Cheque-bounce case in complainant’s bank jurisdiction, says SC

In a significant verdict, the Supreme Court held on Friday that a cheque-bounce case can only be filed in a court within the jurisdiction of which the complainant’s bank is located. Usually, a dispute arises with regard to the jurisdiction of a court where cheque dishonour cases under section 138 of the Negotiable Instruments Act, 1881, have to be filed. Section 138 of the Act deals with a cheque bouncing due to the insufficiency of funds in the bank account. A bench of Justices JB Pardiwala and R Mahadevan settled the legal conundrum while dealing with some transfer petitions filed in a cheque-bounce case.

“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,” the bench said.

The petitioners had approached the top court in the matter through advocate Kaustubh Shukla. In its verdict, the bench also referred to the Negotiable Instruments (Amendment) Act, 2015. It noted that prior to the enactment of the 2015 Act, the issue relating to territorial jurisdiction was “quite complex”.