the Swadeshi Act “27. Penalties Any person who.:- (a) having in his possession, custody or control any property forming part of any of the textile undertaking wrongfully withholds such property from the National Textile Corporation; or (b) wrongfully obtains possession of, or retains any property forming part of, any of the textile undertaking; or shall be punishable with imprisonment for a term which may extend to two years and with fine which may extend to ten thousand rupees. shall be punishable with imprisonment for a term which may extend to two years and with fine which may extend to ten thousand rupees.”- “……that a complaint under Section 27 of Act 30 of 1986 could only have been filed by the petitioner if the title of the property in dispute was clearly in their favour. Both the Courts below have correctly assessed the facts and circumstances of the case and have rightly come to the conclusion that in the absence of having any clear title in their favour the complaint under Section 27 was misconceived and, therefore, rightly dismissed.”

published in http://judis.nic.in/supremecourt/filename=40480
Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4818 OF 2013
(Arising out of SLP (Civil) No. 4706 of 2006)
National Textile Corpn. (UP) Ltd. .... Appellant(s)
Versus
Dr. Raja Ram Jaipuria & Ors. ....
Respondent(s)
WITH
CIVIL APPEAL NO. 4819 OF 2013
(Arising out of SLP (Civil) No. 4773 of 2006)
J U D G M E N T
P. Sathasivam, J.
1) Leave granted.
2) These appeals are directed against the final judgment
and order dated 25.11.2005 passed by the High Court of
Judicature at Allahabad in Misc. Writ Petition Nos. 25090 of
1994 and 30122 of 1996 whereby the High Court dismissed
the petitions filed by the National Textile Corporation (U.P.)
Ltd.-the appellant herein.
1Page 2
SLP (Civil) No. 4706 of 2006
3) Brief facts:
(a) In the year 1921, the Swadeshi Cotton Mills Company
Limited (SCMCL) was incorporated as a private company and
converted into a public company in 1923 which was engaged
in the business of activity of operating and managing textile
mills.
The SCMCL acquired property at Civil Lines, Kanpur,
Uttar Pradesh on which an integrated complex popularly
known as ‘Swadeshi House’ was constructed. The said
House consisted of three buildings, viz., Bungalow No. 1
which was used prior to 1971 as the Registered Office of the
SCMCL and after 1971 it was used for general meetings of
the Board of Directors and also as a Guest House, Bungalow
No. 2 was in the physical possession of the Managing
Director of SCMCL and Bungalow No. 3 was the
Administrative Block of the SCMCL.
(b) The Central Government, vide notification dated
13.04.1978, under Section 18AA of the Industrial
Development Regulation Act, 1951, took over the
management of six textile undertakings of the SCMCL
2Page 3
including the Swadeshi Cotton Mills, Kanpur and the
National Textile Corporation Limited, New Delhi (NTC), a
Government undertaking, was appointed as the authorized
representative under the said takeover. As a result of the
takeover, the NTC took possession and custody of various
properties belonging to the SCMCL including the Guest
House and the Administrative Block. However, Bungalow No.
2 continued to be in the physical possession of Dr. Raja Ram
Jaipuria, the then Director of the SCMCL (Respondent No. 1
herein).
(c) Aggrieved by the order dated 13.04.1978 of take over,
the SCMCL filed Writ Petition No. 408 of 1978 before the
High Court of Delhi. 
In the High Court, vide order dated
04.05.1978, a working arrangement between the parties was
made out wherein Respondent No. 1 herein was permitted to
continue the physical possession of the residential bungalow
on the condition that the same will not be disposed of or
alienated in any way to any outsider.
Ultimately, by order
dated 01.05.1979, the High Court upheld the notification
dated 13.04.1978 but certain assets were excluded from the
3Page 4
purview of the same including the ‘Swadeshi House’ and
‘Shrubbery’-the residence of the Secretary of the SCMCL. 
(d) Being aggrieved by the aforesaid judgment with regard
to the validity and legality of the order of takeover, Swadeshi
Cotton Mills, National Textile Corporation and Union of India
preferred Civil Appeal Nos. 1629, 1857 and 2087 of 1979
respectively before this Court.
This Court, vide judgment
dated 13.01.1981 in Swadeshi Cotton Mills vs. Union of
India (1981) 1 SCC 664 held the said takeover invalid on the
ground that no opportunity of hearing was given to the
SCMCL before the takeover. 
(e) On 19.04.1986, the Central Government promulgated
the Swadeshi Cotton Mills Company (Acquisition and
Transfer of Undertakings) Ordinance, 1986. Thereafter, on
30.05.1986, the said ordinance was replaced by the
Swadeshi Cotton Mills Company Limited (Acquisition and
Transfer of Undertakings) Act, 1986 (in short ‘the Swadeshi
Act’). As per Section 3 of the Swadeshi Act, every textile
undertaking and the right, title and interest of the SCMCL in
the said textile undertaking stood transferred and vested
4Page 5
with the Central Government. 
The transferred undertakings
were further transferred and vested in the NTC. 
Several
proceedings were instituted by the parties as a result of the
acquisition of the undertakings of the SCMCL. 
(f) One Mukesh Bhasin, a minority shareholder of Swadeshi
Polytex Limited (SPL), filed a Civil Suit being No. 506 of 1987
before the High Court of Delhi at New Delhi praying for a
declaration and injunction against the SCMCL on the ground
that all the investments and assets vest with the NTC which
is the rightful owner of the property after coming into force
of the Swadeshi Act. In the said suit, he also sought an
injunction against SPL from recognizing SCMCL and
Swadeshi Mining (subsidiary of SCMCL) as the owners of the
Swadeshi House.
(g) Swadeshi Cotton Mills and SCMCL also preferred a Writ
Petition being No. 2214 of 1987 before the High Court of
Judicature at Allahabad (Lucknow Bench) claiming that
equity shares held by the SCMCL in SPL and Swadeshi Mining
and other “excluded assets” should be declared to be
exempted from the scope and ambit of the Swadeshi Act.
5Page 6
(h) The aforementioned Civil Suit No. 506 of 1987 and Writ
Petition No. 2214 of 1987 were transferred to this Court and
numbered as Transfer Case Nos. 14 and 13 of 1987
respectively.
This Court, vide judgment dated 12.02.1988, in
M/s Doypack Systems Pvt. Ltd. vs. Union of India and
Others (1988) 2 SCC 299, allowed Transfer Case No. 14 of
1987 and dismissed Transfer Case No. 13 of 1987 and held
that the ownership and control of the SCMCL vests with the
NTC. It was also held that Bungalow No. 1 and the
Administrative Block, Civil Lines, Kanpur also vested in the
Central Government. 
(i) As the SCMCL failed to handover the possession of
Bungalow No. 2 of Swadeshi House, the NTC filed Civil Misc.
Petition No. 26004 of 1988 in Transfer Case No. 13 of 1987
praying for a direction to the SCMCL to handover the vacant
possession of Bungalow No. 2. Vide order dated 03.08.1989,
the petition was dismissed without any order with liberty to
move the appropriate court. In view of the said order, the
National Textile Corporation (U.P.) Ltd. (the appellant
herein), which was a successor-in-interest to the NTC
6Page 7
preferred Criminal Complaint No. 1661 of 1991 against the
respondent herein and others in the Court of Metropolitan
Magistrate, Kotwali, Kanpur under Section 27 of the
Swadeshi Act for possession of the said Bungalow. Vide
order dated 18.02.1993, the said complaint got dismissed in
view of the ruling given in Doypack (supra) that only
Bungalow No. 1 and the Administrative Block vested with the
Central Government.
(j) Being aggrieved by the order dated 18.02.1993, the
NTC filed Criminal Revision No. 86 of 1993 before the
Session Judge, Kanpur which also got dismissed vide order
dated 30.10.1993 holding that the NTC failed to prove
beyond doubt that the said Bungalow vested with Central
Government with a direction to move the appropriate court
in terms of the order dated 03.08.1989.
(k) Aggrieved by the same, the NTC preferred Writ Petition
No. 25090 of 1994 before the High Court of Allahabad. In
the meantime, the NTC filed Contempt Petition No. 75 of
2005 in Transfer Case No. 14 of 1987 before this Court
alleging violation of the judgment in Doypack (supra) but
7Page 8
the same got dismissed vide order dated 03.02.2006 on the
ground of omission to disclose about the instant
proceedings. Vide order dated 25.11.2005, the High Court
dismissed the above said writ petition.
(l) Being aggrieved by the order of the High Court, the
appellant herein has preferred this appeal by way of special
leave.
SLP (Civil) No. 4773 of 2006
(m) On 26.10.1989, the NTC also moved an application
under Sections 5 and 7 of the Public Premises (Eviction of
Unauthorized Occupants) Act, 1971 (in short ‘the PP Act’) for
eviction of the respondent herein from the said Bungalow on
the ground that in Doypack (supra), it has already been
held that the Swadeshi House (which also includes Bungalow
No. 2) vested with the NTC and there is no question as to the
title of the respondent herein. During the pendency of the
proceedings before the Estate Officer, Shri Rajaram Jaipuria
(Respondent No. 2 herein) removed certain valuables from
the Bungalow No. 2. The NTC moved an application for
restraining the Respondents herein for the same before the
8Page 9
Estate Officer which was allowed vide order dated
02.05.1993.
(n) Being aggrieved, M/s Ganesh Synthetics Pvt. Ltd
(Respondent No. 16 herein), a related entity of SCMCL,
preferred a Writ Petition being No. 16091 of 1993 before the
High Court. The High Court, by order dated 11.05.1993,
restrained the respondents from removing any article kept in
Bungalow No. 2. Vide order dated 05.08.1994, the Estate
Officer rejected all the preliminary objections filed by the
SCMCL. The respondents herein preferred an Appeal being
No. 228 of 1994 under Section 9 of the PP Act before the
District Court, Kanpur.
(o) Vide order dated 01.05.1996, the above said appeal
was allowed holding that Doypack (supra) had not
addressed the issue relating to Bungalow No. 2. Being
aggrieved, the NTC preferred Writ Petition being No. 30122
of 1996 before the High Court. The High Court, vide order
dated 25.11.2005 dismissed the said petition.
9Page 10
(p) Being aggrieved by the order of the High Court, the
appellant herein has preferred this appeal by way of special
leave.
4) Heard Ms. Indira Jaising, learned Additional Solicitor
General for the appellant, Mr. Dushyant Dave, learned senior
counsel for the contesting respondents and Mr. K.V.
Vishwanathan, learned senior counsel and Mr. Gautam
Narayan, learned counsel for the newly impleaded parties –
Kanpur Builders and Ministry of Textiles respectively.
