Offence U/s. 138 NI Act Should Be Tried By Court Where Cheque Is Delivered For Collection Through Branch Of Payee's Bank: Supreme Court

The Supreme Court was considering an SLP against an order of the High Court affirming the order of the Magistrate Court returning the Complaint for lack of jurisdiction.;

The Supreme Court has reiterated that an offence under Section 138 of the Negotiable Instruments Act can be inquired into and tried only by a local Court in jurisdiction of which the cheque is delivered for collection through an account in the Branch of the Bank where the payee maintains that account.

The Court was considering a Petition for Special Leave to Appeal against an order of the High Court affirming the Magistrate Court's order returning cases registered for cheque dishonour on the grounds of lack of jurisdiction to entertain the complaint cases.

The Bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma held, "As regards territorial jurisdiction for instituting a complaint in relation to dishonor of a cheque, Section 142(2)(a) of the N.I. Act makes it clear that an offence under Section 138 thereof should be inquired into and tried only by a Court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee maintains the account is situated. This provision, as it stands after its amendment in 2015...."

Facts of the Case

The Appellant’s case was that the husband of the Respondent borrowed a sum of Rs.38,50,000/- from him and she stood as a guarantor for the repayment of the loan. She also availed financial assistance from the Appellant and four cheques came to be issued by her during September, 2023, in discharge of her husband’s liability and her own liability. These cheques were deposited by the Appellant at Kotak Mahindra Bank, Opera House Branch, Mumbai. However, they were dishonored due to insufficiency of funds, as was intimated to the Appellant. Thereupon, he filed four complaint cases under Section 200 Cr.P.C. read with Section 138 of the N.I. Act before the Judicial Magistrate First Class. However, the Magistrate returned the complaint cases for presentation before the jurisdictional Court, stating that the drawee bank was Kotak Mahindra Bank at Mumbai and, therefore, his Court had no territorial jurisdiction to entertain the complaint cases. Later, the High Court confirmed the order in Appeal.

Senior Counsel for the Appellant asserted that the Appellant maintains his bank account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, and that he had merely presented the cheques issued by the Respondent at the Bank’s Branch at Opera House, Mumbai, to be credited to the said account. He contended that the High Court proceeded on the erroneous assumption that the Appellant maintained his bank account at the Opera House Branch of Kotak Mahindra Bank in Mumbai and on the strength of this wrong premise, the High Court confirmed the order of the Magistrate, returning the complaint cases on the ground of territorial jurisdiction.

Reasoning By Court

The Court at the outset observed that it is not in dispute that the Appellant maintains his bank account with the Bendurwell, Mangalore Branch, of the Kotak Mahindra Bank and merely deposited the Respondent’s cheques at its Mumbai Branch for the purpose of crediting his account in Mangalore.

It asserted that an offence under Section 138 of the Negotiable Instrument Act can be inquired into and tried only by a local Court in jurisdiction of which the cheque is delivered for collection, that is, through an account in the Branch of the Bank where the payee maintains that account. The same was affirmed in Supreme Court's decision in Bridgestone India Private Limited vs. Inderpal Singh.

"Therefore, once it is established that, at the time of presentation of the cheques in question, the appellant maintained his account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, he was fully justified in filing his complaint cases before the jurisdictional Court at Mangalore. The understanding to the contrary of the learned Magistrate at Mangalore was erroneous and completely opposed to the clear mandate of Section 142(2)(a) of the N.I. Act. The High Court proceeded to confirm the erroneous order passed by the learned Magistrate under the wrong impression that the appellant maintained his bank account at the Opera House Branch of the Kotak Mahindra Bank at Mumbai," the Court held.

The Appeals were accordingly allowed.

Cause Title: Prakash Chimanlal Sheth vs. Jagruti Keyur Rajpopat

Supreme Court: Magistrate Can Direct Registration Of FIR U/s. 156(3) CrPC Even If Informant Has Not Exhausted Remedies

The Supreme Court was considering Special Leave Petitions challenging the judgment whereby the petitions seeking quashing of the order of the Metropolitan Magistrate as well as the criminal proceedings were dismissed.;

The Supreme Court has held that a Magistrate is competent under Section 156(3) CrPC to direct the registration of an FIR if the allegations in the application/complaint disclose the commission of a cognizable offence, even if the informant has not exhausted the remedies provided under the said provision.  The Court also held that ignoring the remedy under Section 154(3) of the CrPC amounts to a mere procedural irregularity.

The Apex Court was considering Special Leave Petitions challenging the judgment whereby the petitions seeking quashing of the order of the Metropolitan Magistrate, New Delhi, as well as the criminal proceedings, were dismissed.

