Section 142(1) N.I Act Not Exclude Power to Transfer Complaint – Supreme Court

21 Feb 2023: Supreme Court observed in the latest judgement (YOGESH UPADHYAY AND ANR. Vs ATLANTA LIMITED D.D. 12 Feb 2023) that the non obstante clause in Section 142(1) of N.I. Act merely refers to the manner in which cognizance is to be taken for offences under Section 138 of the Act of 1881, and it does not exclude the power of the court to transfer pending criminal proceedings under Section 406 Cr.P.C. for offences under Section 138 of the Act of 1881.

The six cheques, which are the subject-matter of the complaint cases, were issued by the petitioners in connection with the purchase of a crusher plant from Atlanta Limited. The sale consideration was to be paid in seven installments by way of cheques. The first cheque was duly honoured, but the remaining six were dishonoured due to 'Stop payment' instructions.

The first two cheques that were dishonoured were presented by Atlanta Limited through its bank in Nagpur, Maharashtra, resulting in the first two complaint cases being filed in Nagpur. The remaining four cheques were presented by Atlanta Limited through its bank in New Delhi, resulting in the remaining four complaint cases being filed in Dwarka Courts, New Delhi.

Petitioner seeking the transfer two complaint cases pending before the Nagpur Civil Court to the New Delhi, to be tried along with four another Complaints Case.

Petitioner contended that since all the cheques are related to the same transaction, it's appropriate to try and decide the cases together.

Respondent opposed the petition on the ground that Section 142 of the Act of 1881 overrides Section 406 Cr.P.C. due to the non obstante clause in it, and therefore the two cases filed at Nagpur cannot be transferred. He asserted that Section 142(2) of the Act of 1881 gives exclusive jurisdiction to the Courts at Nagpur for the first two complaint cases.

Supreme Court observed that the Statement of Objects and Reasons of the Amendment Act 26 of 2015 makes it clear that the insertion of Sections 142(2) and 142-A in the Act was a result of the judgment in Dashrath Rupsingh Rathod v. State of Maharashtra. The phrase "shall be inquired into and tried only by a Court within whose local jurisdiction" in Section 142(2) is contextual to the ruling in Dashrath Rupsingh Rathod that territorial jurisdiction to try an offence under Section 138 vests in the Court having jurisdiction over the drawee bank and not the complainant's bank. Therefore, Section 142(2) makes it clear that the jurisdiction to try such an offence would vest only in the Court within whose jurisdiction the branch of the bank where the cheque was delivered for collection is situated. Section 142-A further validates the transfer of pending cases to the Courts conferred with such jurisdiction after the amendment.

Supreme Court referred the case Bridgestone India Private Limited Vs. Inderpal Singh and upheld  that the non obstante clause in Section 142(1) of the Act of 1881 does not override Section 406 Cr.P.C. and it is permissible for the court to transfer complaint cases under the power of Section 406 Cr.P.C. The non obstante clause in Section 142(1) merely refers to the manner in which cognizance is to be taken for offences under Section 138 of the Act of 1881, and it does not exclude the power of the court to transfer pending criminal proceedings under Section 406 Cr.P.C. for offences under Section 138 of the Act of 1881.

Supreme Court held that the power to transfer criminal cases under Section 406 Cr.P.C. remains intact in relation to offences under Section 138 of the Act of 1881, if it is found expedient for the ends of justice.

The Court observed that the non obstante clause in Section 142(1) of the Act of 1881 merely has reference to the manner in which cognizance is to be taken in offences under Section 138 and it does not exclude the power of the Court to transfer pending criminal proceedings under Section 406 Cr.P.C. in respect of offences under Section 138.

Supreme Court further held that all six complaint cases pertain to the same transaction, it would be advisable to have a common adjudication to avoid the possibility of contradictory findings being rendered by different Courts. Since four of the six cases have been filed by the respondent company before the Dwarka Courts at New Delhi, and only two cases are pending before the Courts at Nagpur, it would be convenient and in the interest of all concerned, including the parties and their witnesses, to transfer the cases to the Dwarka Courts at New Delhi. Transfer petitions allowed and the two complaint cases pending before the Courts at Nagpur are transferred to the Southwest District Courts, Dwarka, New Delhi, to be tried along with the four other complaint cases filed by the respondent company.

YOGESH UPADHYAY AND ANR. Vs ATLANTA LIMITED