Introduction

The case of Aditya Malhotra Prop. M/s ANN Infrastructure Jammu v. Dharminder Singh before the Jammu and Kashmir High Court marks a significant development in the interpretation of territorial jurisdiction in offences under Section 138 of the Negotiable Instruments Act (NIA) combined with Section 420 of the RPC. The petitioner, Aditya Malhotra and his proprietary concern, challenged the proceedings initiated by the respondent, Dharminder Singh, who lodged a complaint alleging that a cheque issued by the petitioner was dishonoured. The dispute notably centers on two pivotal issues: first, whether the Trial Magistrate in Jammu had the requisite territorial jurisdiction to entertain the complaint given that the cheque was presented for collection at an ICICI Bank branch in Noida, Uttar Pradesh; and second, the propriety of accepting preliminary evidence through a sworn affidavit under the relevant procedures.

The respondents, represented by experienced counsel, contended that the petitioner’s participation in proceedings and settlement negotiations had in effect acquiesced to the jurisdiction of the Jammu Trial Magistrate. Conversely, the petitioner argued both for a lack of territorial competence and a deviation from the procedural norm of recording evidence on oath in accordance with Section 200 of the Cr.PC.

Summary of the Judgment

In its judgment dated 03.04.2025, the Jammu and Kashmir High Court held that the Trial Magistrate did not have territorial jurisdiction to entertain a complaint as per the provisions of Section 142(2) of the Negotiable Instruments Act. The court emphasized that for offences under Section 138, the appropriate forum is determined by the branch of the bank where the cheque is deposited by the payee or holder in due course. Given that the cheque was presented for collection at an ICICI Bank branch in Sector 128, Noida (UP), the Jammu Trial Magistrate's assertion of jurisdiction was found entirely misplaced.

The judgment further dismissed the argument that the petitioner had consented to the jurisdiction by virtue of his participation in ongoing proceedings and settlement negotiations. The Court clarified that proceedings in a court lacking inherent territorial jurisdiction cannot be rendered valid, regardless of any subsequent conduct by the parties. Therefore, the impugned order dated 24.07.2021, which had issued process against the petitioner and his co-accused, was set aside, and the complaint was to be returned to the complainant for presentation before the competent forum.

Analysis

Precedents Cited

The judgment draws heavily on prior interpretations of Section 142(2) of the Negotiable Instruments Act, reaffirming the analysis provided by the Supreme Court in the following key cases:

• Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016): This decision underscored that the territorial jurisdiction for cases under Section 138 is determined by the location where the cheque is delivered for collection – specifically, the branch of the payee’s bank. The High Court leveraged the clarity of this decision to obviate doubts regarding the appropriate forum.
• Sh. Sendhuragro and Oil Industries v. Kotak Mahindra Bank Limited (2025): In this recent ruling, the Supreme Court further elaborated on the significance of the phrase “for collection through an account.” The Court concluded that the delivery of the cheque is conceptually tied to the branch where the cheque is presented by the payee or holder in due course – a point that is decisive in determining jurisdiction.

These precedents collectively formed the foundation for the High Court’s reasoning, reinforcing that the correct forum for adjudicating the offence is intrinsically linked to the geographical location of the cheque deposit.

Legal Reasoning

The court’s legal reasoning is structured around the plain text of Section 142(2) of the Negotiable Instruments Act coupled with its explanatory notes. The reasoning can be summarized as follows:

• Determination of Jurisdiction: The Court identified that the cheque in question was presented at the ICICI Bank branch in Noida, Uttar Pradesh. Consequently, under Section 142(2)(a) of the NIA, the jurisdiction to try the case logically falls within that branch’s locale rather than Jammu.
• Procedural Aspect on Evidence: While the petitioner contended that the Trial Magistrate should have recorded the complainant’s statement on oath pursuant to Section 200 of the Cr.PC, the Court found that Section 145 of the NI Act expressly permits the filing of affidavits as evidence. This procedural provision supports the Magistrate’s approach and negates the need for an additional oath-recording stage.
• Acquiescence Argument: The learned Senior Counsel for the respondent argued that the petitioner’s participation in the proceedings amounted to an implied acceptance of jurisdiction. The Court rejected this argument, holding that a party cannot confer jurisdiction on a forum that lacks the inherent power to adjudicate the matter, irrespective of subsequent conduct.

Together, these elements resulted in the conclusion that judicial proceedings initiated in Jammu were inherently flawed due to the lack of territorial jurisdiction.

Impact on Future Cases

This Judgment is poised to have a significant impact on future cases involving dishonoured cheques and the applicability of Section 138 of the Negotiable Instruments Act. The key implications include:

• Strict Adherence to Territorial Jurisdiction: Future complaints will be scrutinized to ensure that they are filed within the proper territorial bounds. Courts nationwide will refer to this precedent to disallow proceedings initiated outside the jurisdiction determined by the branch of the bank where the cheque is deposited.
• Emphasis on Procedural Propriety: The ruling reinforces the permissibility of accepting affidavits as preliminary evidence under Section 145 of the NI Act. This may streamline submissions in similar cases and reduce redundant procedural requirements.
• Limitation on Implied Jurisdiction: The decision clearly negates any notion that a party’s participation in proceedings implicitly waives objections to jurisdiction. This clarity protects parties against the strategic use of proceedings to circumvent established territorial rules.

In essence, this Judgment not only solidifies the correct interpretation of territorial jurisdiction but also reinforces the importance of adhering to the letter of the statute.

Complex Concepts Simplified

Several legal concepts that might appear complex are clarified through this Judgment:

• Territorial Jurisdiction: This refers to the specific geographical area within which a court has the authority to hear a case. Under Section 142(2) of the NI Act, the jurisdiction is determined by the bank branch where the payee maintains their account.
• Cheque Delivery vs. Presentation: While “delivery” normally implies the act of handing over, in the context of cheque collection, what matters is the branch where the cheque is presented by the payee. This location is key in determining the court’s jurisdiction.
• Acquiescence to Jurisdiction: The concept that by participating in legal proceedings, a party might be seen to have accepted the jurisdiction of that forum. The Court clarifies this is not applicable when the forum itself lacks inherent jurisdiction.

Conclusion

The Jammu and Kashmir High Court’s decision in the matter of Aditya Malhotra Prop. M/s ANN Infrastructure Jammu v. Dharminder Singh sets a clear and important precedent regarding the determination of territorial jurisdiction under Section 142(2) of the Negotiable Instruments Act. By affirming that the correct forum is determined by the branch where the cheque is presented for collection, the Court has provided unequivocal guidance which is likely to be influential in any future disputes involving dishonoured cheques.

The Judgment also clarifies procedural issues regarding the acceptance of preliminary affidavits as evidence and refutes the notion that a party’s participation during early stages constitutes acceptance of the court's jurisdiction when such jurisdiction is not inherent. This ruling not only strengthens the statutory interpretation but also underscores the necessity for strict adherence to territorial limits in legal proceedings.

In summary, this decision is significant as it refines the contours of jurisdiction in commercial disputes involving negotiable instruments, ensuring that legal proceedings are confined to the appropriate geographic area and thereby promoting judicial efficiency and statutory clarity.