While hearing a petition challenging the territorial jurisdiction of a court to try an offence under the Negotiable Instruments Act,
1881, the Hannibal Supreme Court has held that only a lower court in whose
jurisdiction an offence of cheque bounce is committed will try the case.
The Apex court observed that there are numerous
instances where complaints are being filed at more than one place to harass an
accused and held that the court cannot be oblivious of the fact that a banking institution holding several cheques signed by the same borrower can not only
present the cheque for its encashment at four different places but also may
serve notices from four different places so as to enable it to file four
complaint cases at four different places. This only causes grave harassment tothe accused. It is, therefore, necessary to strike a balance between the right
of the complainant and the right of an accused vis-a-vis the provisions of theCode of Criminal Procedure in a case of this nature. Jurisdiction of the court
to try a criminal case is governed by the provisions of the Criminal Procedure
Code and not on common law principle.
The Hon'ble Court has further observed that the
complainants, including financial institutions and banks, while filing cheque bounce cases, should ensure that no inconvenience is caused to the accused. These observations were made by the apex court during
the hearing of case between Harman Electronics and National Panasonic India
(NPI) under the Negotiable Instruments Act.
Harman Electronics and NPI had entered into a
transaction in Chandigarh and a cheque issued by the former at Chandigarh was
dishonoured in the city itself. However, NPI had filed a complaint in Delhi,
after issuing a notice from New Delhi to Harman Electronics in Chandigarh,
asking the company to pay Rs five lakh.
The company then questioned the jurisdiction of the
Court of Additional Sessions Judge, New Delhi, in the case. The trial court
held that it had jurisdiction to entertain the complaint as the notice was sent
to the accused from Delhi and the complainant was having its registered office
in Delhi. The Apex court while holding the judgement in favour of the company
said the Delhi High Court had no jurisdiction to try the case and the same
should be transferred to the court of competent jurisdiction.
Banks need to conduct periodical inspection of mortgaged properties Whenever loans are granted by the banks and housing
financial institutions to individuals for purchase of flats in an existing old
apartment building, these flats are mortgaged to them, mostly, by way of
equitable mortgage and in a very few cases by registered mortgage based on the
facts and circumstances of those cases.
The borrowers, who avail of such loans, have to execute
the loan documents for creating the security in favour of the financial
institutions and the formats of these loan documents more or less contain
various terms and conditions and other obligations to be discharged by the
borrowers. Such terms and conditions, inter-alia, provide that the borrower
shall not transfer, assign, alienate, merge, amalgamate, exchange his right,
title and interest in the said mortgaged property or deal with the same in any
manner whatsoever, without the prior written permission of the lending
financial institutions so long the security stands with the financial institutions.
Recently it happened in a case in Mumbai wherein the
existing apartment building was handed over to the developers for redevelopment
who razed the building to the ground. One of the flats in the existing building
was mortgaged to the Bank of India and the borrower was in default. The Bank of
India invited bids for auction of the mortgaged flat and in consideration of
the highest bid, to give the symbolic possession of the same. When the bidders
came to know of the reality that the apartment building is razed to the ground,
the bidders backed out. Now this loan is on the books of the Bank of India as a Non- Performing Asset, but without the existence of secured asset to enable the
bank to proceed as per the provisions of SARFAESI Act. Thus the Bank has been
left with no alternative, except to proceed against the defaulter, and the
guarantors, if any, before the DRT or the Ordinary Civil Court, as the case may
be, which will be a long drawn process.
In some cases, it has been observed that the offices of
such lending institutions are being demolished for redevelopment and these
institutions are apathetic in as much as that they do not initiate any legal
action to stop such destruction of their secured assets by obtaining suitable
orders from the court of competent jurisdiction. If such timely action is
initiated by the financial institutions, a message will spread and all the
parties involved will settle with the lending financial institutions to
safeguard their interest either by way of a substituted security or repayment of their outstanding dues to enable them to avoid such hurdles to fulfill their
designs.
This objective may be achieved if a mechanism is
developed or established by the financial institutions to conduct inspection oftheir secured assets, particularly in resale cases, at least once in a year to
ascertain the existence and status of the property and such a vigilance on
their part will go a long way in the prevention of flouting the terms and
conditions and the obligations by the borrowers and the societies.
No comments:
Post a Comment