A) ABSTRACT / HEADNOTE

This judgment concerns a batch of Section 406 CrPC transfer petitions challenging complaints filed under Section 138 of the Negotiable Instruments Act, 1881 by Kotak Mahindra Bank Ltd. in courts at Chandigarh, while the petitioner-drawer (a proprietorship operating from Coimbatore/Tamil Nadu) contended the entire transaction and prior recovery proceedings occurred in Tamil Nadu and therefore the Chandigarh courts lacked territorial legitimacy.

The principal questions were whether the Supreme Court can transfer a Section 138 complaint under Section 406 CrPC on grounds of territorial jurisdiction, whether lack of territorial jurisdiction alone warrants transfer, and whether the phrase “expedient for the ends of justice” in Section 406 includes jurisdictional defects under Section 142(2) NI Act. After examining the scheme introduced by the Negotiable Instruments (Amendment) Act, 2015 particularly Section 142(2) and Section 142A and recent precedents (including Yogesh Upadhaya v. Atlanta Ltd. and Dashrath Rupsingh Rathod), the Court held that the power under Section 406 CrPC continues to exist but must be exercised sparingly and only where transfer is “expedient for the ends of justice.”

Mere inconvenience, distance, language difficulty or multiplicity of proceedings without evidence of reasonable apprehension that justice will be denied, does not satisfy that standard. The court read Section 142(2)(a) with its Explanation to underscore that jurisdiction exists where a cheque is delivered “for collection through an account” the place of presentation/collection branch is decisive and therefore the Chandigarh filing was permissible; the transfer petitions were dismissed.

Keywords: Section 406 CrPC, Section 138 NI Act, Section 142(2), Section 142A, transfer of criminal cases, territorial jurisdiction, ends of justice.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

This judgment answers recurring litigation problems created by cheque-bouncing prosecutions being instituted in geographically remote fora by banking institutions that maintain multiple collection/processing centres. The petitioner (a coconut-oil producer located at Kangeyam/Coimbatore) availed overdraft facilities processed in Coimbatore, faced SARFAESI recovery and proceedings in Coimbatore/DRT, and allegedly defaulted on EMIs. A complaint under Section 138 NI Act (relating to a cheque for Rs. 21 lakhs) was presented by the bank at its Chandigarh collection branch and a criminal complaint was lodged there.

The petitioner argued that the cause of action and antecedent transactions all occurred in Tamil Nadu and that litigating in Chandigarh caused harassment and inconvenience; the petitioner sought transfer under Section 406 CrPC to a court in Tamil Nadu (Coimbatore/Chennai). The bank relied on Section 142(2)(a)/Explanation and Section 142A to assert Chandigarh was a proper forum because the cheque had been presented/collected through the bank’s Chandigarh collection account.

The constitutional and statutory interplay between Section 142 non- obstante language, the transfer power in Section 406 CrPC, and the remedial object of Section 142A (to prevent multiplicity and to channel subsequent complaints to the first court) guided the Court’s analysis.

D) FACTS OF THE CASE

The petitioner is a proprietorship engaged in coconut-oil production at Kangeyam/Coimbatore. The petitioner obtained an overdraft facility from Kotak Mahindra Bank, processed by the bank’s Coimbatore branch, secured by multiple immovable properties in the Coimbatore/Tiruppur area, and with repayments structured to be debited from the petitioner’s local bank account.

The petitioner defaulted on EMIs (2018), SARFAESI proceedings were initiated and properties were sold in Coimbatore; the petitioner challenged SARFAESI proceedings before the Debt Recovery Tribunal, Coimbatore. Separately, a cheque in favour of the bank for Rs. 21,00,000 was presented by the bank at its Chandigarh collection/processing centre and dishonoured. Thereafter a complaint under Section 138 NI Act was filed before the Judicial Magistrate, Chandigarh (CIS No. NACT/4016/2021); summons issued in 2024.

The petitioner alleges forum-shopping, harassment, language barrier, and safety fears; seeks transfer to Tamil Nadu under Section 406 CrPC. The bank contends it filed where its collection account for NPAs/processing was located, that Section 142(2)(a) and the Explanation support Chandigarh filing, virtual attendance is available, and Section 142A promotes consolidated prosecution.

E) LEGAL ISSUES RAISED

i. Whether a Section 138 NI Act complaint can be transferred under Section 406 CrPC on the ground that the court in which it is filed lacks territorial jurisdiction?
ii. If a trial court lacks territorial jurisdiction under Section 142(2) NI Act, can the Supreme Court in exercise of Section 406 CrPC transfer the complaint to the territorially competent court?
iii. Whether the phrase “expedient for the ends of justice” in Section 406 CrPC subsumes jurisdictional defects alleged in Section 138 NI Act complaints?

F) PETITIONER / APPELLANT’S ARGUMENTS

The petitioner argued that all substantive transactions, repayments, security creation and SARFAESI steps occurred in Coimbatore; thus, institution of criminal proceedings in Chandigarh was unjustified and amounted to misuse of multiple jurisdictions. Invocation of Section 406 CrPC was appropriate because the clause “expedient for the ends of justice” should prevent unfair forum-selection by banks.

The petitioner relied on transfer precedents (e.g., A.E. Premanand, Sri Lakshmi Agencies, Harman Electronics) and urged that Section 142A demonstrates legislative intention to avoid multiplicity and misuse of jurisdiction. The petitioner emphasized inconvenience, language barrier and harassment as cumulative grounds for transfer.

