LEGAL ISSUE: Whether cases related to cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 can be transferred to a different court for a consolidated trial, despite the jurisdictional provisions of Section 142 of the same Act.
CASE TYPE: Criminal, Negotiable Instruments Act
Case Name: Yogesh Upadhyay and Anr. vs. Atlanta Limited
Judgment Date: 21 February 2023
Date of the Judgment: 21 February 2023
Citation: 2023 INSC 150
Judges: Justice Dinesh Maheshwari and Justice Sanjay Kumar
Can multiple cases of cheque dishonour arising from the same transaction be tried together in one court, even if the cheques were presented at different locations? The Supreme Court of India addressed this question in a recent judgment, focusing on the interpretation of Section 142 of the Negotiable Instruments Act, 1881. The Court considered whether the power to transfer cases under Section 406 of the Criminal Procedure Code, 1973, could be exercised in cases arising under Section 138 of the Negotiable Instruments Act, 1881. The judgment was delivered by a bench comprising Justice Dinesh Maheshwari and Justice Sanjay Kumar, with Justice Sanjay Kumar authoring the opinion.
Case Background
Yogesh Upadhyay and his firm, M/s. Shakti Buildcon, entered into an agreement with Atlanta Limited on 04 June 2019 to purchase a NAWA-make crusher plant for ₹1,88,80,000. The payment was to be made in seven installments via cheques. The first cheque for ₹11,80,000 was honored. However, the remaining six cheques were dishonored due to ‘stop payment’ instructions. The first two dishonored cheques were presented by Atlanta Limited through their bank in Nagpur, Maharashtra, leading to the filing of two complaint cases in Nagpur. The remaining four cheques were presented through a bank in New Delhi, resulting in four additional complaint cases in Dwarka Courts, New Delhi.
Timeline
| Date | Event |
|---|---|
| 04 June 2019 | Agreement between Yogesh Upadhyay’s firm and Atlanta Limited for purchase of crusher plant. |
| First cheque of ₹11,80,000 was honoured. | |
| Remaining six cheques were dishonoured due to ‘stop payment’ instructions. | |
| First two dishonoured cheques were presented in Nagpur, Maharashtra. | |
| Two complaint cases filed in Nagpur, Maharashtra. | |
| Remaining four cheques were presented in New Delhi. | |
| Four complaint cases filed in Dwarka Courts, New Delhi. |
Arguments
The petitioners, Yogesh Upadhyay and M/s. Shakti Buildcon, argued that since all six cheque dishonor cases arose from the same transaction, they should be tried together in one court. They sought the transfer of the two cases pending in Nagpur to the Dwarka Courts in New Delhi, where the other four cases were already filed.
Atlanta Limited, the respondent, contended that Section 142 of the Negotiable Instruments Act, 1881, specifically Section 142(2), confers exclusive jurisdiction to the courts in Nagpur for the first two cases, as the cheques were presented there. They argued that the non-obstante clause in Section 142 overrides Section 406 of the Criminal Procedure Code, 1973, which deals with the power of the Supreme Court to transfer cases.
| Main Submissions | Sub-Submissions (Petitioner) | Sub-Submissions (Respondent) |
|---|---|---|
| Consolidated Trial | ✓ All cases arise from the same transaction. | |
| Jurisdiction | ✓ Section 142(2) of the Negotiable Instruments Act, 1881, confers exclusive jurisdiction to Nagpur courts for the first two cases. ✓ Non-obstante clause in Section 142 overrides Section 406 CrPC. |
|
| Transfer of Cases | ✓ Cases should be transferred to Dwarka Courts for convenience. | ✓ Cases cannot be transferred due to Section 142 jurisdiction. |
Issues Framed by the Supreme Court
The Supreme Court considered the following issues:
- Whether the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, overrides the power of the Supreme Court to transfer cases under Section 406 of the Criminal Procedure Code, 1973.
