Mere Inconvenience Cannot Override Statutory Jurisdiction in Cheque Bounce Cases: Supreme Court Rejects Transfer Petition

Where the Cheque is Delivered for Collection, That Court Has Jurisdiction – Supreme Court Upholds Territorial Jurisdiction Under Section 142(2) of the NI Act. In a significant ruling Supreme Court of India dismissed a series of transfer petitions seeking to shift cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) from Chandigarh to Coimbatore. The Court made it unequivocally clear that mere inconvenience of the accused cannot be a valid ground for transfer when the complainant has filed the case in a court that has territorial jurisdiction under the law.

While deciding the case M/s Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd., along with other connected transfer petitions, a bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan ruled, "For the purpose of transfer under Section 406 CrPC, the case must fall within the ambit of the expression ‘expedient for the ends of justice.’ Mere inconvenience or hardship faced by the accused in traveling cannot justify the shifting of proceedings, particularly when the law itself allows the complainant to institute the case in a particular jurisdiction."

The Court rejected the petitioner’s argument that no part of the cause of action arose in Chandigarh and affirmed that under Section 142(2)(a) of the NI Act, a cheque dishonor case can be initiated in the jurisdiction where the cheque was delivered for collection, not just where it was drawn or dishonored.

"Jurisdiction is Determined by Law, Not by the Convenience of the Accused" – Supreme Court Interprets Section 142(2) of the NI Act
The dispute centered around the jurisdiction of courts in cases arising under Section 138 of the NI Act, specifically in light of the 2015 amendment to Section 142(2)(a), which explicitly provides that an offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction the cheque was delivered for collection through an account.

The petitioner contended that since the cheque was drawn and dishonored in Coimbatore, the trial should take place there, rather than in Chandigarh. The Supreme Court rejected this argument, ruling:

"The law is clear. Where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, it shall be deemed to have been delivered to the branch where the payee maintains the account. The court at such a place has jurisdiction to try the complaint under Section 138."

The Court emphasized that the 2015 amendment was enacted to resolve jurisdictional conflicts after the Supreme Court’s ruling in Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129, which had initially restricted jurisdiction to where the drawee bank was located. The judgment noted, "The amendment to Section 142(2) was introduced to address the inconvenience faced by payees, ensuring that complaints could be filed where the cheque was delivered for collection. The petitioner cannot now claim that such jurisdiction is unfair or inconvenient."

The Court reaffirmed its ruling in Bridgestone India Private Limited v. Inderpal Singh (2016) 2 SCC 75, which held that jurisdiction for initiating proceedings under Section 138 of the NI Act lies in the court where the cheque is delivered for collection.

"Accused Cannot Dictate the Place of Trial by Claiming Hardship" – Supreme Court Denies Transfer on Grounds of Convenience
The petitioner argued that traveling from Coimbatore to Chandigarh for trial would cause undue hardship, citing logistical difficulties and language barriers. The Supreme Court dismissed this contention, holding:

"The accused cannot demand a transfer merely because another court also has jurisdiction. The complainant’s right to initiate proceedings in a legally competent forum must be respected. If travel is an issue, the accused may seek an exemption from personal appearance or request virtual participation, but this cannot be a ground to shift the trial."

The Court stressed that territorial jurisdiction in criminal cases is a matter of law, not convenience. It ruled, "When the law expressly confers jurisdiction upon a particular court, it is not open to the accused to insist that another court, which also has jurisdiction, should be preferred for their personal comfort."

Rejecting claims that the complainant bank filed the case in Chandigarh to harass the accused, the Court found that the bank had a legitimate collection branch in Chandigarh, which granted it jurisdiction under the NI Act. It observed: "The law does not allow forum shopping. The complainant must act within the confines of the statute, and in this case, it has done so. The accused cannot claim that statutory jurisdiction is unfair merely because it is inconvenient for them."

"Transfer Under Section 406 CrPC Requires Compelling Grounds, Not Mere Preference" – Supreme Court Lays Down Criteria for Shifting Trials
Examining the broader principles governing transfer of cases under Section 406 of the Code of Criminal Procedure (CrPC), the Supreme Court reaffirmed that transfer is permissible only when there is a real apprehension that justice will not be served at the original forum.

"The purpose of Section 406 CrPC is to ensure a fair trial, not to accommodate the convenience of one party over another. If transfer is granted merely on the accused’s request for convenience, it would open the floodgates for shifting trials to locations of their choosing, defeating the very purpose of statutory jurisdiction."

The Court listed situations where transfer may be warranted, including:

•    "When there is credible evidence that the prosecution is acting in collusion with the accused."
•    "When the accused is in a position to influence witnesses or threaten the complainant."
•    "When there exists a communally charged atmosphere that prevents a fair trial."
•    "When extraneous factors interfere with the judicial process and pose a serious threat to justice."
The Court ruled that none of these circumstances were present in the current case, concluding that "mere inconvenience or hardship is insufficient to justify transfer, especially when the law expressly permits the complainant to file the case in Chandigarh."

"Expeditious Disposal of Cheque Bounce Cases Must Be Ensured" – Supreme Court Emphasizes Need to Prevent Delay Tactics
Dismissing the transfer petitions, the Supreme Court reiterated the need for swift resolution of cheque bounce cases, stating:

"The very purpose of Section 138 of the NI Act is to ensure the sanctity of financial transactions. If cases are delayed due to frivolous transfer requests, the deterrent effect of the law is weakened."

The Court noted that the accused had alternative remedies available, such as seeking exemption from personal appearance or participating via video conferencing, rather than attempting to shift the trial to a preferred jurisdiction.

"The accused has legal remedies to mitigate any inconvenience they may face. However, permitting them to choose their own forum would set a dangerous precedent and encourage unnecessary litigation aimed at stalling justice."

"Supreme Court Reinforces the Primacy of Statutory Jurisdiction in Cheque Dishonor Cases"
The Supreme Court’s ruling establishes a clear precedent on territorial jurisdiction in cheque bounce cases and the limited scope for transferring cases under Section 406 CrPC. The judgment sends a strong message against using transfer petitions as a tool to delay legal proceedings, affirming that:

"The complainant’s right to initiate proceedings under Section 138 of the NI Act in a legally competent jurisdiction must be upheld. The accused cannot misuse procedural provisions to evade accountability."

With this ruling, the Supreme Court has ensured that cheque bounce cases are adjudicated without undue delay, reinforcing trust in financial transactions and upholding the integrity of the judicial process.

Date of Decision: 06 March 2025