The Supreme Court, in Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat [2025: INSC: 897], has reiterated the principle governing territorial jurisdiction for an offence of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). Jurisdiction lies with the court within whose limits the bank branch is situated where the payee maintains the account through which the cheque was presented for collection.
Therefore, jurisdiction is determined not by the physical location where the cheque was deposited, but by the location of the bank branch where the payee’s account is held.
In the instant case, the Complainant deposited the cheques at the Opera House Branch of Kotak Mahindra Bank in Mumbai, while his account was maintained with the bank’s Mangalore branch. The Magistrate in Mangalore dismissed the subsequent complaint, citing a lack of jurisdiction on the grounds that the place of physical presentation determined jurisdiction. While the Karnataka High Court upheld this dismissal, the Supreme Court reversed the decision.
In its reasoning, the Supreme Court relied on its earlier judgment in Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016). This precedent established that Section 142(2)(a) of the Negotiable Instruments Act confers jurisdiction upon the court where the payee’s bank branch is located, provided the cheque is deposited for collection into the account maintained at that branch.
Jurisdiction of the court in cheque dishonour cases
The Section 142 (2) (a) of Negotiable Instruments Act, 1881, states:
“The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction, —
(a)if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or
(b)if the cheque is presented for payment by the payee or holder in due course, otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.
Explanation. — For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.”
References
- Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat, [2025: INSC: 897]
- Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016)
