Supreme Court Upholds Jurisdiction of Courts Where Collection Branch of Bank Falls Under Section 142 NI Act

New Delhi, March 6, 2025: The Supreme Court has reaffirmed that under Section 142(2)(a) of the Negotiable Instruments Act, 1881 (NI Act), a complaint under Section 138 NI Act can be filed before the court within whose jurisdiction the collection branch of the bank is located.

Dismissing a Transfer Petition filed under Section 406 CrPC, the Apex Court ruled that the petitioner’s claim regarding lack of territorial jurisdiction in Chandigarh holds no merit as the law itself permits filing of complaints where the collection branch is situated.

A Bench comprising Justices J.B. Pardiwala and R. Mahadevan delivered the ruling in the case M/s Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd. (2025 INSC 328).

The petitioner, a proprietary concern, had sought the transfer of Criminal Case No. 4016 of 2021 from Chandigarh to Coimbatore, Tamil Nadu, arguing that no part of the cause of action arose in Chandigarh.

SC Rejects Transfer Petition, Affirms Jurisdiction of Collection Branch

Issues Before the Supreme Court

The Apex Court considered the following legal questions:

• Whether a complaint under Section 138 NI Act can be transferred under Section 406 CrPC on the ground of lack of territorial jurisdiction?
• If a court lacks jurisdiction, can the Supreme Court transfer the case to the appropriate jurisdiction?
• Does “expedient for the ends of justice” under Section 406 CrPC include a situation where a court lacks territorial jurisdiction?

Supreme Court’s Observations

The Bench clarified that a cheque presented for collection at any branch of the payee’s bank shall be deemed to have been delivered to that branch, which determines the jurisdiction under Section 142(2)(a) NI Act.

Referring to the law, the Court noted that the word “delivered” is not of significance, but rather the phrase “for collection through an account” is crucial.

The place where the cheque is presented for collection, through the account of the payee or holder in due course, is decisive for determining jurisdiction.

The Supreme Court rejected the petitioner’s claim that the case should be transferred to Coimbatore due to language barriers and convenience.

The Court held that:

• Mere inconvenience or hardship in traveling from Coimbatore to Chandigarh does not qualify as an “expedient for the ends of justice.”
• The accused can seek exemption from personal appearance or request to attend hearings online.

Thus, the Apex Court refused to transfer the case, affirming that Chandigarh had jurisdiction under Section 142(2)(a) NI Act.

SC: Territorial Jurisdiction Cannot Be Sole Ground for Transfer Under Section 406 CrPC

The Supreme Court’s ruling clarifies the jurisdictional aspect of cases under Section 138 NI Act, emphasizing that complaints can be filed where the collection branch of the bank is located.

The Court dismissed the transfer petition, reinforcing that transfer requests under Section 406 CrPC must be based on “expedient for the ends of justice”, not mere inconvenience.

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Case Details

• Case Title: M/s Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd.
• Neutral Citation: 2025 INSC 328
• Bench: Justice J.B. Pardiwala & Justice R. Mahadevan
• Petitioner’s Counsel: Senior Advocate Nikhil Goel with team
• Respondent’s Counsel: Senior Advocate Jayant Mehta with team