Supreme Court Rejects Transfer of Section 138 NI Act Cases Filed in Distant State

A Bench of Justices J.B. Pardiwala and R. Mahadevan heard a batch of transfer petitions under Section 406 Cr.P.C. challenging criminal complaints filed under Section 138 of the Negotiable Instruments Act in Chandigarh and sought their transfer to courts in Tamil Nadu. The petitions arose from a complaint by a bank against a Coimbatore-based proprietary concern alleging dishonour of cheques; the petitioners contended that the entire transaction and cause of action had arisen in Coimbatore and that filing in Chandigarh was an abuse of process.

The Court held that the scope of Section 406 Cr.P.C. remained available even after insertion of Section 142(2) and Section 142-A in the Negotiable Instruments Act, but that the power to transfer must be exercised sparingly and only when “expedient for the ends of justice.” The Bench observed that questions of territorial jurisdiction under Section 138 often required evidence and factual determination under Sections 177–184 Cr.P.C., and thus could not be decided on a transfer petition before trial. The Court, in its reasoning, observed: “Therefore, institution of the first two complaint cases before the Courts at Nagpur is in keeping with the legal position obtaining now. However, the contention that the non obstante clause in Section 142(1) of the Act of 1881 would override Section 406 Cr. P.C. and that it would not be permissible for this Court to transfer the said complaint cases, in exercise of power thereunder, cannot be countenanced. ... The power of this Court to transfer pending criminal proceedings under Section 406 Cr. P.C. does not stand abrogated thereby in respect of offences under Section 138 of the Act of 1881, if it is found expedient for the ends of justice.” The Bench concluded that, on the facts presented, no exceptional circumstance arose to displace the complainant’s choice of forum and therefore dismissed the petitions.

Background

The lead petition (T.P. (Crl.) No. 608 of 2024) was filed by M/s Shri Sendhur Agro & Oil Industries through its proprietor, seeking transfer of Criminal Case No. 4016 of 2021 (Kotak Mahindra Bank Ltd. v. M/s Shri Sendhur Agro and Oil Industries) pending before the Judicial Magistrate First Class, Chandigarh, to a Metropolitan Magistrate in Coimbatore. The petitioner pleaded that the overdraft, loan processing, securities and ECS/EMI debits all occurred through the bank’s Coimbatore branch and that SARFAESI and DRT proceedings were already pending in Coimbatore; it alleged harassment and lack of local means to defend in Chandigarh. The bank replied that its collection/routing account for the NPA was located in Chandigarh and that Section 142(2)(a) and its Explanation permitted filing where the cheque was delivered for collection through an account, or where the collecting branch deeming rule applied. The Court recorded earlier interim orders, called upon the bank to explain the choice of Chandigarh, and heard detailed written submissions relying on precedent including Yogesh Upadhaya v. Atlanta Ltd. and earlier transfer jurisprudence.

The Bench reviewed the statutory scheme of Section 138, Section 142 and Section 142‑A of the Negotiable Instruments Act and the scope of Section 406 Cr.P.C., reiterated that transfer jurisdiction under Section 406 required a reasonable apprehension that justice would not be done and must be "expedient for the ends of justice." The Court noted that territorial jurisdiction challenges often raised factual issues requiring evidence and that mere inconvenience, language difficulty or preference did not ordinarily justify transfer. Relying on precedents, the Court held that while Section 142(2) clarified venue rules, the non obstante clause in Section 142(1) did not oust the Supreme Court’s transfer power. Applying those principles to the record, the Court found no material to show the kind of prejudice or risk of miscarriage of justice that would warrant transfer and therefore dismissed the petitions, recording that “the petition fails and is hereby dismissed.” The Court left open the right to raise territorial-jurisdiction issues before the trial court and to seek personal‑appearance exemptions or virtual attendance.

Case Details: Case No.: 2025 INSC 328 Case Title: M/s Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd. (Transfer Petn. Crl. No.608 of 2024 and connected T.P.(Crl.) Nos. 670/2024, 761/2024, 662/2024, 977/2024, 850/2024) Appearances: For the Petitioner(s): Mr. Nikhil Goel, Senior Counsel For the Respondent(s): (Learned counsel for Kotak Mahindra Bank — name not specified in the judgment)