Cheque Dishonour Complaint Maintainable at Payee’s Bank Location; Accused’s Convenience Not a Ground for Transfer: Supreme Court

The Supreme Court had ruled that a cheque dishonour complaint is maintainable at the payee’s bank location and that the accused cannot seek transfer on grounds of inconvenience.

On 06-03-2025, in a landmark judgment, the Supreme Court Bench of Justice J.B. Pardiwala and Justice R. Mahadevan reviewed multiple Transfer Petitions and held that under Section 138 read with Section 142(2) of the N.I. Act, the territorial jurisdiction to try cheque dishonour cases lies with the court where the payee’s bank is located. The Court further ruled that mere inconvenience or availability of alternative forums does not justify transfer under Section 406 Cr.P.C., as objections to jurisdiction must be raised before the trial court based on evidence.

The Supreme Court, while adjudicating multiple transfer petitions involving identical issues, disposed of them through a common judgment, treating Transfer Petition (Criminal) No. 608 of 2024 as the lead case. The petitioner, a proprietary concern, sought the transfer of Criminal Case No. 4016 of 2021, filed by Kotak Mahindra Bank Ltd. under Section 138 of the Negotiable Instruments Act, 1881, from the Judicial Magistrate Ist Class, Chandigarh, to the Metropolitan Magistrate, Coimbatore, Tamil Nadu. The petitioner contended that all relevant transactions occurred in Coimbatore and that the jurisdiction of Chandigarh was inapplicable under Section 142 of the N.I. Act. The Court initially stayed further proceedings in Chandigarh and later sought clarification from the bank regarding the choice of jurisdiction.

The petitioner argued that the Supreme Court’s transfer powers under Section 406 of the Cr.P.C. should be exercised in the interest of justice, citing the introduction of Section 142A in the N.I. Act and past precedents that allowed transfer petitions where multiple proceedings arose from the same transaction. The petitioner alleged that the bank’s jurisdictional choice was an abuse of process, especially as related proceedings under the SARFAESI Act were already pending in Coimbatore. Conversely, the bank contended that jurisdiction was proper as the cheque had been presented at its Chandigarh branch. It further argued that the petitioner’s act of filing a transfer petition, instead of seeking quashing, indicated an implicit acknowledgment of jurisdiction. The bank maintained that Section 142A permitted transfer only when multiple complaints from the same transaction required consolidation, which was not the case here.

The Supreme Court analyzed the applicability of its transfer powers under Section 406 Cr.P.C. and reaffirmed that the provision enabled it to transfer cases between High Courts or between subordinate criminal courts under different High Courts when expedient in the interest of justice. The Court emphasized that mere inconvenience, such as distance or language barriers, did not constitute sufficient grounds for transfer. It highlighted that territorial jurisdiction in criminal cases, governed by Sections 177 to 184 of the Cr.P.C., depended on evidence establishing relevant facts, and objections to jurisdiction should be raised before the trial court.

The Court, relying on its precedents, held that the jurisdiction to try an offence under Section 138 of the N.I. Act was vested in the court where the cheque was delivered for collection at the payee’s bank. It rejected the petitioner’s argument that no part of the cause of action had arisen in Chandigarh, as the law explicitly permitted complaints to be filed in the jurisdiction of the bank’s collection branch. The Court also clarified that the non obstante clause in Section 142(1) of the N.I. Act did not override its transfer powers under Section 406 Cr.P.C. Ultimately, the Court dismissed the transfer petition, holding that the issue of territorial jurisdiction could be raised before the trial court, which was competent to determine it based on evidence. No costs were awarded.

---

Subscribers can access the Case, including Case Analysis, Ratio Decidendi, Headnotes, Briefs, Case Research, Cited Case Laws, Case Law Cross-references, and the latest updates on Statutes, Notifications, Circulars, Guidelines, Press Releases and more.

Click on the following Citation/Link to access these resources:

REEDLAW 2025 SC 03002