IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2041   OF 2009 (Arising out of S.L.P.(Crl.)NO.2915 of 2007)

Rasiklal Dalpatram Thakkar  … Appellants Vs.

State of Gujarat & Ors.     … Respondents

J U D G M E N T

ALTAMAS KABIR, J.

1. Leave granted.   

2. The  Madhavpura  Mercantile  Cooperative  Bank  

Ltd., which is governed by the provisions of the  

Multi State Cooperative Societies Act, 2002, has  

its Registered as well as Head Office at Madhavpura  

Market,  Shastribaug,  Ahmedabad,  and  carries  on  

banking  operations  in  the  State  of  Gujarat,

Maharashtra among other States in India.  According  

to  the  Bank,  all  its  activities  relating  to  

disbursement of loans are conducted from the Head  

Office at Ahmedabad.

3. In 1992, the appellant’s company took loan from  

the aforesaid Bank which for the reasons prevailing  

closed  down  its  business  operations  in  2001.  

Thereafter, a Scheme of Reconstruction approved by  

the Reserve Bank of India was formulated and a new  

Board  of  Management  (Administration)  came  to  be  

appointed  to  implement  the  same.   Several  

irregularities were discovered regarding the grant  

of loans to borrowers with the connivance of the  

then Chief Executive Officer, Managing Director and  

Chairman of the Bank. Several complaints came to be  

registered against the said officers and several  

borrowers.  Five such complaints were filed against  

the appellant on 9th July, 2003, before the Chief  

Metropolitan  Magistrate,  Ahmedabad,  who  directed  

2

the Economic Offences Wing, State C.I.D. (Crime),  

Ahmedabad, under Section 156(3) Cr.P.C. to carry  

out  an  investigation.   The  Investigating  Agency  

submitted  a  report  stating  that  the  allegations  

complained  of  had  been  committed  within  the  

territorial  limits  of  the  city  of  Mumbai,  

Maharashtra,  and  that  the  investigation  should,  

therefore,  be  transferred  to  the  Investigation  

Agency in Mumbai, Maharashtra.   

4. The  said  report  was  rejected  by  the  Chief  

Metropolitan Magistrate, Ahmedabad, on the ground  

that it was not for the Investigating Agency to  

decide not to investigate a complaint forwarded to  

it under Section 156(3) Cr.P.C. on the ground that  

the offence complained of was allegedly committed  

outside  the  territorial  jurisdiction  of  the  

Investigating Agency. The learned Magistrate by his  

order dated 31.5.2006, directed the Investigating  

Agency  to  carry  out  a  further  investigation  and  

3

report  whether  the  alleged  offence  had  been  

committed or not.

5. The said order of the learned Chief Judicial  

Magistrate,  Ahmedabad,  was  challenged  by  the  

appellant herein before the City Civil and Sessions  

Court at Ahmedabad in revision which was dismissed  

on  22.9.2006  by  the  City  Sessions  Judge  Court  

No.11, Ahmedabad.   A writ petition was filed in  

the High Court by the appellant on 21.11.2006 being  

Writ  Petition  No.2366  of  2006,  challenging  the  

decision of the Sessions Court.        

6. Before the High Court it was reiterated that  

the loan had been availed of by the appellant’s  

company  from  the  Mandvi  Branch  of  the  Bank  in  

Mumbai  which  had  an  independent  identity  as  a  

registered  co-operative  Society  under  the  

Maharashtra Co-operative Societies Act. It was also  

reiterated that the loan amount had been disbursed  

from the said Branch in Mumbai.  It was contended  

4

that  since  the  cause  of  action  for  the  alleged  

offence  had  arisen  outside  the  territorial  

jurisdiction  of  the  Chief  Judicial  Magistrate,  

Ahmedabad, he could not direct the Investigating  

Agency  under  his  jurisdiction  to  conduct  an  

investigation into the complaint made against the  

appellant in respect of such cause of action.    

7. Accepting  the  views  expressed  by  the  Chief  

Metropolitan  Magistrate  that  the  Investigating  

Agency was only required to state the outcome of  

the  investigation  pursuant  to  an  order  under  

Section 156(3) Cr.P.C. and that it had no authority  

to state which Court had jurisdiction to inquire  

into the alleged offence, the High Court by its  

impugned  judgment  dated  15.3.2007  dismissed  the  

writ petition filed by the appellant, inter alia,  

on the following grounds :-   

(i) That  the  Investigating  Agency  had  travelled  beyond  its  jurisdiction  in  

5

expressing  its  views  regarding  the  territorial  jurisdiction  in  regard  to  a  criminal offence which was for the Courts  to decide.

