S.138 NI Act | Indian Courts Have Jurisdiction On "Foreign Cheques" Deposited For Encashment Here: Delhi High Court

The Delhi High Court has made it clear that where a "foreign cheque" is deposited for encashment in India, the Court within whose jurisdiction it is so deposited shall have the jurisdiction to adjudicate on the complaint for its dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).

Justice Navin Chawla presiding over the case, observed,

“It is also to be kept in mind that Section 138 of the NI Act was inserted with the purpose of regulating financial promises in growing business, trade, commerce, and industrial activities of the country, and the strict liability to promote greater vigilance in financial matters. The object was to enhance the acceptability of cheques in the settlement of liabilities and there can be no difference in this regard between an Indian cheque or a foreign cheque.”

“...reading Section 4 of the Cr.P.C. with Section 142 (2) of the NI Act, it must be held that the Courts in India (Delhi) where the cheque has been deposited for encashment, shall have the jurisdiction to adjudicate on the complaint for an offence under Section 138 of the NI Act, even though it is a foreign cheque,” Justice Chawla added.

The ruling came in a petition filed under Section 482 CrPC praying for quashing of the proceedings in a complaint filed under Section 138 of the NI Act.

According to the complaint, respondent no.2 had invested in the accused no.1, that is, the petitioner no.1 herein, a company registered and situated at Dubai, by issuing multiple cheques that were payable in Dubai, which were in foreign currency, that is, AED.

In return, the cheques which were issued by the petitioner no.1 were drawn on National Bank of Abu Dhabi and in the foreign currency-AED. On return of some of the cheques as unpaid, the respondent no.2 had earlier filed the proceedings before the Abu Dhabi Courts of First Instance and orders were also passed in favour of the respondent no.2.

It was only on the non-compliance/non-implementation of the said orders, that the respondent no.2 thereafter presented the subject cheque to his bank at ICICI Bank in New Delhi, which was expectantly also returned unpaid with the remark "insufficient funds".

The issue before the Court was whether the presentation of the subject cheque at the Delhi Branch would be sufficient to invoke the provisions of Section 138 of the NI Act and make the complaint filed by the respondent no.2 as maintainable.

The Court noted that with the 2015 Amendment to Section 142 of the NI Act, the offence under Section 138 is now to be exclusively inquired into and tried by a court situated within the local jurisdiction where the branch of the bank is located, through which the payee or holder in due course maintains the account if the cheque is delivered for collection through an account.

The Court stressed, “In the present case, the cheque was presented for payment by the respondent at Delhi. There is no prohibition of the cheque being deposited by the respondent no.2 for collection in Delhi. Therefore, in terms of Section 142(2) of the NI Act, the Court at Delhi shall have jurisdiction to inquire into and try the offence under Section 138 of the NI Act.”

“In the present case, due to the amendment in Section 142 of the NI Act, now the dishonour of the cheque, due to its presentation for payment at the bank of the respondent no.2 at Delhi, is deemed to have taken place at Delhi. Though, Section 134 of the NI Act states that in absence of a contract to the contrary, the liability of the drawer of a foreign cheque is regulated in all essential matters by the law of the place where he made the cheque, there is nothing in the said provision which would exclude the application of Section 138 of the NI Act read with Section 142 of the NI Act,” the Court added.

The Court also stated, “Merely because the payee or holder in due course of a foreign cheque chooses to present the cheque in India out of malafide, the application of the provision of Section 138 of the NI Act and the jurisdiction of the court where such cheque is deposited for payment, cannot be ousted.”

The Court underscored that the effect of the above provision is that the offence under Section 138 of the NI Act is deemed to have occurred at the place where a cheque is delivered for collection at the branch of the bank of the payee or holder in due course. Thus, the inquiry and trial of the offence shall exclusively fall within the local jurisdiction where the branch of the bank, through which the payee or holder in due course maintains the account, is situated.

Accordingly, the Court rejected to exercise its inherent jurisdiction under Section 482 CrPC to quash the complaint.

Case Title: Right Choice Marketing Solutions Jlt & Ors Vs State Nct Of Delhi & Anr.

Citation: 2024 LiveLaw (Del) 549