Territorial Jurisdiction In Cheque Dishonour Cases: Post-2015 Amendment Position

The territorial jurisdiction of courts in cheque dishonour prosecutions under Section 138 of the Negotiable Instruments Act, 1881 ('N.I. Act') has long been a contested issue. Until the N.I. (Amendment) Act, 2015, Section 142 did not clarify jurisdiction, forcing courts to rely on Sections 177–179 of the Code of Criminal Procedure, 1973 ('CrPC'). These provisions proved ill-suited to the multi-step nature of cheque transactions, leading to conflicting Supreme Court pronouncements, widespread forum shopping, and multiplicity of proceedings. Supreme Court in Kedar Bhausaheb Malhari v. Axis Bank Limited^[1] has framed a question of law on this very issue, which remains pending adjudication.

Uncertainty contributed to massive pendency—18.27 lakh cheque dishonour cases were pending in subordinate courts and 38,379 in High Courts by mid-2015. This eroded confidence in cheques as instruments of commerce and discouraged credit in the banking sector.^[2]

The 2015 amendment sought to end this ambiguity by introducing Sections 142(2) and 142A. Yet, subsequent judicial developments, notably Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd.^[3], show that interpretive difficulties remain. This article examines:

1. Pre-2015 case law and judicial dissonance,
2. Legislative clarifications under the 2015 Amendment, and;
3. Emerging controversies through recent judgments.

The central question: Has the 2015 amendment conclusively resolved jurisdiction in cheque dishonour cases?

Part I: Judicial Disarray Before 2015

• K. Bhaskaran v. Sankaran Vaidhyan Balan^[4]: The Court allowed complaints at any of the five “component” places—drawing, presentation, dishonour, notice, or failure to pay. This wide latitude facilitated forum shopping and harassment of accused.
• Harman Electronics v. National Panasonic India^[5]: The Court restricted jurisdiction to the place where notice was received, not sent. While narrowing Bhaskaran, it failed to establish complete clarity.
• Dashrath Rupsingh Rathod v. State of Maharashtra^[6]: Jurisdiction confined to the drawee bank's location, dismissing complainant's convenience as irrelevant in criminal trials. Though predictable, it caused hardship to complainants and serious operational inefficiencies in industries handling cheques across India.

Summary Table:

The sharp conflict between Bhaskaran (Supra) and Rathod (Supra) created systemic uncertainty until Parliament intervened.

Part II: The 2015 Amendment

To restore certainty, the Negotiable Instruments (Amendment) Act, 2015 introduced a new framework:

• Section 142(2): Jurisdiction depends only on:
  • Clause (a): Payee's bank branch if cheque delivered “through an account” (crossed/account payee cheques).
  • Clause (b): Drawee's bank branch if cheque presented directly (bearer/open cheques).
• Explanation: Deems presentation at any branch as presentation at the
  home branch where payee holds the account.
• Section 142A: Ensures centralisation of multiple cases against the same drawer. Pending complaints in different courts are transferred to the court with jurisdiction under Section 142(2). It applies retrospectively, validating earlier transfers.

Legislative intent was clear: eliminate forum shopping, simplify litigation, and protect the payee by anchoring jurisdiction either to their bank branch or the drawer's bank—not anywhere else.

Types of Cheques:

• Through an account = account payee/crossed cheque (secure, must be credited to payee's account). Jurisdiction = payee's bank branch.
• Otherwise through an account = bearer/open cheque (encashable at counter). Jurisdiction = drawee bank branch.^[7]

Key effect: The situs of “cause of action” or the five-step sequence from Bhaskaran (Supra) became irrelevant. Jurisdiction now attaches strictly to banking locations identified in Section 142(2).

Part III: Emerging Judicial Controversies

Despite legislative clarity, fresh disputes arose around interpretation of the Explanation.

• Bridgestone India Pvt. Ltd. v. Inderpal Singh^[8]: Jurisdiction lies where the payee's bank branch is located, regardless of inter-branch transfers.
• Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat^[9]: Reaffirmed the above principle.
• Refex Energy Ltd. v. Union of India^[10]: Upheld constitutionality of Section 142A; Parliament may override judicial rulings by legislative correction.
• Shri Sendhur Agro & Oil Industries v. Kotak Mahindra Bank Ltd.^[11]: The Court controversially accepted jurisdiction at Chandigarh, where the bank's collection account was located, even though all transactions occurred in Coimbatore. This effectively privileged banks' internal policies over statutory design, creating unintended dual jurisdiction.

This interpretation risks resurrecting jurisdictional confusion the 2015 amendment sought to resolve. If “any branch” equals home branch, complainants could again be dragged to distant forums, undermining legislative intent and constitutional balance.

Section 142A deals with transfer of cheque dishonour cases to the court having jurisdiction as per Section 142 (2) (a) between the same parties. If the abovementioned interpretation is allowed, then on the one hand, if a cheque is presented and dishonoured at 'any branch' and this branch is given the same footing as home branch then the court having jurisdiction over this 'any branch' will have jurisdiction. On top of it, if subsequent or pending cases are filed between same parties, then they will be transferred to the court under which the payee's home branch is situated as per Section 142A (2) and (3). This would create two jurisdictions and will lead to multiplicity of proceedings.

Such interpretation will lead to even more confusion in cases where companies are involved. For example, a company's branch office in Chennai receives a cheque and cheque is delivered in the Chennai branch. The home branch of this company is in Delhi. As per this interpretation, Chennai court will have jurisdiction as it is at par with home branch. Consequently, if another cheque is handed over to Pune branch office of company (by different drawee) and deposited in Pune branch of company's bank then Pune court will have jurisdiction.

