Home  > Recent Judgements  > SUPREME COURT RULES ON PLACE OF FILING COMPLAINTS FOR ACCOUNT PAYEE CHEQUES: WHAT BUSINESSES MUST KNOW

Nov  29- 2025

SUPREME COURT RULES ON PLACE OF FILING COMPLAINTS FOR ACCOUNT PAYEE CHEQUES: WHAT BUSINESSES MUST KNOW

For Account Payee Cheque’s Dishonour, Complaint Must Be Filed Only at Payee’s Home Branch: Section 142(2)(a) of Negotiable Instruments Act

Case Title: Jai Balaji Industries Ltd. & Ors. v. M/s HEG Ltd.

Bench: Justice J.B. Pardiwala & Justice R. Mahadevan

Date: 28 November 2024

“A deeming fiction is created under Explanation to Section 142(2)(a) of the NI Act, that the cheques deposited anywhere are deemed delivered at the home branch, the court said.”

Introduction

In a major clarification on jurisdictional rules governing cheque dishonour complaints, the Supreme Court has held that when an account payee cheque is delivered for collection through an account, the complaint under Section 138 of the Negotiable Instruments Act (“NI Act”) must be filed only in the court having jurisdiction over the payee’s home branch i.e., the bank branch where the payee maintains their account.

The judgment provides much-needed doctrinal clarity, overrides conflicting precedents, and reinforces the legislative intent behind the 2015 amendments that introduced Section 142(2) and its Explanation.

This ruling is poised to significantly impact commercial transactions, cheque collection practices, and litigation strategy, especially in disputes involving multiple branches of banks across different cities.

Key Holding of the Supreme Court

The Court unequivocally held:

“The jurisdiction to try a complaint filed under Section 138 in respect of a cheque delivered for collection through an account is vested in the court within whose local jurisdiction the branch of the bank in which the payee maintains the account is situated.”

In other words:

  • Only the payee’s home branch gets jurisdiction.
  • The branch where the cheque is deposited does not matter.
  • Even if deposited elsewhere, the law deems delivery at the home branch.

This interpretation stems from the Explanation to Section 142(2)(a), which creates a statutory deeming fiction to avoid jurisdictional manipulation and ensure uniformity.

Understanding Section 142(2)(a) NI Act – Legislative Framework

Section 142(2), added through the Negotiable Instruments (Amendment) Act, 2015, sought to resolve confusion created by earlier contradictory rulings about territorial jurisdiction for Section 138 complaints.

Section 142(2)(a) provides:

When a cheque is delivered for collection through an account, the complaint shall be filed in the court within whose jurisdiction the branch of the bank where the payee maintains the account is located.

The Explanation further clarifies:

Delivery of the cheque at any branch of the payee’s bank is deemed to be delivery at the branch where the payee actually maintains the account.

This deeming fiction is crucial- it ensures that commercial convenience does not alter legal jurisdiction.

Why the Court Preferred the ‘Home Branch Only’ Interpretation

The Court stressed that the 2015 amendment aimed to prevent forum shopping, harmonise jurisdictional rules, and provide predictability.

Key observations:

  • Allowing jurisdiction based on the branch of deposit (as Yogesh Upadhyay held) would let payees manipulate jurisdiction by simply choosing where to deposit the cheque.
  • The legislature could not have intended such misuse.
  • The Explanation makes it clear that commercial deposit practices should not determine legal jurisdiction.

The Court emphasised that the necessity of delivering an account payee cheque to the home branch is “legal, not commercial.” Commercial convenience is protected by the Explanation, but legal consequences must flow from the home branch alone.

Earlier Ruling in Yogesh Upadhyay Declared Per Incuriam

The Bench expressly held that the earlier Supreme Court decision in:

YOGESH UPADHYAY V. ATLANTA LTD., 2023 was per incuriam because:

  • It ignored the Explanation to Section 142(2)(a).
  • It permitted multiple jurisdictions at any branch where the cheque was presented—thus enabling forum shopping.
  • It was inconsistent with the legislative intent.