The Division Bench comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti held, “To sum up, the Magistrate ought not to ordinarily entertain an application under Section 156(3) CrPC directly unless the informant has availed and exhausted his remedies provided under Section 154(3) CrPC, but as the Magistrate is otherwise competent under Section 156(3) CrPC to direct the registration of an FIR if the allegations in the application/complaint discloses the commission of a cognizable offence, we are of the opinion that the order so passed by the Magistrate would not be without jurisdiction and would not stand vitiated on this count.”

“Therefore, if an FIR has not been registered for any reason at the police station and the Magistrate is satisfied that the information discloses a cognizable offence, he can certainly direct for its registration obviously on compliance of the provisions of Section 154(3) of the CrPC. This is exactly what has been done by the Magistrate by way of his order dated 01.07.2005 though ignoring the remedy under Section 154(3) of the CrPC which, as said earlier, amounts to mere procedural irregularity”, it added.

Senior Advocate Ranjit Kumar represented the Petitioners, while Senior Advocate Jayant Bhushanrepresented the Respondents.

Factual Background

The complainant, M/s Sunair Hotels Limited, was allotted land at Bangla Sahib Road, New Delhi, for the construction and operation of a hotel. A non-banking finance company, VLS Finance Limited, through its directors and senior officers (accused persons), approached SHL with the desire to join the project as financial consultants. Accordingly, SHL entered into a Memorandum of Understanding but later discovered that the promise of VLS to issue shares at a premium of Rs 100 per share was legally not possible due to the guidelines of the Securities and Exchange Board of India. SHL initiated arbitration proceedings against VLS, alleging that it had not kept its promises. An award was passed, but the same is a subject matter of challenge before the Delhi High Court.

Some time in the year 2000, VLS discovered fraudulent conduct on the part of SHL and filed a complaint. It was alleged that in retaliation for the aforesaid complaints, SHL filed a complaint against the officials of the VLS. An FIR came to be registered under Sections 406, 409, 420, 424 and 122-B IPC on the ground that VLS failed to bring out the public issue of SHL as agreed and VLS played fraud upon SHL. The quashing petitions filed by VLS and its officers were dismissed by the High Court. It was in such circumstances that the SLPs came to be filed before the Apex Court.

Reasoning

On a perusal of the facts of the case, the Bench noted that an application was filed under Section 156(3) of the CrPC wherein the informant had simply stated that an offence under Sections 420, 120-B and 34 of the IPC was committed and that the informant had approached the “police officials” several times but in vain. The application nowhere stated that the informant had ever approached the officer-in-charge of the police station for lodging the FIR following Section 154 of the CrPC or that on refusal to record such information, he had availed the remedy of approaching the Superintendent of Police concerned.

In this case, the informant had neither approached the officer-in-charge of the police station or the Superintendent of Police concerned as contemplated under Sections 154(1) and 154(3) of the CrPC but had directly gone to the Magistrate under Section 156(3) of the CrPC. On this aspect, the Bench said, “In the facts and circumstances of the case, as the informant had directly moved the Magistrate under Section 156(3) of the CrPC without exhausting his statutory remedies, the Magistrate could have avoided taking action on the said application and could have refused to direct for the registration of the FIR. However, as entertaining an application directly by the Magistrate is a mere procedural irregularity and since the Magistrate in a given circumstance is otherwise empowered to pass such an order, the action of the Magistrate may not be illegal or without jurisdiction.”

The Bench found that the Magistrate had not only heard the counsel and perused the documents but had even considered the case law cited and had opined that the information disclosed a cognizable offence. This implied that he had applied his mind to the contents of the application before passing the impugned order directing for the registration of the FIR. Therefore, the Bench found no fault with the order of the High Court in refusing to quash the order of the Magistrate.

It was also stated by the Bench that the High Court had rightly refused to exercise its discretionary jurisdiction so as to interfere with the FIR, as the investigations had been completed and the chargesheets had been filed. On the issue of maintainability of successive FIRs in respect of same cognizable offence, the Bench noted, “ Therefore, agreeing with the view that there can be no second FIR and no fresh investigation on receipt of the subsequent information but as on the basis of the earlier first information, there is no conviction and acquittal, it cannot be said that a second complaint/FIR is not maintainable.”Noting that the allegations were different and even the parties against whom the FIRs were filed were not the same, the Bench refrained from making any final comment on the aspect of maintainability of FIR, as no such finding on this aspect had been returned by the court below.

Thus, noting that the investigations had been completed and the High Court had refused to quash the said FIR in exercise of its discretionary power, the Bench dismissed the petitions and left the matter to proceed further in accordance with law.

