GUJARAT NATIONAL LAW

UNIVERSITY GANDHINAGAR

Law of Banking and Negotiable Instruments

PROJECT ON

Renouncement of Territorial Jurisdiction of Section 138

of Negotiable Instrument Act, 1881

SUBMITTED BY

Shubham Phophalia

(16B153)
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

-: ACKNOWLEDGEMENT :-

The Project work on a topic with such complications is a

tedious task and hence doing a project on such a theme
requires guidance by the subject teachers. The enlightening
experience provided to me by my teachers, who proved to be
the guiding source to complete this project work. As always I
owe sincere gratitude for their untiring and instant academic,
intellectual support and guidance.
I deem it to be my utmost privilege to present this project on
the very pertinent topic of “Renouncement of Territorial
Jurisdiction of Section 138 of Negotiable Instrument Act, 1881
” At the outset, I would like to express our deepest gratitude to
Mrs. Garima Goswami, Assistant Professor of Law at the
Gujarat National Law University for granting this wonderful
opportunity to research and his precious guidance in the
course of preparing this paper.
And also I would like to thank everyone friends, fellow
students and many other who helped me to complete my
research.
Therefore, all in all, I take this opportunity to express our
heartfelt gratitude to one and all under whose valuable
support our crude brainwave has finally materialized into this
coherent and cogent document.

Thanking everyone
Vinod Panwar

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

(3rd year, GNLU)

CONTENTS

Particulars
Page

1. Acknowledgements …………………………………………...…2
2. Abstract..........................................................................

.................4
3. Introduction…………………………………………………...…..5
4. Negotiable Instrument…………………………………………...5
5. Section 138 Of Negotiable Instrument Act,

1881……………….6
6. Jurisdiction……………………………………………………..….7
7. Latest Law On Jurisdiction Of Cheque

Dishonour.....................9
8. Precedent........................................................................

................10
9. The Negotiable Instrument (Amendment) Bill,

2015................14

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

10. Conclusion......................................................................

................17
11. Bibliography....................................................................

...............18

ABSTRACT

Acknowledge, supports and analysis of the statutory provision

regarding the jurisdiction for the cases of Dishonour of cheque
and the aspect given by the Apex Court on the same. Identifies
relevant steps taken under the statute for the protection and
betterment of plaintiff and accused and a thorough study of
the Latest Apex Court Decision on the jurisdictional aspect.

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

INTRODUCATION

In India there is reason to believe that Instrument of Exchange were in

use from early times and The Mohammadan Sovereign of Delhi
introduced the use of paper representing money in the early part of the
Fourth century. The word “Hundi” a generic term used to indicate the
instrument of Exchange in Vernacular and it is derived from the Sanskrit
word “Hund” which means “to collect.” Popularity and increase of the
trade and business there was great demand to use the paper currency as
the huge amount cannot be transferred in the coin currency. These were
used in trade and credit transactions and used as remittance instruments
for the purpose of transfer of funds from one place to another. In Modern
era ‘Hundi’ used as Travellers Cheques.

Negotiable Instrument
Negotiable instrument is a written order or unconditional promise to pay
a fixed sum of money on demand or at a certain time. A negotiable
instrument can be transferred from one person to another. Once the
instrument is transferred, the holder obtains full legal title to the
instrument. The transfer should be unrestricted and in good faith.
Therefore, a negotiable instrument is a document guaranteeing the

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
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payment of a specific amount of money, either on demand, or at a set

