Supreme Court Rules Jurisdiction for Cheque-Dishonour Trials Lies with Branch Where Payee Maintains Account; Transfers Proceedings to Kolkata

A bench of Justices J.B. Pardiwala and R. Mahadevan heard transfer petitions filed under Section 446 of the BNSS read with Order XXXIX of the Supreme Court Rules, 2013, challenging territorial jurisdiction in complaints under Section 138 of the Negotiable Instruments Act, 1881 after the 2015 amendment. The petitions arose from competing claims that a complaint registered in JMFC, Bhopal should be tried there while the complainant sought proceedings in the Metropolitan Magistrate, Kolkata on account of prior presentation and earlier evidence recordings.

The Court held that the amended Section 142(2) fixed territorial jurisdiction for account-payee cheques at the branch of the bank where the payee maintained the account (the payee’s “home branch”), and that the Explanation to Section 142(2)(a) operated as a deeming fiction to treat delivery at any branch as delivery to the home branch for jurisdictional purposes. The Court observed that “the return of the cheque by the drawee bank alone constitutes the commission of the offence and indicates the place where the offence is committed,” and emphasised the Explanation’s role in addressing commercial realities by providing that delivery at any branch is to be deemed delivery to the home branch. The Court, in its reasoning, observed: “In view of the aforesaid discussion, it is as clear as a noon day that the jurisdiction to try a complaint filed under Section 138 in respect of a cheque delivered for collection through an account, i.e., an account payee cheque, is vested in the court within whose local jurisdiction the branch of the bank in which the payee maintains the account, i.e., the payee’s home branch, is situated.” Applying these principles, the Court allowed the transfer petition and directed that the proceedings be transferred to the Metropolitan Magistrate, Kolkata and resumed from the stage prior to the order returning the complaint dated 28.07.2016.

Background The dispute arose from a cheque for Rs. 19,94,996 drawn on the State Bank of Bikaner and Jaipur, Kolkata by the accused company in favour of the complainant, deposited in the complainant’s account with State Bank of India, Bhopal, and dishonoured for insufficiency of funds. The complainant issued the statutory notice under Section 138; summons were issued by MM, Kolkata and the MM had recorded the complainant’s affidavit of evidence-in-chief. After the Negotiable Instruments (Amendment) Act, 2015 introduced Section 142(2), MM, Kolkata returned the complaint as lacking jurisdiction and allowed the complainant to present it before the competent court. The complainant then presented it in JMFC, Bhopal; the accused challenged jurisdiction there and before this Court sought transfer back to MM, Kolkata contending recording of evidence had commenced in Kolkata and invoking Dashrath Rupsingh Rathod principles protecting trials that had advanced to recording of evidence under Section 145(2).

The Supreme Court reviewed prior precedents including K. Bhaskaran, Harman Electronics, Dashrath Rupsingh Rathod, Bridgestone and subsequent decisions, analysed the text and purpose of Section 142(2) and its Explanation, and construed “delivered for collection through an account”, “presented for payment otherwise through an account” and the phrase “maintains an account”. The Court concluded that Section 142(2)(a) placed jurisdiction at the payee’s home branch for account-payee cheques, and that the Explanation created a legal fiction deeming delivery at any branch to be delivery to the home branch to prevent forum-shopping while accommodating cheque-truncation and clearing realities. The Court found Yogesh Upadhyay to be per incuriam and applied the settled construction that Section 142(2) is a special legislation occupying the field, thereby displacing general CrPC rules as to territoriality. The petition succeeded; the complaint proceedings were transferred to MM, Kolkata to resume from the point prior to return of complaint dated 28.07.2016.

Case Details: Case No.: 2025 INSC 1362 Case Title: Transfer Petitions arising out of Complaint Case No. RCT 2501046/2017 (M/s HEG Limited v. Jai Balaji Industries Ltd. & Ors.) Appearances: For the Petitioner(s): [Names not indicated in the judgment] For the Respondent(s): [Names not indicated in the judgment]