Court of the place where cheque is presented have jurisdiction to entertain complaint under Section 138 of the N.I. Act.
In a recent judgment, Hon’ble Supreme Court has held that court of the place where cheque is presented for collection, will have jurisdiction to entertain complaint alleging the commission of offence punishable under Section 138 of the N.I. Act.
ABCAUS Case Law Citation:
4451 (2025) (03) abcaus.in SC
In the instant case, a transfer petition was filed under Section 406 of the Code of Criminal Procedure, 1973 (the CrPC) is at the instance of a proprietary concern through its proprietor with a prayer to transfer a criminal case pending in the court of Judicial Magistrate in Chandigarh to the court of Metropolitan Magistrate in another state.
The Petitioner had obtained loan from the respondent bank and cheques issued towards payment of EMI was dishonoured giving rise to the complaint filed by the bank under Section 138 of the Negotiable Instruments Act, 1881 (the N.I. Act).
The ground taken by the Petitioner was that no cause of action could be said to have arose for the respondent bank to lodge the complaint for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (the N.I. Act) in Chandigarh.
It was stated that the transaction between the Petitioner and the Respondent wholly happened in Coimbatore and the Courts in Coimbatore alone will have the jurisdiction to entertain the criminal complaint. That the Petitioner holds a savings Account in the Respondent’s Coimbatore Branch and the loan was also processed in the same branch. All the previous EMI were also deducted from her Bank Account in Coimbatore and credited to the loan account maintained in the Coimbatore Branch. Therefore, the Court in Chandigarh will have no jurisdiction to entertain the present Criminal Complaint.
It was further submitted that under Section 142 of the Act the Court within whose jurisdiction the Bank where the Cheque, is presented for collection or where the Cheque is presented for payment alone has the Jurisdiction to entertain the complaint under Section 138 of the Act. Whereas the present Complaint does not satisfy any of the conditions under the Section 142.
It was also the case of the Petitioner that the Petitioner had opted to repay the EMI through automatic deduction facility and the same gets credited automatically into the loan account maintained by the Branch office in Chennai. The automatic deduction for the EMI is not branch specific. Therefore, the same does not satisfy the conditions under Sec. 142 for filing the complaint under Section 138 of the Act in Chandigarh.
The Hon’ble Supreme Court opined that although no rigid and inflexible rule or test could be laid down to decide whether or not the power under Section 406 Cr.P.C should be exercised, yet it is manifest from a bare reading of sub-sections (2) and (3) of the said section and on an analysis of the decisions of the Court that an order of transfer of trial is not to be passed as a matter of routine and more particularly on the plea of lack of territorial jurisdiction of the court to try the offence under Section 138 of the N.I. Act. This power has to be exercised cautiously and in exceptional situations, where it becomes necessary to do so to provide credibility to the trial. The Hon’ble Supreme Court laid down some broad factors which could be kept in mind while considering an application for transfer of the trial.
The Hon’ble Supreme Court observed that 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 laid down. 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.
The Hon’ble Supreme Court opined 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 has to be guided by principles that would achieve the ends of justice. The meaning of “ends of justice” essentially refers to justice for all the parties involved in the litigation.
The Hon’ble Supreme Court observed that 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..
The Hon’ble Supreme Court noted that the petitioner alleged that only with a view to harass and cause inconvenience, the respondent Bank had lodged the complaint in Chandigarh. Whereas the Bank said that the law permits it to file the complaint in Chandigarh as the collection centre of the Bank is in Chandigarh. According to the Bank, the law permits filing of such a complaint at the place where a cheque is delivered for collection at any branch of the Bank of the payee or holder in due course, as the cheque is 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 , has an account maintained.
The Hon’ble Supreme Court held that a conjoint reading of Section 142(2)(a) along with the explanation thereof, makes the position emphatically clear 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 N.I. Act.
The Hon’ble Supreme Court opined that 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.
The Hon’ble Supreme Court observed that, while contending that the court in Chandigarh lack the jurisdiction to entertain the case, it was not the case of the petitioner that the respondent Bank has no collection branch in Chandigarh.
Accordingly, the Petition was dismissed.
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