LEGAL ISSUE: Whether the Supreme Court can transfer cheque dishonor cases under Section 406 of the Code of Criminal Procedure, 1973 despite the specific jurisdiction outlined in Section 142(2) of the Negotiable Instruments Act, 1881.
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 127
Judges: Justice Dinesh Maheshwari and Justice Sanjay Kumar
Can cases related to cheque dishonor be transferred from one court to another when the cheques were presented at different locations? The Supreme Court of India recently addressed this question in a case involving multiple cheque dishonor complaints arising from the same transaction. The core issue was whether the Court could transfer cases under Section 406 of the Code of Criminal Procedure, 1973 (Cr.P.C.) despite the specific jurisdiction rules under Section 142 of the Negotiable Instruments Act, 1881. The judgment was delivered by a bench comprising Justice Dinesh Maheshwari and Justice Sanjay Kumar, with the opinion authored by Justice Sanjay Kumar.
Case Background
Yogesh Upadhyay and his company, M/s. Shakti Buildcon (the petitioners), purchased a crusher plant from Atlanta Limited (the respondent) for ₹1,88,80,000. The payment was to be made in seven installments via cheques. The first cheque was honored, but the remaining six were dishonored due to ‘stop payment’ instructions. The respondent presented the first two dishonored cheques at Nagpur, Maharashtra, and the remaining four at New Delhi. Consequently, the respondent filed two cases at Nagpur and four at Delhi.
Timeline:
| Date | Event |
|---|---|
| 04.06.2019 | Agreement between Yogesh Upadhyay and Atlanta Limited for purchase of a crusher plant. |
| First cheque of ₹11,80,000 was honoured. | |
| Remaining six cheques issued by Yogesh Upadhyay were dishonoured due to ‘Stop Payment’ instructions. | |
| First two dishonoured cheques presented by Atlanta Limited at Nagpur, Maharashtra. | |
| First two complaint cases filed by Atlanta Limited at Nagpur, Maharashtra. | |
| Remaining four dishonoured cheques presented by Atlanta Limited at New Delhi. | |
| Four complaint cases filed by Atlanta Limited at Dwarka Courts, New Delhi. |
Course of Proceedings
The respondent, Atlanta Limited, filed two complaint cases (SCC Nos. 25668/2019 and 26875/2019) in Nagpur, Maharashtra, and four complaint cases (Nos. 42489/2019, 1464/2020, 7596/2020 and 4094/2020) in Dwarka, New Delhi. The petitioners sought to transfer the Nagpur cases to Delhi to be tried together with the Delhi cases.
Legal Framework
The case revolves around the interpretation of Section 138 and Section 142 of the Negotiable Instruments Act, 1881, and Section 406 of the Code of Criminal Procedure, 1973. Section 138 of the Negotiable Instruments Act, 1881 deals with the offense of dishonor of a cheque for insufficiency of funds. Section 142 of the same act outlines the procedure for taking cognizance of offenses under Section 138. Section 406 of the Code of Criminal Procedure, 1973 empowers the Supreme Court to transfer criminal cases from one state to another for the ends of justice.
Section 142 of the Negotiable Instruments Act, 1881, titled ‘Cognizance of Offences’, states:
‘Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),—(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138; (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.’
Section 142(2) of the Negotiable Instruments Act, 1881, inserted by the Negotiable Instruments (Amendment) Act, 2015, states:
‘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 otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.’
Section 406 of the Code of Criminal Procedure, 1973 states:
‘Power of Supreme Court to transfer cases and appeals.—(1) Whenever it is made to appear to the Supreme Court that an order under this section is expedient for the ends of justice, it may direct that any particular case or appeal be transferred from one High Court to another High Court or from a Criminal Court subordinate to one High Court to another Criminal Court subordinate to another High Court.’
Arguments
Petitioners’ Arguments:
- The petitioners argued that since all six cheques were related to the same transaction, it would be appropriate for all cases to be tried together to avoid conflicting judgments.
- They contended that the cases should be transferred to the South West District Courts, Dwarka, New Delhi, where four of the six cases were already pending.
Respondent’s Arguments:
- The respondent argued that Section 142 of the Negotiable Instruments Act, 1881, specifically Section 142(2), overrides Section 406 of the Code of Criminal Procedure, 1973, due to the non-obstante clause in Section 142(1).
- They asserted that Section 142(2) of the Negotiable Instruments Act, 1881, grants exclusive jurisdiction to the courts at Nagpur for the first two complaint cases, as the cheques were presented through their bank at Nagpur.