By striking down this precedent, the Court has now restored consistency and legal certainty.

Distinguishing ‘Delivery’ from ‘Presentment’

One of the most analytically significant parts of the judgment is the Court’s distinction between:

  1. Delivery (Section 46 NI Act)
  • handing over the cheque from drawer to payee, and by the payee to their bank branch.
  • relevant for Section 142(2)(a).
  1. Presentment (Section 64 NI Act)
  • presenting the cheque to the drawee bank for payment.
  • relevant for Section 142(2)(b).

Thus, for account-payee cheques:

  • Delivery is always tied to the payee’s account-maintaining branch.
  • Presentment occurs at the drawee’s branch.

This conceptual distinction further reinforces why jurisdiction must rest with the home branch.

Case Background: From Kolkata to Bhopal and Back

Facts:

  • HEG Ltd. deposited the cheque in its Bhopal account.
  • The cheque was dishonoured by the drawer’s bank in Kolkata.
  • HEG initially filed the complaint in Kolkata (2014).
  • After the 2015 amendment, HEG sought transfer to Bhopal.
  • The Kolkata Magistrate returned the complaint.
  • HEG re-filed in Bhopal.
  • The accused sought restoration of jurisdiction to Kolkata before the Supreme Court.

Supreme Court’s Solution:

While the Court agreed that Bhopal had jurisdiction as per law, it noted that the Kolkata trial had:

  • progressed significantly,
  • charges were framed,
  • evidence recorded.

Restarting the case in Bhopal would cause serious prejudice to the accused.

Invoking its extraordinary powers under Article 142, relying on Dashrath Rupsingh Rathod (2014) principles, the Court ordered:

  • Trial to continue in Kolkata from the stage it had reached,
  • Even though Bhopal was the legally correct jurisdiction.

This balanced approach ensured that justice, fairness, and practical realities prevailed.

Key Precedents Considered

The Court considered and harmonised:

  1. PRAKASH CHIMANLAL SHETH V. JAGRUTI KEYUR RAJPOPAT (2025)

which reinforced that the Explanation to Section 142(2)(a) creates a clear jurisdictional rule tied to the payee’s home branch.

  1. BIJOY KUMAR MONI V. PARESH MANNA (2024)

Parliament’s objective behind the 2015 amendments. which clarified that “maintains an account” refers to the personal relationship with a specific branch of the bank.

  1. M/S SHRI SENDHUR AGRO AND OIL INDUSTRIES V. KOTAK MAHINDRA BANK LTD.

consistent with the principle that the account-maintaining branch alone confers jurisdiction.

  1. DASHRATH RUPSINGH RATHOD V. STATE OF MAHARASHTRA (2014)

relied on by the Court for allowing trials at an incorrect venue to continue if they have substantially progressed.

Why This Judgment Matters

  1. Prevents Forum Shopping

Payees can no longer choose any convenient branch to strategically create jurisdiction.

  1. Ensures Consistency & Predictability

Businesses, lawyers, and courts now have a clear, uniform standard.

  1. Affects Banking and Cheque Collection Practices

Even if cheques are deposited in other branches for convenience, legal consequences remain tied to the home branch.

  1. Protects Accused from Prejudice

Even while enforcing the statutory mandate, the Court ensured fairness by allowing the advanced trial in Kolkata to continue.

5. Strengthens Legislative Intent

The ruling reinforces

Conclusion

The Supreme Court’s judgment in JAI BALAJI INDUSTRIES LTD. V. HEG LTD. is a landmark clarification on territorial jurisdiction under the NI Act. By holding that only the payee’s home branch can confer jurisdiction in cases involving account-payee cheques, the Court has decisively aligned jurisprudence with statutory intent and commercial realities.

The decision not only rectifies prior inconsistencies but also ensures fair administration of justice respecting legislative purpose while preventing prejudice to litigants.

The ruling will serve as an authoritative guide for all courts, litigators, and commercial entities dealing with cheque dishonour matters across India. Copies of the judgment have also been directed to all High Courts to ensure uniform implementation.