1. Loan default — Cheque dishonour — Complaints under Section 138, NI Act — Petition for transfer of criminal proceedings to a different jurisdiction. (Para 1 , 2 , 3 , 4 , 5 )
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2025 Supreme(SC) 2003
SUPREME COURT OF INDIA
Surya Kant, Joymalya Bagchi, JJ.
Golla Naraesh Kumar Yadav etc. – Petitioner
Versus
Kotak Mahindra Bank – Respondent
Transfer Petition (Crl.) Nos. 204-205 of 2025
Decided On : 13-11-2025
Advocates Appeared:
For the Petitioner: Mr. P. Mohith Rao, AOR, Ms. J. Akshitha, Adv., Mr. Eugene S Philomene, Adv.
For the Respondent: Mr. Palash Singhai, AOR
For the Petitioner: Mr. P. Mohith Rao, AOR, Ms. J. Akshitha, Adv., Mr. Eugene S Philomene, Adv.
For the Respondent: Mr. Palash Singhai, AOR
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.
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Negotiable Instruments Act, 1881 - Section 138 - Transfer of criminal cases - Petitioners, small borrowers, sought transfer of proceedings from Chandigarh to Hyderabad to avoid undue hardship and ensure fair trial rights, given the large distance and related pending cases in Hyderabad. Court found merit in petitioner's arguments due to their unequal standing against a large bank. (Paras 6, 27)
(B) Transfer of cases - Convenience of parties - The balance of relative convenience must be considered, especially when the parties differ significantly in status. A transfer to ease the burden on the accused may be warranted if it does not severely inconvenience the complainant. (Paras 24, 25)
(C) Jurisdiction under Section 138 - The court emphasized that jurisdiction should account for where the cheque was presented and the legislative intent to assure the payee's convenience was paramount but acknowledged that transfers can occur for justice's sake. (Paras 8, 12)
(D)
Findings of Court:
Transfer proceedings were to be shifted to Chief Metropolitan Magistrate, Hyderabad, balancing convenience for both parties. (Para 27) (E)
Result: Matters referred to Chief Justice for forming a Larger Bench.
Legal Category Hierarchy
Table of Contents
2. Petitioners claim hardship due to distance and language; Respondent Bank asserts statutory jurisdiction under Section 142(2), NI Act, arguing inconvenience is insufficient for transfer. (Para 6 , 7 )
3. Transfer depends on relative convenience and socio-economic disparity between parties to ensure fair trial rights and adequate legal representation for the accused. (Para 15 , 16 , 17 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 )
4. Statutory jurisdiction under Section 142(2), NI Act does not preclude transfer under Section 406 CrPC/446 BNSS if expedient for the ends of justice and fair trial. (Para 12 , 24 )
5. Proceedings transferred to a different court; matter referred to a Larger Bench for definitive opinion. (Para 26 , 27 )
6. Does Section 142(2) of the NI Act preclude the transfer of cases by higher courts?
No. Despite the non obstante clause in Section 142(2), the power of the Supreme Court and High Courts to transfer criminal cases under Section 406 CrPC (now 446 BNSS) remains intact if such transfer is found expedient for the ends of justice. (Para 12 )
7. What factors determine if a transfer is expedient for the ends of justice in Section 138 NI Act cases?
The court considers relative convenience and inconvenience of all stakeholders, including witnesses. In cases of significant socio-economic disparity between a large corporation and a small individual, the need for the accused to secure adequate legal representation may outweigh the complainant's statutory jurisdictional preference. (Para 17 , 20 , 24 )
8. Is mere inconvenience or hardship of the accused a sufficient ground for transfer?
While mere inconvenience may not always suffice, it must be weighed against the complainant's rights. When distance severely impacts the accused's fundamental right to legal assistance and a fair trial, it becomes a valid ground for transfer. (Para 16 , 21 , 23 , 24 )
9. How does the nature of the offence under Section 138 NI Act influence the decision to transfer?
The offence is quasi-criminal, compoundable, and primarily against an individual rather than the state. Therefore, shifting the trial venue does not typically impact societal interests and is judged primarily on the relative convenience of the parties. (Para 19 )
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 amendment in 2015,8[Post the 2015 amendment, Section 142 was re-numbered as sub-section (1), and sub-section (2) was inserted thereafter.] the said provision did not deal with the territorial jurisdiction of the court entitled to try such offence. Such territorial jurisdiction was to be determined under the general law i.e., Chapter XIII of the CRIMINAL PROCEDURE CODE , 1973. Section 177 of the Code9[Corresponding to Section 197 BNSS ] provides that an offence shall be enquired into and tried by a court within whos
