Transfer of proceedings under Section 138 of the N.I. Act should consider the relative convenience of parties, especially in cases where there is a significant disparity in their socio-economic status.

ORDER :

1. The transfer petition depicts a David versus Goliath battle between a gargantuan bank having its branches spread throughout the country and a small-time borrower carrying on business in Adoni, District Kurnool, Andhra Pradesh.

FACTUAL MATRIX

2. Petitioner No. 1, Golla Naraesh Kr. Yadav, is proprietor of M/s Hari Cotton Traders and its sister concern, M/s Hari Cotton Ginning Pressing Factory. In 2021-2022, both firms obtained overdraft and loan facilities to the tune of Rs. 3 crores and Rs. 7 crores, respectively, from the respondent Bank through its branch at Adoni. Petitioners stood as guarantors and issued cheques in favour of the respondent Bank. In the course of business, it is alleged the overdraft facility was not serviced, and in April 2023, the Bank declared the account as a NonPerforming Asset (NPA).

3. Respondent Bank initiated proceedings under the SARFAESI Act, 2002¹[Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Hereinafter, ‘SARFAESI Act’.], which were challenged by the petitioners before the Debt Recovery Tribunal at Hyderabad²[S.A. No. 397 of 2023.] (DRT). Respondent Bank also instituted OA No. 787 of 2023 under Section 19 (4) of Recovery of Debts and Bankruptcy Act, 1993³[Hereinafter, ‘RDB Act’.] before the DRT. Proceedings were also instituted before the High Court of Andhra Pradesh challenging the respondent Bank’s decision to declare the firm’s account as NPA⁴[W.P. No. 16295 of 2024.].

4. In the meanwhile, cheques issued by Petitioner No.(s) 1 and 2, amounting to Rs.3 crores and Rs.6 crores respectively, drawn on their accounts maintained at Adoni branch of HDFC Bank and respondent Bank, were presented by respondent Bank at Chandigarh. Upon dishonour of the said cheques, subject criminal proceedings⁵[Complaint No. 23195 of 2023 and Complaint No. 23197 of 2023.] under Section 138 of the Negotiable Instruments Act, 1881⁶[Hereinafter, ‘N.I. Act’] were instituted before Court of Chief Judicial Magistrate, Chandigarh.

5. This has prompted the petitioners to approach this Court praying for transfer of the said cases from Chief Judicial Magistrate, Chandigarh to the Court of Metropolitan Magistrate, Adoni, Kurnool, Andhra Pradesh.

ARGUMENTS AT THE BAR

6. In support of such prayer, petitioners contend the entire transaction between the parties took place at Andhra Pradesh and a number of proceedings arising out of the same transaction are pending inter se at DRT, Hyderabad and in the High Court of Andhra Pradesh. Petitioners further contend continuation of the said proceedings in Chandigarh would cause irreparable injury to them, as they would have to travel a distance of over 2000 km and would find it difficult to secure legal assistance and defend themselves at a far-off place where the proceedings are conducted in a different language.

7. In rebuttal, the respondent Bank referring to Section 142 (2) of N.I. Act contends the prosecutions were instituted in the court within whose territorial jurisdiction the dishonoured cheques were presented for collection and mere inconvenience of distance or language cannot be a ground for transfer. In support of their plea, they rely on Shri Sendhur Agro & Oil Industries vs. Kotak Mahindra Bank Ltd., (2025) SCC OnLine SC 508

PRINCIPLES GOVERNING TRANSFER OF CASES UNDER SECTION 138 OF N.I. ACT

8. Section 142 of the N.I. Act provides for cognizance of any offence under Section 138 of the Act. Prior to its ame