Latest JudgementNegotiable Instrument Act, 1881Code of Criminal Procedure, 1973
M/S Shri Sendhuragro and Oil Industries Pranab Prakash v. Kotak Mahindra Bank Ltd., 2025
Jurisdiction for filing a complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act); transfer of trial proceedings under Section 406 CrPC.
Supreme Court of India·6 March 2025
Judgement Details
Court
Supreme Court of India
Date of Decision
6 March 2025
Judges
Justices JB Pardiwala ⦁ R Mahadevan
Citation
Acts / Provisions
Section 138, Section 142(2)(a) of Negotiable Instruments Act, 1881 (NI Act)
Section 406 CrPC
Facts of the Case
- The appellant filed a transfer petition to move a cheque dishonor case from Chandigarh to Coimbatore, arguing that the entire transaction, including the cheque issuance and dishonor, took place in Coimbatore.
- The Court was tasked with determining whether the trial could be transferred under Section 406 CrPC on the grounds of territorial jurisdiction. The appellant argued that the court in Chandigarh lacked jurisdiction since the cause of action arose in Coimbatore.
- The Supreme Court examined the jurisdiction issue in the context of the 2015 amendment to Section 142(2) of the NI Act, clarifying that a complaint under Section 138 should be filed where the cheque is presented for collection (not where the transaction occurred).
Issues
- Whether the jurisdiction for filing a cheque dishonor complaint under Section 138 of the NI Act lies where the cheque is presented for collection, i.e., where the payee maintains the account?
- Whether inconvenience to the accused in traveling from Coimbatore to Chandigarh is a valid ground to transfer the case under Section 406 CrPC?
- Whether the jurisdiction for filing a cheque dishonor complaint can be changed based on the location of the drawer's bank?
- Under what circumstances can a trial be transferred under Section 406 CrPC?
Judgement
- The Supreme Court rejected the appellant’s request to transfer the case from Chandigarh to Coimbatore, holding that the trial court in Chandigarh had jurisdiction over the matter. The court emphasized that the jurisdiction for a cheque dishonor complaint under Section 138 of the NI Act lies where the cheque is presented for collection, not where the transaction or issuance of the cheque took place.
- The Court referred to the 2015 amendment to Section 142(2)(a) of the NI Act, stating that the jurisdiction for a Section 138 complaint is where the payee maintains the bank account and where the cheque is presented for collection. This effectively overturned the previous stance held in the Dasrath Rupsingh Rathod v State of Maharashtra (2014) case, which had created confusion about the jurisdiction.
- The Court clarified that mere inconvenience, such as the need for the accused to travel from Coimbatore to Chandigarh, is not a sufficient ground to transfer the trial under Section 406 CrPC. The Court stated that the power of the Supreme Court to transfer cases should not be exercised routinely and must be reserved for exceptional situations.
Held
- The Court held that the jurisdiction to file a complaint under Section 138 NI Act arises where the cheque is presented for collection, which in this case was the Chandigarh branch of the bank. The Court relied on the 2015 amendment to clarify that Section 142(2)(a) allows complaints to be filed where the payee maintains their bank account, regardless of where the transaction occurred.
- The Court also emphasized that inconvenience to the accused in terms of traveling for the trial does not justify transferring the case, except in exceptional circumstances where justice would be compromised. The Court reiterated that territorial jurisdiction for cheque dishonor cases is based on the location of the bank branch where the cheque is presented for collection, rather than where the cheque is drawn or the transaction occurred.
- Section 406 CrPC was not applicable in this case as the Chandigarh court had proper jurisdiction, and there was no exceptional circumstance to justify a transfer.
Analysis
- This judgment solidifies the understanding of jurisdiction for cheque dishonor cases and helps clarify any confusion caused by the Dasrath Rupsingh Rathod case. It also sets clear guidelines on filing complaints for dishonored cheques, reducing potential for forum shopping.
- The ruling also emphasizes that Section 406 CrPC is not a tool for transferring cases simply due to inconvenience. The Court's ruling reflects a stricter approach in terms of territorial transfer, which could impact future requests for case transfers.
- This decision could be contested in cases where the accused faces significant hardship due to traveling for trial. Future cases might test whether the jurisdictional rules under the 2015 amendment are applicable when the complainant and accused are in different jurisdictions.
- Practitioners must note that jurisdiction for Section 138 NI Act complaints is determined by where the cheque is presented for collection.
- Transfer of cases under Section 406 CrPC should only be sought in exceptional cases that involve clear miscarriage of justice or undue hardship, and not based on mere inconvenience.
- The judgment clarifies the jurisdictional aspect of filing cheque dishonor cases under Section 138 NI Act. By highlighting the 2015 amendment, it establishes that jurisdiction is tied to where the cheque is presented for collection, not where the cheque was issued or where the underlying transaction occurred.