The new law on territorial jurisdiction for cheque bounce matters

Bydeb

The new law on territorial jurisdiction for cheque bounce matters

The Gujarat High Court in its recent judgment of Brijendra Enterprise v. State of Gujarat and another has explained the law relating to territorial jurisdiction for filing a complaint for dishonor of cheques.   

As per the Negotiable Instruments (Amendment) Act, 2015 a complaint can be filed under Section 138 for dishonor of cheque at a court within whose local jurisdiction:-
 

  • The branch of the bank is located
  • The payee or the holder maintains an account
     

In view of this recent amendment, a complaint for dishonor of cheque under Section 138 of Negotiable Instruments Act can be filed in the court situated at a place where the bank of the payee is situated.

For better understanding, consider the following examples-
 

  1. Mr. A holds an account in Navrangpura Branch, Ahmedabad of “XYZ” Bank, issues a cheque payable in favor of B. B, who holds an account with the M.S University Road Branch, Vadodara of the “PQR” bank, deposits the said cheque at Surat Branch of ‘PQR bank’ and the cheque is dishonored. The complaint will have to be filed before the court having jurisdiction where the M.S University road branch is situated.
     
  2. A holds an account with the Navrangpura branch, Ahmedabad, of “XYZ” Bank issues a cheque payable in favor of B. B presents the cheque at the Vadodara Branch of the ‘XYZ’ Bank ( but B does not hold an account in any branch of the “XYZ” bank) and the cheque is dishonored. The complaint will have to be filed before the court having jurisdiction over the Navrangpura branch, Ahmedabad, of “XYZ” Bank.
     

To summarise, when the cheque is delivered for collection through an account, the complaint is to be filed before the court  where the branch of the bank is located, where the payee or the holder in due course maintains his account and, when the cheque is presented for payment over the bank, the complaint is to be filed before the court where the drawer maintains his account. 

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