Negotiable Instruments Act, 1881 (N.I. Act) – Section 138 – Dishonour of Cheque – Territorial Jurisdiction for complaint – Section 142(2)(a) N.I. Act (as amended in 2015).
Issue: The central issue in these appeals was the correct territorial jurisdiction for filing complaints related to offences punishable under Section 138 of the N.I. Act.
Facts: The respondent issued four cheques to the appellant, which were dishonoured due to insufficiency of funds. The appellant deposited these cheques at Kotak Mahindra Bank, Opera House Branch, Mumbai. Subsequently, the appellant filed four complaint cases under Section 200 Cr.P.C. read with Section 138 of the N.I. Act before the Judicial Magistrate First Class, Fifth Court, Mangalore. The learned Magistrate returned the complaints, stating a lack of territorial jurisdiction as the drawee bank was in Mumbai. This order was upheld by the High Court of Karnataka at Bengaluru.
Appellant’s Contention: The appellant asserted that he maintained his bank account with Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, and had merely presented the cheques at the Mumbai Branch to be credited to his Mangalore account. He contended that the High Court proceeded on the erroneous assumption that his account was maintained at the Mumbai Branch. It was not disputed that the appellant maintained his bank account with the Bendurwell, Mangalore Branch, and merely deposited the cheques at the Mumbai Branch for the purpose of crediting his account in Mangalore.
Legal Principle: The Court referred to Section 142(2)(a) of the N.I. Act, which, after its amendment in 2015, clarifies that an offence under Section 138 should be inquired into and tried only by a Court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated, if the cheque is delivered for collection through an account. This provision was affirmed by the Supreme Court in Bridgestone India Private Limited vs. Inderpal Singh [(2016) 2 SCC 75].
Held: The Supreme Court determined that once it was established that the appellant maintained his account with the Kotak Mahindra Bank at its Bendurwell, Mangalore Branch, at the time of presentation of the cheques, he was fully justified in filing his complaint cases before the jurisdictional Court at Mangalore. The understanding of the learned Magistrate at Mangalore and its confirmation by the High Court were found to be erroneous and contrary to the clear mandate of Section 142(2)(a) of the N.I. Act.
Decision: The appeals were allowed, setting aside the impugned order of the High Court dated 05.03.2024 and the order of the learned Judicial Magistrate First Class, Fifth Court, Mangalore, dated 12.12.2023. The Judicial Magistrate First Class, Fifth Court, Mangalore, was directed to entertain and expeditiously adjudicate the complaint cases filed by the appellant in accordance with law.
Judges: Sanjay Kumar, J.; Satish Chandra Sharma, J.
Date of Judgment: July 25, 2025
