2017 (1) TMI 1341 - HC - Indian Laws

Transfer of Complaints Upheld, Territorial Jurisdiction Shifts under NI Act

The common order dated 02.06.2016, dismissing applications to transfer complaints, was set aside. The complaints were deemed pending due to stay orders, ... Territorial jurisdiction in proceedings under Section 138 of the Negotiable Instruments Act - retrospective effect of the Negotiable Instruments (Amendment) Act, 2015 (including Section 142(2) and Section 142A) - effect of a superior court's stay on orders of a subordinate court - transfer of criminal complaints under Section 407 Cr.P.C.Effect of a superior court's stay on orders of a subordinate court - territorial jurisdiction in proceedings under Section 138 of the Negotiable Instruments Act - Whether the 30 complaints remained pending before the learned Metropolitan Magistrate when the Ordinance/Amendment came into effect, in view of stays granted by the High Court and the Supreme Court, and whether non-compliance with the order dated 30.08.2014 could visit the petitioner with adverse consequences. - HELD THAT: - The Court held that the order of the learned Magistrate dated 30.08.2014 directing return of the complaints had been stayed by this Court and that stay was subsequently continued by the Supreme Court; consequently the learned Magistrate could not give effect to the return direction while the superior courts' stays were in force. Under settled principle, a subordinate court is bound by a stay granted by a superior court and actions taken in breach thereof are void; accordingly the 30 complaints continued to remain pending on the file of the learned Metropolitan Magistrate at the time the Ordinance and subsequent Amendment were promulgated. The court rejected the contention that the complaints were no longer pending merely because an order of return had been passed, observing that the operative position must be assessed as on the date of the amendment in light of the purpose of the legislative change which sought to undo the effect of Dashrath Rupsingh Rathod. Therefore non-compliance with the return order did not prejudice the petitioner. [Paras 36, 37, 38, 41, 42]The 30 complaints were held to be pending before the learned Magistrate when the Ordinance/Amendment came into effect; the stay of the return order precluded any adverse consequence for non-collection or refiling by the petitioner.Retrospective effect of the Negotiable Instruments (Amendment) Act, 2015 (including Section 142(2) and Section 142A) - territorial jurisdiction in proceedings under Section 138 of the Negotiable Instruments Act - transfer of criminal complaints under Section 407 Cr.P.C. - Whether, in view of the retrospective amendment effected by the Ordinance/Amendment (inserting Section 142(2) and Section 142A) which alters the test for territorial jurisdiction, the complaints ought to be tried at the forum where the payee's branch account is maintained and whether transfer of the 30 complaints to the competent Magistrate at Patiala House Courts should be ordered. - HELD THAT: - The Court accepted the legal position, as articulated in Bridgestone and Pankaj Garg, that the amendment (via the Ordinance and subsequently the Act) is retrospective and displaces the earlier territorial-rule in Dashrath Rupsingh Rathod by making the place where the cheque is delivered for collection (the branch where the payee/holder maintains the account) determinative of jurisdiction, and that Section 142A (with its non obstante clause) gives effect to that change even over prior judicial orders. Applying that retrospective effect and having found that the complaints were pending before the Magistrate when the amendment took effect, the Court concluded that the learned Magistrate's impugned common order dated 02.06.2016 (dismissing transfer/revival applications) was laconic and unsustainable. In exercise of its powers under Section 407 Cr.P.C., the Court set aside the impugned order and directed transfer of the 30 complaints to the Court of the learned CMM, New Delhi District, for assignment to the competent Metropolitan Magistrate at Patiala House Courts where the payee's bank branch is situate. [Paras 32, 33, 34, 35, 43]The impugned common order dated 02.06.2016 is set aside; the 30 complaints are transferred to the learned CMM, New Delhi District, Patiala House Courts for assignment to the competent Magistrate having jurisdiction where the payee's account-branch is situated.Final Conclusion: The High Court set aside the learned Magistrate's common order dated 02.06.2016 and, applying the retrospective effect of the Negotiable Instruments (Amendment) Act, 2015 and the operation of superior courts' stays, transferred the 30 complaints to the learned CMM, New Delhi District, Patiala House Courts for assignment to the appropriate Metropolitan Magistrate; costs were awarded to the petitioner. Issues Involved:1. Quashing of the common order dated 02.06.2016 by the learned MM.2. Territorial jurisdiction of the Court to entertain complaints under Section 138 of the Negotiable Instruments Act.3. Applicability of the Negotiable Instruments (Amendment) Act, 2015.4. Status of the complaints during the stay of the order dated 30.08.2014.5. Alleged forum shopping by the petitioner.6. Determination of whether the complaints were 'pending' during the amendment.Issue-Wise Detailed Analysis:1. Quashing of the Common Order Dated 02.06.2016:The petitioner sought to quash the common order dated 02.06.2016, which dismissed their applications for transferring 30 complaints. The learned Magistrate held that the complaints were no longer pending after the order dated 30.08.2014 and that the Magistrate had become functus officio. The Court found the common impugned order to be patently laconic and inclined to allow the transfer of the complaints.2. Territorial Jurisdiction of the Court:The Supreme Court's decision in Dashrath Rupsingh Rathod ruled that the offence under Section 138 of the NI Act is committed at the place where the cheque is dishonored. Consequently, the complaints were directed to be filed in the Court having territorial jurisdiction at Raigarh, Chhattisgarh. However, the Negotiable Instruments (Amendment) Act, 2015, amended the jurisdiction to include the place where the payee's bank is located, thus affecting the territorial jurisdiction.3. Applicability of the Negotiable Instruments (Amendment) Act, 2015:The amendment was introduced to neutralize the effect of the Dashrath Rupsingh Rathod judgment retrospectively. The Court noted that the amendment was applicable to pending cases, and the complaints in question were deemed to be pending due to the stay orders from the High Court and the Supreme Court.4. Status of the Complaints During the Stay of the Order Dated 30.08.2014:The stay orders from the High Court and the Supreme Court meant that the petitioner was not obliged to collect and re-file the complaints. The complaints remained pending as they were prior to the order dated 30.08.2014. The Court cited Mulraj v. Murti Raghonathji Maharaj, stating that any proceedings taken after the knowledge of the stay order would be a nullity.5. Alleged Forum Shopping by the Petitioner:The learned Magistrate accused the petitioner of forum shopping. However, the Court found this observation unwarranted as the petitioner had diligently pursued their remedies through the proper legal channels, including approaching the High Court and the Supreme Court.6. Determination of Whether the Complaints Were 'Pending':The Court held that the complaints were pending as the stay orders prevented the execution of the order dated 30.08.2014. The amendment to the Negotiable Instruments Act was intended to undo the effect of the Dashrath Rupsingh Rathod judgment, and the complaints were considered pending in light of the amendment.Conclusion:The impugned common order dated 02.06.2016 was set aside. The complaints were transferred to the Court of the learned CMM for assignment to the competent MM at Patiala House Courts, New Delhi. The petitioner was awarded costs of Rs. 5,000/- for each petition. The Court communicated the order to the relevant CMMs for compliance.