Magistrate:The petitioners raised concerns about the Magistrate's territorial jurisdiction due to complaints filed at different courts. The court clarified that jurisdiction is determined by the branch of the payee bank, as per section 142A of the Negotiable Instruments Act, 1881. Filing complaints at different locations does not automatically challenge the Magistrate's jurisdiction.Validity of order and false averments:Lastly, the petitioners disputed the validity of the order based on false statements in the complaint regarding a previous case. The court deemed the statement inconsequential to the merits of the case and upheld the validity of the order, ultimately dismissing the writ petition without costs.