YOGESH UPADHYAY AND ANR. versus ATLANTA LIMITED on 21 February 2023

1. By way of these transfer petitions filed under Section 406Cr.P.C., Yogesh Upadhyay and his proprietary concern, M/s. ShaktiBuildcon, seek transfer of SCC Nos.25668/2019 and 26875/2019, bothBtitled ‘Atlanta Limited Vs. M/s Shakti Buildcon & Anr.’, pending beforethe learned 22[nd] Jt. Civil Judge, Senior Division, Nagpur, and the learned20[th] Civil Judge, Senior Division, Nagpur, respectively, to the South WestDistrict Courts, Dwarka, New Delhi, to be tried along with ComplaintCase Nos. 42489/2019, 1464/2020, 7596/2020 and 4094/2020, all titledC‘Atlanta Limited Vs. Yogesh Upadhyay’. These six complaint caseswere filed against the petitioners by Atlanta Limited, the respondentherein, under Sections 138 and 142 of the Negotiable Instruments Act,1881 [for short, ‘the Act of 1881’].

2. The six cheques, which are the subject-matter of these complaintDcases, were issued by the petitioners in connection with purchase of aNAWA-make crusher plant from the respondent company for a sum of`.1,88,80,000/-, under Agreement dated 04.06.2019. This saleconsideration was to be paid in seven installments by way of cheques.The first cheque issued by the petitioners for a sum of `.11,80,000/- wasduly honoured upon presentation by the respondent company. TheEremaining six cheques, however, were dishonoured on the strength of‘Stop payment’ instructions. The first two cheques that came to bedishonoured were presented by the respondent company through its bankat Nagpur, Maharashtra. The first two complaint cases were accordinglyfiled before the Courts at Nagpur, Maharashtra. The remaining fourFcheques were thereafter presented by the respondent company throughits bank at New Delhi and in consequence, those complaint cases werefiled before the Dwarka Courts, New Delhi.

3. Mr. Rajmangal Kumar, learned counsel, appearing for thepetitioners, would contend that as all the cheques relate to the sameGtransaction, it would be proper and appropriate that the cases pertainingto their dishonour are tried and decided together. He would rely on caselaw to support his contention.

4. On the other hand, Mr. Chirag M. Shroff, learned counsel forthe respondent company, would contend that Section 142 of the Act of1881 would override Section 406 Cr.P.C., in view of the non obstanteH

clause therein, and that the two cases filed at Nagpur, Maharashtra,therefore cannot be transferred. Further, he would assert that Section142(2) of the Act of 1881 confers exclusive jurisdiction upon the Courtsat Nagpur in so far as the first two complaint cases are concerned. Hewould also place reliance on case law.

5. It is now well settled that the offence under Section 138 of theAct of 1881 is complete upon dishonour of the cheque but prosecution inrelation to such offence is postponed, by virtue of the provisos therein,till the failure of the drawer of the cheque to make the payment within15 days of receiving the demand notice. However, jurisdiction to try thisoffence remained a troublesome issue for a long time.

6. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan and another[(1999) 7 SCC 510], this Court held that an offence under Section 138of the Act of 1881 has five components: (1) drawing of the cheque, (2)presentation of the cheque to the bank, (3) returning of the cheque unpaidby the drawee bank, (4) giving notice in writing to the drawer of thecheque demanding payment of the cheque amount, and (5) failure of thedrawer to make payment within 15 days of the receipt of the notice. Itwas further held that the Courts having jurisdiction over the territoriallimits wherein any of the five acts, that constitute the components of theoffence, occurred would have the jurisdiction to deal with the case andif the five acts were done in five different areas, any one of the Courtsexercising jurisdiction in those five areas would have jurisdiction and thecomplainant could choose any one of those Courts.

7. Thereafter, in Dashrath Rupsingh Rathod Vs. State ofMaharashtra and another [(2014) 9 SCC 129], a 3-Judges Bench ofthis Court observed that the return of the cheque by the drawee bankwould alone constitute commission of the offence under Section 138 ofthe Act of 1881 and would indicate the place where the offence iscommitted. It was, therefore, held that the place, situs or venue of judicialinquiry and trial of the offence must logically be restricted to where thedrawee bank is located, i.e., where the cheque is dishonoured uponpresentation and not where the complainant’s bank is situated.

8. In this regard, it may be noted that Section 142 of the Act of1881, titled ‘Cognizance of Offences’, provided that, notwithstandinganything contained in the Code of Criminal Procedure, 1973, no Courtshall take cognizance of an offence punishable under Section 138 excepton a complaint in writing made by the payee or, as the case may be, the A

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Aholder in due course of the cheque; such complaint is made within onemonth of the date on which the cause of action arises under clause (c)of the proviso to Section 138; and no Court inferior to that of aMetropolitan Magistrate or a Judicial Magistrate of the First Class shalltry an offence punishable under Section 138.

B9. Significantly, the aforestated original Section 142 of the Act of1881 was renumbered as Section 142(1) when amendments were madein the Act of 1881 by the Negotiable Instruments (Amendment) Act,2015 (Act 26 of 2015). Further, Section 142(2) was inserted in the statutebook along with Section 142-A. The newly inserted Section 142(2), tothe extent relevant, states that the offence under Section 138 shall beCinquired into and tried only by a Court within whose local jurisdiction -(a) if the cheque is delivered for collection through an account, the branchof the bank where the payee or holder in due course, as the case maybe, maintains the account, is situated.

