The Supreme Court of India, on March 6, ruled that a case under the Negotiable Instrument Act, 1881 (NI Act), cannot be transferred from one place to another due to lack of territorial jurisdiction under Section 406 of the Code of Criminal Procedure (CrPC).
A series of transfer petitions had been submitted to the Supreme Court, seeking to shift cases to a court that holds proper territorial jurisdiction to adjudicate complaints under the NI Act. A bench comprising Justices J.B. Pardiwala and R. Mahadevan examined three key legal questions:
- Can a complaint under Section 138 of the NI Act be transferred from one court to another using the powers granted under Section 406 of the CrPC on the basis of territorial jurisdiction?
- If a court lacks territorial jurisdiction, does the Supreme Court have the authority under Section 406 CrPC to transfer the complaint to a court with proper jurisdiction?
- Does the phrase "for the ends of justice" in Section 406 CrPC imply that the Supreme Court has the power to transfer any criminal case or appeal to any court?
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Answering these questions in the negative, the Court made it clear that territorial jurisdiction cannot be a ground for transferring a case under Section 406 CrPC.
"Our final conclusion is, we have made ourselves very clear that the territorial jurisdiction issue cannot be raised for the purpose of Section 406 CrPC. For the purpose of any transfer of case or proceedings under Section 406 CrPC, the case must fall under the ambit of the expression 'expedient for the ends of justice'."
The Court also ruled that mere inconvenience or hardship faced by the accused in traveling is not a sufficient ground for transfer of the case under Section 406 CrPC.
"Mere convenience or hardship that the accused may have to face in travelling from Coimbatore to Chandigarh would not fall within the expression 'expedient for the ends of justice'. The case must fall within any of the five situations as narrated in paragraph 49 of this judgment."
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Instead, the Court suggested that the accused has the option to seek exemption from personal appearances or request to participate in the proceedings through an online platform.
Background of the Case
The case originated from a loan transaction that took place in Coimbatore. The petitioner had deposited money in Coimbatore, and the loan was secured through an equitable mortgage of properties located in the same city. However, the respondent bank—Kotak Mahindra Bank—initiated proceedings under Section 138 of the NI Act in Chandigarh, prompting the petitioner to file a transfer petition.
In light of the Supreme Court’s ruling, all transfer petitions related to this case have been dismissed.
Case Title: M/S SHRI SENDHURAGRO AND OIL INDUSTRIES PRANAB PRAKASH v. KOTAK MAHINDRA BANK LTD.
Case Number: T.P.(Crl.) No. 608/2024 and others
