Cheque Bounce Case Can Be Filed Where Payee’s Bank Is Located: Supreme Court Clarifies Jurisdiction
Cheque Bounce Case Can Be Filed Where Payee's Bank Is Located: Supreme Court Clarifies Jurisdiction
SC sets aside Karnataka HC order, says complaint under NI Act maintainable at place of cheque presentation in payee’s bank.
In a significant ruling, the Supreme Court of India has held that in cheque bounce cases under the Negotiable Instruments Act, 1881, complaints can be filed at the place where the payee’s bank account is located, i.e., where the cheque was presented for collection.
The apex court clarified the scope of Section 142(2)(a) of the NI Act, introduced through the 2015 amendment, and resolved confusion arising from earlier judgments. The Court referred to the precedent set in Bridgestone India Pvt Ltd v. Inderpal Singh (2016) 2 SCC 75, reaffirming that jurisdiction in cheque dishonour cases lies with the court under whose jurisdiction the payee’s bank falls.
The case was related to Prakash Chimanlal Seth, who accused Kiyur Lalitbhai Rajpopat of borrowing ₹38.5 lakh. Kiyur’s wife, Jagruti Kiyur Rajpopat, was also made a respondent, being the guarantor and an independent beneficiary of financial assistance. Four cheques were issued in September 2023, which were deposited by the appellant at Kotak Mahindra Bank, Opera House Branch, Mumbai, but were dishonoured due to insufficient funds. The return intimation was received on 15.09.2023.
Subsequently, the appellant lodged four criminal complaints in Mangaluru, under Section 200 CrPC and Section 138 NI Act. However, the Judicial Magistrate, on 12.12.2023, dismissed the complaints citing lack of territorial jurisdiction, as the cheques were drawn on a Mumbai bank.
The Karnataka High Court upheld this view on 05.03.2024, rejecting the appellant’s challenge.
However, the Supreme Court overturned both decisions, noting that the appellant’s bank account is in Mangaluru, and the cheques were presented in Mumbai solely for deposit into that account. This fact was confirmed by bank records. The Court observed that under Section 142(2)(a) of the NI Act, as amended in 2015, the place of presentation of cheque for collection—i.e., the payee’s bank—is determinative of jurisdiction.
The SC ruled that the Magistrate’s and High Court’s orders were based on an incorrect assumption that the complainant’s account was in Mumbai.
Accordingly, the Supreme Court remanded the case to the Judicial Magistrate First Class, Fifth Court, Mangaluru, directing the court to consider the complaints afresh as per law and decide them expeditiously, including pending applications.
