SECTION 142 & 142-A of Negotiable Instruments Act: Concept and effect

Dashrath Rupsingh Rathod Vs State of Maharashtra (2014) 9SCC 129 is no longer applicable

Section 142 A has been inserted in the Negotiable Instruments Act by way of amendment and known as the Negotiable Instruments (Amendment) Act, 2015, w.e.f. 15 June, 2015, which provides for the validation for the transfer of cases pending in various courts of law arising out of common transactions. It may be worthwhile to reproduce the provision of section 142 A of the Act before delving further, with a view to elicit further clarity. The Section 142A reads as under:

142A. Validation for transfer of pending cases.—

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974) 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 (Ord. 6 of 2015), shall be deemed to have been transferred under this Act, as if that sub-section 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 (26 of 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 (Ord. 6 of 2015), before which the first case was filed and is pending, as if that sub-section had been in force at all material times.

 

Interestingly, Section 142 A (1) gives retrospective in operation to the Section 142 (2) of the Negotiation Instruments Act. The words “as if that sub-section had been in force at all material times” used with reference to section 142 (2), in section 142A (1) gives retrospectively to the provision. According to section 142 A (1), all cases arising out of Section 138 of the Negotiable Instruments Act, pending in any court, before the Negotiable Instruments (Amendment) Ordinance, 2015 shall be transferred to the court having jurisdiction as per section 142(2) of the Act as if that sub section had been in force at all times. To decide the jurisdiction of filing the cheque bounce case, the question to be determined is not where the cheque got bounced. A cheque will always be deemed to be bounced within the territorial jurisdiction of that court where the payee or the holder in due course maintains the account or where the branch of the drawee bank where the drawer maintains the account is situated.

Given that the provision of section 142-A is recent, thus, the authorities in the context are limited. In this context, a judgment of Allahabad High Court reported as  
Indraveer Singh And Another vs State Of U.P. And Another Neutral Citation No. - 2024:AHC:95747 is worthy of reference.

In Indraveer Singh (Supra), the Allahabad High Court had the occasion to deal with the issue in a petition filed u/s 482 of Cr.PC for seeking quashing of entire proceedings of two complaints under section 138 of Negotiable Instruments Act, for reference-“new complaint” and “old complaint”.   

 

Interestingly, the cheque in question was presented in the account of opposite party no.2 in a bank at Jalaun (U.P), but the complaint was filed at Orai (U.P). Ther application was moved before a Sessions Court for transfer and the ld Sessions Court was pleased to transfer the case from Orai to Jalaun on the ground that the Court at Jalaun had jurisdiction as per Section 142 (2) of the Act, 1881. Once, the case was transferred, a plea was taken, before the Court concerned, requesting that cognizance be taken by the Court afresh as the earlier cognisance at the court of Orai was bad in law as the said court was not competent to take cognisance. However, the ld Judicial Magistrate, Jalaun, had rejected that application.

Hence, petition u/s 482 Cr.PC was preferred before the Allahabad High Court. The petitioner placed reliance on the following judgments:

The learned counsel for the applicant relied upon the following judgments of Supreme Court in support of their contentions that if cognisance was taken without jurisdiction, the same is bad in law and should be transferred to the appropriate court.

(1) Yogesh Upadhyaya & Anr Vs Atlanta Limited 2023 SCC Online SC 170;

(ii) Dashrath Rupsingh Rathod Vs State of Maharashtra (2014) 9SCC 129.

