S.142 NI Act: Supreme Court Clarifies Jurisdiction — Cheque Dishonour Complaint Must Be Filed Where Payee Maintains Bank Account, Not Place of Presentation

S.142 NI Act: Supreme Court Clarifies Jurisdiction — Cheque Dishonour Complaint Must Be Filed Where Payee Maintains Bank Account, Not Place of Presentation

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The Supreme Court has reaffirmed and clarified that territorial jurisdiction for filing a cheque dishonour complaint under Section 138 of the Negotiable Instruments Act, 1881 lies with the court within whose local limits the payee or holder in due course maintains the bank account through which the cheque was delivered for collection, not where the cheque was physically presented for encashment or deposited at a different branch or city. This ruling eliminates recurring confusion in cheque bounce litigation and aligns strictly with the 2015 amendment to Section 142(2)(a) NI Act and earlier Supreme Court precedent in Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016).

What the Supreme Court Held

  • Jurisdiction attaches to the place where the payee’s bank branch is situated, provided the cheque was delivered for collection “through an account” maintained at that branch, irrespective of where the cheque was physically deposited or processed.
  • The bench set aside the Karnataka High Court’s view that jurisdiction should follow the place of presentation (Mumbai), restoring the complaint filed where the payee’s account was actually maintained (Mangalore).
  • The Court reiterated that the statutory mandate of Section 142(2)(a), introduced in 2015, governs the forum and was crafted to remove forum-shopping and jurisdictional ambiguity in cheque bounce prosecutions.

Case Snapshot

  • Cause title: Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat.
  • Facts: Cheques were deposited at Kotak Mahindra Bank’s Opera House Branch, Mumbai, but the payee maintained his operative account at Kotak Mahindra Bank, Bendurwell, Mangalore; the complaint was filed in Mangalore.
  • Lower courts: The Magistrate and the Karnataka High Court rejected jurisdiction at Mangalore, assuming the account was in Mumbai and focusing on the site of deposit.
  • Supreme Court: Reversed, holding the Mangalore court has jurisdiction under Section 142(2)(a), as the payee’s account was maintained at Mangalore; deposit in Mumbai for collection is irrelevant.

“Once it is established that, at the time of presentation of the cheques in question, the appellant maintained his account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, he was fully justified in filing his complaint cases before the jurisdictional Court at Mangalore.”

The Statute in Focus: Section 142(2)(a) NI Act (2015 Amendment)

Section 142(2)(a) provides that an offence under Section 138 “shall be inquired into and tried only by a court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course… maintains the account is situated”. The Supreme Court’s ruling applies this language literally and purposefully:

  • “Through an account” ties forum to the payee’s account location, not the deposit point, satellite branch, or collection centre.
  • The 2015 amendment was designed to centralize and simplify jurisdiction to curb multiplicity and forum manipulation, replacing earlier, broader approaches that once allowed multiple venues.

Alignment with Precedent

  • Bridgestone India Pvt. Ltd. v. Inderpal Singh, (2016) 2 SCC 75: Confirmed that jurisdiction vests where the payee’s bank branch is located if the cheque is delivered for collection through that account; applied here as controlling precedent.
  • The decision also sits consistently with recent Supreme Court guidance that transfer and forum questions must respect the Section 142 framework, discouraging creative attempts to shift venues absent statutory grounds.

Why the Place of Presentation Is Irrelevant

In modern banking, cheques can be deposited at any branch for centralized processing and credit to an account that may be maintained elsewhere; jurisdictional rules must reflect this operational reality. The Court emphasized:

  • The decisive factor is the situs of the payee’s operative account into which the cheque is sought to be credited, not the physical counter where the instrument was handed over.
  • This construction reduces litigation over “deposit” locations and aligns with the legislature’s intent to provide a single, predictable forum.

Practical Implications

  • For complainants/payees: File Section 138 complaints in the court where the bank branch maintaining the payee’s account is situated, provided the cheque was delivered for collection through that account.
  • For accused/drawers: Objections based on the place of physical presentation or alternate branches will generally fail where the payee’s account location is established.
  • For magistrates: Verify the account-maintaining branch and whether the cheque was delivered for collection through that account; avoid dismissals based on mere deposit location or incorrect assumptions about branch relationships.
  • For counsel: Secure a bank certificate or letter confirming the account-maintaining branch as of the presentation date; this proved decisive in the Supreme Court’s analysis.

How This Resolves Earlier Confusion

Historically, K. Bhaskaran permitted complaints at multiple places tied to different components of the offence timeline; the 2015 amendment and subsequent Supreme Court decisions reoriented the rule to a single forum based on the payee’s bank branch for collection, curbing forum-shopping and jurisdictional skirmishes. The present ruling cements that post-2015 regime:

  • Single-point jurisdiction: The court where the payee maintains the account used for presenting the cheque for collection.
  • Uniform application: Deposit at other branches, cities, or collection centres is not a jurisdictional anchor.
  • Transfer discipline: Transfers cannot be sought merely because another court could arguably be competent; the chosen competent forum should ordinarily proceed.

Key Takeaways for Compliance Teams and Litigators

  • Documentary proof: Obtain authoritative bank confirmation of the account-maintaining branch at presentation time; attach to the complaint to preempt jurisdictional objections.
  • Drafting clarity: Plead that the cheque was delivered for collection “through the account” maintained at the specified branch, tracking the statutory phrase.
  • Venue strategy: Anchor litigation at the payee’s account location; resist attempts to shift focus to deposit or processing locations.
  • Legacy cases: Review pending matters where jurisdiction was premised on deposit branch; consider corrective steps consistent with the present clarification and Section 142A.

Recent Supreme Court pronouncements have consistently reiterated the centrality of Section 142(2) in territorial questions and discouraged transfer petitions premised on speculative or parallel-competent venues when the chosen court already satisfies the statutory locus. Commentary and practice notes reflect the same reading: jurisdiction is tied to the payee’s bank branch maintaining the account, not the physical site of deposit.

Conclusion

The Supreme Court’s ruling reinforces a clean and predictable rule: in cheque dishonour prosecutions under Section 138 NI Act, jurisdiction vests in the court where the payee’s account-maintaining bank branch is located, provided the cheque was delivered for collection through that account—not where it was physically presented or processed. By correcting lower court errors and reasserting the post-2015 statutory framework with support from Bridgestone, the Court has further streamlined NI Act litigation and minimized procedural derailments rooted in jurisdictional technicalities.

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