5) It is the definite case of the appellant-NTC that
Swadeshi House was and has always consisted of an
integrated complex comprising of three buildings, viz.,
Bungalow No.2 (used as the personal residence of the
Directors), Bungalow No.1 (used as Guest House of the
Company) and an Administrative Block besides Servants’
Quarters and adjacent land and because of Section 3 of the
Swadeshi Act, every textile undertaking and the right, title
and interest of the SCMCL in the said textile undertaking
stood transferred and vested with the Central Government
and further transferred and vested in the NTC. Among the
10Page 11
properties owned by the SCMCL, now we are concerned only
about the ownership of Bungalow No.2.
6) On the other hand, it is the case of the respondents
that the properties of SCMCL, Kanpur, vested with the
Central Government, did not include Bungalow No.2 as the
same was always the property of the SCMCL and not of its
Kanpur Mills. It is their assertion that the land on which the
SCMCL is constructed was purchased in the year 1921 and
the building was constructed soon thereafter. The said land
and house were not purchased/constructed from the profits
generated by the SCMCL, Kanpur but from the shareholders’
fund(s) arranged otherwise. It is also their assertion that the
said land, viz., Bungalow No.2, was never vested in the
appellant as decided by this Court in Doypack (supra). It is
also brought to our notice by the respondents that Bungalow
Nos. 1 and 2 have been recorded by the Kanpur Municipality
as separate premises ever since the said two bungalows
were constructed. It is also pointed out that at present
Bungalow No.1 is numbered as Premises No. 16/15 and
Bungalow No.2 is numbered as Premises No. 16/14, Civil
11Page 12
Lines, Kanpur and both are separate premises having
separate boundaries.
7) In view of the above, it is relevant to mention the
following provisions of the Swadeshi Act:
(i) In Section 2(c) of the Swadeshi Act, there is a reference
to a registered office of the SCMCL being at “Swadeshi
House”.
(ii) The expression “textile undertakings” has been defined
in Section 2(k) to mean the following six textile undertakings
of SCMCL:
(a) the Swadeshi Cotton Mills, Kanpur;
(b) the Swadeshi Cotton Mills, Pondicherry;
(c) the Swadeshi Cotton Mills, Naini;
(d) the Swadeshi Cotton Mills, Maunath Bhanjan;
(e) the Udaipur Cotton Mills, Udaipur;
(f) the Rae Bareli Textile Mills, Rae Bareli;
(iii) Section 3 of the Swadeshi Act transfers and vests the
right, title and interest of the SCMCL “to every such textile
undertaking” in the Central Government and thereafter in
the National Textile Corporation (NTC).
12Page 13
(iv) Section 4 of the Swadeshi Act defines the effect of
“vesting” as under:
“(1) The textile undertakings referred to in Section 3 shall
be deemed to include all assets, rights, lease-holds,
powers, authorities and privileges and all property,
movable and immovable, including lands, buildings,
workshops, stores, instruments, machinery and equipment,
cash balances, cash on hand, reserve funds, investments
and books debts pertaining to the textile undertakings and
all other rights and interests in, or arising out of, such
property as were immediately before the appointed day in
the ownership, possession, power or control of the
Company in relation to the said undertakings whether
within or outside India, and all books of accounts, registers
and all other documents of whatever nature relating
thereto.”
(v) Section 8 of the Swadeshi Act provides a compensation
of Rs.24,32,00,000/- to be paid to the SCMCL.
(vi) Section 27 deals with Penalties as under:
“27. Penalties
Any person who.:-
(a) having in his possession, custody or control any
property forming part of any of the textile undertaking
wrongfully withholds such property from the National
Textile Corporation; or
(b) wrongfully obtains possession of, or retains any
property forming part of, any of the textile undertaking; or
shall be punishable with imprisonment for a term which
may extend to two years and with fine which may extend
to ten thousand rupees.
shall be punishable with imprisonment for a term which
may extend to two years and with fine which may extend
to ten thousand rupees.”
13Page 14
8) Learned ASG has brought to our notice that several
proceedings were instituted by the parties as a result of the
acquisition of textile undertakings of the SCMCL. Two
significant proceedings are:
(1) “A civil suit instituted by one Mukesh Bhasin on 26.02.1987
before the High Court of Delhi. In paragraph 3 (xix) of the
said suit, the appellant made the following submissions:
(xix) The Swadeshi House in an integral part of the Kanpur
Undertaking and includes substantial area of land and
building. The plaintiff reasonably and bona fide believes
that the said House was built in 1921 as a part of the
textile undertaking of defendant No.3 for the benefit and
use of its business, which at that time consisted only of the
Kanpur Textile Undertaking.”
In the said suit, the following prayer was sought:
“(a) that the defendant No.1 is the rightful owner of 10
lakhs equity shares of defendant No.2 held by defendant
No.3 and 17,18,000/- equity shares held by defendant No.4
in defendant No.2 and Swadeshi House at Kanpur and all
the rights, title and interest attached therewith are assets
and investments pertaining to and relate to the textile
undertaking of defendant No.3 and they vest in defendant
No.1 w.e.f. 1.4.1985 and defendant Nos. 3 & 4 be
restrained by a decree of permanent injunction from
dealing with them in any manner whatsoever.
(b) Defendant No.2 should also be restrained by
permanent injunction from recognizing defendant Nos. 3 &
4 as owners of the aforesaid shares and Swadeshi
House.”
(2) “The other was a petition instituted by the Swadeshi
Mining and Manufacturing Company Ltd. (“SMMCL”), a
subsidiary of SCMCL. In the said petition, being the civil
W.P. No. 2214 of 1987 instituted on 03.04.1987 in the High
14Page 15
Court of Allahabad (Lucknow Bench), SCMCL was petitioner
No.2”.
The aforementioned Civil Suit No. 506 of 1987 and Writ
Petition No. 2214 of 1987 were transferred to this Court and
numbered as Transfer Case Nos. 14 and 13 of 1987
respectively. This Court, vide judgment dated 12.02.1988 in
Doypack (supra) allowed Transfer Case No. 14 of 1987 and
dismissed Transfer Case No. 13 of 1987.
9) Both the parties adverted to various paragraphs in
Doypack (supra) in extenso. As a matter of fact, basing
reliance on Doypack (supra), learned ASJ submitted that
Bungalow No.2 of Swadeshi House, Kanpur vested with
them. In the light of the assertion and claim of both the
sides, we have gone through the entire judgment in
Doypack (supra). It is also to be noted that the said
judgment was scrutinized by various courts in earlier legal
proceedings initiated by the appellant herein and all such
proceedings were dismissed by the courts including this
Court. A thorough analysis of the judgment in Doypack
(supra) shows that the issue as to whether Bungalow No.2
15Page 16
of the Swadeshi House vested in appellant or not was neither
considered nor decided by this Court in the said case. This is
clear from the plain reading of first paragraph of the
judgment itself which reads as under:
“1. What falls for consideration in all these matters is a
common question of law, namely, whether equity shares in
the two companies i.e. 10,00,000 shares in Swadeshi
Polytex Limited and 17,18,344 shares in Swadeshi Mining
and Manufacturing Company Limited, held by the Swadeshi
Cotton Mills, vest in the Central Government under Section
3 of the Swadeshi Cotton Mills Company Limited
(Acquisition and Transfer of Undertakings) Act, 1986
(hereinafter referred to as “the said Act”). The other
subsidiary question is whether the immovable properties,
namely the bungalow No. 1 and the Administrative Block,
Civil Lines, Kanpur have also vested in the Government.
The question as to one more property known as Shrubbery
property whether it has been taken over or not is still to be
argued and is not covered by this judgment.”
10) From the above, the questions which formed the
subject matter of Doypack (supra) were as under:
“(a) Whether equity shares in the two companies, i.e.,
10,00,000 shares in Swadeshi Polytex Limited and
17,18,344 shares in Swadeshi Mining and Manufacturing
Co. Ltd. held by the Swadeshi Cotton Mills, vest in the
Central Government under Section 3 of the Swadeshi
Cotton Mills Co. Ltd. (Acquisition and Transfer of
Understandings) Act, 1986 (hereinafter referred to as “the
Act”).
(b) Whether the immovable properties, namely, the
Bungalow No.1 and the Administrative Block, Civil Lines,
Kanpur have also vested in the Government.”
16Page 17
The abovementioned questions, after detailed reasonings,
were answered by this Court in paragraph Nos. 69 and 70 as
under:
“69. We therefore, reiterate that the shares are vested in
the Central Government. Accordingly the shares in
question are vested in NTC and it has right over the said 34
per cent of the shareholdings.
70. In the aforesaid view of the matter we hold that the
10,00,000 shares in Swadeshi Polytex Limited and
17,18,344 shares in Swadeshi Mining and Manufacturing
Company Limited held by the Swadeshi Cotton Mills vested
in the Central Government under Sections 3 and 4 of the
Act.
71. We are further of the opinion that in view of the
amplitude of the language used, the immovable properties,
namely, the bungalow No. 1 and the Administrative Block,
Civil Lines, Kanpur have also vested in NTC.”
11) A bare reading of the judgment in Doypack (supra)
makes it clear that the issue regarding vesting of the
Bungalow No.2 of Swadeshi House, Kanpur was not
considered by this Court in the said judgment. Hence, the
very same contention of the appellant is liable to be
rejected.
12) As the SCMCL failed to handover the possession of
Bungalow No. 2 of Swadeshi House, the NTC filed Civil Misc.
Petition No. 26004 of 1988 in Transfer Case No. 13 of 1987
17Page 18
praying for a direction to the SCMCL to handover the vacant
possession of Bungalow No. 2. The said application was
disposed of by this Court on 03.08.1989 which reads as
under:
“CMP No. 26004 of 1988 : There will be no order on this
CMP. This will not prejudice the right of parties to move
the appropriate courts in accordance with law.”
From the above order, it is clear that this Court did not
decide the issue relating to Bungalow No.2 of the Swadeshi
House and had left it open to the appellant to agitate the
question of title as regards the said Bungalow by moving
before the appropriate court in accordance with law. It is
brought to our notice that such proceedings were never
initiated by the appellant herein.
