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Jurisdiction of Courts u/s 142 of NI Act to try cheque bounce cases clarified by Supreme Court of India

The Hon’ble Supreme Court of India in M/S Himalaya Self Farming Group Vs. M/S Goyal Feed Suppliers [Transfer Petition Criminal No. 273 of 2020] held that the court within whose jurisdiction the branch of the bank where payee maintains the account is situated, will have jurisdiction to try the offence under the Negotiable Instruments Act, 1881, (“Act”) if the cheque is delivered for collection through an account.

 

Background:

The petitioner approached the court by filing a petition u/s 406 of CrPC contending that under the delivery challan all disputes between the parties will be subjected to the jurisdiction of Silliguri and there was no reason to lodge complaint in agra other than the ulterior motive to harass the petitioner.

 

Relevant Provisions:

Through the Negotiable Instruments Amendment Act, 2015, Section 142 of the act was amended to introduce the following provision –

“(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,—

(a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be,maintains the account, is situated; or

(b) if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.”

 

Held/Observation –

The bench headed by Hon’ble Justice V. Ramasubramanian , while examining a Transfer Petition observed that, “If the delivery challan which states that all disputes will be subject to the jurisdiction of courts in Siliguri, is construed by the petitioners to constitute a bar for the courts in any other jurisdiction to entertain the proceedings, it is always open to the petitioners to raise this point before the Agra Court. This cannot be a ground for seeking transfer.”

It was further observed by the Hon’ble Apex Court that “The fact that the petitioners have made a prior complaint to the police about the loss that he sustained on account of the poor quality of feed supplied by the respondent herein cannot be a ground to seek the transfer of the proceedings under Section 138.”

The Apex Court while dismissing the Transfer Petition held that “The fact that the respondent has its Head Office at Siliguri and that there is no reason why it chose to file a complaint in Agra except to harass the petitioners, cannot also be a ground for seeking transfer. Under Section 142(2)(a) of the Negotiable Instrument Act, the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated, will have jurisdiction to try the offence, if the cheque is delivered for collection through an account. Therefore, all the grounds on which the petitioners seek transfer, are unsustainable.”

Click here to read the judgement

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