A challenge to the validity of Section 142(2) of the Negotiable Instruments Act recently led the Madras High Court to reiterate that subsequent legislation can take away the basis of a judgment through validating acts.

Section 142(2) was introduced by way of a 2015 amendment to the Negotiable Instruments Act, 1881. The provision concerns which court has the jurisdiction to deal with cases regarding the dishonour of a cheque.

Prior to the 2015 amendment, a three-judge Bench of the Supreme Court had laid down certain guidelines on the issue in the 2014 judgment in Dashrath Rupsingh Rathod v. State of Maharastra.

Subsequently, Section 142(2) was introduced to clear ambiguities in the field. The petitioner before the Madras High Court challenged this amendment on the ground that it was completely contrary to the Supreme Court’s judgment in Dashrath Rupsingh Rathod.

The Bench of Chief Justice AP Sahi and Justice Subramonium Prasad however, pointed out that the legislature was well within its authorities to introduce legislation that can take away the basis of a judgment.

“The contention of the learned Counsel for the petitioner is that this amendment amounts to setting at naught a judgment of the Honourable Supreme Court which is not permissible in law. The contention of the petitioner cannot be accepted. It is well settled right from the decision in Shri Prithvi Cotton Mills Ltd., etc., v. Broach Borough Municipality and others reported in AIR 1970 Supreme Court 192 that Legislation can take away the basis of a judgment.”

The Court proceeded to explain further,

"By virtue of the said amendment, the entire basis of the judgment of Dashrath Rupsingh Rathod (supra) has been removed. The power of the Legislature to take away the basis of a judgment by making amendments is well settled. It is trite law that the Legislature can take away the basis of the judgment of a judicial pronouncement by either passing a Validating Act or passing amendments to the parent Act.”

The Bench proceeded to dismiss the petition after also taking note that the challenged provision did not violate any fundamental rights under the Constitution of India.

“In view of the above, there is no infirmity in the amendment. Even otherwise, the Parliament is competent to bring out the amendment under the Negotiable Instruments Act. The said amendment cannot be said to be ultra vires in view of the provisions of the Act or Part III of the Constitution of India. The amendment cannot also be called to be manifestly arbitrary in the absence of any materials on record.”