The President of India has promulgated the Negotiable Instruments (Amendment) Ordinance, 2015 (6 of 2015) on 15^th June 2015. The amendments to the Negotiable Instruments Act, 1881 (“The NI Act”) are focused on clarifying the jurisdiction related issues for filing cases for offence committed u/s 138 of the NI Act.

A three Judge Bench of the Hon’ble Supreme Court in Dashrath Rupsingh Rathod vs. State of Maharashtra[1] held that a Complaint of dishonour of cheque can be filed only to the Court within whose local jurisdiction where the cheque is dishonoured by the bank on which it is drawn. This judgment overruled the earlier two Judge Bench Judgment of the Hon’ble Supreme Court in K. Bhaskaran v. Sankaran Vaidhyan  Balan[2] .

The Hon’ble Supreme Court in the matter of Dashrath, directed that the complaints u/s 138 NI Act should be returned to the Complainant to presented within 30 days from the date of such return before the Court having jurisdiction where the cheque is dishonoured by the bank on which it is drawn.

The amendment of 2015 inserted Section 142(2) in the Principal Act. The amendment reads as follows:

“(2) The offence under Section 138 shall be inquired into and tried only by a court within whose local jurisdiction –

     (a)    If the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or

     (b)    If the cheque is presented for payment by the payee or holder in due course otherwise through his account, the branch of the drawee bank where the drawer maintains the account, is situate.

Explanation – For the purpose of clause (a), where the cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account.”

To cite examples to understand the jurisdiction as per the amendment:

1. A holds an account with Fort Branch, Mumbai of XYZ Bank, issues a cheque payable at par in favour of B. B holds an account with M.G. Road Branch, Pune of PQR Bank, deposits the said cheque at Nagpur Branch of PQR Bank and the cheque is dishonoured. The Complaint will have be filed before the Court having local jurisdiction where M.G. Road Branch, Pune of PQR Bank is situated.
2. A holds an account with Fort Branch, Mumbai  of XYZ Bank, issues a cheque payable at par in favour of B. B presents the said cheque at Nagpur Branch of XYZ Bank, (but B does not hold account in any branch of XYZ Bank) and the cheque is dishonoured. The Complaint will have be filed before the Court having local jurisdiction where Fort Branch, Mumbai  of XYZ Bank is situated.

 Therefore, to summarise, firstly, 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 situated, where the payee or the holder in due course maintains his account and secondly when the cheque is presented for payment over the counter the complaint is to be filed before the Court where the drawer maintains his account.

In addition to the aforesaid amendment, Section 142A is inserted which reads as follows:

“(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or directions of any court, all cases arising out of section 138 which were pending in any court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Act, 2015, shall be transferred to the court having jurisdiction under sub-section (2) of section 142 as if that sub-section had been in force at all material times.

(2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1), all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court.

(3) If, on the date of commencement of the Negotiable Instruments (Amendment) Act, 2015, more than one prosecution filed by the same person against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section 142(2) before which the first case was filed as if that sub-section had been in force at all material times.”

Sec. 142A can be summed up as under:

•  All cases pending before any Court, whether filed before it or transferred to it pending before 15^th June 2015, shall be transferred to the Court having jurisdiction as per Sec. 142 (2).
•  If a complaint is filed by the payee or the holder in due course against a drawer before the Court having jurisdiction u/s 142(2), all further complaints against that drawer shall be filed before the same Court where the first complaint is filed, irrespective of whether the cheque is presented or delivered for collection to the bank/ branch within the local limits of Court having jurisdiction where that bank/branch is situated.
• If on 15^th June 2015, there are more than one cases u/s 138 NI Act pending between the same parties in different Courts, then the cases should be transferred to the Court having jurisdiction u/s 142 (2) and all subsequent complaints between the same parties should be filed before the same Court.

In view of this amendment, all cases transferred pursuant to the judgment in the matter of Dashrath and all other pending cases would have to be transferred as per Sec. 142A

Dominic Braganza

Partner

Abhay Nevagi & Associates, Advocates, Pune

[1] (2014) 9 SCALE 97

[2] (1999)  7 SCC 510