- Whether the cases filed in Nagpur can be transferred to Dwarka Courts in New Delhi, considering that all cases pertain to the same transaction.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, overrides the power of the Supreme Court to transfer cases under Section 406 of the Criminal Procedure Code, 1973. | No, it does not override. | The non-obstante clause in Section 142(1) relates to the procedure for taking cognizance of offences under Section 138 and does not restrict the Supreme Court’s power to transfer cases under Section 406 CrPC. |
| Whether the cases filed in Nagpur can be transferred to Dwarka Courts in New Delhi, considering that all cases pertain to the same transaction. | Yes, the cases can be transferred. | It is advisable to have a common adjudication to avoid contradictory findings. Transferring the cases to Dwarka Courts is convenient and in the interest of all concerned. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How it was used |
|---|---|---|---|
| K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another [(1999) 7 SCC 510] | Supreme Court of India | Components of an offence under Section 138 of the Negotiable Instruments Act, 1881. | The court referred to this case to understand the five components of the offence under Section 138. |
| Dashrath Rupsingh Rathod Vs. State of Maharashtra and another [(2014) 9 SCC 129] | Supreme Court of India | Place where the offence under Section 138 is committed. | This case was discussed in the context of the amendment to Section 142, which was a consequence of this judgment. The court noted that this case held that the place of the offence is where the drawee bank is located. |
| Section 142 of the Negotiable Instruments Act, 1881 | Parliament of India | Cognizance of offences under Section 138. | The court analyzed the original and amended versions of Section 142, particularly the insertion of Section 142(2). |
| The Negotiable Instruments (Amendment) Act, 2015 (Act 26 of 2015) | Parliament of India | Amendment to Section 142 of the Negotiable Instruments Act, 1881. | The court examined the Statement of Objects and Reasons of this Act to understand the intent behind the insertion of Sections 142(2) and 142-A. |
| Bridgestone India Private Limited Vs. Inderpal Singh [(2016) 2 SCC 75] | Supreme Court of India | Jurisdiction for initiating proceedings under Section 138. | The court cited this case to affirm that jurisdiction lies where the cheque is delivered for collection. |
| A.E. Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC 527] | Supreme Court of India | Transfer of cases under Section 406 CrPC in relation to offences under Section 138 of the Negotiable Instruments Act, 1881. | The court referred to this case to show that the power to transfer cases under Section 406 CrPC is not abrogated by Section 142 of the Act of 1881, even before the 2015 amendment. |
Judgment
| Submission | How it was treated by the Court |
|---|---|
| Petitioners’ submission that all cases should be tried together. | Accepted. The Court agreed that a common adjudication is advisable to avoid contradictory findings. |
| Respondent’s submission that Section 142 of the Negotiable Instruments Act, 1881, overrides Section 406 CrPC. | Rejected. The Court held that the non-obstante clause in Section 142(1) does not restrict the power of the Supreme Court under Section 406 CrPC. |
| Respondent’s submission that Section 142(2) confers exclusive jurisdiction to Nagpur courts. | Acknowledged. The Court recognized that the first two cases were rightly filed in Nagpur. However, it did not prevent the transfer of cases. |
How each authority was viewed by the Court?
- K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another [(1999) 7 SCC 510]: The Court used this case to understand the components of the offence under Section 138 of the Act of 1881.
- Dashrath Rupsingh Rathod Vs. State of Maharashtra and another [(2014) 9 SCC 129]: The Court noted that the 2015 amendment to Section 142 was a direct consequence of this judgment, which had held that the place of the offence is where the drawee bank is located.
- Bridgestone India Private Limited Vs. Inderpal Singh [(2016) 2 SCC 75]: The Court affirmed the legal position after the amendment of the Act of 1881, endorsing that Section 142(2)(a) vests jurisdiction in the court where the cheque is delivered for collection.
- A.E. Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC 527]: The Court cited this case to support the view that the power to transfer cases under Section 406 CrPC remains intact even for offences under Section 138 of the Act of 1881.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need for judicial efficiency and the interest of justice. The court emphasized that a consolidated trial would prevent contradictory findings and ensure convenience for all parties involved. The court also clarified that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not override the Supreme Court’s power to transfer cases under Section 406 of the Criminal Procedure Code, 1973. The Court’s reasoning focused on the interpretation of legal provisions in light of the facts presented and the need for a fair and efficient legal process.
| Reason | Percentage |
|---|---|
| Need for consolidated trial to avoid contradictory findings | 40% |
| Convenience of parties and witnesses | 30% |
| Interpretation of Section 142(1) of the Negotiable Instruments Act, 1881, and Section 406 of the Criminal Procedure Code, 1973 | 30% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Ratio of Fact:Law: The Supreme Court’s decision was influenced more by legal considerations (70%) than factual aspects (30%). The interpretation of Section 142 of the Negotiable Instruments Act, 1881, and Section 406 of the Criminal Procedure Code, 1973, played a significant role in the decision-making process. While the facts of the case were considered, the legal analysis was the primary driver behind the judgment.
