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
3-Judge Bench
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 — Payee's Bank Branch Only
The Supreme Court held that a Section 138 complaint can only be filed at the court within whose local jurisdiction the bank branch of the payee (complainant) is situated — i.e., the branch where the cheque was presented for payment and returned dishonoured. This is the only place where the cause of action is complete.
Transfer of Pending Cases
The Court directed that all pending Section 138 cases filed at places other than the payee's bank branch must be transferred to the appropriate court. This led to the mass transfer of thousands of cases across India.
2015 Amendment — Legislative Override
Parliament responded to this judgment by amending the NI Act in 2015 (Negotiable Instruments (Amendment) Act, 2015). Section 142A was inserted to provide that a complaint in respect of a cheque dishonour may be filed by the payee or holder in due course at a place where the cheque is delivered for collection (i.e., payee's bank) — effectively codifying the Dashrath Rupsingh ruling.
Additionally, the 2015 Amendment provided for the transfer of all pending cases to the court of competent jurisdiction as defined under the amended provision.
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 — contact us before filing.