Court Cases

Cheque Bounce Cases Must Be Filed Where Payee’s Bank Account is Located

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Recently, the Supreme Court made an important clarification about where cheque bounce cases should be filed under Section 138 of the Negotiable Instruments Act (N.I. Act). The Court said that such complaints must be filed in the city or area where the payee (the person receiving the cheque) holds their bank account—not where the cheque was physically dropped for deposit.

The case involved a financial dispute between a person (appellant) and a woman named Jagruti Keyur Rajpopat. The appellant said that Jagruti, who is the wife of one Keyur Rajpopat, had acted as a guarantor for a loan of ₹38.5 lakh. To repay this loan, she gave four cheques in September 2023.

The appellant said that Keyur Lalitbhai Rajpopat borrowed a sum of 38,50,000/- from him and the respondent herein, ₹ viz., Jagruti Keyur Rajpopat, being the wife of Keyur Lalitbhai Rajpopat, stood as a guarantor for the repayment of the loan. It appears that she also availed financial assistance from the appellant and four cheques came to be issued by her during September, 2023, in discharge of her husband’s liability and her own liability.

These cheques were deposited by the appellant at Kotak Mahindra Bank, Opera House Branch, Mumbai. However, they were dishonored due to insufficiency of funds, as was intimated to the appellant on 15.09.2023. Thereupon, he filed four complaint cases in C.C. Nos. 1258, 1259, 1260 and 1261 of 2023 under Section 200 Cr.P.C. read with Section 138 of the N.I. Act before the learned Judicial Magistrate First Class, Fifth Court, Mangalore.

However, by order dated 12.12.2023, the learned Magistrate returned the complaint cases for presentation before the jurisdictional Court, stating that the drawee bank was Kotak Mahindra Bank at Mumbai and, therefore, his Court had no territorial jurisdiction to entertain the complaint cases.

Aggrieved thereby, the appellant approached the High Court of Karnataka at Bengaluru under Section 482 Cr.P.C., vide Criminal Petition Nos. 1237, 1720, 1769 and 1770 of 2024. However, the High Court confirmed the order passed by the learned Magistrate and dismissed his petitions by order dated 05.03.3024. Hence, these appeals.

The appellant argued that even though the cheques were deposited in Mumbai, his bank account was actually located at Kotak Mahindra Bank’s Bendurwell Branch in Mangalore. According to Section 142(2)(a) of the N.I. Act, this means the Mangalore court had the right to hear the case because the payee’s account (the one where the cheque was meant to be credited) was in Mangalore.

To support this claim, the appellant submitted a certificate from Kotak Mahindra Bank confirming that his account was indeed based in Mangalore. Interestingly, the respondent’s own lawyer also agreed that the account had originally been in Mumbai but had been shifted to Mangalore. Aggrieved, the appellant moved the Supreme Court.

Supreme Court’s Decision

The Supreme Court referred to a previous case—Bridgestone India Private Limited v. Inderpal Singh—which had already made it clear that under Section 142(2)(a), the correct court for filing a cheque bounce case is the one where the payee’s account is located.

The Court said that since the appellant had an account in Mangalore at the time he deposited the cheques, it was completely valid for him to file his complaint there. The Court added that both the Magistrate and the Karnataka High Court had misunderstood the law by assuming the account was still in Mumbai.

As a result, the Supreme Court cancelled the earlier orders and allowed the appeals.

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