25 July 2025 Cheque Bounce >> Civil/Debt  

This case of Prakash Chimanlal Sheth v/s Jagruti Keyur Rajpopat clarifies the appropriate jurisdiction for filing complaints related to cheque dishonor under Section 138 of the Negotiable Instruments Act, 1881. The appellant, who lent money to Keyur Lalitbhai Rajpopat with his wife Jagruti Keyur Rajpopat as guarantor, received four cheques from Jagruti that were dishonored due to insufficient funds.

The appellant initially deposited these cheques at the Kotak Mahindra Bank, Opera House Branch, Mumbai. However, he maintained his primary account at the Kotak Mahindra Bank, Bendurwell, Mangalore Branch. Upon dishonor, he filed complaints in Mangalore. Both the Judicial Magistrate First Class in Mangalore and the High Court of Karnataka at Bengaluru dismissed his complaints, stating that the Mumbai branch (where the cheques were deposited) had jurisdiction.

The Supreme Court, however, overturned these decisions. It highlighted Section 142(2)(a) of the N.I. Act, which stipulates that jurisdiction lies with the court where the payee maintains their account, provided the cheque is delivered for collection through that account. Since the appellant's account was at the Bendurwell, Mangalore Branch, despite the physical deposit in Mumbai, Mangalore was the correct jurisdiction. The Court emphasized that the lower courts erred in their interpretation of the law, setting aside their orders and directing the Mangalore court to proceed with the complaints.

Section 138, Negotiable Instruments Act - 1881  

Section 142, Negotiable Instruments Act - 1881  

Negotiable Instruments Act, 1881