(NI Act) Cheque Dishonour Case To Be Filed At Payee’s Bank Location; Accused Cannot Demand Transfer

Supreme Court Ruling on Jurisdiction in Cheque Dishonour Cases

 

The Supreme Court recently addressed key legal questions regarding the jurisdiction of cheque dishonour cases under Section 138 of the Negotiable Instruments (NI) Act and the scope of transfer under Section 406 of the CrPC.

 

Key Issues Considered:

 

1. Jurisdiction: Should the complaint be filed where the cheque is presented or where the drawer maintains an account?

 

 

2. Transfer of Case: Can an accused seek transfer based on personal inconvenience?

 

 

3. Bank’s Jurisdiction Rights: Does the bank’s choice of jurisdiction under Section 142(2) override the accused’s plea for transfer?

 

 

 

Supreme Court's Decision

 

Dismissing the transfer petitions, the Court ruled that jurisdiction lies where the payee’s bank presents the cheque for collection, not where the drawer’s bank is located. It held that personal inconvenience cannot be a ground for transfer under Section 406 CrPC.

 

Key Takeaways from the Judgment

 

The Court relied on Yogesh Upadhaya v. Atlanta Ltd. (2023), reaffirming that complaints must be filed at the payee’s bank location, per the 2015 NI Act amendment.

 

Section 142-A was introduced to ensure consistency by consolidating multiple complaints against the same accused in one court.

 

While Section 406 CrPC allows case transfers, the Court clarified that this power is to be used sparingly, preventing the accused from dictating litigation forums based on convenience.

 

 

Arguments by the Parties

 

Petitioner (M/s Shri Sendhur Agro & Oil Industries):

 

The cheque was drawn, issued, and dishonoured in Coimbatore, making Chandigarh an inconvenient forum.

 

Filing in Chandigarh was a deliberate harassment tactic by the complainant bank.

 

Attending proceedings in Chandigarh posed undue travel and language barriers.

 

Parallel SARFAESI proceedings in Coimbatore made the Chandigarh case unnecessary.

 

 

Respondent (Kotak Mahindra Bank Ltd.):

 

The bank had the legal right to present the cheque in Chandigarh, which established jurisdiction.

 

The accused defaulted on multiple payments, and the complaint was lawful.

 

Personal inconvenience does not justify transfer under Section 405 CrPC.

 

 

Legal Precedents Cited

 

Dashrath Rupsingh Rathod v. State of Maharashtra (2014): Jurisdiction lies where the cheque is presented and dishonoured.

 

Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016): Reinforced the 2015 NI Act amendment restricting jurisdiction to the payee’s bank location.

 

A.E. Premanand v. Escorts Finance Ltd. (2004): Established that transfer petitions in NI Act cases should be granted only in exceptional circumstances.

 

 

Conclusion

 

With this ruling, the Supreme Court has reaffirmed that banks can determine jurisdiction by presenting cheques at their chosen branch, ensuring consistency in adjudication. The decision strengthens the position of financial institutions while limiting the accused’s ability to manipulate the forum based on convenience.

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