Section 142 NI Act Allows Filing Of Complaint Before Courts Within Whose Jurisdiction Collection Branch Of Bank Falls: Supreme Court

The Supreme Court held that Section 142(2)(a) of the Negotiable Instruments Act, 1881 (NI Act) allows the Complainant to file a Complaint before the Courts within whose jurisdiction the collection branch of the Bank falls.

The Court held thus in a Transfer Petition preferred by a proprietary concern through its proprietor under Section 406 of the Criminal Procedure Code, 1973 (CrPC), praying to transfer a Criminal Case.

The two-Judge Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan observed, “The strong assertion on the part of the petitioner that no part of the cause of action could be said to have arisen within Chandigarh, is of no avail to them, more particularly when the law itself allows the institution of a complaint in Chandigarh. The enactment of sub-section (2)(a) of Section 142 of the N.I. Act and the Explanation thereto allows the complainant to file a complaint before the courts within whose jurisdiction the collection branch of the bank falls. In the present case, while contending that the court in Chandigarh lack the jurisdiction to entertain the case, it is not the case of the petitioner that the respondent Bank has no collection branch in Chandigarh.”

The Bench explained that where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.

Senior Advocate Nikhil Goel appeared for the Petitioner while Senior Advocate Jayant Mehta appeared for the Respondent.

Brief Facts

The Transfer Petition filed under Section 406 the CrPC was at the instance of a proprietary concern through its proprietor with a prayer to transfer Criminal Case No. 4016 of 2021 titled as Kotak Mahindra Bank Limited v. M/s Shri Sendhur Agro and Oil Industries pending in the Court of Judicial Magistrate First Class, Chandigarh (Union Territory) to the Court of Metropolitan Magistrate, Coimbatore, Tamil Nadu, essentially on the ground that no cause of action could be said to have arose for the Bank to lodge the Complaint for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 in Chandigarh.

Issues For Consideration

The following issues arose before the Supreme Court for its consideration –

i. Whether a complaint filed under Section 138 of the N.I. Act can be ordered to be transferred from one Court to the other in exercise of powers under Section 406 of the Cr.P.C. on the ground of lack of territorial jurisdiction of the Court in which the complaint is filed?

ii. Assuming that the Court in which the complaint filed under Section 138 of the N.I. Act lacks territorial jurisdiction to try the same, then is it permissible for the Apex Court in exercise of powers under Section 406 of the Cr.P.C. to transfer the said complaint to the Court having territorial jurisdiction to try the offence?

iii. Whether the expression “that for the ends of justice, the Apex Court can transfer any criminal case or appeal to any place.” in Section 406 Cr.P.C. embraces in itself the lack of territorial jurisdiction of the Court to try the offence under Section 138 N.I. Act?

Court’s Observations

The Supreme Court in view of the above issues, noted, “… if an offender is tried by a Magistrate not empowered by law in that behalf, his proceedings shall be void under Section 461. Section 462 does not make the principle contained therein to have force notwithstanding anything contained in Section 461.”

The Court said that when a complainant institutes a case in a Court of his choosing and such a Court has the territorial jurisdiction to adjudicate the matter, then the transfer of such case must be guided by principles that would achieve the ends of justice.

“Section 142 of the N.I. Act in clear terms, provides the complainant with the right to lodge a complaint, before a court, within whose jurisdiction, the branch of the bank where the cheque is delivered for collection, is situated. Therefore, the argument of the accused that another court might also be empowered to take cognizance of the matter under Section 142, since the cause of action arose within that jurisdiction, cannot by itself be a ground for seeking transfer under Section 406 of the Cr.P.C.”, it added.

Furthermore, the Court clarified that when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, as the case may be, maintains the account then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and the Court of the place where such cheque was presented for collection, will have the jurisdiction to entertain the complaint alleging the commission of offence punishable under Section 138 of the NI Act.

“In that view of the position of law, the word ‘delivered’ used in Section 142(2)(a) of the N.I. Act has no significance. What is of significance is the expression ‘for collection through an account’. That is to say, delivery of the cheque takes place where the cheque was issued and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction”, it elucidated.

The Court was of the view that the argument canvassed on behalf of the Petitioner that although the Court in Chandigarh has the territorial jurisdiction to try the case under Section 138 of the N.I. Act yet as the Court in Delhi also has the territorial jurisdiction to try the case, the proceedings deserve to be transferred to the Court in Delhi to take care of two situations for the Petitioner (i) language barrier and (ii) convenience.

“For the purpose of transfer of any case or proceedings under Section 406 of the Cr.P.C., the case must fall within the ambit of the expression “expedient for the ends of justice”. Mere inconvenience or hardship that the accused may have to face in travelling from Coimbatore to Chandigarh would not fall within the expression “expedient for the ends of justice”. The case must fall within any of the five situations as narrated in para 49 of this judgment. It is always open for the petitioner accused to pray for exemption from personal appearance or request the Court that he may be permitted to join the proceedings online”, it also observed.

The Court, therefore, concluded that no case is made out for transfer of the proceedings in question under Section 406 of CrPC.

Accordingly, the Apex Court dismissed the Transfer Petition.

Cause Title- M/s Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd. (Neutral Citation: 2025 INSC 328)

Appearance:

Petitioner: Senior Advocate Nikhil Goel, AORs C. Solomon, Zulfiqar Ali Khan, Pranab Prakash, Advocates Kaushal Kishore, Bikash Chandra, Amit Pratap Shaunak, Jitendra Kumar Sah, Chetan Bairwa, Mohd Israr Khan, D Durga Devi, and Siddhi Gupta.

Respondent: Senior Advocate Jayant Mehta, Advocates Sonia Dube, Kanchan Yadav, Tanishq Sharma, Chetna Bisht, Saumya Sharma, and Jasleen Virk.

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