Since companies have multiple official branches and regularly receive multiple cheques at various locations then multiple jurisdictions will be the natural consequence.

Section 142 (2) (a), only empowers the home branch or the branch where the payee maintains the account to be the 'appropriate jurisdiction'^[12]. Even the words used in the Explanation as well as Section 142 (2) (a) are the same to intend the same situs or place or venue.

Clause (a) thus mandates: 'delivered for collection… the branch of the payee or holder in due course… maintains the account'. Explanation thus says: 'delivered for collection…to the branch of the bank in which payee or holder in due course… maintains the account'.

Delivered vs. Presented: Statutory Distinction

As per the text of Section 142 (2) and overall scheme of the Act, 'Delivered' means the payee hands the cheque to their own bank for collection. The cheque is deposited into the payee's account, and the bank forwards it to the drawee bank through clearing. Jurisdiction lies at the payee's bank branch. For example, if you deposit a cheque in your SBI branch in Delhi, SBI handles collection from HDFC, the drawee bank. Thus, “delivered for collection” refers to deposit with the payee's bank, not the drawer handing it over.

'Presented' refers to direct submission at the drawee bank, such as over-the-counter encashment or non-account presentation. Here, no account involvement of the payee exists. Jurisdiction lies with the drawee's bank branch. For example, if you present the cheque directly to HDFC at its branch, jurisdiction vests there.

Key distinction:

• Delivered for collection (Section 142(2)(a)): cheque given to payee's bank, involves the payee's account, jurisdiction = payee's bank branch, used for account payee cheques.
• Presented for payment (Section 142(2)(b)): cheque given to drawee's bank, no payee account involved, jurisdiction = drawee bank branch, used for bearer/self cheques.

Where the drawee and payee are the same bank, 'delivered' means handing over to the payee branch for collection. Internal banking policies about where a cheque is cleared are irrelevant, the Act fixes jurisdiction based on where the cheque is deposited or presented, not on a bank's internal processing location.

The conflation of these terms by courts reopens space for inconsistent application.

Policy and Constitutional Concerns

The object of Section 138 was to enhance the credibility of cheques by penalising dishonour.^[13] The 2015 amendment reaffirmed this by ensuring victim-centered jurisdiction. However, if courts allow banks' collection policies to dictate jurisdiction, justice may tilt against small borrowers who face litigation far from their place of transaction.

The principle of access to justice, implicit in Article 21^[14] and reinforced by the Preamble's commitment to justice—social, economic, and political—requires that jurisdiction not become an instrument of oppression. The Supreme Court in Navapavithra G. v. Cholamandalam Finance^[15] cautioned financial institutions against exploiting jurisdiction to harass borrowers.

Conclusion and Way Forward

The 2015 Amendment was a watershed in resolving jurisdictional uncertainty under the N.I. Act. By anchoring complaints to either the payee's or the drawer's bank branch, it effectively curtailed forum shopping and multiplicity. Yet, judicial interpretation of the Explanation in Section 142(2) continues to create pockets of confusion.

To stabilize the framework:

1. Judicial clarification:
   The Supreme Court, perhaps through a Constitution Bench or at least a three-judge bench, could settle the meaning of the Explanation to Section 142(2) to ensure uniformity across High Courts.
2. Legislative Refinement: Parliament could consider amending the Explanation to explicitly state that “any branch” is not to be equated with the payee's home branch, thereby closing the door to expansive and inconvenient jurisdictional claims.
3. Procedural Streamlining: Special NI Act benches or e-filing systems could be empowered to automatically reject complaints filed outside the statutorily defined jurisdiction, thus enforcing the territorial mandate at the threshold.

The challenge now is not legislative silence but judicial consistency. Unless courts interpret Sections 142(2) and 142A purposefully, the problem of uncertainty could resurface, undermining commercial trust in cheques. A predictable jurisdictional regime is essential for reducing pendency, bolstering credit flow, and upholding the constitutional promise of justice and equality before law.

Author is an Advocate, High Court of Delhi. Views Are Personal.

References:

1. Transfer Petition (Crl.) No. 33 of 2018 SC ↑

2. Lok Sabha Debates on the Negotiable Instruments (Amendment) Bill, cheque, 'Discussion on the Resolution on the Negotiable Instruments (Amendment) Ordinance and statutory resolution regarding disapproval of Ordinance and Bill, 6 August 2015', Lok Sabha Debates, indiankanoon.org https://indiankanoon.org/doc/71112813/ accessed 13.08.2025 ↑

3. 2025 SCC OnLine SC 508 ↑

4. (1999) 7 SCC 510 ↑

5. (2009) 1 SCC 720 ↑

6. (2014) 9 SCC 129 ↑

7. Banking Law (Professional), Module 9.1 on Banking Law and Practice, ICSI (Institute of Company Secretaries of India) Pgs. 106, 283 https://www.icsi.edu/media/webmodules/publications/9.1 Banking Law -Professional.pdf accessed [13.08.2025]. ↑

8. (2016) 2 SCC 75 ↑

9. 2025 SCC OnLine SC 1511 ↑

10. (2019) SCC OnLine Mad 9941 ↑

11. 2025 SCC OnLine SC 508 ↑

12. Press Information Bureau, 'The Negotiable Instruments (Amendment) Bill, 2015 notified; Focus on clarifying jurisdiction related issues for filing cases under Section 138', PIB, 5 January 2016 https://www.pib.gov.in/newsite/PrintRelease.aspx?relid=134187 accessed [13.08.2025] ↑

13. Bir Singh v. Mukesh Kumar (2019) 4 SCC 197 ↑

14. Constitution of India, art 21 ↑

15. TP (Crl.) No. 441 of 2024 order dated 24-10-2024 ↑