“Jurisdiction Can't Be Created by Consent: J&K High Court Quashes Trial in ₹60 Lakh Cheque Bounce Case ;‘Mere Participation or Settlement Talks Don’t Vest Court with Power Under NI Act’”
Sanchayita Lahkar
The High Court of Jammu & Kashmir and Ladakh Single Bench of Justice Sanjay Dhar quashed the summoning order passed by the Judicial Magistrate 1st Class (Special Mobile Magistrate), Jammu, in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881. The Court held that the Magistrate lacked territorial jurisdiction to entertain the complaint and directed that the complaint be returned to the complainant for presentation before the competent Magistrate having jurisdiction.
The petitioner challenged the criminal complaint filed against him and his proprietary concern under Section 138 of the Negotiable Instruments Act read with Section 420 of the Ranbir Penal Code, along with the summoning order dated 24.07.2021 issued by the Trial Magistrate at Jammu. The complaint alleged that the petitioner had issued a cheque for Rs. 60 lakhs from his account maintained with Axis Bank, Jammu, in discharge of liability towards the respondent. The cheque was presented for encashment by the respondent through his bank—ICICI Bank Limited.
The cheque was returned unpaid with the endorsement “title of account required” on the dishonour memo dated 30.09.2020. A legal demand notice dated 08.10.2020 was issued by the respondent, but the amount remained unpaid. Based on these allegations, the respondent filed a complaint before the Judicial Magistrate at Jammu, who issued process against the petitioner after considering the complainant’s preliminary evidence submitted via affidavit.
The petitioner assailed the summoning order on two grounds. First, it was argued that the Trial Magistrate lacked territorial jurisdiction because the cheque was presented in the respondent’s ICICI Bank account at Sector 128, Noida, Uttar Pradesh. Second, the petitioner contended that the Magistrate could not have accepted preliminary evidence by way of affidavit without recording the complainant’s statement on oath as per Section 200 of the Code of Criminal Procedure (CrPC).
In response, the respondent’s Senior Counsel submitted that the petitioner had participated in the proceedings for over two years without raising any jurisdictional objection and had even entered into negotiations and made part payment during the proceedings. It was argued that this amounted to acquiescence to the Trial Court’s jurisdiction.
Regarding the mode of recording preliminary evidence, it was submitted that Section 145 of the Negotiable Instruments Act permitted affidavits to be accepted as evidence in trials or inquiries under the Act.
The Court noted from the dishonour memo that the respondent’s bank account was maintained at ICICI Bank, Sector 128, Gautam Budh Nagar, Noida, Uttar Pradesh. It referred to Section 142(2) of the Negotiable Instruments Act, which stipulates that offences under Section 138 shall be inquired into and tried only by the court within whose local jurisdiction the cheque is delivered for collection through an account, or where the drawee maintains the account if not presented through an account.
Justice Dhar quoted the statutory language of Section 142(2), observing that under clause (a), jurisdiction lies where the payee or holder maintains an account through which the cheque is presented for collection. Clause (b) covers scenarios where the cheque is presented otherwise than through an account, locating jurisdiction at the place of the drawer’s bank.
The Court further relied on the Supreme Court’s decision in Bridgestone India Pvt. Ltd. v Inderpal Singh, (2016) 2 SCC 75, which stated that the amended Section 142(2), including its Explanation, governed jurisdiction in cheque dishonour cases. It also cited Sh. Sendhuragro and Oil Industries v Kotak Mahindra Bank Limited, 2025 LiveLaw SC 292, where the Supreme Court clarified that “what is of significance is the expression ‘for collection through an account’” and that the presentation of the cheque for collection at a bank branch determines jurisdiction.
The Court noted that the complainant had presented the cheque in his account maintained at ICICI Bank, Sector 128, Noida, which fell outside the territorial jurisdiction of the Magistrate at Jammu. Therefore, the conditions of Section 142(2) were not satisfied for the Jammu Court to exercise jurisdiction.
Addressing the respondent’s argument of acquiescence, the Court observed that judgments relied upon by the respondent involved arbitration and special statutes, and in those cases, jurisdiction was challenged after final adjudication. In the present matter, proceedings were still at an early stage, with only affidavits submitted and no cross-examination conducted. The Court noted that “a Court which lacks inherent jurisdiction to entertain a case cannot be vested with jurisdiction by consent of the parties.”
Since the lack of jurisdiction was dispositive, the Court held it unnecessary to address the petitioner’s second argument regarding the mode of recording preliminary evidence.
The Court stated that “from a perusal of the aforesaid provision, it is clear that a complaint for offence under section 138 Negotiable Instruments Act can be inquired into and tried only by the court within whose local jurisdiction a cheque is delivered for collection i.e. the branch of the bank of the payee or the holder in due course.”
Quoting the judgment in Sh. Sendhuragro and Oil Industries v Kotak Mahindra Bank Limited, the Court recorded:
“62. A conjoint reading of Section 142(2)(a) along with the explanation thereof, makes the position emphatically clear that, when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, as the case may be, maintains the account then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and the court of the place where such cheque was presented for collection, will have the jurisdiction to entertain the complaint alleging the commission of offence punishable under Section 138 of the N.I. Act.”
It further noted:
“The provisions contained in section 177 of the Cr.P.C. do not apply to cases under Negotiable Instruments Act while determining the territorial jurisdiction of a court because Section 142 of the Negotiable Instruments Act begins with a non obstinate clause and Section 142 (2) uses the expression ‘only’.”
On the issue of acquiescence, the Court stated:
“Even otherwise a Court which lacks inherent jurisdiction to entertain a case cannot be vested with jurisdiction by consent of the parties.”
The Court quashed the summoning order and directed that the complaint be returned to the respondent for presentation before the appropriate court having jurisdiction.
“The petition is allowed and the impugned order passed by the learned Trial Magistrate on 24.07.2021 is set aside on the ground of lack of territorial jurisdiction.”
“The learned Trial Magistrate shall return the complaint to the respondent/complainant along with original documents for its presentation before the competent Magistrate having jurisdiction. It shall be open to the respondent/complainant to seek condonation of delay in filing the complaint before the Magistrate having jurisdiction.”
Advocates Representing the Parties
For the Petitioners: Mr. Vishal Kapoor, Advocate
For the Respondents: Mr. Sunil Sethi, Senior Advocate with Mr. Navyug Sethi, Advocate
Case Title: Aditya Malhotra Prop. M/s ANN Infrastructure v Dharminder Singh
Case Number: CRM(M) No. 967/2022
Bench: Justice Sanjay Dhar
[Read/Download order]
