Bank’s Right to Choose Jurisdiction for Cheque Dishonour Cases Upheld – Transfer Denied Under Section 406 of the Code of Criminal Procedure, 1973

Jurisdiction under Section 142 of the N.I. Act – The Supreme Court held that the jurisdiction for filing a complaint under Section 138 of the N.I. Act lies with the court where the cheque is delivered for collection through the payee’s bank account. The court clarified that the bank has the right to choose the jurisdiction based on the branch where the cheque is presented for collection, even if the cause of action arose elsewhere. (Paras 12, 13, 22, 61, 62)

Transfer under Section 406 of Cr.P.C. – The Court reiterated that the power to transfer cases under Section 406 of the Cr.P.C. is discretionary and should be exercised sparingly. Mere inconvenience or hardship to the accused, such as travel or language barriers, does not justify transfer unless there is a reasonable apprehension of miscarriage of justice. (Paras 28, 29, 47, 65)

Cause of Action – The Court emphasized that the cause of action for a cheque dishonour case under Section 138 of the N.I. Act is determined by the place where the cheque is presented for collection, not where the transaction originated. (Paras 56, 58, 63)

Amendment to Section 142 of the N.I. Act – The Court noted that the 2015 amendment to Section 142 of the N.I. Act, which introduced Section 142A, was enacted to address jurisdictional issues following the judgment in Dashrath Rupsingh Rathod v. State of Maharashtra. The amendment clarified that the court where the cheque is delivered for collection has jurisdiction. (Paras 21, 22, 60)

Reasonable Apprehension of Bias – The Court held that for a transfer petition to succeed, there must be a reasonable apprehension of bias or miscarriage of justice, not just inconvenience. The petitioner failed to establish such apprehension. (Paras 47, 49, 65)

The Supreme Court dismissed the transfer petition, holding that the Chandigarh court had jurisdiction under Section 142 of the N.I. Act. The Court found no reasonable apprehension of bias or miscarriage of justice to justify transfer under Section 406 of the Cr.P.C. (Paras 66, 67)

Major Acts:

1. Negotiable Instruments Act, 1881 (N.I. Act) – Sections 138, 142, and 142A.

2. Code of Criminal Procedure, 1973 (Cr.P.C.) – Section 406.

3. Constitution of India (COI) – Article 14.

Facts:

1. Nature of the Litigation – The petitioner, M/s Shri Sendhur Agro & Oil Industries, sought the transfer of a criminal complaint filed by Kotak Mahindra Bank under Section 138 of the N.I. Act from Chandigarh to Coimbatore, Tamil Nadu, on the grounds that the entire transaction occurred in Coimbatore. (Paras 1, 3, 4)

2. Remedy Sought – The petitioner requested the Supreme Court to transfer the case under Section 406 of the Cr.P.C., arguing that the Chandigarh court lacked jurisdiction and that the bank’s choice of forum was intended to harass the petitioner. (Paras 3, 4, 7)

3. Reason for Filing – The petitioner contended that the bank’s decision to file the complaint in Chandigarh, despite the transaction occurring in Coimbatore, was an abuse of process and caused undue hardship. (Paras 4, 58)

4. Previous Proceedings – The petitioner had already initiated proceedings under the SARFAESI Act in Coimbatore, and the bank had filed multiple complaints in Chandigarh. (Paras 4, 58)

Issues:

1. Whether a complaint under Section 138 of the N.I. Act can be transferred under Section 406 of the Cr.P.C. on the ground of lack of territorial jurisdiction? (Para 11)

2. Whether the expression “expedient for the ends of justice” in Section 406 of the Cr.P.C. includes lack of territorial jurisdiction? (Para 11)

3. Whether the bank’s choice of jurisdiction in Chandigarh was valid under Section 142 of the N.I. Act? (Paras 12, 13, 22)

Submissions/Arguments:

• Petitioner’s Arguments:

  • The entire transaction occurred in Coimbatore, and the Chandigarh court lacked jurisdiction. (Paras 3, 4)

  • The bank’s decision to file the complaint in Chandigarh was intended to harass the petitioner. (Paras 4, 58)

  • The petitioner faced inconvenience due to language barriers and travel. (Paras 4, 65)

• Respondent’s Arguments:

  • The bank had the right to file the complaint in Chandigarh as the cheque was presented for collection there. (Paras 9, 58)

  • The petitioner did not dispute the jurisdiction of the Chandigarh court but sought transfer on grounds of convenience. (Para 9)

Ratio:

1. Jurisdiction under Section 142 of the N.I. Act – The court where the cheque is delivered for collection has jurisdiction, regardless of where the transaction originated. (Paras 12, 13, 22, 61, 62)

2. Transfer under Section 406 of Cr.P.C. – Transfer petitions should be granted only when there is a reasonable apprehension of bias or miscarriage of justice, not merely for convenience. (Paras 28, 29, 47, 65)

3. Cause of Action – The cause of action for a cheque dishonour case is determined by the place where the cheque is presented for collection. (Paras 56, 58, 63)

Subjects:

• Cheque Dishonour – Section 138 of the N.I. Act.

• Jurisdiction – Section 142 of the N.I. Act.

• Transfer of Cases – Section 406 of the Cr.P.C.

• Cause of Action – Place of cheque presentation.

• Reasonable Apprehension – Bias, miscarriage of justice.