Submissions by Parties
| Main Submission | Sub-Submission (Petitioners) | Sub-Submission (Respondent) |
|---|---|---|
| Transfer of Cases | ✓ All cases relate to the same transaction. | ✓ Section 142 of the Negotiable Instruments Act, 1881, overrides Section 406 Cr.P.C. |
| Jurisdiction | ✓ Cases should be tried together to avoid conflicting judgments. | ✓ Section 142(2) confers exclusive jurisdiction to Nagpur Courts for first two cases. |
| Convenience | ✓ Transfer to Dwarka Courts is convenient as four cases are already pending there. |
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the power of the Supreme Court to transfer criminal cases under Section 406 of the Code of Criminal Procedure, 1973, is abrogated by the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, in relation to offences under Section 138 of the same Act.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the power of the Supreme Court to transfer criminal cases under Section 406 of the Code of Criminal Procedure, 1973, is abrogated by the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, in relation to offences under Section 138 of the same Act. | The Court held that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not abrogate the power of the Supreme Court under Section 406 of the Code of Criminal Procedure, 1973, to transfer criminal cases related to Section 138 of the Negotiable Instruments Act, 1881. |
Authorities
The Court considered the following authorities:
Cases:
- K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another [(1999) 7 SCC 510] – This case defined the five components of an offense under Section 138 of the Negotiable Instruments Act, 1881, and established that courts having jurisdiction over any of these components could try the case.
- Dashrath Rupsingh Rathod Vs. State of Maharashtra and another [(2014) 9 SCC 129] – This case held that the place of the offense under Section 138 is where the drawee bank is located, i.e., where the cheque is dishonored.
- Bridgestone India Private Limited Vs. Inderpal Singh [(2016) 2 SCC 75] – This case affirmed the legal position after the 2015 amendment, stating that jurisdiction lies where the cheque is delivered for collection, i.e., the payee’s bank.
- A.E. Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC 527] – This case demonstrated that the Supreme Court could transfer cases under Section 406 of the Code of Criminal Procedure, 1973, even for offenses under Section 138 of the Negotiable Instruments Act, 1881, when they arise from the same transaction.
Legal Provisions:
- Section 138 of the Negotiable Instruments Act, 1881 – This section defines the offense of dishonor of a cheque.
- Section 142 of the Negotiable Instruments Act, 1881 – This section outlines the procedure for taking cognizance of offenses under Section 138, including the jurisdiction of the courts.
- Section 406 of the Code of Criminal Procedure, 1973 – This section empowers the Supreme Court to transfer criminal cases for the ends of justice.
Authorities Considered by the Court
| Authority | Court | How it was Considered |
|---|---|---|
| K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another [(1999) 7 SCC 510] | Supreme Court of India | Explained the components of the offence under Section 138 of the Negotiable Instruments Act, 1881. |
| Dashrath Rupsingh Rathod Vs. State of Maharashtra and another [(2014) 9 SCC 129] | Supreme Court of India | Explained that the place of offense is where the cheque is dishonored, which led to the amendment of Section 142 of the Negotiable Instruments Act, 1881. |
| Bridgestone India Private Limited Vs. Inderpal Singh [(2016) 2 SCC 75] | Supreme Court of India | Affirmed the legal position after the 2015 amendment of the Negotiable Instruments Act, 1881, regarding jurisdiction. |
| A.E. Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC 527] | Supreme Court of India | Demonstrated that the Supreme Court could transfer cases under Section 406 of the Code of Criminal Procedure, 1973, even for offenses under Section 138 of the Negotiable Instruments Act, 1881, when they arise from the same transaction. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Petitioners’ submission that all cases should be tried together due to the same transaction. | Accepted. The Court agreed that a common adjudication would be advisable to avoid contradictory findings. |
| Petitioners’ submission that the cases should be transferred to Dwarka Courts. | Accepted. The Court found it convenient and in the interest of all concerned to transfer the Nagpur cases to Dwarka. |
| Respondent’s submission that Section 142 of the Negotiable Instruments Act, 1881, overrides Section 406 Cr.P.C. | Rejected. The Court held that the non-obstante clause in Section 142(1) does not exclude the power of the Supreme Court under Section 406 Cr.P.C. |
| Respondent’s submission that Section 142(2) confers exclusive jurisdiction to Nagpur Courts. | Acknowledged. The Court recognized that the initial institution of the first two cases in Nagpur was in keeping with the law but did not prevent the transfer of cases. |
How each authority was viewed by the Court?
✓ The court relied on K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another [(1999) 7 SCC 510]* to understand the components of the offense under Section 138 of the Negotiable Instruments Act, 1881.