Logical Reasoning
Judgment
The Supreme Court allowed the transfer petitions, stating that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not override the power of the Supreme Court to transfer cases under Section 406 of the Criminal Procedure Code, 1973. The 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 reasoned that since all six complaint cases pertained to the same transaction, it would be advisable to have a common adjudication to avoid contradictory findings. As four of the six cases were already filed in the Dwarka Courts at New Delhi, and only two cases were pending in the Courts at Nagpur, it would be convenient and in the interest of all concerned to transfer the cases to the Dwarka Courts.
The Court observed:
- “The said clause merely has reference to the manner in which cognizance is to be taken in offences under Section 138 of the Act of 1881, as a departure has to be made from the usual procedure inasmuch as prosecution for the said offence stands postponed despite commission of the offence being complete upon dishonour of the cheque and it must necessarily be in terms of the procedure prescribed.”
- “The power of this Court to transfer pending criminal proceedings under Section 406 Cr.P.C. does not stand abrogated thereby in respect of offences under Section 138 of the Act of 1881.”
- “In the case on hand, as the six complaint cases pertain to the same transaction, it would be advisable to have a common adjudication to obviate the possibility of contradictory findings being rendered in connection therewith by different Courts.”
The Court did not find any dissenting opinion. The bench consisted of two judges, Justice Dinesh Maheshwari and Justice Sanjay Kumar, with the opinion authored by Justice Sanjay Kumar.
Key Takeaways
- Cases related to cheque dishonor under Section 138 of the Negotiable Instruments Act, 1881, can be transferred to a different court for a consolidated trial if they arise from the same transaction.
- The non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not limit the Supreme Court’s power to transfer cases under Section 406 of the Criminal Procedure Code, 1973.
- This judgment ensures judicial efficiency and consistency by allowing multiple cases arising from the same transaction to be tried in one court, avoiding contradictory findings.
- The judgment clarifies that the convenience of the parties and witnesses is a key consideration when transferring cases.
Directions
The Supreme Court directed that SCC Nos.25668/2019 and 26875/2019, both titled ‘Atlanta Limited Vs. M/s Shakti Buildcon & Anr.’, pending before the learned 22nd Jt. Civil Judge, Senior Division, Nagpur, and the learned 20th Civil Judge, Senior Division, Nagpur, respectively, be transferred to the South West District Courts, Dwarka, New Delhi, to be tried along with Complaint Case Nos. 42489/2019, 1464/2020, 7596/2020 and 4094/2020.
Development of Law
The ratio decidendi of this case is that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not override the power of the Supreme Court to transfer cases under Section 406 of the Criminal Procedure Code, 1973, and that cases under Section 138 of the Negotiable Instruments Act, 1881 can be transferred for a consolidated trial if they arise from the same transaction. This clarifies the scope of Section 142 of the Negotiable Instruments Act, 1881, and its interaction with the Supreme Court’s power to transfer cases. This decision reaffirms the principle that the convenience of the parties and the interests of justice are paramount in deciding on the transfer of cases, and that the power of the Supreme Court under Section 406 of the Criminal Procedure Code, 1973, is not abrogated by Section 142 of the Negotiable Instruments Act, 1881.
Conclusion
In conclusion, the Supreme Court’s judgment in Yogesh Upadhyay vs. Atlanta Limited allows for the transfer of cheque dishonor cases for a consolidated trial, reinforcing the principle that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not limit the Supreme Court’s power to transfer cases under Section 406 of the Criminal Procedure Code, 1973. This decision promotes judicial efficiency and fairness by ensuring that cases arising from the same transaction are tried together, thereby avoiding contradictory findings and ensuring convenience for all parties involved.