Thursday, May 14, 2015

Bidding Adieu to Dashrath Rupsingh Rathod?

If you haven't had a chance to read the news, the Lok Sabha passed the Negotiable Instruments (Amendment) Bill, 2015 yesterday, which is available here. Notably, it inserts Section 142-A to the statute, and inserts a new sub-clause to the existing Section 142 [sub-clause (2)]. The latter stipulates:

"(2) The offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated"

So now, the only place where we can file complaints under Section 138 is the court where the cheque is presented for payment. The operation of this jurisdictional rule is affected/implemented by the new section 142-A, which reads:

"(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any other judgment, decree, order or directions of any court, all cases arising out of section 138 which were pending in any court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Act, 2015, shall be transferred to the court having jurisdiction under sub-section (2) of section 142 as if that sub-section had been in force at all material times.

(2) Notwithstanding anything contained in sub-section (2) of section 142 of sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1), all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court.

(3) If, on the date of commencement of the Negotiable Instruments (Amendment) Act, 2015, more than one prosecution filed by the same person against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section 142(2) before which the first case was filed as if that sub-section had been in force at all material times."

The Statement of Objects & Reasons [SoR] appended to the Bill makes it pretty clear that the amendments are directed towards nullifying the effect of the three judge bench decision in Dashrath Rupsingh Rathod v. State of Maharashtra [(2014) 9 SCC 129]. It restricted the jurisdiction for filing of complaints under Section 138 to only those courts within whose jurisdiction the cheque was drawn, and did so with retrospective effect. I've discussed Dashrath and its problematic retrospective application in some detail before. The SoR reveals that the amendment is spurred by representations received by the Government from various stakeholders (read banks) that the decision affords undue protection to defaulters. More important reasons seem to have been the failure of the decision to consider (i) the uniqueness of "at-par" payable cheques, (ii) the electronic clearance of cheques which is devoid of territorial-links, and (iii) the potential for multiple litigation between same parties at different locations.

These concerns raised with the decision were quite pertinent and the amendment is welcome, in most parts at least because I have my reservations about the ease with which the amendment allows for transferring matters (not because of the supposed harm to the common man which follows). What I fail to understand though is the fetish both Judiciary and Legislature seem to have with making changes retrospective. Through the new Section 142-A these jurisdictional tweaks are made retrospective in their operation. On a plain reading it suggests that all cases pending before any other court shall be transferred to the court of proper jurisdiction as now defined by Section 142(2). 

The possibility of the retrospective operation being unconstitutional was being discussed with friends yesterday, where my initial gusto legally supporting a challenge was dampened by the clearly correct position of Legislature being supreme. The only limits to retrospective operation are found in Article 20(1) of the Constitution, prohibiting the retrospective imposition of liability. This is indisputable. A challenge can certainly be mounted to the vagueness in Section 142-A regarding the stage at which a complaint must be for a transfer to happen. Surely the Legislature does not envisage every pending case to be scrutinized. Or does it? Cue: several more months of confusion about the jurisdiction of courts to entertain complaints under Section 138.

Thanks to Chetna Kumar for pointing out important errors in the previous version of this post

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