The Amendment to Article 142(2) of NI Act, 2015 is Constitutional: Madras HC

Ronita Biswas | National Law University, Orissa | 28th December 2019

Refex Energy Ltd. v. Union of India & M/s Passive Infra Projects Pvt. Ltd. (W.P (MD) No. 11150 of 2016 and W.M.P (MD) No. 8571 of 2016

• Matter

The case dealt with a writ petition challenging the amendment to Article 142(2) of the Negotiable Instruments Act, primarily on the ground that the amendment goes contrary to the judgment of the SC in Dashrath Rupsingh Rathod v. State of Maharastra (AIR 2014 SC 3519).

• Petitioner’s contention

The Petitioner contended that the said amendment was in violation of the judgement of the SC, which is not permissible in law. The Petioner relied on the judgment of Dashrath Rupsingh Rathod (supra) where the Court held that suit can be instituted against the drawer of the cheque only before the Court within whose jurisdiction the dishonour takes place.

• Held

The Court held that the contention of the Petitioner cannot be accepted since it is a well-settled law that legislation can take away the basis of a judgment [Shri Prithvi Cotton Mills Ltd. etc., v. Broach Borough Municipality and others (AIR 1970 SC 192)].

The Parliament thereafter passed the Negotiable Instruments (Amendment) Act, 2015. By way of amendment, a new law was instituted. The offence under s. 138 shall be inquired into and tried only by a court within whose local jurisdiction

• The branch of the bank where the payee/holder maintains his account is situated (if the cheque is delivered for collection through an account).
• The branch of the drawee bank where the drawer maintains his account is situated (if the cheque is presented for payment by the payee/holder).

The Court held that by the said amendment the entire basis of the judgment of Dashrath Rupsingh Rathod (supra) had been removed. The power of the Legislature to take away the basis of a judgment by making amendments is well settled. The Court reiterated that the Legislature can take away the basis of a judgment of a judicial pronouncement by either passing a validating act or making amendments to the parent Act. The Court also cited other judgments to support their contention such as State of Karnataka v. Karnataka Pawn Brokers Association and Ors. (2018 6 SCC 363) and Gujarat Ambuja Cements and Anr. v. Union of India & Anr. (2005 4 SCC 214).

The Court held that the said amendment was constitutionally valid.