S.138 NI Act Complaint Cannot Be Transferred Under S.406 CrPC For Lack Of Territorial Jurisdiction : Supreme Court

The Supreme Court today(March 6) held that a case under the Negotiable Instrument Act, 1881 (NI Act) cannot be transferred from one place to another for the lack of jurisdiction under Section 406(Power of Supreme Court to transfer cases and appeals) of the Code of Criminal Procedure. 

A batch of transfer petitions were filed before the Supreme Court seeking transfer to a Court having territorial jurisdiction to try the said complaints under the NI Act. A bench of Justices J.B. Pardiwala and R. Mahadevan addressed the transfer petitions on three issues, namely: 

1. Whether a complaint filed under Section 138 of the NI Act can be transferred from one Court to another in the exercise of powers under Section 406 of the CrPC on the ground of lack of territorial jurisdiction of the Court in which the complaint is filed.

2. Assuming that the Court lacks territorial jurisdiction to try the same, is it permissible for this Court in the exercise of powers under Section 406 CrPC to transfer the said complaint to the Court having terroritial jurisdiction. 

3. Whether the expression "that for the ends of justice" means that this Court can transfer any criminal case or appeal to any Court in Section 406 CrPC

Answering in negative, the Court ordered:

 "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 406CrPC, the case must fall under the ambit of the expression 'expedient for the ends of justice',"Jusitce Pardiwala said while pronouncing the judgment.

In Paragraph 49 of the judgment, the Court observed that "an order of transfer of trial is not to be passed as a matter of routine and more particularly on the plea of lack of territorial jurisdiction of the court to try the offence under Section 138 of the N.I. Act."

Mere inconvenience no ground to transfer

The Court further held that mere hardship of the accused is not a ground to transfer.

"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 situation as narated in paragraph 49 of this judgment. It is always open for the petitioner accused to pray for the exemption from personal experience or request the Court to be permitted to join the proceedings online," the Court pronounced.

In the light of the order, all transfer petitions have been disposed of. As per the brief facts, a loan transaction was entered into at Coimbatore against the equitable mortgage of properties located at Coimbatore and money was also deposited at Coimbatore by the petitioner. However, the respondent-Bank has chosen to institute the proceedings under Section 138 of the NI Act, at Chandigarh.

When can cases be transferred?

The Court illustrated the following circumstances which justify the transfer of a case as per Section 406 CrPC.

(i) when it appears that the State machinery or prosecution is acting hand in glove with the accused, and there is likelihood of miscarriage of justice due to the lackadaisical attitude of the prosecution;

(ii) when there is material to show that the accused may influence the prosecution witnesses or cause physical harm to the complainant;

(iii) comparative inconvenience and hardships likely to be caused to the accused, the complainant/the prosecution and the witnesses, besides the burden to be borne by the State exchequer in making payment of travelling and other expenses of the official and non-official witnesses;

(iv) a communally surcharged atmosphere, indicating some proof of inability in holding a fair and impartial trial because of the accusations made and the nature of the crime committed by the accused; and

(v) existence of some material from which it can be inferred that some persons are so hostile that they are interfering or are likely to interfere, either directly or indirectly, with the course of justice

Case Details: M/S SHRI SENDHURAGRO AND OIL INDUSTRIES PRANAB PRAKASH v. KOTAK MAHINDRA BANK LTD.|1503 T.P.(Crl.) No. 608/2024 and others 

Citation : 2025 LiveLaw (SC) 292

Click here to read the judgment