25 July 2025 Negotiable Instruments Act >> Criminal Law  

This case of Prakash Chimanlal Sheth v/s Jagruti Keyur Rajpopat addresses the correct jurisdiction for filing a complaint under Section 138 of the Negotiable Instruments Act, 1881, which deals with the dishonor of cheques. The appellant had lent money to an individual, and the respondent, the borrower's wife, issued four cheques to repay the debt. The appellant deposited these cheques at the Kotak Mahindra Bank's Opera House Branch in Mumbai to be credited to his account. However, his bank account was actually located at the Kotak Mahindra Bank's Bendurwell, Mangalore Branch.

When the cheques were dishonored, the appellant filed four complaint cases in Mangalore. The local magistrate and the Karnataka High Court dismissed these cases, reasoning that since the cheques were presented at a bank branch in Mumbai, the Mangalore court lacked territorial jurisdiction. The High Court mistakenly assumed that the appellant's account was also in Mumbai.

The Supreme Court, however, overturned these decisions. It clarified that under Section 142(2)(a) of the N.I. Act, the correct jurisdiction for a dishonored cheque case is the location of the branch where the payee (the person receiving the payment) maintains their account. Since the appellant's account was in Mangalore, the complaints should have been filed there, regardless of where the cheques were physically deposited. The SupremeCourt established that the High Court's decision was based on a factual error about the appellant's account location. As a result, the Supreme Court allowed the appeal, reinstated the complaints in the Mangalore court, and directed the magistrate to proceed with the cases.

  Negotiable Instruments Act, 1881