13) It is useful to point out that despite the dismissal of Civil
Misc. Petition No. 26004 of 1988 in T.C. No. 13 of 1987, the
appellant herein again moved before this Court by filing
Contempt Petition No. 75 of 2005 in Transfer Case No. 14 of
1987 alleging violation of the judgment in Doypack
(supra). It was alleged by the appellant in the said
contempt petition that since the contemnors therein have
18Page 19
sold Bungalow No. 2 to one Kanpur Builders Ltd., they have
violated the judgment in Doypack (supra) and, therefore,
they are liable to be punished for contempt. The Director of
the said Kanpur Builders Ltd. was also impleaded as
Contemnor No. 3 in the said contempt petition. By order
dated 03.02.2006, this Court, dismissed the said contempt
petition. After several rounds of litigation, as discussed in
the paragraphs (supra), the appellant filed Writ Petition No.
25090 of 1994 before the High Court of Allahabad. By
judgment dated 25.11.2005, learned single Judge of the High
Court dismissed the writ petition filed by the appellant
herein holding that under Section 27 of Act 30 of 1986 a
complaint could only have been filed by the appellant if the
property had vested in them. It was further held by the High
Court that,
“……that a complaint under Section 27 of Act 30 of
1986 could only have been filed by the petitioner if the title
of the property in dispute was clearly in their favour. Both
the Courts below have correctly assessed the facts and
circumstances of the case and have rightly come to the
conclusion that in the absence of having any clear title in
their favour the complaint under Section 27 was
misconceived and, therefore, rightly dismissed.”
19Page 20
14) In addition to the above said proceedings, the appellant
herein initiated further proceedings for their eviction under
Sections 5 and 7 of the PP Act. Similarly, after rounds of
litigation, the claim of the appellant herein got rejected and
finally the appellant herein filed Writ Petition No. 30122 of
1996 before the High Court. The High Court, vide order
dated 25.11.2005, also dismissed the same and held as
under:
“…..the learned District Judge has also rightly come the
conclusion that Bungalow No.2 has not vested with the
petitioner. This, the learned Judge has said on the basis of
the judgment of the Hon’ble supreme Court as referred in
the case of Doypack Systems Pvt. Ltd., AIR 1988 SC
782 wherein the only vesting of Bungalow No.1 and
Administrative Block has been upheld. It had been left
open to the petitioner to file a civil suit for declaration of
his title over Bungalow No.2. No suit was filed by the
petitioner. There is no order giving a declaration of title in
favour of the petitioner.”
15) Taking note of all the above said applications/petitions,
as mentioned in paragraphs (supra), it is abundantly clear
that the appellant herein have time and again filed various
proceedings on the premise that Bungalow No.2 formed part
of the Swadeshi House but failed in all the attempts. It is not
in dispute that all the proceedings went against the
appellant herein.
20Page 21
16) All the above details, various orders and decisions by
different courts negatived the claim of the appellant and the
same issue is now again sought to be raised by the appellant
in the present proceedings.
We are satisfied that in view of
categorical decision of this Court in Doypack (supra),
rejection of subsequent application filed by the appellant for
clarification/modification, direction to approach the Civil
Court, initiation of proceedings under the PP Act which
ended in dismissal, dismissal of complaint under Section 27
of the Swadeshi Act, were passed by various courts which
undoubtedly go against the claim and stand of the appellant.
It is also brought to our notice by the newly impleaded
parties that they had purchased the said property in a bona
fide manner with clean title of the property vested in the
SCMCL, therefore, they are entitled for the same. It is made
clear that we have not expressed any thing about the said
issue.
17) In view of the above, we are in entire agreement with
the orders passed by the trial Court as well as the High
21Page 22
Court, consequently, both the appeals fail and are
accordingly dismissed. There shall be no order as to costs.
...…………….…………………………J.
(P. SATHASIVAM)
.…....…………………………………J.
(JAGDISH SINGH KHEHAR)
NEW DELHI;
JULY 01, 2013.
22

Cheque dishonor case = under Section 138 of the N.I. Act, in case of issuance of cheque from joint accounts, a joint account holder cannot be prosecuted unless the cheque has been signed by each and every person who is a joint account holder. The said principle is an exception to Section 141 of the N.I. Act which would have no application in the case on hand. The proceedings filed under Section 138 cannot be used as an arm twisting tactics to recover the amount allegedly due from the appellant. It cannot be said that the complainant has no remedy against the appellant but certainly not under Section 138. The culpability attached to dishonour of a cheque can, in no case “except in case of Section 141 of the N.I. Act” be extended to those on whose behalf the cheque is issued. This Court reiterates that it is only the drawer of the cheque who can be made an accused in any proceeding under Section 138 of the Act.

published in http://judis.nic.in/supremecourt/filename=40479
Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 813 OF 2013
(Arising out of S.L.P. (Crl.) No. 9794 of 2010)
Mrs. Aparna A. Shah .... Appellant(s)
Versus
M/s Sheth Developers Pvt. Ltd. & Anr. .... Respondent(s)
J U D G M E N T
P.Sathasivam,J.
1) Leave granted.
2) This appeal is directed against the final judgment and
order dated 24.09.2010 passed by the High Court of
Judicature at Bombay in Criminal Writ Petition No. 1823 of
2010 whereby the High Court partly allowed the petition filed
by the appellant herein.
3) Brief facts:
a) M/s Sheth Developers Private Ltd.-the respondent
herein is a company incorporated under the provisions of the
1Page 2
Companies Act, 1956 having its registered office at 11, Vora
Palace, M.G. Road, Kandivali (West), Mumbai and is engaged
in the business of land development and constructions.
Aparna A. Shah (the appellant herein) and Ashish Shah, her
husband, are the Land Aggregators and Developers who
have been in the said business for the last 15 years and are
the owners of certain lands in and around Panvel.
b) According to the appellant, in January 2008, since the
Company was interested in developing a Township Project
and a Special Economic Zone (SEZ) project in and around
Panvel, Dist. Raigad, Maharashtra, one Virender Gala of
Mahavir Estate Agency - the Broker, introduced them to the
appellant herein and her husband as the land owners holding
huge land in Panvel. The appellant represented to the
Company that the said land was ideal for the development of
a Township Project and a Special Economic Zone (SEZ) and
also that they have no financial means and capacity to
develop the same single handedly. It was further
represented that they were also looking for a suitable person,
interested in developing the said land jointly with them.
2Page 3
(c) On believing the above said representations, the
respondent-Company agreed for the development of the said
land jointly with the appellant herein and her husband.
When the respondent-Company requested for inspection of
the title documents in respect of the said land, the appellant
and her husband agreed for the same upon the entrustment
of a token amount of Rs. 25 crores with an understanding
between the parties that the said amount would be returned
if the project is not materialize. Agreeing the same, the
respondent-Company issued a cheque of Rs. 25 crores in
favour of the appellant herein and her husband. However, for
various reasons, the proposed joint venture did not
materialize and it was claimed by the appellant herein that
the whole amount of Rs. 25 crores was spent in order to
meet the requirements of the initial joint venture in the
manner as requested by the respondent-Company.
(d) According to the appellant, again the respondentCompany expressed interest to start a new project and to
take financial facilities from their bank in order to submit a
tender for the purchase of a mill land. With regard to the
3
same, the respondent-Company approached the appellant
herein and her husband and informed that they are not
having sufficient securities to enable the bank to grant the
facility and the bank is to show receivables in writing.
Therefore, on an understanding between the respondent and
the appellant, a cheque of Rs. 25 crores was issued by the
husband of the appellant from their joint account. It is the
case of the appellant that in breach of the aforementioned
understanding, on 05.02.2009, the respondent deposited the
cheque with IDBI Bank at Cuffe Parade, Mumbai and the said
cheque was dishonoured due to “insufficient funds”
e) On 18.02.2009, a statutory notice under Section 138 of
the Negotiable Instruments Act, 1881 (in short ‘the N.I. Act”)
was issued to the appellant and her husband asking them to
repay the sum of Rs. 25 crores. On 06.03.2009, the
appellant and her husband jointly replied mentioning the
circumstances in which the said cheque was issued with the
supporting letters.
f) On 04.04.2009, a complaint was filed against the
appellant and her husband in the Court of the Metropolitan
4Page 5
Magistrate, Dadar, Mumbai and the same was registered as
Case No. 1171-SS of 2009. By order dated 20.04.2009,
process was issued against them.
g) On 12.01.2010, the appellant and her husband filed an
application objecting the exhibition of documents and the
same was registered as Exh. 28. By order dated 11.05.2010,
the said application was dismissed.
h) Against the issuance of process dated 20.04.2009 and
order dated 11.05.2010 dismissing the application by the
Magistrate, the appellant filed Writ Petition No. 1823 of 2010
before the High Court. The High Court, by impugned order
dated 24.09.2010, partly allowed the petition and quashed
the order dated 11.05.2010 and directed the Magistrate to
decide the objections raised by the counsel for the accused
after hearing both the sides, but refused to quash the
proceedings.
i) Aggrieved by the said order, the appellant has filed the
above appeal by way of special leave.
5
4) Heard Mr. K.V. Vishwanathan, learned senior counsel for
the appellant and Mr. Mukul Rohtagi, learned senior counsel
for respondent No.1.
Contentions:
5) Mr. K.V. Vishwanathan, learned senior counsel for the
appellant, by drawing our attention to Section 138 of the N.I.
Act as well as various decisions of this Court relating to
interpretation of the expression “drawer”, submitted that the
issuance of process by learned Magistrate cannot be
sustained. On the other hand, Mr. Mukul Rohtagi, learned
senior counsel for respondent No.1/the complainant
submitted that inasmuch as the instant case is squarely
covered by Section 141 of the N.I. Act and that the accused
persons, namely, Ashish Shah and Aparna Shah (appellant
No.1) are an association of individuals as envisaged under
Section 141, learned Magistrate was fully justified in issuing
process. He also submitted that the transaction with
respondent No.1 herein was negotiated by both the accused,
the cheque which had been issued by respondent No.1 was
deposited in the joint account maintained by both the
6
accused, the cheque bears the name and stamp of both the
accused and by suppressing all the materials, the appellant
has approached the High Court and this Court, hence her
claim has to be rejected on the ground of
concealing/suppressing material facts. He finally pointed out
that inasmuch as the trial has commenced and the appellant
will have her remedy during trial, the High Court was right in
dismissing her petition filed under Section 482 of the Code of
Criminal Procedure, 1973 (in short ‘the Code’).
6) We have carefully considered the rival submissions and
perused all the relevant materials.