Cause Title: Anurag Bhatnagar & Anr. v. State (Nct of Delhi) & Anr. (Neutral Citation: 2025 INSC 895)

‘Gross Misconduct' : Supreme Court Upholds Advocate's Suspension For Claiming Fees Based On MACT Compensation

The Supreme Court recently refused to show leniency in the case of an advocate whose license was suspended for 3 years over issuance of a fee notice of Rs.2.3 lakhs to a client who got motor accident compensation claim of Rs.5 lakhs.

The Court underlined the risk of poor people, seeking motor accident compensation claims, getting exploited by advocates' 'giroh' and opined that the petitioner's conduct of demanding fees depending on the MACT outcome amounted to 'gross misconduct'.

A bench of Justices Vikram Nath and Sandeep Mehta was dealing with the petitioner-advocate's plea against a 5-year suspension imposed upon him by Bar Council of Punjab and Haryana. In a challenge, this suspension period had been reduced by the Bar Council of India to 3 years. Still aggrieved, the petitioner approached the Supreme Court.

"You've sent a notice of fees of Rs.2,30,000 against a claim of Rs.5,00,000? How can you? Can the legal fees be [greater] than the outcome? Can it be? it's your own case before the Bar Council that on the outcome of the claim, you'll be entitled to claim fees...Gross Misconduct! The very fact that you issue a notice demanding fees depending on the outcome...we are proposing to give notice for enhancement...this is a man who has tried to cheat [a sister] out of her brother's compensation”, Justice Mehta posed to the petitioner's counsel. 

“The BCI has already reduced the period to 3 years”,added Justice Nath. 

When the petitioner's counsel pleaded for reduction of the suspension period, saying that the petitioner's career would be ruined if the punishment prevails, Justice Nath replied, "we don't know how many others you have cheated like this...complete misconduct”. 

Although it was sought to be contended that there were other cases for which fee was due from the client's end and a consolidated amount was raised, the bench was not convinced. It also did not find ground to interfere on the petitioner's contention that he was proceeded ex-partedespite being present and denied opportunity to cross-examine.

"Lawyers need to get trained in discipline", said Justice Nath, before parting with the matter.

Case Title: X Versus BAR COUNCIL OF INDIA AND ORS.

Pension A Constitutional Right, Can't Be Reduced Without Proper Procedure : Supreme Court

READ JUDGMENT 

The Supreme Court provided relief to the ex-Central Bank Of India employee whose pension was reduced by one-third without consulting board of directors, as mandated under Central Bank of India (Employees') Pension Regulations, 1995 (“Regulation”). 

The Court reiterated that pension is an employee's right to property, which is a constitutional right, that cannot be denied without the authority of law, even if an employee was compulsorily retired on account of misconduct.

When Regulation 33 of the Bank specifically mentioned that no reduction in the pension would be made without prior consultation with the Board of Directors, then the act of the bank to reduce the Appellant's pension by one third was arbitrary and unjustified, the court said. 

“There is no cavil that pension is not a discretion of the employer but a valuable right to property and can be denied only through authority of law. When an authority is vested with the discretion to grant pension less than full pension admissible under the Pension Regulations, all procedural safeguards in favour of the employee including prior consultation must be strictly followed.”, the court observed. 

“A plain reading of regulation 33 would show award of pension less than full pension is to be done with prior consultation of the Board of Directors. Such prior consultation with the highest authority of the Bank i.e., Board of Directors must be understood as a valuable mandatory safeguard before an employee's constitutional right to pension is curtailed. In these circumstances, a post facto approval cannot be a substitute of prior consultation with the Board before the decision is made.”, the court added. 

The bench comprising Justices PS Narasimha and Joymalya Bagchi heard the case involving an appellant, who was found guilty of sanctioning 12 housing and mortgage loans in breach of procedural norms, exposing the bank to a potential loss of ₹3.26 crore. 

A departmental inquiry initiated under Regulation 20(3)(iii) of the Central Bank of India Officer Employees' Service Regulations continued even after his retirement. He was compulsorily retired with effect from his superannuation date (30.11.2014). 

Subsequently, the bank, through the appellate authority ordered a reduction of his pension by one-third, without consulting the Board of Directors. The Patna High Court upheld this action, prompting the appellant to approach the Supreme Court. 

Setting aside the High Court's decision, the judgment authored by Justice Bagchi interpreting clauses (1) and (2) of Regulation 33 observed that although a higher authority is vested with the power to grant pension “not less than two-thirds” of full pension under Clause 1, but if any competent authority (disciplinary, appellate, or reviewing) intends to award less than full pension, it must first consult the Board of Directors as stated under Clause 2. 

