The Madras High Court in its judgment in Reflex Energy Ltd. Vs. Union of India, upheld the constitutional validity of the Section 142(2) of the Negotiable Instruments Act, 1881, by reiterating that the Parliament or the State Legislature can take away the basis of judicial pronouncement by the way of enacting a legislative enactment. The judgment was delivered by a division bench of Chief Justice AP Sahi and Justice Subramonium Prasad.

In the abovementioned case, the petitioner company contested that the amendment in the act violated the ruling of the Supreme Court in the case of Dashrath Rupsingh Rathod v. State of Maharashtra, in this case the apex court held that in the cases of dishonour of cheque the court in whose territorial limits the drawee bank is situated will only have jurisdiction by saying:

The general rule stipulated under Section 177 of Cr.P.C applies to cases under Section 138 of the Negotiable Instruments Act. Prosecution in such cases can, therefore, be launched against the drawer of the cheque only before the Court within whose jurisdiction the dishonour takes place except in situations where the offence of dishonour of the cheque punishable under Section 138 is committed along with other offences in a single transaction within the meaning of Section 220(1) read with Section 184 of the Code of Criminal Procedure or is covered by the provisions of Section 182(1) read with Sections 184 and 220 thereof,”

The government by amending the act nullified the ruling of the apex court and made the law to the effect that, if the cheque is presented by any other way than through account, the court within whose jurisdiction the branch of the drawee bank where the drawer hold the account, is situated will have the jurisdiction.

The court upheld the validity of this by saying:

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 SC 192 that Legislation can take away the basis of a judgment.

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Link to the judgment:

Refex Energy Ltd. v. Union of India and Anr.