time, with the payer named on the document. It is an indebtedness to pay
an amount and the negotiable instrument is an unconditional guarantee
for the same.
Some Examples of Negotiable instruments are Promissory notes,
Cheques, Bills of Exchange, bearer bonds, bank notes etc.
The law on Negotiable instruments in India is governed by the
Negotiable Instruments Act of 1881. The Negotiable Instruments Act
1881 was passed in 1882 and was amended in 1989 and 2002, there was
no provision before 1988 to restrain the person issuing
the Cheque without having sufficient funds in his account. The only
redressal against a Dishonoured cheque was a civil liability accrued. In
order to ensure promptitude and remedy against the defaulters of the
Negotiable Instrument a criminal remedy of penalty was included in
Negotiable Instruments Act, 1881 by amending it with Negotiable
Instruments Act, 1988. The second amendment was when the parliament
legislated the Negotiable Instruments (Amendment and Miscellaneous
Provisions) Act, 2002 which is intended to plug the drawbacks. This
amendment Act inserts five new sections from 143 to 147 concerning
various limbs of the parent Act. This act is applicable to the whole of
India including the state of Jammu and Kashmir, which was included
under the purview of the act in 1956.
Section 6 of Negotiable Instruments Act defines cheque as :- “Cheque”-A
“cheque” is a bill of exchange drawn on a specified banker and not
expressed to be payable otherwise than on demand and it includes the
electronic image of a truncated cheque and a cheque in the electronic
form. Explanation I.-For the purposes of this section, the expressions-
(a) “a cheque in the electronic form” means a cheque which contains
the exact mirror image of a paper cheque, and is generated, written
and signed in a secure system ensuring the minimum safety standards
with the use of digital signature (with or without biometrics
signature) and asymmetric crypto system;

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
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(b) “a truncated cheque” means a cheque which is truncated during the

course of a clearing cycle, either by the clearing house or by the bank
whether paying or receiving payment, immediately on generation of an
electronic image for transmission, substitu ing the further
physical movement of the cheque in writing.
Explanation II.-For the purposes of this section, the expression
“clearing house” means the clearing house managed by the Reserve
Bank of India or a clearing house recognised as such by the Reserve
Bank of India.’.

E-CHEQUE
Electronic cheque (e-cheque) is the image of a normal paper cheque
generated, written and signed in a secure system using digital signature
and asymmetric crypto system. Simply said an electronic cheque is
nothing more than an ordinary cheque produced on a computer system
and instead of signing it in ink, it is signed using the digital equivalent of
ink. After the coming into force of The Negotiable Instruments
(Amendment And Miscellaneous Provisions) Act, 2002, legal recognition
has been accorded to e-cheques and they have been brought at par with
the normal cheques. Now, a ‘cheque’ includes an e-cheque.

Section 138 Negotiable Instruments Act 1881 1

Section 138 Negotiable Instruments Act as it is at present after coming
into force of The Negotiable Instruments (Amendment And Miscellaneous
Provisions) Act, 2002:
Section 138. Dishonour of cheque for insufficiency, etc., of funds in the
account:- Where any cheque drawn by a person on an account
maintained by him with a banker for payment of any amount of money
to another person from out of that account for the discharge, in
whole or in part, of any debt or other liability, is returned by the
bank unpaid, either because of the amount of money standing to
the credit of that account is insufficient to honour the cheque or

1
The Negotiable Instrument Act 1881 as Amended in 2002 & 2005
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

that it exceeds the amount arranged to be paid from that account

by an agreement made with that bank, such person shall be deemed
to have committed an offence and shall, without prejudice to any other
provisions of this Act, be punished with imprisonment for 19 [a term
which may be extended to two years], or with fine which may
extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
—
(a) the cheque has been presented to the bank within a period of six
months from the date on which it is drawn or within the period of its
validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may
be, makes a
demand for the payment of the said amount of money by giving a notice
in writing, to the drawer of the cheque, 20 [within thirty days] of the
receipt of information by him from the bank regarding the return of the
cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said
amount of money to the payee or, as the case may be, to the holder in
due course of the cheque, within fifteen days of the receipt of the said
notice.
Explanation.— For the purposes of this section, “debt or other liability”
means a legally enforceable debt or other liability

Jurisdiction

Jurisdiction of the courts can be divided under the following categories2-

1. Territorial / Local Jurisdiction- Every Court has its own local or

territorial limits beyond which it cannot exercise its jurisdiction.
These limits are fixed by the Government.

2
http://court.laws.com/jurisdiction
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

2. Pecuniary Jurisdiction- Pecuniary means monetary. It means that

the remedy asked by the plaintiff is also classified on the basis of
the valuation of the suit. It is governed by the Suit Valuation Act as
well as Court Fees Act. Different States have defined different
pecuniary jurisdiction in their respective Court Fees Act.
3. Subject Matter Jurisdiction- Different Courts are given power to
decide different types of suits. Certain courts are precluded from
entertaining certain suits/claim. Special Courts are designated for
various subject matter. For eg. Family Courts for family dispute.
Special Negotiable Instruments Court for disputed qua dishonour
of cheques.
4. Original or Appellate Jurisdiction- The Trial/District and in
some States High Courts have the original civil jurisdiction. For
example the original ordinary jurisdiction for entertaining suits
relating to trademark/copyrights is with District Court and High
Courts in some States as the law on the subject provides the same.
In ordinary courts the original ordinary jurisdiction is Civil Court.