(ii) That the Station House Officer is vested  with  the  authority  to  investigate  any  cognizable offence in respect of which an  F.I.R. is lodged.  

(iii) The  powers  reserved  to  the  High  Court  under  Section  482  Cr.P.C.  could  not  be  interfered with or curtailed on the ground  that  the  Investigating  Officer  had  no  territorial  jurisdiction  over  the  investigation.  

8. It appears that when the writ petitions were  

taken  up  for  hearing  a  prayer  was  made  for  

amendment of the prayers by incorporating paragraph  

14(BBB)in each of the writ petitions.  By virtue of  

the amended prayer, the appellant wanted the High  

Court to quash and set aside Enquiry Case No.21 of  

2003  filed  before  the  Chief  Metropolitan  

Magistrate, Ahmedabad, and to also quash the order  

6

directing  investigation  under  Section  156(3)  

Cr.P.C. and the proceedings arising therefrom.  The  

said prayer was rejected by the High Court on the  

ground of delay and also on the ground that the  

order of the Magistrate dated 9.7.2003 had not been  

challenged for a period of four years.   

9. Learned counsel Mr. I.H. Syed, appearing for  

the  appellant  submits  that  the  High  Court  had  

dismissed  the  appellant’s  Writ  Petition  on  an  

erroneous  interpretation  of  the  provisions  of  

Section 156(3) and 181(4) Cr.P.C.   Learned counsel  

submitted that the High Court had failed to notice  

that  Sub-section  (2)  of  Section  156  Cr.P.C.  

conferred  exclusive  jurisdiction  on  the  

Investigation Officer to investigate into a case  

and no proceeding of a police officer in any case  

in which he is entitled to investigate shall at any  

stage be called in question.  Alleging that the  

power of the Magistrate under Sub-section (3) was  

7

circumscribed  by  the  powers  vested  in  the  

Investigating  Agency  under  Sub-Section  (2)  of  

Section  156  Cr.P.C,  and  that  it  was  only  the  

Investigating  Agency  which  could  decide  the  

question relating to the territorial jurisdiction  

in respect of the crime committed, learned counsel  

submitted  that  the  High  Court  had  erred  in  

upholding the views expressed by the learned Chief  

Metropolitan  Magistrate  that  the  Investigating  

Agency was only required to state the outcome of  

the investigation conducted pursuant to an order  

under Section 156(3) Cr.P.C. and that it had no  

authority or right to state as to which Court had  

jurisdiction to inquire into the alleged offence in  

question.  Learned counsel submitted that the High  

Court had erred in law in observing that it was a  

settled proposition of law that when a Magistrate  

directs  an  investigation  to  be  conducted  in  

exercise of his powers under Section 156(3) Cr.P.C.  

the main duty of the Investigating Agency is to  

8

submit a report as to the commission of an offence  

and, thereafter, it was for the Court concerned to  

accept such Report and to decide the question of  

jurisdiction and that the learned Magistrate had  

rightly  rejected  the  Final  Report  on  the  ground  

that  the  Investigating  Agency  had  no  authority  

under the law to express its opinion on the merits  

of a case.   

10. Learned counsel re-emphasized the submissions  

made  before  the  High  Court  that  although  the  

Registered Office and Head Office of the Bank were  

in Ahmedabad in Gujarat, each of its Branches in  

the other States was an independently registered  

Co-operative  Society  and  was  a  unit  of  its  own  

under  the  provisions  of  the  Maharashtra  Co-

operative Societies Act. Furthermore, the loan was  

availed of and disbursed in Mumbai. Consequently,  

since the entire cause of action relating to the  

application and disbursement of the loan had arisen  

9

in Mumbai, the Gujarat High Court had committed an  

error of law in passing the impugned order and the  

same was liable to be quashed. In support of his  

aforesaid contention, learned counsel referred to  

the decision of this Court in  Agencia Commercial  

International Ltd. vs. Custodian of the Branches of  

Banco  National  Ultramarino [(1982)  2  SCC  482],  

wherein while considering a similar question, this  

Court held that in the case of a body corporate its  

branches are not distinct entities and the Branches  

are  mere  components  through  which  the  corporate  

entity  expresses  itself  and  all  transactions  

entered  into  with  the  Branches  are  transactions  

with  the  corporate  body  itself.  However,  a  

distinction was made in cases of Banks which also  

operate through its Branches which are regarded for  

many  purposes  as  separate  and  distinct  entities  

from the Head Office and each other.   