10. This being the statutory scheme, stress is laid by Mr. ChiragDM. Shroff, learned counsel, upon the words: ‘shall be inquired into andtried only by a Court within whose local jurisdiction……’in Section 142(2)to contend that the Courts at Nagpur would have exclusive jurisdictionin relation to the dishonoured cheques presented by the respondentcompany through its bank at Nagpur.E

11. Perusal of the Statement of Objects and Reasons in AmendmentAct 26 of 2015 makes it amply clear that insertion of Sections 142(2)and 142-A in the Act of 1881 was a direct consequence of the judgmentof this Court in Dashrath Rupsingh Rathod (supra). Therefore, theuse of the phrase: ‘shall be inquired into and tried only by a Court withinFwhose local jurisdiction……’in Section 142(2) of the Act 1881 iscontextual to the ratio laid down in Dashrath Rupsingh Rathod (supra)to the contrary, whereby territorial jurisdiction to try an offence underSection 138 of the Act of 1881 vested in the Court having jurisdictionover the drawee bank and not the complainant’s bank where he hadpresented the cheque. Section 142(2) now makes it clear that theGjurisdiction to try such an offence would vest only in the Court withinwhose jurisdiction the branch of the Bank where the cheque wasdelivered for collection, through the account of the payee or holder indue course, is situated. The newly inserted Section 142-A further clarifiesthis position by validating the transfer of pending cases to the CourtsHconferred with such jurisdiction after the amendment.

12. The later decision of this Court in Bridgestone India PrivateLimited Vs. Inderpal Singh [(2016) 2 SCC 75] affirmed the legalposition obtaining after the amendment of the Act of 1881 and endorsedthat Section 142(2)(a) of the Act of 1881 vests jurisdiction for initiatingproceedings for an offence under Section 138 in the Court where thecheque is delivered for collection, i.e., through an account in the branchof the bank where the payee or holder in due course maintains anaccount. This Court also affirmed that Dashrath Rupsingh Rathod(supra) would not non-suit the company in so far as territorial jurisdictionfor initiating proceedings under Section 138 of the Act of 1881 wasconcerned.

13. Therefore, institution of the first two complaint cases beforethe Courts at Nagpur is in keeping with the legal position obtaining now.However, the contention that the non obstante clause in Section 142(1)of the Act of 1881 would override Section 406 Cr.P.C. and that it wouldnot be permissible for this Court to transfer the said complaint cases, inexercise of power thereunder, cannot be countenanced. It may be notedthat the non obstante clause was there in the original Section 142 itselfand was not introduced by way of the amendments in the year 2015,along with Section 142(2). The said clause merely has reference to themanner in which cognizance is to be taken in offences under Section138 of the Act of 1881, as a departure has to be made from the usualprocedure inasmuch as prosecution for the said offence stands postponeddespite commission of the offence being complete upon dishonour of thecheque and it must necessarily be in terms of the procedure prescribed.The clause, therefore, has to be read and understood in the context andfor the purpose it is used and it does not lend itself to the interpretationthat Section 406 Cr.P.C. would stand excluded vis-à-vis offences underSection 138 of the Act of 1881. The power of this Court to transferpending criminal proceedings under Section 406 Cr.P.C. does not standabrogated thereby in respect of offences under Section 138 of the Actof 1881. It may be noted that this Court exercised power under Section406 Cr.P.C. in relation to offences under Section 138 of the Act of 1881even during the time the original Section 142 held the field. In A.E.Premanand Vs. Escorts Finance Ltd. & Others [(2004) 13 SCC527], this Court took note of the fact that the offences therein, underSection 138 of the Act of 1881, had arisen out of one single transactionand found it appropriate and in the interest of justice that all such casesshould be tried in one Court. We, therefore, hold that, notwithstanding A

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Athe non obstante clause in Section 142(1) of the Act of 1881, the powerof this Court to transfer criminal cases under Section 406 Cr.P.C. remainsintact in relation to offences under Section 138 of the Act of 1881, if it isfound expedient for the ends of justice.

14. In the case on hand, as the six complaint cases pertain to theBsame transaction, it would be advisable to have a common adjudicationto obviate the possibility of contradictory findings being rendered inconnection therewith by different Courts. As four of the six cases havebeen filed by the respondent company before the Dwarka Courts atNew Delhi and only two such cases are pending before the Courts atNagpur, Maharashtra, it would be convenient and in the interest of allCconcerned, including the parties and their witnesses, that the cases betransferred to the Dwarka Courts at New Delhi.

15. The transfer petitions are accordingly allowed and SCCNos.25668/2019 and 26875/2019, both titled ‘Atlanta Limited Vs. M/sShakti Buildcon & Anr.’, pending on the files of the learned 22[nd] Jt. CivilDJudge, Senior Division, Nagpur; and the learned 20[th] Civil Judge, SeniorDivision, Nagpur, respectively, are transferred to the South West DistrictCourts, Dwarka, New Delhi, to be tried along with Complaint Case Nos.42489/2019, 1464/2020, 7596/2020 and 4094/2020.

EDivya Pandey

(Assisted by : Shivani Pundir and Roopanshi Virang, LCRAs)

Transfer Petitions allowed.

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