Statutory Laws on Dishonour and Its jurisdiction-

Section 138 of Negotiable Instrument Act, 1881 in regard to dishonour of

cheque attracts criminal liability. Offence under Section 138 is an offence
without any malafide intention .It is not a criminal offence in real sense
as it does not require mens rea, like few other criminal offences, but as
public interest is hampered by such offence so it has been made a
punishable offence. It includes strict liability. Making of the strict liability
is an effective measure by encouraging greater surveillance to prevent
usual callous attitude of drawers of cheques in discharge of debts.

Most often people don’t know about the place where criminal complaint
can be filed under the NI Act, as the act is silent on this matter. Because
the criminal courts are approached, the issue needs to be examined from
the point of view of the criminal procedure code.

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

Section 177 of Cr.P.C3- provides that every offences shall ordinarily

inquired into and tried by a court within whose local jurisdiction it was
committed.

Section 178 of Cr.P.C4- provides that offence may be tried at by a court

having jurisdiction over any of the local where offence is committed. It is
possible that an offence may be committed in several local areas or partly
in one area and in another area. It is also possible that some times
offence may consist of several acts done in different areas in all the
above situations, the court having jurisdiction over any of such local
areas may try the offence.

Section 179. of Cr.P.C5- Offence triable where act is done or consequence

ensues.- When an act is an offence by reason of anything which has been
done and of a consequence which has ensued, the offence may be
inquired into or tried by a Court within whose local jurisdiction such
thing has been done or such consequence has ensued.”

Latest law on Jurisdiction of Dishonour of cheque-

By a landmark judgment, Dashrath Roopsingh Rathod Vs. Stae of

Maharashtra & Anr.6 In this case, the Supreme Court has reversed the
basic criteria under Section 138 of Negotiable Instruments Act which is
to prosecute a person who had presented the cheque which had been
returned due to insufficiency of funds or if the amount exceeds the
amount in the bank of the payer. Earlier, a case under Section 138 could
be started by the holder of the cheque at his place of business or
residence. But, a bench of justices TS Thakur, Vikramjit Sen and C

3
Section 177 of Criminal Procedure Code, 1973
4
Section 178 of Criminal Procedure Code, 1973
5
Section 179 of Criminal Procedure Code, 1973
6
Dashrath Rusingh Rathod vs. State Of Maharashtra & Anr. Cr. Appeal No. 2287/2009
Decided by Hon’ble Supreme Court Of India on 1st August 2014.

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
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Nagappan ruled that the case has to be started at the place where the
branch of the bank on which the cheque was drawn is located.

And the judgment would apply retrospectively. This means, lakhs of cases
pending in various courts across the country would witness an interstate
transfer of cheque bouncing cases.

The bench said: “In this analysis, we hold that the place, sites or venue of
judicial inquiry and trial of the offence must logically be restricted to
where the drawee bank is located.”

The rationale behind this change is that the payers majority being
businessmen and traders were using extending credit recklessly and due
to the flexibility in the provision of Section 138, it was being misused in
regards to the place of institution, as sometime the payer had no concern
with the place where the cheque was issued and to unnecessarily harass
the payee cause hardship of place of institution of case according to their
convenience. To stop this practice this judgment aims to get to the root of
the issue and resolve it by a strict approach so as to discourage the payer
from misusing or carelessly issuing cheques. The problem of travelling to
the location of drawee bank is now on the payer.

The change in the existing law shifts the inconvenience and problem on
the payer because now he would have to travel to the place of the drawee
bank where the cheque gets dishonored due to insufficiency of funds.
Hence, guaranteeing more precaution by the payer at the time of issuing
the cheque.

PRECEDENT

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

In K. Bhaskaran vs. Sankaran Vaidhyan Balan And Anr .7 the Court

read Section 138 of the Act with Sections177 to 179 of the Code of
Criminal Procedure, 1973 ("CrPC"). It observed that the offence under
Section 138can be completed only with the concatenation of the following
five acts:-

 Drawing of the cheque

 Presentation of the cheque to the bank
 Returning the cheque unpaid by the drawee bank
 Giving notice in writing to the drawer of the cheque demanding
payment of the cheque amount
 Failure of the drawer to make payment within 15 days of the
receipt of the notice.