Discussion:
7) In order to understand the rival contentions, it is useful
to refer Section 138 of the N.I. Act which reads as under:
“138. Dishonour of cheque for insufficiency, etc., of
funds in the account.—Where any cheque drawn by a
person on an account maintained by him with a banker for
payment of any amount of money to another person from
out of that account for the discharge, in whole or in part,
of any debt or other liability, is returned by the bank
unpaid, either because of the amount of money standing
to the credit of that account is insufficient to honour the
cheque or that it exceeds the amount arranged to be paid
from that account by an arrangement made with that
bank, such person shall be deemed to have committed an
offence and shall, without prejudice to any other
provisions of this Act, be punished with imprisonment for a
7
term which may extend to two years, or with fine which
may extend to twice the amount of the cheque, or with
both:
Provided that nothing contained in this section shall apply
unless—
(a) the cheque has been presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque,
as the case may be, makes a demand for the payment of
the said amount of money by giving a notice in writing, to
the drawer of the cheque, within thirty days of the receipt
of information by him from the bank regarding the return
of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the
payment of the said amount of money to the payee or, as
the case may be, to the holder in due course of the cheque
within fifteen days of the receipt of the said notice.
Explanation.-For the purposes of this section, “debt or
other liability” means a legally enforceable debt or other
liability”.
8) In order to constitute an offence under Section 138 of
the N.I. Act, this Court, in Jugesh Sehgal vs. Shamsher
Singh Gogi, (2009) 14 SCC 683, noted the following
ingredients which are required to be fulfilled:
“(i) a person must have drawn a cheque on an account
maintained by him in a bank for payment of a certain
amount of money to another person from out of that
account;
(ii) the cheque should have been issued for the discharge,
in whole or in part, of any debt or other liability;
(iii) that cheque has been presented to the bank within a
period of six months from the date on which it is drawn or
within the period of its validity whichever is earlier;
8
(iv) that cheque is returned by the bank unpaid, either
because of the amount of money standing to the credit of
the account is insufficient to honour the cheque or that it
exceeds the amount arranged to be paid from that
account by an agreement made with the bank;
(v) the payee or the holder in due course of the cheque
makes a demand for the payment of the said amount of
money by giving a notice in writing, to the drawer of the
cheque, within 15 days of the receipt of information by
him from the bank regarding the return of the cheque as
unpaid;
(vi) the drawer of such cheque fails to make payment of
the said amount of money to the payee or the holder in
due course of the cheque within 15 days of the receipt of
the said notice.
Being cumulative, it is only when all the aforementioned
ingredients are satisfied that the person who had drawn
the cheque can be deemed to have committed an offence
under Section 138 of the Act.”
Considering the language used in Section 138 and taking
note of background agreement pursuant to which a cheque
is issued by more than one person, we are of the view that it
is only the “drawer” of the cheque who can be made liable
for the penal action under the provisions of the N.I. Act. It is
settled law that strict interpretation is required to be given to
penal statutes.
9) In Jugesh Sehgal (supra), after noting the ingredients
for attracting Section 138 on the facts of the case, this Court
concluded that there is no case to proceed under Section 138
9
of the Act. In that case, on 20.01.2001, the complainant filed
an FIR against all the accused for the offence under Sections
420, 467, 468, 471 and 406 of the Indian Penal Code, 1860
(hereinafter referred to as “IPC) and there was hardly any
dispute that the cheque, subject-matter of the complaint
under Section 138 of the N.I. Act, had not been drawn by the
appellant on an account maintained by him in Indian Bank,
Sonepat Branch. In the light of the ingredients required to be
fulfilled to attract the provisions of Section 138, this Court,
after finding that there is little doubt that the very first
ingredient of Section 138 of the N.I. Act enumerated above is
not satisfied and concluded that the case against the
appellant for having committed an offence under Section 138
cannot be proved.
10) In S.K. Alagh vs. State of Uttar Pradesh and
Others, (2008) 5 SCC 662, this Court held:
19. … …. If and when a statute contemplates creation of
such a legal fiction, it provides specifically therefor. In
absence of any provision laid down under the statute, a
Director of a Company or an employee cannot be held to
be vicariously liable for any offence committed by the
Company itself. (See Sabitha Ramamurthy v. R.B.S.
Channabasavaradhya, (2006) 10 SCC 581)”
10
11) In Sham Sunder and Others vs. State of Haryana,
(1989) 4 SCC 630, this Court held as under:
“9. The penal provision must be strictly construed in the
first place. Secondly, there is no vicarious liability in
criminal law unless the statute takes that also within its
fold. Section 10 does not provide for such liability. It does
not make all the partners liable for the offence whether
they do business or not.”
12) As rightly pointed out by learned senior counsel for the
appellant, the interpretation sought to be advanced by the
respondents would add words to Section 141 and extend the
principle of vicarious liability to persons who are not named
in it.
13) In the case on hand, we are concerned with criminal
liability on account of dishonour of a cheque. It primarily falls
on the drawer, if it is a Company, then Drawer Company and
is extended to the officers of the company. The normal rule
in the cases involving criminal liability is against vicarious
liability. To put it clear, no one is to be held criminally liable
for an act of another. This normal rule is, however, subject to
exception on account of specific provision being made in
statutes extending liability to others. For example, Section
11
141 of the N.I. Act is an instance of specific provision that in
case an offence under Section 138 is committed by a
company, the criminal liability for dishonour of a cheque will
extend to the officers of the company. As a matter of fact,
Section 141 contains conditions which have to be satisfied
before the liability can be extended. Inasmuch as the
provision creates a criminal liability, the conditions have to
be strictly complied with. In other words, the persons who
had nothing to do with the matter, need not be roped in. A
company being a juristic person, all its deeds and functions
are the result of acts of others. Therefore, the officers of the
company, who are responsible for the acts done in the name
of the company, are sought to be made personally liable for
the acts which result in criminal action being taken against
the company. In other words, it makes every person who, at
the time the offence was committed, was in-charge of, and
was responsible to the company for the conduct of business
of the company, as well as the company, liable for the
offence. It is true that the proviso to sub-section enables
certain persons to prove that the offence was committed
12
without their knowledge or that they had exercised all due
diligence to prevent commission of the offence. The liability
under Section 141 of the N.I. Act is sought to be fastened
vicariously on a person connected with the company, the
principal accused being the company itself. It is a departure
from the rule in criminal law against vicarious liability.
14) It is not in dispute that the first respondent has not filed
any complaint under any other provisions of the penal code
and, therefore, the argument pertaining to the intention of
the parties is completely misconceived. We were taken
through the notice issued under the provisions of Section
138, reply given thereto, copy of the complaint and the order
issuing process. In this regard, Mr.Mukul Rohatgi, learned
senior counsel for the respondent after narrating the
involvement of the appellant herein and her husband
contended that they cannot be permitted to raise any
objection on the ground of concealing/suppressing material
facts within her knowledge. For the said purpose, he relied
on Oswal Fats and Oils Limited vs. Additional
Commissioner (Administration), Bareilly Division,
13
Bareilly and Others, (2010) 4 SCC 728, Balwantrai
Chimanlal Trivedi vs. M.N. Nagrashna & Ors., AIR 1960
SC 1292, J.P. Builders & Anr. vs. A. Ramadas Rao &
Anr., (2011) 1 SCC 429. Inasmuch as the appellant had
annexed the relevant materials, namely, copy of notice, copy
of reply, copy of the complaint and the order issuing process
which alone is relevant for consideration in respect of
complaint under Section 138 of the N.I. Act, the argument of
learned senior counsel for Respondent No.1 that the stand of
the appellant has to be rejected for suppressing of material
facts or relevant facts, cannot stand. In such circumstances,
we are of the view that the case law relied upon by the
contesting respondent No.1 is inapplicable to the facts of the
present case.
15) Mr. Mukul Rohtagi, learned senior counsel for
respondent No.1, by drawing our attention to the definition of
“person” in Section 3(42) of the General Clauses Act, 1897
submitted that in view of various circumstances mentioned,
the appellant herein being wife, is liable for criminal
prosecution. He also submitted that in view of the
14
explanation in Section 141(2) of the N.I. Act, the appellant
wife is being prosecuted as an association of individual. In
our view, all the above contentions are unacceptable since it
was never the case of respondent No.1 in the complaint filed
before learned Magistrate that the appellant wife is being
prosecuted as an association of individuals and, therefore, on
this ground alone, the above submission is liable to be
rejected. Since, this expression has not been defined, the
same has to be interpreted ejusdem generis having regard to
the purpose of the principle of vicarious liability incorporated
in Section 141. The terms “complaint”, “persons”
“association of persons” “company” and “directors” have
been explained by this Court in Raghu Lakshminarayanan
vs. Fine Tubes, (2007) 5 SCC 103.
16) The above discussion with reference to Section 138 and
the materials culled out from the statutory notice, reply, copy
of the complaint, order, issuance of process etc., clearly show
that only the drawer of the cheque being responsible for the
same.
15
17) In addition to our conclusion, it is useful to refer some of
the decisions rendered by various High Courts on this issue.
18) Learned Single Judge of the Madras High Court in
Devendra Pundir vs. Rajendra Prasad Maurya,
Proprietor, Satyamev Exports S/o. Sri Rama Shankar
Maurya, 2008 Criminal Law Journal 777, following decisions
of this Court, has concluded thus:
“7. This Court is of the considered view that the above
proposition of law laid down by the Hon’ble Apex Court in
the decision cited supra is squarely applicable to the facts
of the instant case. Even in this case, as already pointed
out, the first accused is admittedly the sole proprietrix of
the concern namely, “Kamakshi Enterprises” and as such,
the question of the second accused to be vicariously held
liable for the offence said to have been committed by the
first accused under Section 138 of the Negotiable
Instruments Act not at all arise.”
After saying so, learned Single Judge, quashed the
proceedings initiated against the petitioner therein and
permitted the Judicial Magistrate to proceed and expedite
the trial in respect of others.
19) In Gita Berry vs. Genesis Educational Foundation,
151 (2008) DLT 155, the petitioner therein was wife and she
filed a petition under Section 482 of the Code seeking
quashing of the complaint filed under Section 138 of the N.I.
16
Act. The case of the petitioner therein was that the offence
under Section 138 of the Act cannot be said to have been
made out against her only on the ground that she was a joint
account holder along with her husband. It was pointed out
that she has neither drawn nor issued the cheque in question
and, therefore, according to her, the complaint against her
was not maintainable. Learned Single Judge of the High
Court of Delhi, after noting that the complaint was only under
Section 138 of the Act and not under Section 420 IPC and
pointing out that nothing was elicited from the complainant
to the effect that the petitioner was responsible for the
cheque in question, quashed the proceedings insofar as the
petitioner therein.