Accordingly, the appeal was allowed, and the High Court's order and the Bank's pension reduction order were set aside. 

The Court directed the Bank to reconsider the matter within two months after, giving the appellant an opportunity of hearing, and obtaining prior approval from the Board of Directors. 

Cause Title: Vijay Kumar VERSUS Central Bank of India & Ors.

Secretly Recorded Telephonic Conversation Of Spouse Admissible Evidence In Matrimonial Cases : Supreme Court

The Supreme Court on Monday (July 14) set aside the Punjab &Haryana High Court's judgment that held that recording a wife's telephonic conversation without her knowledge amounts to a "clear breach" of her fundamental right of privacy and cannot be admitted in evidence before a Family Court.

A bench of Justice BV Nagarathna and Justice Satish Chandra Sharma thus held that secretly recorded telephonic conversation of the spouse is admissible as evidence in matrimonial proceedings.

"Some arguments have been made that permitting such an evidence would jeopardise domestic harmony and matrimonial relationships as it would encourage snooping on the spouses, therefore, infringing the objective of section 122 of the Evidence Act.

We don't think such an argument is tenable. If the marriage has reached a stage where spouses are actively snooping on each other, that is in itself a symptom of a broken relationship and denotes a lack of trust between them," the bench observed while pronouncing the judgment.

The case arises from a Special Leave Petition (SLP) challenging a decision of the Punjab and Haryana High Court, which held that recording of a wife's telephonic conversation without her knowledge amounts to a “clear breach of the fundamental right of the petitioner-wife i.e., her right to privacy” and cannot be admitted in evidence before a Family Court.

Short details big the  Case

The High Court's judgment was delivered by Justice Lisa Gill in a case involving divorce proceedings under Section 13 of the Hindu Marriage Act, 1955. The Family Court at Bathinda had allowed the husband to rely on a compact disc containing recorded phone conversations with his wife to prove allegations of cruelty. Challenging this, the wife approached the High Court, contending that the recording was made without her consent and its acceptance would breach her fundamental right to privacy.

The High Court accepted her plea and set aside the Family Court's order. The Court noted that permitting such recordings in evidence would be unjustified, as the conversations were recorded surreptitiously by one party. It held that the circumstances in which the responses were elicited could not be ascertained and that the court would be ill-equipped to assess such context, even with cross-examination. The Court observed:

“…it cannot be said or ascertained as to the circumstances in which the conversations were held or the manner in which response elicited by a person who was recording the conversations, because it is evident that these conversations would necessarily have been recorded surreptitiously by one of the parties.”

The High Court relied on the case of Deepinder Singh Mann v. Ranjit Kaur and reiterated that spouses often speak freely in private, unaware that every word could later be scrutinized in a court of law. It also cited the judgment of the Andhra Pradesh High Court in Smt. Rayala M. Bhuvaneswari v. Napaphander Rayala, which held that recording a spouse's conversation without consent is illegal and amounts to a violation of privacy, making such evidence inadmissible.

The husband challenged the High Court's judgment before the Supreme Court. On January 12, 2022, a bench of Justices Vineet Saran and BV Nagarathna issued notice in the SLP.

Advocate-on-Record Ankit Swarup, appearing for the petitioner-husband, argued that the right to privacy is not absolute and must be balanced with other rights and values. Referring to the exception in Section 122 of the Indian Evidence Act, 1872, it was contended that communication between married persons can be disclosed in matrimonial proceedings seeking divorce. The petition stated:

“In the matrimonial cases involving an allegation of cruelty - mental cruelty, the parties are bound to recreate the issues and events which were otherwise confined to the matrimonial home and the bedroom and away from the public eye, in the Courtroom. On many occasions, such events and issues between the married persons do not have any witnesses apart from the said married person. Such events are also not capable of being proved by documentary evidence. In the present age of technology and computers, such evidence can be brought to the court using the technology and modern electronic devices available. However, as a matter of caution, the Courts are to be circumspect in relying upon such evidence without satisfying itself as to the authenticity and reliability of such evidence recorded on the electronic devices.”

The petitioner also referred to Sections 14 and 20 of the Family Courts Act, 1984, asserting that these provisions were enacted to ensure a fair trial and aid in the discovery of truth in matrimonial disputes. He argued that the recorded conversation was intended to establish the alleged cruelty by the wife.

“The recorded conversation held between the parties is another way of adducing evidence and recreating before the court the events of the matrimonial home just like the evidence of oral testimony of parties and other witnesses does. Without providing the aspect of cruelty, the petitioner would become unsuccessful in seeking a decree of divorce from the Family Court,” the petition stated.

Case no. – SLP(C) No. 21195/2021