Introduction:

In the landmark judgment of Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat, the Supreme Court of India settled an important question concerning territorial jurisdiction under Section 138 of the Negotiable Instruments Act, 1881. The case revolved around a dispute where cheques issued by the respondent towards the repayment of a loan were dishonoured upon presentation. The complainant, maintaining his bank account at Kotak Mahindra Bank’s Bendurwell Branch in Mangalore, deposited the cheques at the bank’s Opera House Branch in Mumbai. After dishonour, he filed a complaint in Mangalore. However, both the Magistrate and the Karnataka High Court dismissed the complaint, holding that the jurisdiction lay with the Mumbai courts since the cheques were physically presented there. The Supreme Court, comprising Justices Sanjay Kumar and S.C. Sharma, overruled this view, reiterating that under Section 142(2)(a) of the NI Act, the court having jurisdiction is the one where the payee maintains the account into which the cheque was deposited for collection—not merely where it was physically presented. This decision draws strength from earlier rulings, notably Bridgestone India Pvt. Ltd. v. Inderpal Singh (2016), and affirms that the payee’s convenience in initiating legal proceedings should not be curtailed by technical interpretations that defeat the legislative intent.

Arguments by the Appellant:

The appellant, Prakash Chimanlal Sheth, contended that his complaint was rightly filed in Mangalore as he maintained his bank account at the Bendurwell Branch of Kotak Mahindra Bank located there. He emphasized that the presentation of the cheque for collection through the Mumbai branch was merely procedural and did not alter the substantive right to file a complaint in the location where his account existed. The appellant drew the Court’s attention to the statutory language of Section 142(2)(a) of the Negotiable Instruments Act, as amended, which specifies that the court within whose local jurisdiction the branch of the bank where the payee or holder maintains the account is situated shall have the authority to try offences under Section 138. Relying on this statutory framework and supported by judicial precedents such as Bridgestone India Pvt. Ltd. v. Inderpal Singh, the appellant submitted that the interpretation given by the Magistrate and subsequently affirmed by the High Court misrepresented the legal position. It was argued that accepting the lower court’s understanding would create unnecessary hardship and confusion, especially in cases where cheques are collected through banks with a wide network of branches across multiple cities. The appellant further argued that the dishonour of the cheque and the consequent criminal liability under Section 138 was directly connected to the bank account in Mangalore, where he maintained his account and from where the cheque was presented for clearing through inter-branch protocols.

Arguments by the Respondent:

On the other side, the respondent, Jagruti Keyur Rajpopat, argued that since the cheque was physically deposited at the Opera House Branch of Kotak Mahindra Bank in Mumbai, the jurisdiction to hear and decide the complaint should rest with the Mumbai courts. The respondent submitted that the physical act of presenting the cheque for clearance was an essential part of the offence under Section 138, and therefore, the location of such presentation could not be discounted. The respondent contended that the branch which received the cheque (in this case, the Mumbai branch) initiated the process leading to dishonour, and hence it was the locus of the cause of action. It was further argued that allowing jurisdiction to be exercised by courts where the account is maintained, even when the cheque is presented elsewhere, could open the floodgates to forum shopping, inconveniencing the drawer of the cheque. The respondent urged the court to uphold the rulings of the lower courts, which took into account the practical aspects of banking operations and cheque presentation.

Supreme Court’s Judgment and Analysis:

Delivering the judgment, Justice Sanjay Kumar authored a clear and authoritative opinion that dismantled the respondent’s arguments and corrected the understanding adopted by the Magistrate and the High Court. The Court unequivocally held that the territorial jurisdiction for initiating complaints under Section 138 of the NI Act is governed by Section 142(2)(a), which specifies that the jurisdiction lies with the court where the branch of the bank is situated in which the payee or holder in due course maintains the account—provided that the cheque in question was delivered for collection through that account. The Court highlighted the legislative intent behind the insertion of Section 142(2) by the Negotiable Instruments (Amendment) Act, 2015, which sought to remove ambiguities and bring consistency in determining jurisdiction. The judgment further observed that the understanding of the Magistrate that jurisdiction lay where the cheque was presented, i.e., Mumbai, was entirely erroneous and contrary to the express language of the law. Referring to the Bridgestone case, the Court emphasized that once the payee’s account is identified as being at a specific location, it is that location’s court which gains jurisdiction, regardless of whether the cheque was physically deposited through another branch or even a different city. The decision of the High Court was held to be unsustainable as it was based on the incorrect premise that the complainant had maintained his bank account in Mumbai. In reality, the bank account was in Mangalore, and the cheque was merely routed through the Mumbai branch for administrative convenience. Thus, the Court concluded that the complaint filed in Mangalore was perfectly maintainable in law, and the contrary view taken by the lower courts amounted to a miscarriage of justice. The Supreme Court accordingly allowed the appeal, quashed the orders of the Magistrate and the High Court, and directed the Judicial Magistrate First Class, Fifth Court, Mangalore, to entertain the complaint and proceed expeditiously in accordance with the law. This ruling provides a much-needed clarification and serves as a precedent in cases involving inter-branch cheque presentation, especially for account holders using nationwide banking networks. It effectively prevents the harassment of payees being forced to travel to remote locations merely because their cheque was routed through a branch far from their home base. The judgment respects the practical realities of banking while also safeguarding the rights of complainants, ensuring that technicalities do not defeat justice.