It was held that upon the completion of the offence, any Court, within
whose jurisdiction, any one of the five acts took place, would have the
required jurisdiction to try such case. In other means, the complainant
can choose any one of those courts having jurisdiction over any one of
the local areas within the territorial limits of which any one of those five
acts was done. As the amplitude stands so vast and so expensive it is an
idle exercise to raise jurisdictional question concerning the offence under
Section 138 of the Act.”

Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd. 8 A three-Judge

Bench in this case held that a combined reading of Sections 3, 72
and 138 of the NI Act mandates the cheque must be
presented at the bank on which it is drawn if the drawer is to be held
criminally liable. The decision in Ishar Alloy clarified that the place
where a complainant may present the cheque for encashment would not
confer territorial jurisdiction and in this respect this runs counter to the
essence of Bhaskaran Case.

A payee can give the cheque to any bank for collection from the drawee
bank, but such presentation will be valid only if the drawee bank receives

7
K. Bhaskaran vs. Sankaran Vaidhyan Balan And Anr. ( 1999) 7 SCC 510 Decided on 29
September, 1999
8
Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd (2001) 3 SCC 609
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
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the cheque for payment within the period of six months from the date of
issue. However, a payee, merely by depositing his/her cheque in any bank
of his choice at any place, cannot create jurisdiction on a Court of his
choice.

The ruling in Bhaskaran case was diluted in Harman Electronics Pvt.

Ltd. v. National Panasonic India Pvt. Ltd.9 The Court addressed the
issue of whether a Delhi Court would have jurisdiction solely because the
statutory notice under Section 138 of the Act was issued from Delhi. The
Court held that:-

1. It said that there was a world of difference between issue of a

notice, on the one hand, and receipt, thereof, on the other. Issue of
notice did not give rise to a cause of action while receipt did, it was
declared by the Court.
2. The Court held that a notice is one of the ingredients for the
maintaining the complaint. It is only on receipt of the notice that
the accused at his own peril may refuse to pay the amount. Clauses
(b) and (c) of the proviso to Section 138 therefore must be read
together. Issuance of notice would not by itself give rise to a cause
of action but communication of the notice would.
3. The Court held that if presentation of the cheque or issue of notice
was to constitute a good reason for vesting courts with jurisdiction
to try offences under Section 138, it would lead to harassment of
the drawer of the cheques thereby calling for the need to strike a
balance between the rights of the parties to the transaction.

So the Jurisdictional perspective as given in Bhaskaran case was diluted

and the logic behind vesting of jurisdiction based on the place from
where the notice was issued questioned. Even presentation of the cheque
as a reason for assumption of jurisdiction to take cognizance was
doubted for a unilateral act of the payee of the cheque could without any
further or supporting reason create jurisdiction on a Court within whose

9
Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. (2009) 1 SCC 720
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

territorial limits nothing except the presentation of the cheque had

happened.

The judgments in Bhaskaran and Harman case showed the liberal and
the strict views, respectively, on the issue of territorial jurisdiction for
trial of the offence of dishonour of cheques under Section 138 of the Act.

Thereafter the Hon’ble Supreme court decided on First of August,2014 ,

in the case of Dashrath Rupsingh Rathod vs. State Of Maharashtra
& Anr., Bearing criminal Appeal No. 2287 of 2009 , Hon’ble Mr. Justice
T.S.Thakur held that applying the general rule recognised under Section
177 of the Cr.P.C. that all offences are local, the place where the
dishonour occurs is the place for commission of the offence vesting the
Court exercising territorial jurisdiction over the area with the power to
try the offences.

We have, with utmost respect to the Judges constituting the

Bench that heard the above cases, found it difficult to follow suit
and subscribe to the view stated in Bhasakaran.

Justice Thakur summarized the principles as follows

1. An offence under Section 138 of the Negotiable Instruments Act,

1881 is committed no sooner a cheque drawn by the accused on an
account being maintained by him in a bank for discharge of debt is
returned unpaid for insufficiency of funds or for the reason that the
amount is more than the arrangement made with the bank.

