Dishonour of cheque — Cheque drawn in foreign country — Accused cannot be prosecuted in India — Negotiable Instruments Act, 1881.

The issue that arose for consideration before the High Court was as to whether a person who is not a citizen of India, who has issued a foreign country cheque on a drawee bank functioning in a foreign country could be prosecuted for an offence punishable u/s.138 of the Act.

The Court observed that a combined reading of sections 1, 11, 12 and 134 to 137 of the Negotiable Instruments Act, 1881, makes clear that a cheque made/drawn in a foreign country on a drawee bank functioning in the foreign country and made payable therein shall be a foreign instrument and the law of the country wherein the cheque was drawn or made payable shall be the law governing the rights and liabilities of the parties and dishonour of the cheque. As such the payee cannot select a country and present it through a bank therein for collection to confer jurisdiction on a Court functioning therein. If the payee is given such a right to proceed criminally against the drawer by selecting the jurisdiction, the same will encourage forum shopping making the payees to go to a country wherein the dishonour of the cheque is made a criminal offence and wherein the law is more favourable to the payee enabling him to collect the amount covered by the cheque by way of fine or compensation by resorting to criminal prosecution. A person who is not a citizen of India for an act committed in a foreign country wherein it is not a punishable offence, cannot be prosecuted in India. In this case, none of the petitioners is a citizen of India. The acts constituting the offence, namely, issuance of the cheque, the dishonour of the cheque, the failure to make payment of the cheque after receipt of the statutory notice were all committed by them not in India, but in the USA. Therefore, they cannot be prosecuted in India for the said act as an offence punishable u/s.138 of the Negotiable Instruments Act, 1881.

The Court further observed that the place of issuance of notice shall not be the only criterion conferring jurisdiction on the Court. All the transactions were made in the USA. The cheques were drawn on a bank in the USA. The cheques were payable at Massachusetts branch, United States of America. That being so, the respondent, with a view to invoke the provisions of section 138 of the Negotiable Instruments Act, 1881 in order to have a short-cut method of collecting the cheque amount, has chosen to present the cheques in a bank at Anna Nagar, Chennai, Tamil Nadu for collection, issue notice from Adyar, Chennai and prefer the complaint on the file of the IX Metropolitan Magistrate, Saidapet. The said act on the part of the respondent not only amounts to forum shopping, but also is an example of abuse of process of the Court. Therefore, the Court in order to avoid miscarriage of justice, to prevent abuse of process of the Court and to render complete justice, in exercise of its inherent power u/s.482 Cr. P.C. quashed the criminal proceedings.