2015 (12) TMI 777 - SC - Indian Laws

Section 142(2)(a) allows dishonored cheque cases where payee's bank account located for collection proceedings

The SC held that under Section 142(2)(a) of the Negotiable Instruments Act, as amended by the 2015 Ordinance, territorial jurisdiction for Section 138 ... Territorial jurisdiction under section 138 of the Negotiable Instruments Act, 1881 -Applicability of the Negotiable Instruments (Amendment) Second Ordinance, 2015 - Held 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 142A(1) to the effect, that the judgment rendered by this Court in Dashrath Rupsingh Rathod’s case [2014 (8) TMI 417 - SUPREME COURT] would not stand in the way of the appellant, insofar as the territorial jurisdiction for initiating proceedings emerging from the dishonor of the cheque in the present case arises. Since cheque No.1950, in the sum of ₹ 26,958/-, drawn on the Union Bank of India, Chandigarh, dated 02.05.2006, was presented for encashment at the IDBI Bank, Indore, which intimated its dishonor to the appellant on 04.08.2006, we are of the view that the Judicial Magistrate, First Class, Indore, would have the territorial jurisdiction to take cognizance of the proceedings initiated by the appellant under Section 138 of the Negotiable Instruments Act, 1881, after the promulgation of the Negotiable Instruments (Amendment) Second Ordinance, 2015. 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 retrospectivity to the provision. In the above view of the matter, the instant appeal is allowed, and the impugned order passed by the High Court of Madhya Pradesh, by its Indore Bench, dated 05.05.2011, is set aside. The parties are directed to appear before the Judicial Magistrate, First Class, Indore, on 15.01.2016. In case the complaint filed by the appellant has been returned, it shall be re-presented before the Judicial Magistrate, First Class, Indore, Madhya Pradesh, on the date of appearance indicated hereinabove. Issues Involved:1. Territorial jurisdiction under Section 138 of the Negotiable Instruments Act, 1881.2. Applicability of the Negotiable Instruments (Amendment) Second Ordinance, 2015.Issue-wise Detailed Analysis:1. Territorial Jurisdiction under Section 138 of the Negotiable Instruments Act, 1881:The core issue revolves around the territorial jurisdiction for initiating proceedings under Section 138 of the Negotiable Instruments Act, 1881. The respondent contested the jurisdiction of the Judicial Magistrate, First Class, Indore, claiming that the appropriate jurisdiction lay with the court where the drawee bank (Union Bank of India, Chandigarh) was located. The Judicial Magistrate, First Class, Indore, initially dismissed this contention, relying on the precedent set in K. Bhaskaran vs. Sankaran Vaidhyan Balan and another, AIR 1999 SC 3762.The respondent then approached the High Court of Madhya Pradesh, which, after considering additional documents, remitted the case back to the Judicial Magistrate, First Class, Indore. Upon reconsideration, the Judicial Magistrate reaffirmed its jurisdiction. However, the High Court, upon a subsequent challenge, ruled that jurisdiction lay with the court where the drawee bank was situated, i.e., Chandigarh.The appellant challenged this ruling in the Supreme Court, citing the decision in Dashrath Rupsingh Rathod vs. State of Maharashtra and another, (2014) 9 SCC 129, which emphasized that the jurisdiction for trying cases under Section 138 is determined by the place where the cheque is dishonored.2. Applicability of the Negotiable Instruments (Amendment) Second Ordinance, 2015:During the Supreme Court proceedings, the appellant's counsel highlighted the Negotiable Instruments (Amendment) Second Ordinance, 2015, which came into force on 15.06.2015. The Ordinance amended Section 142 and introduced Section 142A, altering the jurisdictional rules. According to Section 142(2), the jurisdiction for trying offences under Section 138 is vested in the court where the cheque is delivered for collection or where the drawee bank is located.Section 142A(1) further clarified that the provisions of the Code of Criminal Procedure, 1973, and any prior court judgments, decrees, or orders would not affect the jurisdictional determination under the amended Section 142(2). This non-obstante clause ensured that the new jurisdictional rules applied retrospectively.The Supreme Court agreed with the appellant's contention, noting that the amended Section 142(2)(a) explicitly vested jurisdiction in the court where the cheque was delivered for collection, which in this case was the IDBI Bank, Indore. Consequently, the Judicial Magistrate, First Class, Indore, retained the jurisdiction to adjudicate the matter.Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's order and directing the parties to appear before the Judicial Magistrate, First Class, Indore. The amended provisions of the Negotiable Instruments Act, as introduced by the Negotiable Instruments (Amendment) Second Ordinance, 2015, were deemed applicable, thereby affirming the jurisdiction of the Indore court.Additional Appeals:Criminal Appeals No. 1562, 1563, and 1564 of 2015, which raised identical issues, were also allowed based on the judgment in Criminal Appeal No. 1557 of 2015, thereby ensuring consistency in the application of the amended jurisdictional rules under the Negotiable Instruments Act.