20) In Smt. Bandeep Kaur vs. S. Avneet Singh, (2008) 2
PLR 796, in a similar situation, learned Single Judge of the
Punjab and Haryana High Court held that in case the drawer
of a cheque fails to make the payment on receipt of a notice,
then the provisions of Section 138 of the Act could be
attracted against him only. Learned Single Judge further
held that though the cheque was drawn to a joint bank
17
account which is to be operated by anyone, i.e., the
petitioner or by her husband, but the controversial document
is the cheque, the liability regarding dishonouring of which
can be fastened on the drawer of it. After saying so, learned
Single Judge accepted the plea of the petitioner and quashed
the proceedings insofar as it relates to her and permitted the
complainant to proceed further insofar as against others.
21) In the light of the principles as discussed in the earlier
paras, we fully endorse the view expressed by the learned
Judges of the Madras, Delhi and Punjab & Haryana High
Courts.
22) In the light of the above discussion, we hold that under
Section 138 of the Act, it is only the drawer of the cheque
who can be prosecuted. In the case on hand, admittedly, the
appellant is not a drawer of the cheque and she has not
signed the same. A copy of the cheque was brought to our
notice, though it contains name of the appellant and her
husband, the fact remains that her husband alone put his
signature. In addition to the same, a bare reading of the
complaint as also the affidavit of examination-in-chief of the
18
complainant and a bare look at the cheque would show that
the appellant has not signed the cheque.
23) We also hold that 
under Section 138 of the N.I. Act, in
case of issuance of cheque from joint accounts, a joint
account holder cannot be prosecuted unless the cheque has
been signed by each and every person who is a joint account
holder. 
The said principle is an exception to Section 141 of
the N.I. Act which would have no application in the case on
hand. 
The proceedings filed under Section 138 cannot be
used as an arm twisting tactics to recover the amount
allegedly due from the appellant. 
It cannot be said that the
complainant has no remedy against the appellant but
certainly not under Section 138. 
The culpability attached to
dishonour of a cheque can, in no case “except in case of
Section 141 of the N.I. Act” be extended to those on whose
behalf the cheque is issued. 
This Court reiterates that it is
only the drawer of the cheque who can be made an accused
in any proceeding under Section 138 of the Act. 
Even the
High Court has specifically recorded the stand of the
appellant that she was not the signatory of the cheque but
19
rejected the contention that the amount was not due and
payable by her solely on the ground that the trial is in
progress. It is to be noted that only after issuance of
process, a person can approach the High Court seeking
quashing of the same on various grounds available to him.
Accordingly, the High Court was clearly wrong in holding that
the prayer of the appellant cannot even be considered.
Further, the High Court itself has directed the Magistrate to
carry out the process of admission/denial of documents. In
such circumstances, it cannot be concluded that the trial is in
advanced stage. 
24) Under these circumstances, the appeal deserves to be
allowed and process in Criminal Case No. 1171/SS/2009
pending before the Court of learned Metropolitan Magistrate
13th Court, Dadar, Mumbai deserves to be quashed,
accordingly, quashed against the appellant herein. The
appeal is allowed. 
………….…………………………J.
(P. SATHASIVAM)
 ………….…………………………J.
2Page 21
(JAGDISH SINGH KHEHAR)
NEW DELHI;
JULY 01, 2013

whether the Court, where a cheque is deposited for collection, would have territorial jurisdiction to try the accused for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (in short “the N.I.Act”) or would it be only the Court exercising territorial jurisdiction over the drawee bank or the bank on which the cheque is drawn? = whether the sending of notice from Delhi itself would give rise to a cause of action in taking cognizance under the N.I. Act. In such circumstances, we are of the view that Harman Electronics (supra) is only an authority on the question where a court will have jurisdiction because only notice is issued from the place which falls within its jurisdiction and it does not deviate from the other principles laid down in K. Bhaskaran (supra). This Court has accepted that the place where the cheque was presented and dishonoured has jurisdiction to try the complaint. In this way, this Court concluded that issuance of notice would not by itself give rise to a cause of action but communication of the notice would. In other words, the court clarified only on the service in such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days, thereafter, the commission of an offence completes. We are of the view that this Court in Harman Electronics (supra) affirmed what it had said in K. Bhaskaran (supra) that court within whose jurisdiction the cheque is presented and in whose jurisdiction there is failure to make payment within 15 days of the receipt of notice can have jurisdiction to try the offence under Section 138 of the N.I. Act. It is also relevant to point out that while holding that the Chandigarh Court has jurisdiction, this Court in Harman Electronics (supra) observed that in the case before it, the complaint was silent as to whether the said cheque was presented at Delhi. In the case on hand, it is categorically stated that the cheque was presented at Bhiwani whereas in Harman Electronics (supra) the dishonour had taken place at Chandigarh and this fact was taken into account while holding that Chandigarh court has jurisdiction. In the complaint in question, it is specifically stated that the dishonour took place at Bhiwani. We are also satisfied that nothing said in Harman Electronics (supra) had adverse impact on the complainant’s case in the present case. we must note that in K. Bhaskaran (supra), this Court has held that Section 178 of the Code has widened the scope of jurisdiction of a criminal court and Section 179 of the Code has stretched it to still a wider horizon. Further, for the sake of repetition, we reiterate that the judgment in Ishar Alloy (supra) does not affect the ratio in K. Bhaskaran (supra) which provides jurisdiction at the place of residence of the payer and the payee. We are satisfied that in the facts and circumstances and even on merits, the High Court rightly refused to exercise its extraordinary jurisdiction under Section 482 of the Code and dismissed the petition filed by the appellantaccused. In the light of the above discussion, we hold that the ratio laid down in K.Bhaskaran (supra) squarely applies to the case on hand. The said principle was correctly applied by the learned Sessions Judge as well as the High Court. Consequently, the appeal fails and the same is dismissed. In view of the dismissal of the appeal, the interim order granted by this Court on 09.12.2011 shall stand vacated.

published in http://judis.nic.in/supremecourt/filename=40477
Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 808 OF 2013
(Arising out of S.L.P. (Crl.) No. 9434 of 2011)
Nishant Aggarwal .... Appellant(s)
Versus
Kailash Kumar Sharma .... Respondent(s)
J U D G M E N T
P.Sathasivam,J.
1) Leave granted.
2) The question which has to be decided in this appeal is
whether the Court, where a cheque is deposited for
collection, would have territorial jurisdiction to try the
accused for an offence punishable under Section 138 of the
Negotiable Instruments Act, 1881 (in short “the N.I.Act”) or
would it be only the Court exercising territorial jurisdiction
over the drawee bank or the bank on which the cheque is
drawn?
1Page 2
3) This appeal is directed against the final judgment and
order dated 31.10.2011 passed by the High Court of Punjab
& Haryana at Chandigarh in Criminal Misc. No. M-32542 of
2011 whereby the High Court dismissed the petition filed by
the appellant herein on the ground that it is not a fit case for
invoking Section 482 of the Code of Criminal Procedure,
1973 (hereinafter referred to as “the Code”).
4) Brief facts:
a) The appellant herein is the Director of M/s Byrni Steel
Private Limited and his father Mr. B.L. Aggarwal is the
Managing Director of M/s Mechfeb Engineering Industries
Private Limited situated at Meghalaya and Guwahati. The
respondent was associated with both the abovementioned
firms as he used to bring business from various private firms
and Government Departments on commission basis.
b) During the course of business, the appellant herein
issued a post-dated cheque bearing No. 925504 dated
01.08.2009 drawn on Standard Chartered Bank, Guwahati,
for Rs. 28,62,700/- in favour of the complainant-respondent
herein in order to discharge his legal enforceable liabilities.
2Page 3
Vide letter dated 21.01.2006, the appellant informed the
Branch Manager, Standard Chartered Bank, Guwahati, as
well as the officer in-charge, Dispur Police Station, Guwahati
regarding missing of the said cheque. Thereafter, on
28.03.2008, the appellant wrote a letter to the Standard
Chartered Bank for stop payment of the said cheque as the
same was missing. 
c) According to the respondent, on 13.08.2009, when he
presented the same for collection through its bankers, viz.,
Canara Bank, Bhiwani, Haryana, it was returned unpaid on
11.09.2009 due to stop payment by the appellant. When the
respondent approached the appellant about dishonour of the
same, he was told to present the same again for collection
after one month. On 15.10.2009, the respondent again
presented the cheque for collection but the same was again
returned unpaid on 14.12.2009. 
d) On 11.01.2010, the respondent sent a legal notice to
the appellant asking him to pay Rs. 28,62,700/- within a
period of 15 days from the date of the receipt of the notice
3Page 4
along with the interest, failing which, he shall be liable to be
prosecuted under Section 138(b) of the N.I. Act. 
e) On 05.02.2010, the appellant herein filed a complaint
petition being C.R. No. 340 of 2010 in the Court of Addl.
Chief Judicial Magistrate, Kamrup at Guwahati under
Sections 379, 381,411 and 420 of the Indian Penal Code,
1860 (in short “the IPC”) against the respondent. 
On
05.03.2010, the respondent filed a complaint being C.R. No.
9 of 2010 before the Court of J.M.I.C., Bhiwani under Section
190 of the Code for taking cognizance of the offence
committed by the appellant under Sections 138 and 141 of
the N.I. Act. 
f) The Additional Chief Judicial Magistrate, Kamrup, by
order dated 15.06.2010, in C.R. No. 340 of 2010, issued
bailable warrants against the respondent. Thereafter, on
06.08.2010, the respondent filed an application for recall of
the bailable warrants issued against him.
Ultimately,
learned Judicial Magistrate, Bhiwani, vide order dated
05.03.2011, accepted the application with the observation
that the Court at Bhiwani has no jurisdiction and the
4Page 5
complaint was returned for presentation before the proper
Court having jurisdiction.
g) Dissatisfied with the order dated 05.03.2011, the
respondent filed Criminal Revision Petition being No. 35 of
2011 before the Court of Additional Sessions Judge IV,
Bihwani. By order dated 12.05.2011, the Additional Sessions
Judge set aside the order of the Judicial Magistrate, Bhiwani
and allowed the revision. 
h) Aggrieved by the said order, the appellant herein filed
Crl. Misc. No. M-32542 of 2011 before the High Court. The
High Court, by impugned order dated 31.10.2011, dismissed
the petition. 
i) Against the said order, the appellant has preferred this
appeal by way of special leave before this Court.
5) Heard Mr. Huzefa Ahmadi, learned senior counsel for
the appellant-accused and Mr. Mahabir Singh, learned senior
counsel for the respondent-the complainant.