2. Cognizance of any such offence is however prohibited under Section

142 of the Act except upon a complaint in writing made by the payee
or holder of the cheque in due course within a period of one month
from the date the cause of action accrues to such payee or holder
under clause (c) of proviso to Section 138.

3. The cause of action to file a complaint accrues to a

complainant/payee/holder of a cheque in due course if-

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

i. the dishonoured cheque is given to the drawee bank within a

period of six months from the date of its issue.

ii. If the complainant wants payment of cheque amount within

thirty days of receipt of information by him from the bank
regarding the dishonour of the cheque and

iii. If the drawer cannot to pay the cheque amount within fifteen
days of receipt of such notice.

iv. The facts constituting cause of action do not comprise the

ingredients of the offence under Section 138 of the Act.

v. The proviso to Section 138 simply postpones/defers

institution of criminal proceedings and taking of cognizance by
the Court till such time cause of action in terms of clause
(c) of proviso accrues to the complainant.

vi. Once the cause of action accrues to the complainant, the

jurisdiction of the Court to try the suit will be determined by
reference to the place where the cheque is dishonoured.

vii. The general rule conditioned under Section 177 of Cr.P.C

applies to cases under Section 138 of the Negotiable
Instruments Act. Prosecution in such suits can, therefore, be
launched against the drawer of the cheque only before the
Court within whose jurisdiction the dishonour takes place
except in situations where the offence of dishonour of the
cheque punishable under Section 138 is committed along with
other offences in a single transaction within the meaning of
Section 220(1) read with Section 184 of the Code of Criminal
Procedure or is covered by the provisions of Section 182(1)
read with Sections 184 and 220 thereof.

viii. The general rule stipulated under Section 177 of Cr.P.C applies
to cases under Section 138 of the Negotiable Instruments Act.
Prosecution in such cases can, therefore, be launched against
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

the drawer of the cheque only before the Court within whose
jurisdiction the dishonour takes place except in situations
where the offence of dishonour of the cheque punishable
under Section 138 is committed along with other offences in a
single transaction within the meaning of Section 220(1) read
with Section 184 of the Code of Criminal Procedure or is
covered by the provisions of Section 182(1) read with
Sections 184 and 220 thereof.

So by this case the position of territorial jurisdiction of Negotiable

Instrument 138(Cheque Bouncing Cases) changed and now a petitioner
can only filed a complaint with regard to dishonour of cheque in a court
which has the territorial jurisdiction over the place where the cheque is
dishonoured by the bank on which it is drawn.

Example, if you are the payee of the cheque and if you present this
cheque for clearing at Delhi, it cannot be filed at Delhi. Thus, the
uncertainty about the place where such a case can be filed was removed.

The positive impact of this judgement is that, the payee of a cheque could
not unnecessarily harass the drawer of the cheque by filing the cheque
bouncing case at the place of his choice by deliberately choosing a
different place for presenting the cheque or for sending the notice, etc.

By this judgement the negative impact is that drawee need to filed the
case where the cheque is dishonoured other means where the payee
bank account, even if the fault is by the payee.

This judgement was not clear, what will happen in situation where “at per
payable at all branches of the bank” ?

This proposition was taken in case of Ramanbhai Mathurbhai Patel v.

State of Maharashtra [in Criminal Writ Petition No. 2362 of 2014]- in
this case the uncertainty in respect of multi-city cheques payable at par
in all branches of the bank. This Bombay HC the decision that the payee
of a multi-city cheque, which is payable at par in all branches of the

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
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bank, can choose the place where he wants to present the cheque, and
thereafter when it is sent for clearing to the nearest branch of the bank
in that city, the court having jurisdiction over that clearing branch has
the territorial jurisdiction of the cheque bouncing case! So, in respect of
the multi-city cheques. Here in this case the court again create doubt on
the territorial jurisdiction of cheque bouncing cases with regard to multi-
city cheques payable at par in all branches of bank.

The Negotiable Instrument (Amendment) Bill, 2015-

These all proposition laid down in Dhashart singh case will be changed
after the parliament make a new amendment in Negotiable Instrument.
The Negotiable Instrument (Amendment) Bill, 2015 was introduced in the
Lok-sabha on May 06,2015 and passed on May 13, and this bill was
withdrawn in Rajya-sabha on July 24, 2015.

