Tuesday, April 7, 2015

Delhi High Court on Section 138 and Dashrath Rupsingh

Section 138 of the Negotiable Instruments Act, 1881 [NI Act] remains primarily responsible for clogging the dockets of most courts. The ease of prosecution had also transformed it into a weapon for abuse and misuse by errant litigants, so thought the Supreme Court while passing the important decision of Dashrath Rupsingh Rathod v. State of Maharashtra [(2014) 9 SCC 129]. The decision has been already discussed on this blog, and I remarked on how the follow up will be interesting. 

One issue among several left open in Dashrath is how do we interpret the requirement that cases shall not be transferred if they have reached the stage of Section 145(2) of the Act. The relevant extract from the decision reads as follows:

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 by us from the Court ordinarily possessing territorial jurisdiction, as now clarified, to the Court where it is presently pending.

Pendulum Swinging in the High Court
I have been following the decisions from the High Courts of Bombay and Delhi in the aftermath of Dashrath on this point, and the Delhi High Court has provided interesting material for study. Two material decisions are discussed below:

1. New Delhi Tele Tech v. Cisco Systems Capital (India) Pvt Ltd [Crl. M.C. 4690/2014, decided on 12.01.2015, Vaish J.]
This matter was part of a series of cases, with the same Bench passing another order in separate but connected cases on 13.01.2015. Here, an application under Section 145(2) was filed by the Accused persons and allowed on 25.03.2014 but no examination was conducted, and then a jurisdictional challenge under Dashrath was made. The Single Judge held this was sufficient to conclude trial has commenced, thus warranting the case to remain with the same judge though a jurisdictional challenge existed under Dashrath. The Court held:

The Apex Court in Dashrath Rupsingh Rathod’s case (supra) observed in para 22 that the category of complaint cases where proceedings have gone to the stage of Section 145(2) of the Act or beyond shall be deemed to have been transferred from the Court ordinarily possessing territorial jurisdiction, as clarified therein, to the Court where it is presently pending. Thus, it is only when the stage of proceedings in cases filed under Section 138 of the Act has reached the stage of Section 145(2) of the Act or beyond thereof, such case shall continue to be dealt with by the Court where it is pending trial [Emphasis supplied].

2. Neerav J. Shah v. State & Anr [Crl. M.C. 700/2012, decided on 23.03.2015, Gaur J.]
Similar to the previous case, here an application for cross-examination of the Complainant under Section 145(2) was allowed by the Magistrate in 2011, but no cross-examination had been conducted till the challenge under Dashrath was made. The decisions in the Cisco litigation were relied upon to argue that the cases must be retained by the same magistrate albeit there was no jurisdiction. On this occasion, a co-ordinate Bench disagreed thus dismissing this and other connected matters. 

Relying upon Dashrath as seemingly clarified in Shivgiri Associates & Ors v. Metso Mineral (India) Pvt Ltd [(2014) 12 SCC 366], the Court held that it was necessary for actual evidence to be recorded and merely allowing the application would not do. The Court held:

On careful perusal of afore-noted two decisions of this Court, it becomes apparent that Apex Court decision rendered by Hon’ble Mr. Justice T.S.Thakur and Hon’ble Mr. Justice Vikramjit Sen in Shivgiri Associates (supra) was not brought to the notice of the two Coordinate Benches of this Court, which had rendered the decision in cases of CISCO Systems (supra) and Naveen Malhotra (supra). The Apex Court’s decision in Dashrath Rupsingh (supra) is authored by Hon’ble Mr. Justice Vikramajit Sen, who is also party to the later Apex Court decision in Shivgiri (supra), wherein paragraph No.22 of Dashrath Rupsingh (supra) stands duly explained. In Shivgiri (supra), it has been clearly held that evidence post-summoning has not been recorded and so the complaint under Section 138 of Negotiable Instruments Act, 1881 was directed to be transferred to the Court of competent territorial jurisdiction. In the face of latest Apex Court decision in Shivgiri (supra), reliance placed upon decisions in Peter David Xavier Pinto v. Dinesh M. Ranwat & Anr. 2014 SCC Online Bom 1248, New Delhi Tele Tech Pvt. Ltd. v. M/s CISCO Systems Capital (India) Pvt. Ltd. 2015 SCC Online Del.6533, Radhey Shyam Garg v. Naresh Kumar Gupta (2009) 13 SCC 201 and CISCO Systems Capital (India) Pvt. Ltd. v. New Delhi Tele Tech. Pvt. Ltd. & Ors. 2015 SCC Online Del 6535 is of no avail. Applying the dictum of Apex Court in Dashrath Rupsingh (supra) which is reiterated in Shivgiri (supra), it is held that the complaints in which cross examination in pursuance to allowing of application under Section 145(2) of Negotiable Instruments Act, 1881 has not commenced, shall stand transferred to the court of competent territorial jurisdiction.

Thus, after holding that an application for cross-examination need only be allowed for the matter to remain with the original court, the High Court has now shifted its position to require for the actual cross-examination to have begun. In my opinion, it does not further the underlying intent behind the restriction provided by the Supreme Court in Dashrath, despite the best efforts of Gaur J. to convince us otherwise. The Supreme Court in Dashrath created this exception to reduce the number of matters which were bound to be transferred due to the decision being given retrospective effect. The delays caused in examining witnesses before the trial courts are notorious but very real, and to allow matters to be transferred even where applications for cross-examination have been allowed is a position ignorant of this reality. 

The latest decision only worsens the confusion currently pervading across trial courts in cheque bouncing cases. But on the bright side, this clearly contradictory stand of co-ordinate benches might necessitate intervention by a higher bench/higher court to finally put the issue to bed.  

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