 

Per contra, the opposite party/respondent before the high court had contended that even if the cognizance was taken by the Court having no jurisdiction, that being a bona fide mistake, the transfer before the transferee court shall not render the cognisance illegal. and the transferee Court should proceed further from the stage of enquiry or trial. Moreover, as per sub-clause (2) of Section 142 of Negotiable Instruments Act (NI Act), an offence under Section 138 of the N.I. Act, can be inquired into and tried only by a Court within whose local jurisdiction the cheque was presented for collection and bounced. The reliance was placed on:

(1)    V. Velu, S/o. Vedappan Vs. Chennakrishnan Vs. Chennakrishnan Criminal Appeal No.398 of 2011

It is held in the aforesaid judgment by the Madras High Court, that, if the cognisance was taken by a court having no jurisdiction and in good faith, such cognisance shall not vitiate the proceeding. It is held as under:   

“19. Section 460 (e) of  Cr.P.C read with 462 of Cr.PC would clearly say that, if any Magistrate not empowered by law to take cognizance of an offence under clause (a) or clause (b) of sub-section (1) of Section 190; erroneously in good faith take cognizance, it shall not be set aside merely on the ground of his not being so empowered. Such an irregularity will not vitiate the proceedings. The Appellate Courts cannot set aside finding sentence or order of the Magistrate, merely on the ground that the proceedings took place in a wrong sessions division, district, sub-division or other local areas, unless it appears that such error has in fact occasioned a failure of justice.”

 

In Indraveer Singh (Supra) it is held that:

“8. Sub-sections (2) of Section 142 and Section 142-A of N.I. Act was introduced w.e.f. 15.06.2015. As per Section 142 sub-section (2), an offence under Section 138 N.I. Act can be inquired and tried by the Court within whose local jurisdiction the Branch of Bank where the holder in due course was maintaining the account, in which cheque was presented for collection. Section 142-A N.I. Act provides that all cases under Section 138 N.I. Act shall be deemed to be transferred to the Court having jurisdiction under Section 142 (2)  N.I. Act”. 

The Section 142 (2) sub-section (2) as well as Section 142- A of N.I. Act are reproduced as under:-

"142. Cognizance of offences.—

(1)..

(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.

Section 142-A of the NI Act have already been reproduced above.

The Supreme Courtin Dashrath Rupsingh Rathod (Supra) has observed that in the complaint under Section 138 of NI Act, where the accused has been summoned and appeared by a Court that has no jurisdiction over that complaint, will be transferred to the Court having jurisdiction. It was further held that the competent Court will proceed, and all other complaints, including that complaint where the accused has not been properly served, shall be returned to that complaint for filing in proper Court. Paragraph no.22 in the said judgment may be perused as under:

"22. We are quite alive to the magnitude of the impact that the present decision shall have to possibly lakhs of cases pending in various courts spanning across the country. One approach could be to declare that this judgment will have only prospective pertinence i.e. applicability to complaints that may be filed after this pronouncement. However, keeping in perspective the hardship that this will continue to bear on alleged respondent-accused who may have to travel long distances in conducting their defence, and also mindful of the legal implications of proceedings being permitted to continue in a court devoid of jurisdiction, this recourse in entirety does not commend itself to us. Consequent on considerable consideration we think it expedient to direct that only those cases where, post the summoning and appearance of the alleged accused, the recording of evidence has commenced as envisaged in Section 145(2) of the Negotiable Instruments Act, 1881, will proceeding continue at that place. To clarify, regardless of whether evidence has been led before the Magistrate at the pre-summoning stage, either by affidavit or by oral statement, the complaint will be maintainable only at the place where the cheque stands dishonoured. To obviate and eradicate any legal complications, the category of complaint cases where proceedings have gone to the stage of Section 145(2) or beyond shall be deemed to have been transferred from the Court ordinarily possessing territorial jurisdiction, as now clarified, to the Court where it is presently pending. All other complaints (including those where the respondent-accused has not been properly served) shall be returned to the complainant for filing in the proper Court, in consonance with our exposition of the law. If such complaints are filed/refiled within thirty days of their return, they shall be deemed to have been filed within the time prescribed by law, unless the initial or prior filing was itself time-barred."