1

11. Learned counsel then relied on the decision of  

this  Court  in  Satvinder  Kaur vs.  State  (NCT  of  

Delhi) [(1999)  8  SCC  728}  in  support  of  his  

submission  that  in  view  of  the  provisions  of  

Section  156(1)  Cr.P.C.  a  police  officer  was  

competent to investigate any cognizable offence and  

was  also  competent  to  forward  the  same  to  the  

police station having territorial jurisdiction if  

he came to the conclusion that the crime had been  

committed beyond his territorial jurisdiction.   

12. Reference was also made to the decision of this  

Court in the case of  Naresh Kavarchand Khatri vs.  

State  of  Gujarat [(2008)  8  SCC  300],  where  the  

question involved was the High Court’s jurisdiction  

to  transfer  an  investigation  from  one  police  

station to another. In the facts of the said case  

it  was  held  that  under  Section  156  Cr.P.C.  the  

police  authorities  exercise  statutory  powers  to  

direct transfer of an investigation from one police  

1

station to another in the event it was found that  

they did not have jurisdiction in the matter and  

the Court should not interfere in the matter at an  

initial stage in regard thereto.           

13. Similar  observations  were  made  in  Asit  

Bhattacharjee vs. Hanuman Prasad Ojha [(2007) 5 SCC  

786], though in a different context involving the  

transfer of an investigation ordered under Section  

156(3)  Cr.P.C.  to  another  State  where  the  major  

part of the offences had taken place.  This Court  

reiterated that only in the event an Investigating  

Officer arrived at a finding that the alleged crime  

had  not  been  committed  within  his  territorial  

jurisdiction could the F.I.R. be transferred to the  

police having jurisdiction in the matter.  

14. Learned  counsel  urged  that  once  the  

Investigating Agency in respect of an order under  

Section 156(3) Cr.P.C. came to a finding that it  

did  not  have  territorial  jurisdiction  in  the  

1

matter, the High Court could not have directed a  

fresh investigation into the matter on the ground  

that it was not for the Investigating Agency to  

decide the question of jurisdiction which is the  

prerogative of the Courts.  

15. Appearing for the private respondents, Mr. L.N.  

Rao,  Senior  Advocate,  submitted  that  except  for  

disbursement of the loan amount to the appellant  

through the Mandvi Branch of the Bank at Mumbai,  

the entire transaction had been proceeded and dealt  

with at the Head Office in Ahmedabad.  Even the  

application for the loan had been made directly to  

the Head Office at Ahmedabad instead of filing it  

in the Mandvi Branch at Mumbai.   

16. On the legal question raised on behalf of the  

appellant,  Mr.  Rao  submitted  that  Section  156  

Cr.P.C.  only  spelt  out  the  powers  of  a  police  

officer to investigate a cognizable case and the  

power  of  a  Magistrate  to  order  such  an  

1

investigation to be made.  In addition, it was also  

stipulated  that  no  investigation  by  a  police  

officer at any stage of such investigation could be  

questioned on the ground that such officer was not  

empowered to conduct such investigation.  Mr. Rao  

submitted that the decisions cited by Mr. Syed did  

not really make any difference to the appellant’s  

case as the power of the Investigating Officer to  

transfer an investigation, which he did not have  

the  jurisdiction  to  investigate,  to  a  police  

officer  having  such  jurisdiction,  was  never  at  

issue in the instant case.  What was at issue was  

the Investigating Officer’s decision not to conduct  

an  investigation  despite  an  order  passed  by  the  

Chief Judicial Magistrate, Ahmedabad, under Section  

156(3) Cr.P.C. on the ground that he did not have  

territorial  jurisdiction  to  undertake  such  

investigation.  Mr.  Rao  submitted  that  an  

investigation ordered under the provisions of Sub-

Section (4) of Section 181 Cr.P.C. would have to be  

1

read in that context.   

17. Appearing for the State, Mr. Hemantika Wahi,  

learned  Advocate,  submitted  that  the  State  was  

ready to carry out whatever directions that may be  

given by the Court in regard to the investigation  

directed  to  be  conducted  by  the  Chief  Judicial  

Magistrate, Ahmedabad.

18. The principal question which emerges from the  

submissions  made  on  behalf  of  the  parties  is  

whether in regard to an order passed under Section  

156(3)  Cr.P.C.  the  police  authorities  empowered  

under  Sub-Section  (1)  of  Section  156  can  

unilaterally decide not to conduct an investigation  

on  the  ground  that  they  had  no  territorial  

jurisdiction to do so.

