Supreme Court Rules on Jurisdiction in Cheque Bounce Case: Devendra Kishanlal Dagalia vs Dwarkesh Diamonds Pvt. Ltd.

In the case of Devendra Kishanlal Dagalia vs Dwarkesh Diamonds Pvt. Ltd. & Ors., the Supreme Court of India made an important decision regarding a cheque bounce complaint. The Court allowed the appeals, setting aside the High Court’s order and supporting the decision of the Sessions Judge.

Here’s a simple explanation of the case and the Court’s decision.

Background of the Case

The case involved a complaint under Section 138 of the Negotiable Instruments Act, which deals with dishonored cheques.

The appellant (Devendra Kishanlal Dagalia) had filed a complaint in Mumbai, claiming that a cheque issued by the respondents (Dwarkesh Diamonds Pvt. Ltd.) was dishonored.

The respondents argued that the Mumbai court did not have the jurisdiction to hear the case.

Key Legal Issues

1. Magistrate’s Authority to Recall Summons: Once a Magistrate issues a summons under Section 204 of the Code of Criminal Procedure (CrPC), do they have the authority to recall or review that decision under Section 201 CrPC?​

2. Jurisdiction in Cheque Bounce Cases: Can a complaint under Section 138 of the Negotiable Instruments Act be filed in a location where at least one component of the offense, such as issuing a legal notice, occurred?​

Supreme Court’s Findings

1. On Magistrate’s Authority: The Court held that after a Magistrate issues a summons under Section 204 CrPC, indicating sufficient grounds to proceed, they do not have the power to recall or review that order under Section 201 CrPC.

2. Section 201 applies only when a Magistrate, upon receiving a complaint, determines they lack jurisdiction before taking cognizance of the offense. Once cognizance is taken and summons are issued, the Magistrate cannot revisit the jurisdiction question under Section 201.

3. On Jurisdiction: The Court clarified that an offense under Section 138 of the Negotiable Instruments Act comprises several acts:​

   • Drawing of the cheque.​

   • Presentation of the cheque to the bank.​

   • Returning of the cheque unpaid by the drawee bank.​

   • Giving notice in writing to the drawer demanding payment.​

   • Failure of the drawer to make payment within 15 days.

The Court emphasized that it’s unnecessary for all these acts to occur in the same location. If at least one of these acts takes place in a particular location, the courts there have jurisdiction to entertain the complaint.

In this case, since the legal notice was issued from Mumbai, the Mumbai courts had jurisdiction to hear the complaint.

The Supreme Court set aside the High Court’s order and reinstated the Sessions Judge’s decision, affirming that the Magistrate in Mumbai had the jurisdiction to entertain the complaint under Section 138 of the Negotiable Instruments Act.

This judgment clarifies that in cheque bounce cases, the location where any component of the offense occurs can determine the jurisdiction, and Magistrates do not have the authority to recall summons once issued under Section 204 CrPC

Arguments by the Appellant (Devendra Kishanlal Dagalia)

1. Magistrate Cannot Recall Summons: The appellant argued that once a summons is issued under Section 204 of the Cr.P.C., the Magistrate does not have the power to recall or review it under Section 201 of the Cr.P.C..
2. Jurisdiction in Mumbai: The appellant claimed that at least one act of the offense (issuance of the legal notice) occurred in Mumbai, so the Mumbai court had the authority to handle the case.

Arguments by the Respondents (Dwarkesh Diamonds Pvt. Ltd.)

1. Magistrate Can Recall Summons: The respondents argued that the Magistrate had the power to recall the summons under Section 201 of the Cr.P.C..
2. No Jurisdiction in Mumbai: They claimed that none of the acts of the offense occurred in Mumbai, so the Mumbai court did not have the authority to hear the case.

Supreme Court’s Decision

The Supreme Court agreed with the appellant and set aside the High Court’s order, supporting the decision of the Sessions Judge. Here’s why:

1. Magistrate’s Power to Recall Summons: The Court ruled that once a summons is issued under Section 204 of the Cr.P.C., the Magistrate does not have the power to recall or review it under Section 201 of the Cr.P.C..
2. Jurisdiction Based on Acts of Offense: The Court explained that the offense under Section 138 of the Negotiable Instruments Act involves five acts, and it is not necessary for all five acts to occur in the same place.
3. In this case, at least one act (issuance of the legal notice) occurred in Mumbai, so the Mumbai court had the jurisdiction to hear the case.

Key Takeaways

• Once a summons is issued under Section 204 of the Cr.P.C., the Magistrate cannot recall or review it under Section 201 of the Cr.P.C..
• For a cheque bounce case, jurisdiction is determined by where any of the five acts of the offense occurred. It is not necessary for all acts to occur in the same place.
• In this case, the issuance of the legal notice in Mumbai gave the Mumbai court the authority to handle the case.

Conclusion

This decision by the Supreme Court clarifies the rules about jurisdiction in cheque bounce cases and the powers of Magistrates regarding summons.

If you ever face a legal issue, it’s always best to consult a qualified lawyer for guidance.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For specific legal guidance, please consult a qualified lawyer.