The Supreme Court has ruled that cheque bounce complaints under Section 138 NI Act must be filed only in the court where the payee’s bank home branch is located, clarifying jurisdiction after the 2015 amendment and preventing forum shopping.
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NEW DELHI: In a judgment impacting cheque dishonour litigation across India, the Supreme Court on 28 November 2025, has clarified that the jurisdiction to try complaints under Section 138 of the Negotiable Instruments Act, 1881, relating to account-payee cheques, lies exclusively with the court where the payee’s bank home branch is located. The ruling was delivered by a Division Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan.
The judgment came while deciding a batch of Transfer Petitions, the lead matter requesting the transfer of a complaint from Judicial Magistrate First Class (JMFC), Bhopal, to the Metropolitan Magistrate (MM), Kolkata.
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The Court held that:
“…the jurisdiction to try a complaint filed under Section 138 in respect of a cheque delivered for collection through an account, i.e., an account payee cheque, is vested in the court within whose local jurisdiction the branch of the bank in which the payee maintains the account is situated.”
Accordingly, MM Kolkata had no jurisdiction to try the case since the payee’s bank account was located in Bhopal.
Background of the Case
The dispute arose from a commercial transaction between two companies, where the accused company, along with its directors, issued a cheque amounting to ₹19,94,996 to the complainant company against an invoice dated March 23, 2014. This cheque was drawn on State Bank of Bikaner & Jaipur, Kolkata and was deposited by the complainant on June 19, 2014, in its bank account maintained at State Bank of India, Bhopal. Upon presentation, the cheque was dishonoured due to insufficient funds, prompting the issuance of a statutory legal notice under the NI Act.
The accused contended that the cheque had been issued merely as a security deposit rather than in discharge of a legally enforceable debt. The complainant first instituted the complaint before the Metropolitan Magistrate in Kolkata; however, the Court returned the complaint, observing lack of territorial jurisdiction and advising the complainant to approach the appropriate forum.
The matter was subsequently filed before the JMFC in Bhopal. The accused objected to the jurisdiction of the Bhopal Court, relying on provisions of the Code of Criminal Procedure (CrPC), but the objection was rejected. This led to the filing of a Criminal Revision before the Sessions Court, Bhopal, and eventually to the Supreme Court.
Issues Before the Supreme Court
- Whether courts where the drawee bank is located retain jurisdiction after the Amendment Act, 2015?
- Can the case be transferred to such a court when evidence under Section 145 NI Act has already begun?
Supreme Court’s Reasoning
The Court devoted extensive analysis to jurisdictional development under Section 138 NI Act, reviewing seminal cases including K. Bhaskaran (1999), Harman Electronics (2009), and Dashrath Rupsingh Rathod (2014), tracking how jurisdiction has shifted from liberal multi-forum options to strict localisation. The Court recognised that Dashrath Rupsingh imposed an offence-centric approach by confining jurisdiction to the place of dishonour, i.e., where the drawee bank is located.
On examining the legal issue, the Court held that once a cheque is identified as an account payee cheque, the point of delivery is legally recognised as the branch where the payee maintains the account. Consequently, the jurisdiction to try the complaint lies exclusively with the court within whose local area the payee’s bank branch is situated. The Court rejected the contention that jurisdiction should depend on the location of the drawee bank (i.e., the bank on which the cheque is drawn).
The judgment referenced Bijoy Kumar Moni v. Paresh Manna (2024 SCC OnLine SC 3833) to explain the meaning of “maintains an account”, noting that the term reflects an intrinsic relationship between account holder and branch, not merely the bank as a whole. The Court also cited Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016) 2 SCC 75, where delivery to the bank in the payee’s location was held to confer jurisdiction at the payee’s branch.
Effect of the 2015 Amendment
The Court emphasised that Section 142(2)(a) inserted via the NI (Amendment) Act, 2015, overrides general criminal procedure provisions under CrPC.
The Bench clarified that:
- The terms “delivered for collection” refer to delivery to the payee’s bank.
- Jurisdiction is determined by the place of delivery of the cheque to the payee’s bank, i.e., the home branch.
- Presentment to the bank and delivery are distinct legal acts.
Commercial Convenience
Additionally, the Court distinguished between presenting a cheque under Section 64 and delivery under Section 46, stating that the latter is central to determining jurisdiction for account-payee cheques. The explanation to Section 142(2)(a) includes a deeming provision so that even if a cheque is deposited in a different branch for commercial convenience, it is legally considered delivered to the home branch.
While the Supreme Court agreed that JMFC Bhopal had rightful jurisdiction, it noted that significant progress had already been made before the MM Kolkata before the return of the complaint, including the commencement of evidence under Section 145(2) of the NI Act. To avoid procedural injustice and repetition of judicial effort, the Court transferred the case back to the Metropolitan Magistrate, Kolkata, directing that proceedings resume from the stage preceding the order returning the complaint dated July 28, 2016.
The Supreme Court’s ruling brings essential clarity to jurisdictional conflicts in cheque dishonour cases, reinforcing that:
- Complaints under Section 138 involving account payee cheques must be filed where the payee maintains the bank account, not where the cheque is dishonoured.
- The NI Act Amendment of 2015 overrides general criminal procedure provisions.
- Procedural fairness remains an important judicial consideration when deciding transfer petitions under Section 142A.
The Transfer Petition was allowed, and all connected petitions were disposed of, with directions to circulate copies of the judgment to all High Courts.
What are Sections 138 of the NI Act?
Section 138: Dishonour of Cheque
- Offence: Dishonour of a cheque due to insufficient funds or exceeding overdraft.
- Essential Elements:
- Cheque drawn for payment of money returned unpaid.
- Cheque presented within 6 months of its validity period.
- Payee issues a written demand notice within 30 days of dishonour.
- Drawer fails to pay within 15 days of notice.
- Penalty: Imprisonment up to 2 years, or fine up to twice the cheque amount, or both.
- Scope: Debt or liability must be legally enforceable.
Case Title:
Jai Balaji Industries Ltd. and Ors. v. M/s HEG Ltd.
TRANSFER PETITION (CRL.) NO. 1099 OF 2025
CASE JUDGMENT
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