6) It is the claim of the appellant that the present case is
not covered by the judgment of this Court in K. Bhaskaran
vs. Sankaran Vaidhyan Balan and Another, (1999) 7 SCC
5Page 6
510. On the other hand, it is the specific claim of the
respondent that insofar as territorial jurisdiction of the case
on hand, namely, complaint filed under Section 138 of the
N.I. Act is concerned, the decision of this Court in K.
Bhasaran (supra) squarely applies, accordingly, the Court
at Bhiwani is competent to try and dispose of the complaint
filed by him. It is also pointed out that the said issue was
rightly considered and accepted by the Additional Sessions
Judge, Bhiwani as well as by the High Court.
7) We have already narrated the case of both the parties
in the pleadings portion. In order to answer the only
question, it is relevant to note that the undisputed facts in
the context of territorial jurisdiction of the learned
Magistrate at Bhiwani are that the drawee of the cheque i.e.,
the respondent/complainant is a resident of Bhiwani. The
native village of the respondent, namely, village Barsana is
situated in District Bhiwani. The respondent owns ancestral
agricultural land at village Barsana, District Bhiwani. It is
also asserted that the respondent is running his bank
account with Canara Bank, Bhiwani and is also residing at
6Page 7
the present address for the last about two decades. In view
of the same, it is the claim of the respondent that he
bonafidely presented the cheque in his bank at Bhiwani
which was further presented to the drawer’s Bank at
Guwahati. The cheque was returned uncashed to the
respondent’s bank at Bhiwani with the endorsement
“payment stopped by drawer”. The respondent received the
bounced cheque back from his bank at Bhiwani. Thereafter,
the respondent sent a legal notice under Section 138 of the
N.I. Act to the appellant from Bhiwani. In turn, the appellant
sent a reply to the said notice which the respondent received
at Bhiwani. In view of non-payment of the cheque amount,
the respondent filed a complaint under Sections 138 and 141
of the N.I. Act before the learned Magistrate at Bhiwani.
8) Inasmuch as the issue in question is directly considered
by this Court in K. Bhaskaran (supra), before going into
the applicability of other decisions, it is useful to refer the
relevant portion of the judgment in paras 10 and 11 of the
said case which reads thus:
“10. Learned counsel for the appellant first contended that
the trial court has no jurisdiction to try this case and hence
7Page 8
the High Court should not have converted the acquittal into
conviction on the strength of the evidence collected in
such a trial. Of course, the trial court had upheld the pleas
of the accused that it had no jurisdiction to try the case.
11. We fail to comprehend as to how the trial court could
have found so regarding the jurisdiction question. Under
Section 177 of the Code “every offence shall ordinarily be
enquired into and tried in a court within whose jurisdiction
it was committed”. The locality where the Bank (which
dishonoured the cheque) is situated cannot be regarded as
the sole criterion to determine the place of offence. It must
be remembered that offence under Section 138 would not
be completed with the dishonour of the cheque. It attains
completion only with the failure of the drawer of the
cheque to pay the cheque amount within the expiry of 15
days mentioned in clause (c) of the proviso to Section 138
of the Act. It is normally difficult to fix up a particular
locality as the place of failure to pay the amount covered
by the cheque. A place, for that purpose, would depend
upon a variety of factors. It can either be at the place
where the drawer resides or at the place where the payee
resides or at the place where either of them carries on
business. Hence, the difficulty to fix up any particular
locality as the place of occurrence for the offence under
Section 138 of the Act.
It is clear that this Court also discussed the relevant
provisions of the Code, particularly, Sections 177, 178 and
179 and in the light of the language used, interpreted
Section 138 of the N.I. Act and laid down that Section 138
has five components, namely,
i) drawing of the cheque;
ii) presentation of the cheque to the bank;
iii) returning the cheque unpaid by the drawee bank;
8Page 9
iv) giving notice in writing to the drawer of the cheque
demanding payment of the cheque amount; and
v) failure of the drawer to make payment within 15 days
of the receipt of the notice.
After saying so, this Court concluded that the complainant
can choose any one of the five places to file a complaint.
The further discussion in the said judgment is extracted
hereunder:
“14. The offence under Section 138 of the Act can be
completed only with the concatenation of a number of
acts. The following are the acts which are components of
the said offence: (1) drawing of the cheque, (2)
presentation of the cheque to the bank, (3) returning the
cheque unpaid by the drawee bank, (4) giving notice in
writing to the drawer of the cheque demanding payment of
the cheque amount, (5) failure of the drawer to make
payment within 15 days of the receipt of the notice.
15. It is not necessary that all the above five acts should
have been perpetrated at the same locality. It is possible
that each of those five acts could be done at five different
localities. But a concatenation of all the above five is a sine
qua non for the completion of the offence under Section
138 of the Code. In this context a reference to Section
178(d) of the Code is useful. It is extracted below:
“178. (a)-(c) * * *
(d) where the offence consists of several acts done in
different local areas,
it may be enquired into or tried by a court having
jurisdiction over any of such local areas.”
16. Thus it is clear, if the five different acts were done in
five different localities any one of the courts exercising
jurisdiction in one of the five local areas can become the
9Page 10
place of trial for the offence under Section 138 of the Act.
In other words, the complainant can choose any one of
those courts having jurisdiction over any one of the local
areas within the territorial limits of which any one of those
five acts was done. As the amplitude stands so widened
and so expansive it is an idle exercise to raise jurisdictional
question regarding the offence under Section 138 of the
Act.”
9) Para 11 of K. Bhaskaran (supra), as quoted above,
clarified the place in the context of territorial jurisdiction as
per the fifth component, namely, “failure of the drawer to
make payment within 15 days of the receipt.” As rightly
pointed out by learned senior counsel for the respondent,
the place of failure to pay the amount has been clearly
qualified by this Court as the place where the drawer resides
or the place where the payee resides. In view of the same
and in the light of the law laid down by this Court in
K.Bhaskaran (supra), we are of the view that the learned
Magistrate at Bhiwani has territorial jurisdiction to try the
complaint filed by the respondent as the respondent is
undisputedly a resident of Bhiwani. Further, in K.
Bhaskaran (supra), while considering the territorial
jurisdiction at great length, this Court has concluded that the
amplitude of territorial jurisdiction pertaining to a complaint
10Page 11
under the N.I. Act is very wide and expansive and we are in
entire agreement with the same.
10) Mr. Ahmadi, learned senior counsel for the appellant in
support of his claim that the Court at Bhiwani has no
jurisdiction heavily relied on the decision of this Court in
Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd.,
(2001) 3 SCC 609. We were taken through the entire
judgment. Though the case is also related to N.I. Act, the
issue of territorial jurisdiction was not the subject-matter
thereof. In Ishar Alloy Steels (supra), a three-Judge
Bench of this Court defined the term “the bank” appearing in
clause (a) of Section 138 of the N.I. Act as the drawer’s bank.
It was defined in the context of the statutory period of six
months as mentioned in clause (a), hence, this Court held
that the date of presentation of the cheque for calculating
the statutory time period of six months will be the date of
presentation of the cheque to the drawer’s bank i.e. payee
bank and not the drawee’s bank i.e. collecting bank. This
Court has correctly applied the principle of strict
interpretation appreciating that Section 138 of the N.I. Act
11Page 12
creates an offence as the drawer of the cheque cannot be
expected or saddled with the liability to hold the cheque
amount in his account beyond six months. The reading of
the entire decision in Isher Alloy Steel (supra) shows that
jurisdiction of the Court to take cognizance arises only where
cheque is presented to the bank of drawer either by
drawee’s bank or the drawee/payee personally within six
months. In other words, the analysis of the said decision,
the ratio of Isher Alloy Steel (supra) deals with such a
situation where the cheque has been presented within six
months to the drawer’s bank by the payee in any manner.
Inasmuch as the interpretation relates to filing of complaint
within the statutory time period of six months, we are of the
view that the reliance on the law laid down in Isher Alloy
Steel (supra) has no relevance as far as the present case is
concerned. In fact, that is the reason that in Isher Alloy
Steel (supra), the judgment in K.Bhaskaran (supra) was
not discussed since territorial jurisdiction was not the issue
in that case. In view of the same, the definition of the term
“the bank” envisaged in Isher Alloy Steel (supra) cannot
12Page 13
be employed to decide the jurisdictional aspect and dilute
the ratio of the judgment in K. Bhaskaran (supra). Hence,
we are of the view that on the strength of the judgment in
Isher Alloy Steel (supra) defining the term “the bank”, it
cannot be said that jurisdiction to file a complaint under
Section 138 of the N.I. Act does not lie at the place of
drawee’s bank. To put it clearly, the judgment in Isher Alloy
Steel (supra) does not affect the ratio of the judgment in
K.Bhaskaran (supra) which provides for jurisdiction at the
place of residence of the payer and the payee. In such
circumstances, we are of the view that the judgment in
Isher Alloy Steel (supra) as well as judgments of various
High Courts relied on by the appellant cannot be read
against the respondent to hold that the Magistrate at
Bhiwani does not have the jurisdiction to try the complaint.
11) Though several decisions of various High Courts were
cited before us, we deem it appropriate to refer only one
Division Bench decision of the Bombay High Court rendered
in Criminal Writ Petition No. 3158 of 2009, Mrs. Preetha S.
Babu vs. Voltas Limited and Another, reported in 2010
13Page 14
(3) Maharashtra Law Journal 234. The Division Bench, after
analyzing the factual position of both sides, correctly applied
the ratio laid down in K. Bhaskaran (supra) finding that
the Mumbai Court has jurisdiction to entertain the complaint,
dismissed the said writ petition.
12) Mr. Ahmadi, learned senior counsel for the appellant
has also relied on a decision of this Court in Harman
Electronics Private Limited and Another vs. National
Panasonic India Private Limited, (2009) 1 SCC 720. In
Harman Electronics (supra), the complainant and the
accused entered into a business transaction. The accused
was a resident of Chandigarh. He carried on the business in
Chandigarh and issued a cheque in question at Chandigarh.
