Bombay High Court’s Aurangabad bench ruled that serving notice from a particular place in cheque bounce cases shouldn’t mean that the dispute would come under the jurisdiction of the court of that place. “Only because the cheque was presented at the bank from Aurangabad by the complainant, the place for ‘presentation of the cheque to the bank’ and ‘returning it unpaid by the drawee bank’ cannot become Aurangabad,” Justice TV Nalawade ruled, while allowing a petition by a Delhi based businessman against Videocon Industries Limited.
Videocon pleaded that since the notice regarding bouncing of cheque was served from Aurangabad, the case should be put on trial under the court’s jurisdiction in the same city. However, high court made it clear that place of transactions and other criteria point towards Delhi, hence Aurangabad court doesn’t have the required jurisdiction.
Madan Gupta had given a cheque of Rs5.09 lakh drawn from a Delhi based bank to Videocon’s registered office in Aurangabad. However, it bounced, so notice was served to him from Aurangabad and he was directed to make the payment in the same city. This is because, in the agreement, i.e. the tax invoice, it had been clearly mentioned that all disputes would be come under Aurangabad court’s jurisdiction. The respondent company filed a case under Section 138 of Negotiable Instruments Act, 1938 against the petitioner in Aurangabad. Gupta challenged this decision in Aurangabad JMFC stating that the cheque had been given to the company as security and it was misused by Videocon. The court rejected his application.
Gupta then moved the HC contending that since all the transactions had taken place in Delhi, the case comes under the courts there.
Citing an apex court verdict, Justice Nalawade laid down the test to determine where the jurisdiction will lie for such cases. Generally, the place of offence is used for determining the jurisdiction. “The SC verdict laid down five components for a cheque bounce case to test the required jurisdiction,” he observed. First is the place of drawing the cheque, second the place of presentation to the bank, third the place of returning of cheque unpaid by the drawee bank, fourth the place from where notice is served in writing to the drawer demanding payment, and the fifth is the place where the drawer had to make payment within 15 days of the notice being served.