It may be noted that after the judgment of Dashrath Rupsingh Rathod (Supra) the Section 142 of NI Act was amended and section 142(2) and Section 142-A was inserted by the amendment of the year 2015 in the Negotiable Instruments Act. As per the new Section 142(2), the jurisdiction to inquire and try was given to that Court where the cheque was delivered for collection through an account. Thereafter, the issue of jurisdiction under 142 NI Act was again considered in the case of Bridgestone India Pvt Ltd Vs Inderpal Singh (2016) 2 SCC 75, while observing that an amendment was made in Section 142 sub-section (2), and Section 142-A of N.I. Act, will have a retrospective effect, therefore, if the complaint is not filed in the Court, which has no jurisdiction as per Section 142(2) N.I. Act, that complaint would be transferred to the Court having jurisdiction. It was held in Bridgestone (Supra) as under:

`"13. A perusal of the amended Section 142 (2), extracted above, leaves no room for any doubt, especially in view of the Explanation thereunder, that with reference to an offence under Section138 of the Negotiable Instruments Act, 1881, the place where a cheque is delivered for collection i.e. the branch of the bank of the payee or holder in due course, where the drawee maintains an account, would be determinative of the place of territorial jurisdiction.

14. It is, however, imperative for the present controversy, that the appellant overcomes the legal position declared by this Court, as well as, the provisions of the Code of Criminal Procedure. Insofar as the instant aspect of the matter is concerned, a reference may be made to Section 4 of the Negotiable Instruments (Amendment) Second Ordinance, 2015, whereby Section 142-A was inserted into the Negotiable Instruments Act. A perusal of sub-section (1) thereof leaves no room for any doubt, that insofar as the offence under Section 138 of the Negotiable Instruments Act is concerned, on the issue of jurisdiction, the provisions of the Code of Civil Procedure, 1973, would have to give way to the provisions of the instant enactment on account of the non obstante clause in sub-section (1) of Section 142-A. Likewise, any judgment, decree, order or direction issued by a court would have no effect insofar as the territorial jurisdiction for initiating proceedings under Section 138 of the Negotiable Instruments Act is concerned. In the above view of the matter, we are satisfied that the judgment rendered by this Court in Dashrath Rupsingh Rathod case would also not non-suit the appellant for the relief claimed.

15. We are in complete agreement with the contention advanced at the hands of the learned counsel for the appellant. We are satisfied, that Section 142 (2) (a), amended through the Negotiable Instruments (Amendment) Second Ordinance, 2015, vests jurisdiction for initiating proceedings for the offence under Section 138 of the Negotiable Instruments Act, inter alia, in the territorial jurisdiction of the court, where the cheque is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account). We are also satisfied, based on Section 142-A (1) to the effect, that the judgment rendered by this Court in Dashrath Rupsingh Rathod  , would not stand in the way of the appellant, insofar as the territorial jurisdiction for initiating proceedings emerging from the dishonour of the cheque in the present case arises."

 

The Supreme Court in the case of Yogesh Upadhyaya (Supra) & Bridgestone India (Supra) has observed, that, even the Supreme Court can exercise power under Section 406 Cr.P.C, to transfer the cases pending in the Court which has not had jurisdiction to the Court having territorial jurisdiction and also other complaints filed in different Courts to the Court where the first complaint was filed or transferred in the Court having territorial jurisdiction as per Section 142 (2) of NI Act.

In order to appreciate it further, Sections 460, 461 and 462 of Cr.PC may be perused, being relevant in the context:

"460. Irregularities which do not vitiate proceedings.--If any Magistrate not empowered by law to do any of the following things, namely:--

(a) to issue a search-warrant under Section 94;

(b) to order, under Section 155, the police to investigate an offence;

(c) to hold an inquest under Section 176;

(d) to issue process under Section 187, for the apprehension of a person within his local jurisdiction who has committed an offence outside the limits of such jurisdiction;

(e) to take cognizance of an offence under clause (a) or clause (b) of sub-section (1) of Section 190;

(f) to make over a case under sub-section (2) of Section 192;

(g) to tender a pardon under Section 306;

(h) to recall a case and try it himself under Section 410; or

(i) to sell property under Section 458 or Section 459, erroneously in good faith does that thing, his proceedings shall not be set aside merely on the ground of his not being so empowered.