This Negotiable Instrument (Amendment) Bill, 201510- The Bill

seeks to amend the Negotiable Instruments Act, 1881. The Act defines
promissory notes, bills of exchange, cheques and creates penalties for
issues such as bouncing of cheques.

The Act specifies situations under which complaints for cheque bouncing
can be filed. However, the Act does not specify the territorial jurisdiction
of the courts where such a complaint is to be filed. The Bill amends the
Act to state that suits of bouncing of cheques can be filed only in a court
in whose jurisdiction the bank branch of the payee (person who receives
the cheque) lies.

If a complaint against a person issuing a cheque has been filed in the

court with the proper jurisdiction, then all subsequent complaints against
that person will be filed in the same court, irrespective of the relevant
jurisdiction area.

10
The Negotiable Instrument (Amendment) Bill, 2015
http://www.prsindia.org/billtrack/the-negotiable-instruments-amendment-bill-2015-3778/
last visit 2015-09-14

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Instrument Act, 1881
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If more than one suit is filed against the same person before different
courts, the case will be transferred to the court with the appropriate
jurisdiction.

The Bills also amends the definition of ‘cheque in the electronic form’.
Under the Act, it was defined as a cheque having the exact mirror image
of a paper cheque and generated in a secure system using a digital
signature. The definition has been amended to mean a cheque drawn in
electronic medium using any computer source and which is signed in a
secure system with a digital signature, or electronic system.

So, what is the change in jurisdiction for cheque

bouncing cases now in view of the Ordinance?

The jurisdiction of filing cheque dishonour cases under Section 138 of the
N.I. Act is now changed by the above Ordinance as under:

Now a cheque bouncing case can be filed only in the court at the place
where the bank in which the payee has account is located. For example,
if you are based at Delhi and you have an account in a bank in a
particular area of Delhi. You receive a cheque from someone in Mumbai.
You present your cheque in Delhi in the bank where you have your
account. Now, if this cheque is dishonoured, then the cheque bounce case
can be filed only in Delhi in the court which has jurisdiction over the area
where your bank is located.

Secondly, once you have filed a cheque bounce case in one particular
court at a place in this manner, subsequently if there is any other cheque
of the same party (drawer) which has also bounced, then all such
subsequent cheque bounce cases against the same drawer will also have
to filed in the same court (even if you present them in some bank in some
other city or area). This will ensure that the drawer of cheques is not
harassed by filing multiple cheque bounce cases at different locations.
So, even multiple cheque bounce cases against the same party can be

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
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filed only in one court even if you present the cheques in different banks
at different locations.

Thirdly, all cheque bounce cases which are pending as on 15 June 2015 in
different courts in India, will be transferred to the court which has
jurisdiction to try such case in the manner mentioned above, i.e., such
pending cases will be transferred to the court which has jurisdiction over
the place where the bank of the payee is located. If there are multiple
cheque bounce cases pending between the same parties as on 15 June
2015, then all such multiple cases will be transferred to the court where
the first case has jurisdiction as per above principle.11

By this Ordinance, some clarity and uniformity in the matter of cheque

dishonour cases proposed. This Ordinance takes care of the interests of
the payee of the cheque while at the same time also taking care that the
drawer of the multiple cheques is not harassed by filing multiple
litigations at different locations to harass him (if more than one cheque
has bounced). This Ordinance supersedes the Supreme Court decision
dated 1 August 2014 Dashrath Rupsingh Rathod v. State of
Maharashtra, (2014) 9 SCC 129.

11
what is the change in jurisdiction for cheque bouncing cases now in view of the
Ordinance? http://tilakmarg.com/news/jurisdiction-in-cheque-bouncing-cases-is-
changed-by-new-ordinance-superseding-sc-judgment/ last Visit 2015-09-14
Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3
Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

Conclusion:

In the analysis of the above laws and the quoted Hon’ble Supreme court
decisions it is crystal clear that the place, site or venue of judicial inquiry
and trial of the offence u/s 138 of Negotiable Instrument Act, 1881 must
logically be restricted to where the drawer bank is located and this can
also be inferred from the bare reading of section 138 of N.I Act read with
section 177 of Criminal Procedure Code, 1973 which leaves no iota of
doubt that return of cheque by the drawee bank along constitute the
commission of offence and indicates the place where the offence is
committed. While taking into consideration the territorial aspect on the
same at “At Par Cheques”, the Hon’ble High Court of Bombay held that
the cheques issued at par provide the complainant an option to choose
the place of jurisdiction. But because this verdict is by the Hon’ble High
Court of Bombay so it is not binding to all and that is why restricted
within the territory of the Jurisdiction of the Hon’ble High Court Of
Bombay and having no binding effect on other territories though it may
be consider by them. So till now according to Art. 141 of the Constitution
of India, the decision of Hon’ble Supreme Court in the case of Deshrath
Rupsingh Rathor is binding to all a to all and so the jurisdiction
restricted to where the drawer bank is located.

