Supreme Court clarifies that jurisdiction for cheque dishonour cases under Section 138 NI Act lies with court where payee's bank branch is situated, not drawee bank. Court establishes that legal fiction in Explanation to Section 142(2)(a) deems cheque delivered to payee's home branch regardless of actual collection branch.
(i) WHETHER AFTER THE ENACTMENT OF THE AMENDMENT ACT, 2015, THE COURT WITHIN WHOSE LOCAL JURISDICTION THE DRAWEE BANK IS SITUATED, HAS THE JURISDICTION TO TRY A COMPLAINT UNDER SECTION 138?
(ii) WHETHER AFTER THE ENACTMENT OF THE AMENDMENT ACT, 2015, A COMPLAINT UNDER SECTION 138 OF THE ACT, 1881 CAN BE TRANSFERRED TO THE COURT WITHIN WHOSE LOCAL JURISDICTION THE DRAWEE BANK IS SITUATED, IF THE RECORDING OF EVIDENCE UNDER SECTION 145 HAS ALREADY COMMENCED IN THE SAID COURT?
(i) No. After the 2015 Amendment, jurisdiction lies exclusively with the court where the branch of the payee's bank is situated (where the payee maintains account), not the drawee bank.
(ii) Yes. If recording of evidence under Section 145(2) has already commenced, the case can continue in the same court to avoid procedural impropriety, even if it's not the court with jurisdiction as per Section 142(2).
Bhaskaran Case: Supreme Court held that cheque dishonour cases could be filed at any of the five places where different acts constituting the offence occurred
Harman Electronics: Limited the wide jurisdiction by holding that cause of action arises where notice is received, not sent
Dashrath Rupsingh: Restricted jurisdiction exclusively to court where drawee bank is situated
Amendment Act: Parliament introduced Section 142(2) to clarify jurisdiction lies with court where payee's bank is situated
Bridgestone India: Applied amended Section 142(2) confirming jurisdiction at payee's bank location
Yogesh Upadhyay: Interpreted jurisdiction based on actual branch where cheque was delivered for collection
Current Judgment: Overruled Yogesh Upadhyay, established that legal fiction deems cheque delivered to payee's home branch
| Legal Provision | What It Means | Application in This Case |
|---|---|---|
| Section 142(2)(a) NI Act Account Payee Cheques |
Jurisdiction lies with court where payee's bank branch is situated | Overrides earlier position of drawee bank jurisdiction |
| Explanation to Section 142(2)(a) Legal Fiction |
Deems cheque delivered to payee's home branch regardless of actual delivery | Prevents forum shopping and ensures certainty |
| Section 142(2)(b) NI Act Bearer Cheques |
Jurisdiction lies with court where drawer's bank branch is situated | Applies when cheque presented otherwise through account |
| Section 142A NI Act Transfer of Cases |
Allows transfer of pending cases to court with jurisdiction | Balances jurisdictional correctness with practical realities |
The specific branch of the bank where the payee maintains their account, regardless of which branch the cheque was actually deposited for collection.
A legal assumption that a thing is true which is not necessarily true, used to achieve a particular legal result. Here, deeming cheque delivered to home branch.
A cheque that can only be deposited into the account of the payee and cannot be endorsed to anyone else. Crossed with "Account Payee" or "A/C Payee".
A cheque payable to the person who presents it to the bank for payment, not necessarily the original payee. Can be transferred by delivery.
"The legal fiction created in the Explanation to Section 142(2)(a) stipulates that jurisdiction would lie at the Home Branch of the Payee irrespective of where the cheque has been delivered by the Payee. This interpretation prevents forum shopping and ensures certainty in jurisdictional matters."
This judgment establishes that the 2015 Amendment to the Negotiable Instruments Act fundamentally changed the jurisdictional landscape for cheque dishonour cases. The Court emphasized that the legal fiction in the Explanation to Section 142(2)(a) creates certainty by fixing jurisdiction at the payee's home branch, preventing manipulation of venue selection.
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This analysis decodes a complex jurisdictional judgment to help businesses and individuals understand where to file cheque dishonour cases after the 2015 Amendment.