461. Irregularities which vitiate proceedings.--If any Magistrate, not being empowered by law in this behalf, does any of the following things, namely:--

(a) attaches and sells property under Section 83;

(b) issues a search-warrant for a document, parcel or other thing in the custody of a postal or telegraph authority;

(c) demands security to keep the peace;

(d) demands security for good behaviour;

(e) discharges a person lawfully bound to be of good behaviour;

(f) cancels a bond to keep the peace;

(g) makes an order for maintenance;

(h) makes an order under Section 133 as to a local nuisance;

(i) prohibits, under Section 143, the repetition or continuance of a public nuisance;

(j) makes an order under Part C or Part D of Chapter X;

(k) takes cognizance of an offence under clause (c) of sub-section (1) of Section 190;

(l) tries an offender;

(m) tries an offender summarily;

(n) passes a sentence, under Section 325, on proceedings recorded by another Magistrate;

(o) decides an appeal;

(p) calls, under Section 397, for proceedings; or

(q) revises an order passed under Section 446, his proceedings shall be void.

462. Proceedings in wrong place.—

No finding, sentence or order of any Criminal Court shall be set aside merely on the ground that the inquiry, trial or other proceedings in the course of which it was arrived at or passed, took place in a wrong sessions division, district, sub-division or other local area, unless it appears that such error has in fact occasioned a failure of justice."

A bare perusal of the aforesaid provisions, makes it explicit that Section 460 (e) Cr.PC stipulates that if the cognizance of an offence is taken, though, erroneously and in good faith under Clause (a) of Section 190 (1) of Cr.PC, by a Court not having jurisdiction, even then, same will not vitiate the proceeding. Again, Section 462 Cr.PC also prescribes that no finding, sentence or order of Criminal Court will be set aside only on the ground that inquiry, trial or other proceedings have been arrived at in the wrong Court, unless, an error has the effect of causing failure of justice.

The Allahabad High Court in Indraveer Singh (Supra) has       held as under:

“15. In the present case, on the basis of the complaint, statement and documents on record, cognizance was taken by the earlier Court not having jurisdiction, which was subsequently transferred to the Judicial Magistrate, Orai; this will not in any way occasion a failure of justice to the applicant because transferee court itself has to consider the same complaint and document and pass order on the basis of prima facie satisfaction. Section 461(k) Cr.P.C. further provides that if the cognizance is taken by a Court which is not competent under Section 190 (1) (c) Cr.P.C., only then the cognizance will vitiate the proceeding. However, in the present case, cognizance was taken under Section 190 (1) (a) Cr.P.C., and not under Section 190(1)(c). Therefore, cognizance will not be vitiated under Section 461 (k) of Cr.P.C.

 

16. In the present case, the earlier Court of Chief Judicial Magistrate, Jalaun at Orai, after taking evidence on an affidavit under Section 145 N.I. Act, summoned the accused persons. Subsequently, accused persons, including applicant no.1, appeared before the Court below. Therefore, in view of the above legal position, the transferee Court will continue to proceed from that stage instead of hearing the complaint afresh.

What emerges, thus, is that Dashrath Rupsingh Rathod  (Supra) is no longer relevant after the amendment in the Negotiable Instruments Act and cognisance by a court which had no jurisdiction, may not buy itself shall be vitiated and the subsequent /transferee court shall take up the matter from that stage and no fresh cognisance is contemplated. Moreover, section 142-A (2) and (3) of the Negotiable Instruments Act clearly provides that the complaints shall be transferred to the courts where the old set of complaints arising out of the same transaction was filed.

                                                --------

                                                Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com