The Supreme Court has clarified that in cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881, the territorial jurisdiction lies with the court where the payee maintains their bank account—not where the cheque was presented for collection.
A bench of Justices Sanjay Kumar and Satish Chandra Sharma delivered the ruling on July 25, 2025, in Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat [Criminal Appeal Nos. _____ of 2025 (@ SLP(Crl.) Nos. 5540–5543 of 2024)], while allowing an appeal against orders of the Karnataka High Court and a Mangalore Magistrate.
Background
The appellant, Prakash Chimanlal Sheth, alleged that one Keyur Lalitbhai Rajpopat borrowed ₹38,50,000 from him, and that the respondent, Jagruti Keyur Rajpopat, wife of the borrower, stood as a guarantor. He further stated that she availed financial assistance herself and issued four cheques in September 2023 to discharge both liabilities.
These cheques were deposited by the appellant at Kotak Mahindra Bank’s Opera House Branch in Mumbai but were dishonoured due to insufficient funds. The dishonour was intimated on 15.09.2023.
Subsequently, the appellant filed four complaints under Section 200 CrPC read with Section 138 of the N.I. Act before the Judicial Magistrate First Class, Fifth Court, Mangalore. However, on 12.12.2023, the Magistrate returned the complaints, stating that since the drawee bank was in Mumbai, the court at Mangalore lacked jurisdiction.
The appellant challenged this before the Karnataka High Court, which dismissed the petitions on 05.03.2024, affirming the Magistrate’s view.
Supreme Court’s Findings
Before the Supreme Court, the appellant clarified that his account was with Kotak Mahindra Bank’s Bendurwell Branch in Mangalore, and the cheques were deposited at the Mumbai branch only for credit to that account. A letter from the Mangalore branch and a bank statement from the respondent supported this claim.
The respondent’s counsel also confirmed that the appellant had previously held an account at the Mumbai branch but had since transferred it to Mangalore.
The Court noted:
“Once it is established that, at the time of presentation of the cheques in question, the appellant maintained his account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, he was fully justified in filing his complaint cases before the jurisdictional Court at Mangalore.”
Relying on Section 142(2)(a) of the N.I. Act, the Court held that the appropriate jurisdiction is where the payee maintains their account, if the cheque is presented through an account. It referred to the ruling in Bridgestone India Private Limited v. Inderpal Singh, (2016) 2 SCC 75, which had interpreted the amended provision similarly.
The Court found that both the Magistrate and the High Court had erred by assuming the appellant’s account was still in Mumbai.
Allowing the appeals, the Supreme Court set aside the orders dated 05.03.2024 (High Court) and 12.12.2023 (Magistrate). It directed the Magistrate at Mangalore to entertain and expeditiously decide the complaints filed by the appellant.
All pending applications were closed.
