The Supreme Court today (March 6) ruled that a cheque dishonor complaint under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), should be filed in the court having jurisdiction over the branch of the bank where the payee maintains an account i.e., where the cheque is presented for collection.
Taking reference to Section 142(2) introduced via the 2015 amendment to the NI Act, the Court clarified that the jurisdiction to adjudicate upon the cheque dishonor complaint lies with the court where the branch of the bank (where the payee maintains the account) is located. The 2015 amendment was brought in by the Parliament to address the confusion created by the Supreme Court's judgment in Dasrath Rupsingh Rathod v State of Maharashtra (2014) which held that the jurisdiction for cases under Section 138 is determined by the place of the bank where the cheque was drawn.
“A conjoint reading of Section 142(2)(a) along with the explanation thereof, makes the position emphatically clear that, when a cheque is delivered or issued to a person with liberty to present the cheque for collection at any branch of the bank where the payee or holder in due course, as the case may be, maintains the account then, the cheque shall be deemed to have been delivered or issued to the branch of the bank, in which, the payee or holder in due course, as the case may be, maintains the account, and the court of the place where such cheque was presented for collection, will have the jurisdiction to entertain the complaint alleging the commission of offence punishable under Section 138 of the N.I. Act. In that view of the position of law, the word 'delivered' used in Section 142(2)(a) of the N.I. Act has no significance. What is of significance is the expression 'for collection through an account'. That is to say, delivery of the cheque takes place where the cheque was issued and presentation of the cheque will be through the account of the payee or holder in due course, and the said place is decisive to determine the question of jurisdiction.”,
