S.142 NI Act | Cheque Dishonour Complaint To Be Filed Where Payee Maintains Bank Account; Not Place Of Presentation : Supreme Court

The Supreme Court reiterated that the territorial jurisdiction for a complaint for the offence of cheque dishonour under Section 138 of the Negotiable Instruments Act is with the Court having jurisdiction over the place where the payee maintains his bank account through which the cheque was delivered for collection.  

The jurisdiction is not where the cheque was physically presented for encashment through the account but at the place where the account is maintained.

Holding thus, the bench comprising Justices Sanjay Kumar and SC Sharma set aside the Karnataka High Court's decision, which rejected a complaint filed in Mangalore on the ground that the cheque was presented in Mumbai.

The case arose from a dispute concerning the dishonour of cheques issued by the Respondent towards repayment of a loan. The Appellant had deposited these cheques at Kotak Mahindra Bank's Opera House Branch in Mumbai. However, the account was maintained at the Bendurwell Branch in Mangalore. When the cheques got dishonoured, he filed a complaint there under the Negotiable Instruments Act. However, the Magistrate in Mangalore dismissed the complaint on the ground that jurisdiction lay where the cheques were physically presented i.e., Mumbai, a view later upheld by the High Court.

Citing Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016), where it was held that Section 142(2)(a) of the NI Act confers jurisdiction on courts where the payee's bank branch is situated, provided the cheque is deposited through that account, the judgment authored by Justice Sanjay Kumar observed:

“Therefore, 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 understanding to the contrary of the learned Magistrate at Mangalore was erroneous and completely opposed to the clear mandate of Section 142(2)(a) of the N.I. Act. The High Court proceeded to confirm the erroneous order passed by the learned Magistrate under the wrong impression that the appellant maintained his bank account at the Opera House Branch of the Kotak Mahindra Bank at Mumbai.”

Resultantly, the appeal was allowed with a direction to the Judicial Magistrate First Class, Fifth Court, Mangalore, to entertain and expeditiously adjudicate the complaint cases filed by the appellant in accordance with law.

Cause Title: Prakash Chimanlal Sheth Versus Jagruti Keyur Rajpopat

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Appearance:

For Petitioner(s) : Mr. Shailesh Madiyal, Sr. Adv. Mr. Anantha Narayana M.G., AOR Mr. Shakeer Abbas, Adv. Mr. M.L. Gopalakrishna, Adv. Mr. V.C. Shukla, Adv. Ms. Divija Mahajan, Adv.

For Respondent(s) : Mr. Pulkit Prakash, AOR Mr. Mudit Makhijani, Adv. Mr. Eeshan Pandey, Adv. Mr. Arjun Mohan, Adv. Ms. Arushi Sharma, Adv. Ms. Ankita Sinha, Adv. Mr. Saimon Farooqui, Adv.