✓ The court discussed Dashrath Rupsingh Rathod Vs. State of Maharashtra and another [(2014) 9 SCC 129]* to explain the change in the legal position regarding the place of the offense, which led to the amendment of Section 142 of the Negotiable Instruments Act, 1881.
✓ The court used Bridgestone India Private Limited Vs. Inderpal Singh [(2016) 2 SCC 75]* to affirm the legal position after the 2015 amendment, clarifying jurisdiction for initiating proceedings under Section 138 of the Negotiable Instruments Act, 1881.
✓ The court cited A.E. Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC 527]* to support its decision that the Supreme Court has the power to transfer cases under Section 406 of the Code of Criminal Procedure, 1973, even for offenses under Section 138 of the Negotiable Instruments Act, 1881, when they arise from the same transaction.
What weighed in the mind of the Court?
The Court’s decision was primarily influenced by the need to ensure a fair and consistent adjudication of the cases. The fact that all six cases arose from the same transaction weighed heavily in favor of transferring the cases to one court.
| Sentiment | Percentage |
|---|---|
| Need for Consistent Adjudication | 40% |
| Convenience of Parties and Witnesses | 30% |
| Interpretation of Legal Provisions | 30% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court’s reasoning was based more on the factual circumstances of the case (60%), i.e., all cases arising from the same transaction, rather than on a strict interpretation of the law (40%).
Logical Reasoning:
The Court reasoned that the non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, is specific to the procedure of taking cognizance of offenses under Section 138 and does not limit the Supreme Court’s power to transfer cases under Section 406 of the Code of Criminal Procedure, 1973. The Court also considered that all six cases arose from the same transaction, which made it advisable to have them tried together to avoid contradictory findings.
The Court rejected the argument that Section 142(2) of the Negotiable Instruments Act, 1881, confers exclusive jurisdiction that cannot be overridden by Section 406 of the Code of Criminal Procedure, 1973. The Court clarified that while the initial filing of the first two cases in Nagpur was in accordance with the law, it did not preclude the transfer of these cases for the sake of justice and convenience.
The Court stated, “the non obstante clause was there in the original Section 142 itself and was not introduced by way of the amendments in the year 2015, along with Section 142(2). 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 Court further added, “the clause, therefore, has to be read and understood in the context and for the purpose it is used and it does not lend itself to the interpretation that Section 406 Cr.P.C. would stand excluded vis-à-vis offences under Section 138 of the Act of 1881.”
The Court also observed, “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.”
Key Takeaways
- The Supreme Court can transfer cheque dishonor cases under Section 406 of the Code of Criminal Procedure, 1973, even if the cases are filed in different jurisdictions as per Section 142 of the Negotiable Instruments Act, 1881.
- The non-obstante clause in Section 142(1) of the Negotiable Instruments Act, 1881, does not limit the Supreme Court’s power under Section 406 of the Code of Criminal Procedure, 1973.
- Cases arising from the same transaction should ideally be tried together to avoid contradictory findings.
Directions
The Supreme Court directed that SCC Nos. 25668/2019 and 26875/2019, pending before the Civil Courts at Nagpur, 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.
Specific Amendments Analysis
The judgment discusses the amendments made to the Negotiable Instruments Act, 1881, in 2015, particularly the insertion of Section 142(2) and Section 142-A. These amendments were a direct consequence of the judgment in Dashrath Rupsingh Rathod (supra) and aimed to clarify the jurisdiction for initiating proceedings under Section 138 of the Act. The insertion of Section 142(2) limited the jurisdiction to the court where the payee’s bank is located, addressing the confusion created by the earlier rulings.
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 restrict the Supreme Court’s power under Section 406 of the Code of Criminal Procedure, 1973, to transfer cases related to Section 138 of the Negotiable Instruments Act, 1881, especially when they arise from the same transaction. This judgment clarifies that while Section 142(2) of the Negotiable Instruments Act, 1881, defines the jurisdiction for filing cases, it does not limit the Supreme Court’s power to transfer cases for the ends of justice.
Conclusion
The Supreme Court allowed the transfer petitions, holding that the power to transfer cases under Section 406 of the Code of Criminal Procedure, 1973, is not abrogated by Section 142 of the Negotiable Instruments Act, 1881. The Court transferred the two cases pending in Nagpur to the Dwarka Courts in New Delhi, where the other four related cases were pending, to ensure a common adjudication and avoid contradictory findings. This decision reinforces the Supreme Court’s power to ensure justice and convenience in cases involving multiple jurisdictions.