In a significant ruling, the Supreme Court has reaffirmed that cheque dishonour complaints under Section 138 of the Negotiable Instruments Act (NI Act) must be filed in the jurisdiction where the payee’s bank branch is located, rejecting any claims for transfer based on inconvenience.
Clarifying the law under the 2015 amendment to the NI Act, the Court emphasized that cases should be initiated where the cheque is presented for collection, not where it was originally issued. This amendment was introduced to override an earlier 2014 Supreme Court ruling that determined jurisdiction based on where the cheque was drawn.
A bench comprising Justices JB Pardiwala and R Mahadevan ruled on a transfer petition, where the petitioner sought to move a case from Chandigarh to Coimbatore, arguing that the entire transaction had taken place in Coimbatore. The Court, however, dismissed the plea, stating that the law allows complainants to file cases where their bank accounts are held.
“The legal framework clearly establishes that the presentation of the cheque for collection determines jurisdiction. The petitioner’s argument that no part of the cause of action arose in Chandigarh is unsustainable, given that the respondent bank has a collection branch there,” the Court noted.
The Court also dismissed claims that requiring the accused to defend themselves in a distant location constituted undue hardship, reiterating that the statutory provision takes precedence over personal inconvenience.
The decision comes as the Supreme Court continues to examine related cases, including Kedar Bhausaheb Malhari vs. Axis Bank Limited, which questions whether courts can transfer cheque dishonour complaints to the jurisdiction where the drawer’s bank is located despite the NI Act’s explicit bar on such transfers.
The ruling reinforces the legislative intent behind the NI Act amendment—ensuring clarity in jurisdiction while preventing unnecessary legal maneuvers to delay proceedings.