The complainant had a Branch Office at Chandigarh although
his Head Office was at Delhi. He presented the cheque given
by the accused at Chandigarh. The cheque was dishonoured
at Chandigarh. The complainant issued a notice upon the
accused asking him to pay the amount from New Delhi. The
said notice was served on the accused at Chandigarh. On
failure on the part of the accused to pay the amount within
14Page 15
15 days from the date of the communication of the said
letter, the complainant filed a complaint at Delhi. In the
complaint, it was stated that the Delhi Court has jurisdiction
to try the case because the complainant was carrying on
business at Delhi, the demand notice was issued from Delhi,
the amount of cheque was payable at Delhi and the accused
failed to make the payment of the said cheque within the
statutory period of 15 days from the date of receipt of
notice. It is further seen that the cognizance of the offence
was taken by the learned Magistrate at Delhi. The accused
questioned the jurisdiction of the Magistrate at Delhi before
the Addl. Sessions Judge, New Delhi. The Sessions Judge
held that the Magistrate at Delhi had jurisdiction to entertain
the complaint as, admitedly, the notice was sent by the
complainant to the accused from Delhi and the complainant
was having its Registered Office at Delhi and was carrying on
business at Delhi. The learned Judge has also observed that
the accused failed to make payment at Delhi as the demand
was made from Delhi and the payment was to be made to
the complainant at Delhi. The Delhi High Court dismissed
15Page 16
the petition filed by the accused. Thereafter, the accused
approached this Court.
This Court considered Section 138 of
the N.I. Act and also referred to K.Bhaskaran’s case
(supra) and quoted the five components of offence under
Section 138 which have been noted in paragraph supra. This
Court reiterated that the five different acts which are the
components of offence under Section 138 of the N.I. Act
were done in five different localities, any one of the courts
exercising jurisdiction in one of the five local areas can
become the place of trial for the offence under Section 138
of the N.I. Act and the complainant would be at liberty to file
a complaint at any of those places. Ultimately, this Court
held that the Chandigarh Court had jurisdiction to entertain
the complaint because the parties were carrying on business
at Chandigarh, Branch Office of the complainant was also in
Chandigarh, the transactions were carried on only from
Chandigarh and the cheque was issued and presented at
Chandigarh. This Court pointed out that the complaint did
not show that the cheque was presented at Delhi, because it
was absolutely silent in that regard and, therefore, there was
16Page 17
no option but to presume that the cheque was presented at
Chandigarh. 
It is not in dispute that the dishonour of the
cheque also took place at Chandigarh and, therefore, the
only question which arose before this Court for consideration
was
whether the sending of notice from Delhi itself would
give rise to a cause of action in taking cognizance under the
N.I. Act. In such circumstances, we are of the view that
Harman Electronics (supra) is only an authority on the
question where a court will have jurisdiction because only
notice is issued from the place which falls within its
jurisdiction and it does not deviate from the other principles
laid down in K. Bhaskaran (supra). 
This Court has
accepted that the place where the cheque was presented
and dishonoured has jurisdiction to try the complaint. In this
way, this Court concluded that issuance of notice would not
by itself give rise to a cause of action but communication of
the notice would. 
In other words, the court clarified only on
the service in such notice and failure on the part of the
accused to pay the demanded amount within a period of 15
days, thereafter, the commission of an offence completes.
17Page 18
We are of the view that this Court in Harman Electronics
(supra) affirmed what it had said in K. Bhaskaran (supra)
that court within whose jurisdiction the cheque is presented
and in whose jurisdiction there is failure to make payment
within 15 days of the receipt of notice can have jurisdiction
to try the offence under Section 138 of the N.I. Act.
 It is also
relevant to point out that while holding that the Chandigarh
Court has jurisdiction, this Court in Harman Electronics
(supra) observed that in the case before it, the complaint
was silent as to whether the said cheque was presented at
Delhi. 
In the case on hand, it is categorically stated that the
cheque was presented at Bhiwani whereas in Harman
Electronics (supra) the dishonour had taken place at
Chandigarh and this fact was taken into account while
holding that Chandigarh court has jurisdiction. 
In the
complaint in question, it is specifically stated that the
dishonour took place at Bhiwani. We are also satisfied that
nothing said in Harman Electronics (supra) had adverse
impact on the complainant’s case in the present case.
13) As observed earlier,
we must note that in K.
18Page 19
Bhaskaran (supra), this Court has held that 
Section 178 of
the Code has widened the scope of jurisdiction of a criminal
court and Section 179 of the Code has stretched it to still a
wider horizon. Further, for the sake of repetition, we
reiterate that the judgment in Ishar Alloy (supra) does not
affect the ratio in K. Bhaskaran (supra) which provides
jurisdiction at the place of residence of the payer and the
payee. We are satisfied that in the facts and circumstances
and even on merits, the High Court rightly refused to
exercise its extraordinary jurisdiction under Section 482 of
the Code and dismissed the petition filed by the appellantaccused. 
14) In the light of the above discussion, we hold that the
ratio laid down in K.Bhaskaran (supra) squarely applies to
the case on hand. 
The said principle was correctly applied
by the learned Sessions Judge as well as the High Court.
Consequently, the appeal fails and the same is dismissed. In
view of the dismissal of the appeal, the interim order
granted by this Court on 09.12.2011 shall stand vacated. 
………….…………………………J.
19Page 20
(P. SATHASIVAM)
 ………….…………………………J.
(JAGDISH SINGH KHEHAR)
NEW DELHI;
JULY 01, 2013.
20

Damages to the standing crop +The question relating to the value of larger extent of agricultural land, if required to be determined with reference to price fixed for small residential plot, = “When the value of a large extent of agricultural land has to be determined with reference to the price fetched by sale of a small residential plot, it is necessary to make an appropriate deduction towards the development cost, to arrive at the value of the large tract of land. The deduction towards development cost may vary from 20% to 75% depending upon various factors. Even if the acquired lands have situational advantages, the minimum deduction from the market value of a small residential plot, to arrive at the market value of a larger agricultural land, in the usual course, will be in the range of 20% to 25%. In this case, the Collector has himself adopted a 25% deduction which has been affirmed by the Reference Court and the High Court. We, therefore, do not propose to alter it.” Therefore, it is clear that mere reliance made by a Court on sale deeds of smaller residential area for determination of market value of larger agricultural area, the same will not render the determination illegal until and unless it is shown that the determination was not proper. 20. In the instant case, the average value of the sale­deeds relied upon by the Reference Court (Ext.1 and Ext.1/b) was Rs. 401/­ at the time of acquisition. Therefore, as the sale­deeds were in relation to smaller plots, the deduction of 37% was made by the Reference Court and thereafter, by allowing appropriate 10% increase in the value of the land from the date of the sale deeds upto the date of Notification under Section 4 of the Act, the Reference Court arrived at a figure of Rs.250/­ per decimal. The High Court while arriving at figure of Rs. 100/­ per decimal considered only the fact that the sale deeds relied upon were in relation to smaller plots and those sale deeds(Ext.1 and Ext.1/b) were related to homestead land and hence fixed Rs. 10,000/­ per acre as compensation. It completely failed to consider the increase in price of land and the deduction made by the 9Page 10 High Court is nearly 75% which is not in accordance with law. we have no other alternative but to set aside the order passed by the High Court and restore the award passed by the Reference Court.-The respondents are directed to pay the appellant the compensation in terms of the award passed by the Reference Court after adjusting the amount already paid within three months. There shall be no separate order as to costs.

published in http://judis.nic.in/supremecourt/filename=40470
Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5311 OF 2012
(arising out of SLP(C)No.34284 of 2011)
AHSANUL HODA  … APPELLANT
Versus
STATE OF BIHAR     … RESPONDENT
J U D G M E N T
SUDHANSU JYOTI MUKHOPADHAYA, J.
This   appeal   has   been   filed   by   the   claimant­
appellant against the judgment and order of the Patna
High   Court   dated   10.2.2011   by   which   the   High   Court
reduced   the   compensation   awarded   to   the   claimant,   by
fixing the lower market rate of the land in question
and   set   aside   the   part   of   the   order   passed   by   the
Reference Court granting Rs.10,000/­ towards damages of
standing crops.
2.   Certain lands in  Mauja Mothabari, Thana Katoria,
Pargana   Sarohi,   District   Bhagalpur   (now   Banka)   were
acquired   for   the   construction   of   the   Orni­reservoir.
Land   measuring   3.54   acres   of   Khata   No.111,   Khasra
No.2925 of same village belonging to the appellant was
also acquired. The Collector by an award order dated
16.10.1984 fixed the compensation of Rs.6513.60 for the
1Page 2
entire land based on market rate at Rs.16 per decimal.
No   amount   was   awarded   towards   damages   of   standing
crops.
3. The  Reference   Court  to   which   the   claims   of   the
land   owners   for   higher   compensation   were   referred,
determined the market value as Rs. 250/­ per decimal
i.e. Rs. 25,000/­ per acre.  The Reference Court based
its decision on two sale transactions submitted by the
claimant   dated   25.11.1980   and   16.10.1975   (Ext.1   and
Ext.1/b) relating to sale of plots in the neighbouring
area.   Considering the fact that the sale deeds were
related to small extent of land of nearby village and
the acquisition was related to a larger extent,   the
Reference   Court     was   of   the   view   that   certain
percentage   could   be   deducted   while   determining   the
value of the land in question. However, as sale deeds
were   of   the   earlier   period,     after   such   deduction,
appropriate increase in the value of the land from the
date of the sale deed to the date of the Notification
under   Section   4     of   the   Land   Acquisition   Act,   1894
(hereinafter referred to as ‘the Act’) was made.
4. The respondent preferred an appeal before the High
Court.    The High Court disposed of the said appeal by
impugned   judgment   dated   10.2.2011.   The     High   Court
2Page 3
modified   the   judgment   of   the   Reference   Court   with
regard to the market value by reducing the market rate
from Rs.250/­ per decimal to Rs.100/­ per decimal and
set   aside   the   part   of     the   order   whereby   sum   of
Rs.10,000/­ was granted by the Tribunal as damages of
standing crops.
5. During the pendency of the appeal before the High
Court   and   after   23   years   of   the   acquisition,   the
appellant received a sum of Rs. 5,69,531/­ on  4.7.2007
as per determination of  the Reference Court and paid a
sum   of   Rs   56,953/­   towards   tax.       The   effect   of
impugned judgment passed by the High Court is that the
claimant has to refund part of the amount received by
the claimant as compensation.
6. The   questions   that   arise   for   our   consideration
are:
(i)  Whether   the   market   value   as   fixed   by   the
Tribunal   is   excessive   as   contended   by   the
State of Bihar;
(ii)  Whether the Tribunal rightly compensated
the claimant for damages of standing crops.
7. The High Court by its impugned judgment modified
the compensation and set aside the part of the   order
3Page 4
relating to compensation   for standing crops on three
counts, namely;   (a) The sale deeds dated 25.11.1980
(Ext.1)   and   16.10.1975   (Ext.1/b)     related   to   smaller
area of  25 and  6 ½ decimals of land respectively; (b)
Aforesaid sale deeds do not relate to agricultural land
but  homestead land as  in the boundary of one of the
sale­deed ‘Masjid’ and ‘road’   is shown; (c)   OP­W­1,
Shri Ratneshwar Pd. Singh has stated that there was no
crop   standing   on   the     land   at   the   time   of   the
possession.
