Criminal proceedings quashed for lack of territorial jurisdiction where cause of action arose entirely outside district.

The opposite party no.2 (complainant) filed Complaint Case No. 312 of 2021 in Firozabad, alleging that the applicants induced him to rent their house in Bangalore.

The complainant transferred ₹1,00,001 as security via net banking and resided in the Bangalore property.

He alleged that after vacating the house due to the COVID-19 pandemic, the applicants refused to return the security deposit and misappropriated personal belongings (cash and gold) kept at the Bangalore residence.

The Magistrate at Firozabad summoned the applicants under Sections 406 and 420 IPC.

The applicants challenged the proceedings, contending that the dispute was contractual and that the Firozabad court lacked territorial jurisdiction since the alleged offences occurred in Bangalore.

1. Whether the Court at Firozabad had the territorial jurisdiction to try the offences under Sections 406 and 420 IPC when the alleged misappropriation occurred in Bangalore.

2. Whether the Magistrate complied with the mandatory requirement of conducting an inquiry under Section 202(1) Cr.P.C. before summoning accused persons residing outside its jurisdiction.

The Court applied Section 177 of the Cr.P.C., which mandates that every offence shall ordinarily be tried by a Court within whose local jurisdiction it was committed.

It relied on the precedent Y. Abraham Ajith and Others v. Inspector of Police, Chennai and Another (2004) 8 SCC 100, establishing that "cause of action" in criminal cases consists of the bundle of facts occurring in a specific local jurisdiction that constitute the infraction of rights.

The Court applied the 2005 Amendment to Section 202(1) Cr.P.C., which makes it mandatory for a Magistrate to postpone the issue of process and conduct an inquiry or investigation if the accused resides beyond the area of the Court’s jurisdiction.

The Court observed that while the initial conversation regarding the rental agreement may have occurred at Firozabad, the actual subject matter of the dispute—the occupancy of the house, the payment of rent, the storage of valuables, and the alleged refusal to return the security deposit—all took place in Bangalore.

Consequently, no part of the "cause of action" or "bundle of facts" giving rise to the offence occurred in Firozabad; merely sending a legal notice from Firozabad did not confer jurisdiction.

Additionally, the court found a procedural lapse: the applicants resided outside the Firozabad jurisdiction, yet the Magistrate failed to conduct the mandatory inquiry required under Section 202(1) Cr.P.C. to determine if there were sufficient grounds for proceeding.

The Court concluded the dispute was essentially a contractual matter dragged into criminal prosecution without adhering to jurisdictional and procedural safeguards.

It further determined that the summoning order was vitiated by the failure to conduct a mandatory inquiry under Section 202(1) Cr.P.C.

The High Court allowed the application, quashing the entire proceedings of Complaint Case No. 312 of 2021.

The Court granted liberty to the complainant to file a fresh complaint in the appropriate Court in accordance with the law.