Madras HC | S. 142(2) of Negotiable Instruments Amendment Act, 2015 — not ultra vires of Art. 14 of Constitution; Legislation can take away the basis of a Judgment

Madras High Court: A Division Bench of A.P. Sahi, CJ and Subramonium Prasad, J., while deciding a petition filed in regard to declaring Section 142(2) of the Negotiable Instruments Act, 1881 as ultra vires Article 14 of Constitution, held by placing reliance on certain cases that,

“Parliament is competent to bring out the amendment under the Negotiable Instruments Act. The said amendment cannot be said to be ultra vires in view of the provisions of the Act or Part III of the Constitution of India.”

In the present petition, the challenge was placed upon Section 142(2) of NI Act on the ground that the said amendment is contrary to the Supreme Court case in, Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129.

Counsel for the petitioner, K. Govindarajan, submitted that the above-said amendment amounts to setting at naught a judgment of the Supreme Court which is not permissible in law. Relying on the Supreme Court case in Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, (1969) 2 SCC 283, it is well settled that,

“Legislation can take away the basis of a judgment.”

In Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129, following was held with respect to the place of suing:

“…Once the cause of action accrues to the complainant, the jurisdiction of the Court to try the case will be determined by reference to the place where the cheque is dishonoured.

   (vii) The general rule stipulated under Section 177 of Cr.P.C applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before the Court within whose jurisdiction the dishonour takes place except in situations where the offence of dishonour of the cheque punishable under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof.”

Thus, the following was held in the above-said case by the Supreme Court,

a Complaint of dishonour of cheque can be filed only to the Court within whose local jurisdiction where the cheque is dishonoured by the bank on which it is drawn.

To resolve the concerns arising from the above-judgment, through the Negotiable Instruments (Amendment) Act, 2015, certain amendments in regard to challenged Section was made as follows:

“(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,—

(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or

(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.

Explanation— For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.”

Further Section 142(a) was also inserted through the Amendment Act, which is as follows:

142A.(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or direction of any court, all cases transferred to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments

(Amendment) Ordinance, 2015, shall be deemed to have been transferred under this Act, as if that subsection had been in force at all material times.

 (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1) and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.

 (3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Act,

2015, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142, as amended by the Negotiable Instruments (Amendment) Ordinance, 2015, before which the first case was filed and is pending, as if that subsection had been in force at all material times.”

Through the above Amendment Act, entire basis of the Supreme Court case in, Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129, was removed.

By placing reliance on certain Supreme Court cases such as, State of Karnataka v. Karnataka Pawn Brokers Assn., (2018) 6 SCC 363; State of Karnataka v. Pro Lab, (2015) 8 SCC 557, Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, (1969) 2 SCC 283, following was laid down:

 “Legislature can take away the basis of the judgment of a judicial pronouncement by either Validating Act or passing amendments to the parent Act.”

Thus, on perusal of the above, no infirmity was found by the Court in the amendment. Therefore, said amendment cannot be said to be ultra vires in view of the provisions of the Act or Part III of the Constitution of India.

In view of the above, the writ petition stands dismissed. [Refex Energy Ltd. v. Union of India, 2019 SCC OnLine Mad 9941, decided on 18-12-2019]


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