Legal provisions involved: Section 138, Negotiable Instruments Act, 1881, Section 142A, NI Act
Judgment by: The Supreme Court
Bench: Justices J.B. Pardiwala and R. Mahadevan
Facts
The petitioner company and its directors issued an account payee cheque of Rs. 19,94,996/- to the complainant company against an invoice dated March 23, 2014. The cheque, drawn on the State Bank of Bikaner and Jaipur, Kolkata, was deposited in the complainant’s account at SBI, Bhopal, but bounced due to insufficient funds.
The complainant filed a complaint under Section 138 of the NI Act before the MM, Kolkata, which returned it for lack of jurisdiction. The complaint was subsequently filed before JMFC, Bhopal. The accused challenged the court’s territorial jurisdiction, citing the CrPC.
Key legal provisions
- Section 138, Negotiable Instruments Act, 1881
- Section 142(2), NI Act (Amendment 2015)
- Section 142A, NI Act
- Sections 64 & 46, NI Act
Issues raised
- Whether after the 2015 Amendment, jurisdiction will lie where the drawee bank is located or not?
- Whether a complaint under Section 138 can be transferred to the court within whose local jurisdiction the drawee bank is situated once the recording of evidence has already started?
Arguments of the case
The petitioners argued that only the court near the drawee bank could hear the case. The complainant argued that under Section 142(2), the case should be heard where the payee’s home branch is located because the cheque is considered delivered there.
Judgement
The Supreme Court held that for account payee cheques, the legal delivery is to the payee’s home branch, so jurisdiction lies there. The court allowed the transfer of the case to JMFC, Bhopal, to continue from where the complaint was returned. It clarified that Section 142(2) of the NI Act overrides general CrPc rules.
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