G) RESPONDENT’S ARGUMENTS

The bank defended the choice of forum by pointing to a collection/processing account located in Chandigarh and to Section 142(2)(a) and the Explanation, which render the place of collection decisive. It submitted that Section 406 is discretionary and to be used sparingly; mere convenience, distance or language issues do not satisfy the “ends of justice” threshold. Virtual attendance and procedural remedies (exemptions) were available. The bank also invoked Section 142A to justify filing related complaints at the same place and argued that the petitioner had not alleged any reasonable apprehension of denial of justice.

H) JUDGEMENT

The Court began by recording prior interim orders and the pleadings, then framed three central questions (see E above). It examined the statutory text of Section 138, Section 142(2) and Section 142A and traced legislative history the 2015 amendment aimed at correcting the territorial uncertainty after Dashrath Rupsingh Rathod and channeling subsequent complaints to the court of the first filed case. The Court summarized precedent: K. Bhaskaran (five components of S.138), Dashrath Rupsingh Rathod (focus on place of dishonour), and Yogesh Upadhaya (treatment of S.142(2) and recognition that S.406 CrPC power survives).

The Court reaffirmed that Section 406 CrPC empowers the Supreme Court to transfer when “expedient for the ends of justice” and that such power is discretionary, exceptional and must be supported by reliable material showing reasonable apprehension that justice may not be done if the case proceeds in the chosen forum. The Court held that mere inconvenience, travel burden, language difference, or multiplicity of proceedings without evidence that trial in the chosen forum would cause denial of justice do not meet the high threshold.

The Court analyzed Section 142(2)(a) and its Explanation, concluding that the word delivered is not decisive; what matters is “for collection through an account” effectively the place of presentation/collection branch where the payee/holder maintains an account is decisive. Applying these principles, the Court found that Chandigarh filing was permissible (the bank’s collection account was there) and the petitioner had not shown grounds for reasonable apprehension or any of the specified exceptional situations warranting transfer. Consequently, the transfer petitions were dismissed.

a. RATIO DECIDENDI

The operative ratio is twofold.

First, Section 406 CrPC remains available to transfer Section 138 NI Act complaints, but its exercise is constrained: transfer is permissible only when “expedient for the ends of justice,” shown by reliable material that justice may otherwise be denied not by mere inconvenience or distance.

Second, statutory construction of Section 142(2)(a) and the Explanation confirms that jurisdiction rests where a cheque is presented “for collection through an account” (place of collection/presentation via the payee’s account), and therefore filing at the collection branch’s forum (Chandigarh) is lawful. The petitioner’s case did not establish the exceptional circumstances required to invoke Section 406.

b. OBITER DICTA 

The Court observed obiter that while virtual facilities and procedural exemptions can mitigate hardship, courts must balance convenience of witnesses and parties and guard against tactical forum-shopping by financial institutions. The Court reiterated that Section 142A aims to prevent multiplicity by channeling subsequent complaints to the court where the first complaint resides; but this does not displace S.406 authority in appropriate cases. The judgment stressed judicial caution: transfer orders should not be routine and must be factually grounded.

c. GUIDELINES

1. Section 406 CrPC should be exercised sparingly and only where reliable material demonstrates reasonable apprehension that justice will not be done.

2. Mere inconvenience, travel cost, language differences, or multiplicity must be supported by evidence of prejudice or denial of fair trial to justify transfer.

3. Section 142(2)(a) must be read with the Explanation: the decisive factor is presentation “for collection through an account”, which fixes territorial jurisdiction at the collection/presentation branch.

4. Section 142A must be read as validating consolidation to the first filed court, discouraging fragmented prosecutions.

5. Courts should consider convenience of witnesses, potential for contradictory findings, and whether consolidation will promote efficient and credible adjudication.

I) CONCLUSION & COMMENTS

The decision provides a pragmatic synthesis: it preserves the Supreme Court’s constitutional discretionary power under Section 406 CrPC while giving statutory primacy to the jurisdictional scheme enacted via Section 142(2) and Section 142A of the NI Act. Practically, the judgment reins in transfer petitions based on generalized inconvenience and clarifies that banks may lawfully present cheques at collection centres, thereby invoking territorial jurisdiction of those courts.

For practitioners, the ruling means:

(i) challenge to filing place should focus on demonstrable jurisdictional defect or tangible prejudice,

(ii) affidavits and concrete evidence of bias, risks to fair trial, witness-availability problems or potential for contradictory orders will have persuasive value when seeking transfer, and

(iii) courts and litigants must be conscious of Section 142A’s consolidation objective.

The judgment strikes a careful balance between preventing forum-shopping and protecting accuseds from oppressive multi-jurisdictional prosecutions but it places the evidential burden squarely on the party seeking transfer.

J) REFERENCES

a. Important Cases Referred

1. Yogesh Upadhaya & Anr. v. Atlanta Limited, 2023 SCC OnLine SC 170.

2. Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129.

3. K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510.

4. A.E. Premanand v. Escorts Finance Ltd., (2004) 13 SCC 527.

5. Bhiaru Ram & Ors. v. CBI & Ors., (2010) 7 SCC 799.

6. Kaushik Chatterjee v. State of Haryana & Ors., (2020) 10 SCC 92.

7. Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd., (2009) 1 SCC 720.

b. Important Statutes Referred

1. Negotiable Instruments Act, 1881 — Sections 138, 142, 142A (as amended by the Negotiable Instruments (Amendment) Act, 2015).

2. Code of Criminal Procedure, 1973 — Section 406 (transfer powers).