19. Section  156  Cr.P.C.  which  is  the  focus  of  

consideration in this case, reads as under :-

“156.  Police  officer's  power  to  investigate cognizable cases.

1

(1)  Any  officer  in  charge  of  a  police  station  may,  without  the  order  of  a  Magistrate,  investigate  any  cognizable  case  which  a  court  having  jurisdiction  over the local area within the limits of  such station would have power to inquire  into  or  try  under  the  provisions  of  Chapter XIII.

(2) No proceeding of a police officer in  any such case shall at any stage be called  in question on the ground that the case  was  one,  which  such  officer  was  not  empowered  under  this  section  to  investigate.

(3) Any Magistrate empowered under section  190  may  order  such  an  investigation  as  above mentioned.”

20. From the aforesaid provisions it is quite clear  

that a police officer in charge of a police station  

can, without the order of a Magistrate, investigate  

any  cognizable  offence  which  a  Court  having  

jurisdiction over such police station can inquire  

into or try under Chapter III of the Code.  Sub-

section (2) of Section 156 ensures that once an  

investigation is commenced under Sub-section (1),  

the same is not interrupted on the ground that the  

1

police officer was not empowered under the Section  

to investigate.  It is in the nature of a “savings  

clause” in respect of investigations undertaken in  

respect of cognizable offences.  In addition to the  

powers  vested  in  a  Magistrate  empowered  under  

Section 190 Cr.P.C. to order an investigation under  

Sub-section (1) of section 202 Cr.P.C., Sub-section  

(3) of Section 156 also empowers such Magistrate to  

order an investigation on a complaint filed before  

him.  

21. As far as the reference made to Sub-section (4)  

of Section 181 is concerned, the same appears to be  

misconceived having regard to the contents thereof  

which read as follows :-

“181. Place of trial in case of certain  offences. (1) xxx xxx xxx (2) xxx xxx xxx

(3) xxx xxx xxx (4)  Any  offence  of  criminal  misappropriation or of criminal breach of  

1

trust may he inquired into or tried by a  court within whose local jurisdiction the  offence was committed or any part of the  property  which  is  the  subject  of  the  offence was received or retained, or was  required to be returned or accounted for,  by the accused person.”

Sub-section (4) only indicates that an inquiry  

or trial of an offence of criminal misappropriation  

or criminal breach of trust can be conducted by a  

Court  within  whose  jurisdiction  the  offence  had  

been committed or any part of the property forming  

the subject matter of the offence is received or  

retained  or  was  required  to  be  returned  or  

accounted  for  by  the  accused  person.  The  said  

provisions do not account for a stage contemplated  

on account of an order made under Section 156(3)  

Cr.P.C.  

22. In  the  instant  case,  the  stage  contemplated  

under  Section  181(4)  Cr.P.C.  has  not  yet  been  

reached.   Prior  to  taking  cognizance  on  the  

complaint  filed  by  the  Bank,  the  learned  Chief  

1

Judicial  Metropolitan  Magistrate,  Ahmedabad,  had  

directed an inquiry under Section 156(3) Cr.P.C.  

and as it appears, a final report was submitted by  

the  Investigating  Agency  entrusted  with  the  

investigation  stating  that  since  the  alleged  

transactions had taken place within the territorial  

limits of the city of Mumbai, no cause of action  

had arisen in the State of Gujarat and, therefore,  

the  investigation  should  be  transferred  to  the  

police agency in Mumbai.  There seems to be little  

doubt that the Economic Offences Wing, State CID  

(Crime),  which  had  been  entrusted  with  the  

investigation,  had  upon  initial  inquiries  

recommended that the investigation be transferred  

to the police agency of Mumbai.  In our view, both  

the trial Court as well as the Bombay High Court  

had correctly interpreted the provisions of Section  

156 Cr.P.C. to hold that it was not within the  

jurisdiction of the Investigating Agency to refrain  

itself  from  holding  a  proper  and  complete  

1

investigation merely upon arriving at a conclusion  

that  the  offences  had  been  committed  beyond  its  

territorial jurisdiction.  A glance at the material  

before the Magistrate would indicate that the major  

part of the loan transaction had, in fact, taken  

place  in  the  State  of  Gujarat  and  that  having  

regard  to  the  provisions  of  Sub-section  (2)  of  

Section  156  Cr.P.C.,  the  proceedings  of  the  

investigation could not be questioned on the ground  

of  jurisdiction  of  the  officer  to  conduct  such  

investigation.  It  was  open  to  the  learned  

Magistrate to direct an investigation under Section  

156(3)  Cr.P.C.  without  taking  cognizance  on  the  

complaint and where an investigation is undertaken  

at the instance of the Magistrate a Police Officer  

empowered under Sub-section (1) of Section 156 is  

bound, except in specific and specially exceptional  

cases, to conduct such an investigation even if he  

was of the view that he did not have jurisdiction  

to investigate the matter.  

