Supreme Court of India · 2014
Dashrath Rupsingh Rathod v. State of Maharashtra & Anr.
(2014) 9 SCC 129 · AIR 2014 SC 3519
Court
Supreme Court of India
Bench
P. Sathasivam CJI, R.P. Desai & R. Gogoi, JJ.
Subject
NI Act 138 — Jurisdiction
Year
2014
The Jurisdictional Problem
Prior to this judgment, there was considerable confusion about where a Section 138 NI Act cheque bounce complaint could be filed. Multiple High Courts had taken conflicting views — some held that the complaint could be filed at the place where the cheque was drawn (issuer's bank), some held it could be at the place of presentation (payee's bank), and some held it could be at any place where any part of the cause of action arose.
This led to forum shopping by complainants who would file cases in distant cities to harass accused persons. The Supreme Court was called upon to settle this question definitively.
The Ruling
Core Holding — Drawee Bank Branch (Place of Dishonour)
The three-Judge Bench held that the offence under Section 138 is completed only at the place where the cheque is dishonoured — that is, within the local jurisdiction of the branch of the drawee bank (the bank on which the cheque is drawn) that returns the cheque unpaid. A complaint could therefore be filed only before the court having jurisdiction over the place of dishonour. The Court overruled the wider view in K. Bhaskaran v. Sankaran Vaidhyan Balan, which had permitted filing at any of the several places where parts of the cause of action arose.
Transfer of Pending Cases
The Court directed that pending Section 138 complaints filed in courts that did not have jurisdiction over the place of dishonour (the drawee bank branch) be transferred to the competent court. This led to the mass transfer of thousands of cases across India.
2015 Amendment — Legislative Override
Parliament responded by enacting the Negotiable Instruments (Amendment) Act, 2015, which reversed Dashrath Rupsingh. A new Section 142(2) provides that the complaint shall be filed in the court within whose jurisdiction the branch of the bank where the payee maintains the account — the branch where the cheque is delivered for collection — is situated (and, where the cheque is presented otherwise than through an account, where the drawee bank branch is located). Section 142A was inserted to validate and govern the transfer of proceedings consistently with the amended position. The 2015 Amendment therefore shifted jurisdiction to the payee's bank; it did not codify Dashrath Rupsingh, it superseded it.
The amendment also provided for the transfer and consolidation of pending complaints to the court of competent jurisdiction as defined under the amended provisions, so that multiple complaints against the same drawer are tried together.
Cheque Bounce Matter? File in the Right Court.
Unified Chambers handles Section 138 NI Act matters across all courts in Delhi and India. Correct filing jurisdiction is critical; our team advises on Section 138 complaints and the post-2015 jurisdiction rules.