Delhi High Court Dismisses Writ Petitions for Lack of Territorial Jurisdiction in Bank Fraud Cases

In a significant ruling concerning the application of territorial jurisdiction, the Delhi High Court today dismissed two writ petitions filed against the Bank of India and Punjab National Bank. The petitions, filed by Pune Buildtech Pvt Ltd and Majestic Infracon Pvt. Ltd., challenged the banks’ decision to declare their accounts as ‘fraud’ under the RBI Master Circular on the Classification and Reporting of Fraud dated 01.07.2016.

Justice Purushaindra Kumar Kaurav, presiding over the matter, held that the Delhi High Court lacks territorial jurisdiction to entertain these writ petitions. The Court emphasized the importance of the ‘cause of action’ in determining jurisdiction, stating, “The Court examines whether essential facts constituting the cause of action arose within its jurisdiction.”

This observation is crucial as it underscores the principle that not every fact in a dispute confers jurisdiction upon a court. The judgment further elaborated that “the convenience of the parties cannot be the sole criterion for the determination of jurisdiction considering the broader perspective of dynamism of technology and increased access to justice.”

The key contention revolved around the jurisdiction of the Delhi High Court in cases where the primary actions under scrutiny – including loan agreements and the declaration of accounts as fraud – occurred outside its territorial limits, particularly in Mumbai.

The petitions were dismissed, with the Court advising the parties to approach the appropriate jurisdictional High Court. The Court clarified that its decision was strictly on jurisdictional grounds, without delving into the merits of the cases.

 Date of Decision: 19.12.2023

 PUNE BUILDTECH PVT LTD VS BANK OF INDIA