2

23. Having regard to the law in existence today, we  

are unable to accept Mr. Syed’s submissions that  

the High Court had erred in upholding the order of  

the learned Trial Judge when the entire cause of  

action  in  respect  of  the  offence  had  allegedly  

arisen outside the State of Gujarat.  We are also  

unable to accept the submission that it was for the  

Investigating  Officer  in  the  course  of  

investigation to decide whether a particular Court  

had jurisdiction to entertain a complaint or not.  

It is the settled law that the complaint made in a  

criminal  case  follows  the  place  where  the  cause  

arises,  but  the  distinguishing  feature  in  the  

instant case is that the stage of taking cognizance  

was yet to arrive.   The Investigating Agency was  

required  to  place  the  facts  elicited  during  the  

investigation before the Court in order to enable  

the Court to come to a conclusion as to whether it  

had jurisdiction to entertain the complaint or not.  

2

Without conducting such an investigation, it was  

improper on the part of the Investigating Agency to  

forward its report with the observation that since  

the entire cause of action for the alleged offence  

had purportedly arisen in the city of Mumbai within  

the State of Maharashtra, the investigation should  

be transferred to the concerned Police Station in  

Mumbai.    Section  156(3)  Cr.P.C.  contemplates  a  

stage where the learned Magistrate is not convinced  

as to whether process should issue on the facts  

disclosed in the complaint.  Once the facts are  

received, it is for the Magistrate to decide his  

next  course  of  action.  In  this  case,  there  are  

materials to show that the appellant had filed his  

application for loan with the Head Office of the  

Bank at Ahmedabad and that the processing and the  

sanction of the loan was also done in Ahmedabad  

which clearly indicates that the major part of the  

cause of action for the complaints arose within the  

jurisdiction of the Chief Metropolitan Magistrate,  

2

Ahmedabad.  It was not, therefore, desirable on the  

part  of  the  Investigating  Agency  to  make  an  

observation  that  it  did  not  have  territorial  

jurisdiction  to  proceed  with  the  investigation,  

which was required to be transferred to the Police  

Station having jurisdiction to do so.   

24. On  the  materials  before  him  the  learned  

Magistrate  was  fully  justified  in  rejecting  the  

Final  Report  submitted  by  the  Economic  Offences  

Wing,  State  CID  (Crime)  and  to  order  a  fresh  

investigation into the allegations made on behalf  

of the Bank.  The High Court, therefore, did not  

commit any error in upholding the views expressed  

by the Trial Court.   As mentioned hereinbefore,  

Section  181(4)  Cr.P.C.  deals  with  the  Court’s  

powers to inquire or try an offence of criminal  

misappropriation or of a criminal breach of trust  

if the same has been committed or any part of the  

property, which is the subject of the offence, is  

2

received or retained within the local jurisdiction  

of the said Court.

25. The various decisions cited by Mr. Syed, and in  

particular the decision in  Satvinder Kaur’s case  

(supra) provide an insight into the views held by  

the Supreme Court on the accepted position that the  

Investigating Officer was entitled to transfer an  

investigation  to  a  Police  Station  having  

jurisdiction  to  conduct  the  same.   The  said  

question is not in issue before us and as indicated  

hereinbefore,  we  are  only  required  to  consider  

whether the Investigating Officer in respect of an  

investigation  undertaken  under  Section  156(3)  

Cr.P.C. can file a report stating that he had no  

jurisdiction to investigate into the complaint as  

the entire cause of action had arisen outside his  

jurisdiction despite there being material available  

to the contrary.  The answer, in our view, is in  

the negative and we are of the firm view that the  

2

powers  vested  in  the  Investigating  Authorities,  

under Sections 156(1) Cr.P.C., did not restrict the  

jurisdiction  of  the  Investigating  Agency  to  

investigate into a complaint even if it did not  

have territorial jurisdiction to do so.  Unlike as  

in other cases, it was for the Court to decide  

whether  it  had  jurisdiction  to  entertain  the  

complaint as and when the entire facts were placed  

before it.   

26. We, therefore, are not inclined to entertain  

the appeal and the same is, accordingly, dismissed.  

…………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (CYRIAC JOSEPH)

New Delhi Dated: November 6, 2009.

2