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

Bibliography

Articles-

1. Landmark Supreme Court Judgment on Sec 138 of Negotiable

Instruments Act <http://www.vakilno1.com/legalviews/landmark-
supreme-court-judgment-sec-138-negotiable-instruments-act.html>
accessed2015-09-14
2. Effect of the negotiable instruments (amendment) ordinance, 2015
(6 of 2015)
<http://www.legallyindia.com/Blogs/effect-of-the-negotiable-
instruments-amendment-ordinance-2015-6-of-2015> accessed
2015-09-14
3. Jurisdiction in cheque bouncing cases is changed by new
Ordinance, superseding SC judgment
<http://tilakmarg.com/news/jurisdiction-in-cheque-bouncing-cases-
is-changed-by-new-ordinance-superseding-sc-judgment/> accessed
2015-09-14

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

4. Cheque Bounce Retains Original Jurisdiction of Payee U/s 138 &

142 of N.I.Act,1881
<http://amlegals.com/cheque-bounce-retains-original-jurisdiction-
of-payee-under-section-138-of-n-i-act1881/> accessed 2015-09-14
5. India: Section 138 Cases For Dishonour Of Cheques - Supreme
Court Clarifies On The Jurisdiction, Article by- Mansukhlal Hiralal
& Company
<http://www.mondaq.com/india/x/366512/trials+appeals+compens
ation/Section+138+Cases+For+Dishonour+Of+Cheques+Supreme
+Court> accessed 2015-09-14
6. Recent trends in section 138 of the negotiable instruments act.
<http://mja.gov.in/Site/Upload/GR/Workshop%20Summary%208-11-
2014%20Criminal%20Side-Gadchiroli.pdf> accessed 2015-09-14
7. Jurisdiction of Cases For Dishonour of Cheque in the Pretext of the
Statutory Laws & Recent Judgments
<http://worldwidejournals.com/gra/file.php?
val=September_2014_1411460876__100.pdf> accessed 2015-09-14
8. The Negotiable Instrument(Amendment) Bill,
<http://www.prsindia.org/billtrack/the-negotiable-instruments-
amendment-bill-2015-3778/> accessed 2015-09-14
9. what is the change in jurisdiction for cheque bouncing cases now in
view of the Ordinance?
<http://tilakmarg.com/news/jurisdiction-in-cheque-bouncing-cases-
is-changed-by-new-ordinance-superseding-sc-judgment/> accessed
2015-09-14

Books-
1. S.N. Gupta, Dishonour of Cheques: Liability-Civil & Criminal,
Sixth edition 2010, Universal law publishing co. Pvt. Ltd.
2. The Negotiable Instruments Act, 1881, Government Central
Press, 1881
3. Avatar Singh Modern Banking: Theory And Practice,

Cases-

1. Dashrath Rusingh Rathod vs. State Of Maharashtra & Anr. Cr.

Appeal No. 2287/2009 Decided by Hon’ble Supreme Court Of
India on 1st August 2014.

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881
 GUJARAT NATIONAL LAW UNIVERSITY,GANDHINAGAR

2. K. Bhaskaran vs. Sankaran Vaidhyan Balan And Anr. ( 1999) 7

SCC 510 Decided on 29 September, 1999
3. Shri Ishar Alloy Steels Ltd. vs. Jayaswals Neco Ltd (2001) 3
SCC 609
4. Harman Electronics (P) Ltd. v. National Panasonic India (P)
Ltd. (2009) 1 SCC 720
5. Ramanbhai Mathurbhai Patel vs. State of Maharashtra [in
Criminal Writ Petition No. 2362 of 2014

Renouncement of Territorial Jurisdiction of Section 138 of Negotiable 3

Instrument Act, 1881