Supreme Court says “non-obstante clause in Section 142 (1) overrides Section 406 Cr.P.C.”: cheque cases cannot be transferred

In Yogesh Upadhyay and Anr. vs Atlanta Limited case, transfer petitions were filed by Yogesh Upadhyay and M/s. Shakti Buildcon under Section 406 Cr.P.C. seeking transfer from one state to another. The six cheques, which are the subject matter of these complaint cases, were issued by the petitioners in connection with the purchase of a NAWA-make crusher plant from the respondent company for a sum of ₹.1,88,80,000/- The payment for the same was to be paid in seven installments through cheques. The petitioner paid a sum of Rs. 11,80,000/- by way of cheque and was duly honored upon presentation by the respondent company. The remaining six cheques were dishonored on the strength of ‘Stop Payment’ instructions. 

The first two dishonored cheques were presented by the respondent company via Nagpur, Maharashtra bank therefore; the first two complaint cases were also filed before Nagpur, Maharashtra Courts. The other four cheques were presented by the company through the bank in New Delhi; therefore, complaint cases were filed before the Dwarka Courts. In this context, learned counsel appearing for the petitioners, Mr. Rajmangal Kumar, contended that “as all cheques related to the same transaction, it would be proper and appropriate that the cases pertaining to their dishonor are tried and decided together.” Learned counsel for the respondent company, Mr. Chirag M. Shroff, 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.” 

It has been identified that the offence under Section 138 of the Act of 1881 was complete upon dishonor of the cheque but prosecution in relation to such offence was postponed. The power of the Supreme 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 the Supreme 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, Justices Dinesh Maheshwari and Sanjay Kumar were hearing the case and said that “It would be advisable to have a common adjudication to obviate the possibility of contradictory findings being rendered in connection therewith by different Courts. As four of the six cases have been filed by the respondent company before the Dwarka Courts at New Delhi and only two such cases are pending before the Courts at Nagpur, Maharashtra, it would be convenient and in the interest of all concerned, including the parties and their witnesses, that the cases be transferred to the Dwarka Courts at New Delhi.” In addition to this, the Supreme Court also highlighted that “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.” The impugned order passed by the Division bench confirming the order passed by the Single bench allowing the filed writ petition was set aside and the appeal was allowed.