Supreme Court: Court has Power under Section 406 Cr.P.C to Transfer Cheque Cases from One State to Another

Supreme Court: Court has Power under Section 406 Cr.P.C to Transfer Cheque Cases from One State to Another

The Supreme Court by its division bench comprising of Justices Dinesh Maheshwari and Sanjay Kumar observed that, notwithstanding the non-obstante clause in Section 142(1) of the Negotiable Instruments Act 1881 (hereinafter referred to as 'the Act'), the power of this Court to transfer criminal cases under Section 406 Code of Criminal Procedure, 1973 (Cr.P.C.) remains intact in relation to offences under Section 138 of the Act, if it is found expedient for the ends of justice.

The Court was adjudicating a criminal transfer petition in the matter of Yogesh Upadhyay and another vs. Atlanta Limited wherein four of the six cases have been filed by a company before the Dwarka Courts at New Delhi and two such cases are pending before the Courts at Nagpur, Maharashtra. The Petitioners/accused approached the Apex Court seeking transfer of two cases from Nagpur Court to Dwarka Courts.

Mr. Rajmangal Kumar, learned counsel, appearing for the petitioners, contended that as all the cheques relate to the same transaction, it would be proper and appropriate that the cases pertaining to their dishonor are tried and decided together.

On the other hand, Mr. Chirag M. Shroff, learned counsel for the respondent company, contended that Section 142 of the Act of 1881 would override Section 406 Cr.P.C., in view of the non obstante clause therein, and that the two cases filed at Nagpur, Maharashtra, therefore cannot be transferred. Further, he asserted that Section 142(2) of the Act of 1881 confers exclusive jurisdiction upon the Courts at Nagpur in so far as the first two complaint cases are concerned.

The Apex Court remarked that it is now well settled that the offence under Section 138 of the Act of 1881 is complete upon dishonor of the cheque but prosecution in relation to such offence was postponed, by virtue of the provisos therein, till the failure of the drawer of the cheque to make the payment within 15 days of receiving the demand notice, however, jurisdiction to try this offence remained a troublesome issue for a long time.

The bench emphasized that Section 142 of the Act of 1881, titled 'Cognizance of Offences', provided that, notwithstanding anything contained in the Code of Criminal Procedure, 1973, no Court shall take cognizance of an offence punishable under Section 138 except on a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque; 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; and no Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the First Class shall try an offence punishable under Section 138.

The Court while rejecting the contention forwarded by the learned counsel for respondents observed, "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 would not be permissible for this Court to transfer the said complaint cases, in exercise of power thereunder, cannot be countenanced. It may be noted that 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 dishonor of the cheque and it must necessarily be in terms of the procedure prescribed."

The bench 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 power of this Court to transfer pending criminal proceedings under Section 406 Cr.P.C. does not stand abrogated thereby in respect of offences under Section 138 of the Act of 1881. It may be noted that this Court exercised power under Section 406 Cr.P.C. in relation to offences under Section 138 of the Act of 1881 even during the time the original Section 142 held the field."

The bench concluded by observing that notwithstanding the non-obstante clause in Section 142(1) of the Act of 1881, the power of this Court to transfer criminal cases under Section 406 Cr.P.C. remains intact in relation to offences under Section 138 of the Act of 1881, if it is found expedient for the ends of justice.

The Court accordingly, allowed the transfer petitions.