Executive Summary
One of the most litigated issues under Section 138 of the Negotiable Instruments (NI) Act hasn’t been about the cheque itself, but rather where the case should be filed. Can a merchant in Mumbai deposit a cheque received from a client in Delhi into his bank in Chennai, and then file the criminal case in Chennai to harass the debtor? The history of territorial jurisdiction under the NI Act is a fascinating tug-of-war between the Supreme Court and Parliament to prevent exactly this kind of misuse.
Jurisdiction under the NI Act is no longer a tool for harassment; it is strictly defined by statute to balance the scales between the complainant and the accused.
The Era of Forum Shopping
Historically, under the Supreme Court’s ruling in K. Bhaskaran v. Sankaran Vaidhyan Balan (1999), a complainant had tremendous flexibility. They could file a case in any of five locations: where the cheque was drawn, where it was presented, where it was returned by the bank, where the demand notice was sent from, or where the notice was received.
This led to massive "forum shopping." Creditors would deliberately deposit cheques in remote branch locations hundreds of miles away just to force the defaulting debtor to travel across the country for every court hearing.
The 2014 SC Reversal
Realizing the abuse, the Supreme Court drastically reversed course in Dashrath Rupsingh Rathod v. State of Maharashtra (2014). The Court ruled that a complaint could strictly only be filed where the drawee bank, the bank of the person who wrote the cheque, was situated.
While this protected debtors from harassment, it created a nightmare for businesses. A company headquartered in Mumbai supplying goods nationwide would suddenly have to file hundreds of cheque bounce cases in remote towns across India wherever their defaulting clients had bank accounts.
The 2015 Legislative Fix
The business community protested, prompting Parliament to intervene. The Negotiable Instruments (Amendment) Act, 2015 introduced Section 142(2), which permanently settled the jurisdiction debate by shifting the focus to the payee’s bank, the person receiving the money.
The Modern Rule (Section 142(2) NI Act):
1. Account Payee Cheques: If you receive a cheque and deposit it into your bank account, the case must be filed in the court having jurisdiction over the branch where you maintain your account.
2. Bearer/Over-the-Counter Cheques: If the cheque is presented directly at the branch of the person who wrote it, the case must be filed where the drawer’s bank branch is situated.
The Current Rule
Under Section 142(2) of the NI Act, the territorial jurisdiction for filing a cheque dishonour complaint for an account payee cheque vests exclusively with the court located where the payee maintains their bank account, extinguishing all previous judicial ambiguities and preventing forum shopping.
Frequently Asked Questions
I live in Delhi, but my client who gave me the cheque lives in Mumbai. Where do I file?
If you deposit the cheque into your bank account in Delhi, you will file the case in the Delhi courts. The 2015 amendment allows you to file where your bank branch is located.
What if I have multiple cheque bounce cases against the same person from different branches?
Section 142A of the NI Act states that if one case is already pending in a court, all subsequent cheque bounce cases against the same drawer must be filed in that exact same court, regardless of where the subsequent cheques were presented.
Key Takeaways
Jurisdiction is tied to the specific bank branch where the payee maintains the account, not just the city.
Subsequent offences by the same drawer must be clubbed together in the court where the first case was filed.