Supreme Court holds cheque complaint was maintainable where payee's bank account was held, sets aside orders returning cases for want of territorial jurisdiction

A bench of Justice Sanjay Kumar and Justice Satish Chandra Sharma heard appeals arising from the return of four complaints under Section 138 of the Negotiable Instruments Act on the ground of territorial jurisdiction. The narrow issue concerned the court in which complaints for dishonour of cheques must be filed where the cheques were presented at one branch but the payee maintained an account at another branch.

The Court allowed the appeals, set aside the orders passed by the Judicial Magistrate First Class, Fifth Court, Mangalore and the High Court of Karnataka, and directed the learned Magistrate at Mangalore to entertain and expeditiously adjudicate the complaint cases in accordance with law. The Court held that jurisdiction under Section 142(2)(a) of the N.I. Act lay where the cheque was “delivered for collection through an account” in the branch of the bank where the payee maintained the account, affirming the principle in Bridgestone India Pvt. Ltd. v. Inderpal Singh. The Court, in its reasoning, observed: "As regards territorial jurisdiction for instituting a complaint in relation to dishonor of a cheque, Section 142(2)(a) of the N.I. Act makes it clear that an offence under Section 138 thereof should be inquired into and tried only by a Court within whose local jurisdiction, if the cheque is delivered for collection through an account, the branch of the bank where the payee maintains the account is situated. This provision, as it stands after its amendment in 2015, was considered in Bridgestone India Private Limited vs. Inderpal Singh and this Court affirmed that Section 142(2)(a) of the N.I. Act vests jurisdiction apropos an offence under Section 138 thereof in the Court where the cheque is delivered for collection, that is, through an account in the Branch of the Bank where the payee maintains that account." The Court further noted that "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" and described the Magistrate's contrary view as "erroneous and completely opposed to the clear mandate of Section 142(2)(a) of the N.I. Act."

Background The appellant alleged that Keyur Lalitbhai Rajpopat borrowed ₹38,50,000 and that the respondent, his wife, stood as guarantor and also availed funds, issuing four cheques in September 2023. Those cheques were deposited at Kotak Mahindra Bank, Opera House Branch, Mumbai, and were dishonoured for insufficiency of funds, with the appellant receiving notice of dishonour on 15.09.2023. The appellant filed four complaints before the Judicial Magistrate First Class, Fifth Court, Mangalore. The learned Magistrate returned the complaints on 12.12.2023 holding that the drawee branch was in Mumbai and his Court lacked territorial jurisdiction. The appellant petitioned the Karnataka High Court under Section 482 Cr.P.C.; the High Court confirmed the return and dismissed the petitions on 05.03.2024.

On appeal to the Supreme Court, documentary evidence showed the appellant's account number as 0412108431 and a certificate from Kotak Mahindra Bank, Bendurwell, Mangalore, confirming the same account number at that branch. The respondent accepted that the appellant earlier maintained an account at Opera House, Mumbai, but had transferred it to the Bendurwell, Mangalore branch. The Supreme Court applied Section 142(2)(a) post-amendment jurisprudence and relied on this Court's decision in Bridgestone to conclude that the complaints were maintainable in Mangalore. The appeals were allowed, the impugned orders were set aside, and the Magistrate was directed to proceed expeditiously. Pending applications stood closed.

Case Details: Case No.: Criminal Appeal Nos. of 2025 (@ S.L.P.(Crl.) Nos. 5540-5543 of 2024) Case Title: Prakash Chimanlal Sheth … Appellant Versus Jagruti Keyur Rajpopat … Respondent Appearances: For the Petitioner(s): Senior counsel for the appellant (name not specified in judgment) For the Respondent(s): Counsel for the respondent (name not specified in judgment)