8. Learned   counsel   for   the   appellant   assailed   the
judgment   passed   by   the     High   Court   on   the   following
grounds:
(i) In  the  absence  of  any  other   evidence  except
the   sale   deeds   (Ext.1   and   Ext.1/b),     the
determination of market value is not based on any
evidence but on mere presumption and surmises.
(ii) The   High   Court   wrongly   relied   on   the
statement of OP­W­1, Ratneshwar   Pd. Singh,   who
was posted elsewhere at the time of   acquisition
of the land.   On the other hand,   the Reference
Court   decided   the   quantum   of   payment   towards
damages of standing crops on the basis of evidence
on record.
4Page 5
9. Learned counsel for the State justified the order
passed by the High Court.   It was contended that the
compensation   with   regard   to   larger   area   cannot   be
determined   on   the   basis   of   sale   deeds   related   to
smaller area.   As the sale deeds at Ext.1 and Ext.1/b
related   to   homestead   land   having   shown   ‘road’   or
‘masjid’ in the boundary,   no comparison can be made
with the agricultural land acquired for other purpose.
10. Before the Reference Court claimant produced seven
witnesses, AW­1 to AW­7 and three sale deeds, Ext.1,
Ext.1/a   and   Ext.1/b.     On   behalf   of   the   State,   one
witness OP­W­1, Ratneshwar Pd. Singh, an assistant to
the   Land   Acquisition   Officer,   Medium   Irrigation
Project,   Bhagalpur   and   the   two   valuation   Khatiyans,
Ext. A and A/1 were produced.
11. AW­6,   the   claimant,   himself   in   his   deposition
stated that 3.54 acres of his land acquired is ‘three
fasla’   (produced   three   crops   in   an   area)   and   was
irrigated  from the Orni river.  At the time of taking
possession by State,  potato, wheat and sugar­cane were
standing crops which were damaged causing a loss of Rs.
10,000/­ to Rs.12,000/­.   The market value of the land
at the time of acquisition was between Rs. 50,000/­ to
Rs. 60,000/­ per acre.  Similar statements were made by
5Page 6
other witnesses i.e. AW­1 to AW­5.  They supported the
claim of the claimant.
12. Kanhaiya Lall Ghosh, A.W.7, a deed writer proved
sale   deeds   Ext.   1   dated   25.11.1980,   Ext.   1/a     dated
6.10.1980   and   Ext.1/b     dated   16.10.1975.     He   stated
that he was the deed writer of Exts.1, 1/a and 1/b.  By
Ext.1/a,   Bibi   Rahana   Sultana   and   others   sold   70
decimals   of   land   for   consideration   of   Rs.7,000/­   on
6.10.1980.  By Ext.1/b  dated 16.10.1975, Seikh Janual
and others sold 6 ½  decimals of land for consideration
of Rs. 1500/­ .
13. Ratneshwar   Pd.   Singh,   OP­W­1   deposed   before   the
Reference   that   the   land   of   the   appellant   measuring
3.54 acres had  been acquired by the State vide  L.A.
Case   No.   76/81­82   and     department   paid   Rs.   5664/­
towards   value   of   the   land   and   Rs.   849.60     as
additional compensation; a sum of Rs. 6513.60 in total
was paid as compensation.  He specifically stated that
he   was   not   posted   at   the   time   of   acquisition   and
whatever he stated is based on the official record.  
14. Ext. A and Ext. A/1,  valuation Khatiayan  mainly
contains Khata No.,   Khesra No., area   acquired, rate
per   acre,   value   of   the   land   determined   and     other
statutory benefits provided to one or other claimant.
6Page 7
Those Exts. A and A/1  do not show anything about the
market value of any land of the village or the nearby
village.
15. The   Reference   Court,     based   on   the   sale   deeds
Ext.1   and   Ext.1/b   and   considering     the   evidence   on
record,   determined the market value at Rs.250/­ per
decimal and allowed a sum of Rs.10,000/­ towards damage
of standing crops.
16. This  Court in number of cases has taken judicial
notice of the fact that there is a steady increase in
the market value of the  land and has also adopted the
procedure   for   determining   the   increased   market   value
and relied upon  the transaction at  a given rate per
year.
17. In  General   Manager,   Oil   and   Natural   Gas
Corporation Limited vs. Rameshbhai Jilvanbhai Patel and
Another  reported in (2008) 14  SCC 745,    this Court
observed   that   in   the   absence   of   other   acceptable
evidence, a cumulative increase of 10 to 15 per cent
is permissible with reference to acquisitions in  1990.
In the decades preceding 1990s, the quantum of increase
was considered to be less than 10 per cent per annum.
18. This Court in Sardar Joginder Singh vs. State of
Uttar Pradesh and Another (2008) 17 SCC 133,   noticed
7Page 8
that the said case related to acquisition in  the year
1979   and   relying     upon     the     award   related   to   an
acquisition of  1969 observed that the general increase
between 1969­79 can be taken to be around 8­10 per cent
per   annum.     If   this   increase   is   calculated
cumulatively, the total increase in 10 years would be
around 100 per cent.
19.   The   question   relating   to   the   value   of   larger
extent   of   agricultural   land,   if   required   to   be
determined   with   reference   to   price   fixed   for   small
residential   plot,   came   for   consideration   before   this
Court   
in  Haridwar   Development   Authority   Vs.   Raghubir
singh and Others (2010)11 SCC 581.   
In the said case, this Court held as follows:
“When the value of a large extent of agricultural
land has to be determined with reference to the
price   fetched   by   sale   of   a   small   residential
plot,   it   is   necessary   to     make   an   appropriate
deduction towards the development cost, to arrive
at the value of the large   tract of land.   The
deduction towards development cost may vary from
20% to 75% depending upon various factors.   Even
if   the   acquired   lands   have   situational
advantages,     the   minimum   deduction   from   the
market   value   of   a   small   residential   plot,   to
arrive   at   the   market   value   of   a   larger
agricultural land,  in the  usual course, will be
in the range of 20% to 25%.   In this case,   the
Collector   has   himself   adopted   a   25%   deduction
which   has   been   affirmed   by   the   Reference   Court
and   the   High   Court.     We,     therefore,   do   not
propose to alter it.”
8Page 9
Therefore, it is clear that mere reliance made by
a Court on sale deeds of smaller residential area for
determination   of   market   value   of   larger   agricultural
area,     the   same   will   not render   the   determination
illegal   until   and   unless   it   is   shown   that   the
determination was not proper.
20. In   the   instant   case,   the   average   value   of   the
sale­deeds   relied   upon   by   the   Reference   Court   (Ext.1
and Ext.1/b) was Rs. 401/­ at the time of acquisition.
Therefore,   as   the   sale­deeds   were   in   relation   to
smaller plots,   the deduction of 37% was made by the
Reference   Court   and     thereafter,   by   allowing
appropriate 10% increase in the value of the land from
the   date   of   the   sale   deeds   upto   the   date   of
Notification under Section 4 of the Act,  the Reference
Court   arrived     at   a   figure   of   Rs.250/­   per   decimal.
The High Court while arriving at figure of Rs. 100/­
per   decimal   considered   only   the   fact   that   the   sale
deeds relied upon were in relation to smaller plots and
those   sale   deeds(Ext.1   and   Ext.1/b)   were   related   to
homestead land and hence fixed Rs. 10,000/­ per acre as
compensation.    
 It completely failed to consider the
increase in price of land and the deduction made by the
9Page 10
High   Court   is   nearly   75%   which   is   not   in   accordance
with law.
As Ext.1 and Ext.1/b which were related to smaller
area,     were   the   only   sale   deeds   available   for
comparison, the same were relied upon by the Reference
Court,  
 but   the   High   Court   erred   completely   in
disregarding the said sale­ deeds and thus arrived at a
finding   of   Rs.100/­   per   decimal   as     market   value   on
mere presumption and surmises.   
There was no evidence
on record to arrive at this value and, even if it was a
case of deduction, the High Court has not  given  any
reason in support of the same. 
21. The   High   Court   also   committed   error     in   holding
that   the   sale   deeds   (Ext.1   and   Ext.1/b)   relate   to
homestead   land,   on   the   ground   that   a   ‘road’   and   a
‘masjid’  has been shown in the boundary  of one of the
exhibits.   
From   the   copies   of   Ext.1   and   Ext.   1/b   on
record (Annexure P­12 Colly), we find no citation in
Ext.1 showing the land as homestead land.  On the other
hand   Ext.1/b   specifically   cites   that   the   land   is   an
agricultural land for which the annual revenue rent of
Rs.25 is payable. 
22. The High Court disregarded the evidence adduced by
the   claimants   in   its   entirety   without   any   reason;
10Page 11
however,   it   relied   on   evidence   of   an   officer   of   the
State (OP­W­1) Ratneshwar Pd. Singh and set aside the
compensation in relation to the standing crops.  
 The
Reference Court has clearly recorded in its order that
the said State Officer was not posted in that area at
the time of acquisition and his knowledge was limited
to the official record.   
The record was silent as to the standing crops.     
The Khatiyans (Ext.A and Ext.­
A/1)   were   also   not   relating   to   standing   crops.    
The
fact   that   the   Collector   had   not   allowed   any   amount
towards   damage   of   standing   crops   and   that   no   such
amount is mentioned in the Khatiyan  does not mean that
no   standing   crop   was   there   at   the   time   of   taking
possession   of   the   land.     
On   the   contrary,     the
witnesses   AW­1   to   AW­5   appeared   and   supported   the
statement   of   claimant   that   at   the   time   of   the
possession,   standing   crops   were   there   which   were
damaged causing loss to the extent of Rs.10,000 to Rs.
12,000/­.     
During   their   cross   examination   the
respondents   could   not   extract   any   other   material
evidence against the claimants.
23. In view of the finding as recorded above, we have
no other alternative but to set aside the order passed
by the High Court and restore the award passed by the
11Page 12
Reference   Court.   The   impugned   judgment   passed   by   the
High Court is accordingly set aside and the appeal is
allowed.     The   respondents   are   directed   to   pay   the
appellant the compensation in terms of the award passed
by   the   Reference     Court     after   adjusting   the   amount
already paid within three months.   There shall be no
separate order as to costs.  
………………………….........…………………….J.
(G.S. SINGHVI )
….........…………………………………………….J.
(SUDHANSU JYOTI MUKHOPADHAYA)
NEW DELHI,
JULY 1 , 2013.
12