Appellant- Prakash Chimanlal Sheth

Respondent- Jagruti Keyur Rajpopat

Court – Supreme Court of India

Judges: Justice Sanjay Kumar and Justice Satish Chandra Sharma

Judgment Date: July 25, 2025

Citation: 2025 INSC 897

Introduction

The case of Prakash Chimanlal Sheth .V. Jagruti Keyur Rajpopat deals with issue of territorial jurisdiction in cheque bounce cases under Section 138 of the Negotiable Instrument Act, 1881. The dispute arose when the lower courts returned the complaints on the ground that they lacked jurisdiction to entertain them.

Facts of the Case

In this case, there was an financial transaction Keyur Lalitbhai Rajpopat received a loan of Rs. 38,50,000/- from Prakash Chimanlal Sheth. Whereas Jagruti Keyur Rajpopat was the wife of Mr.Keyur Rajpopat and she was being served as loan repayment. Additionally she was receive independent financial support from Mr.Prakash. The respondent in September 2023 wrote four cheques to towards her repayment of her husband’s liability and her own obligations. The appellant deposit the cheque at Opera House Branch of Kotak Mahindra Bank in Mumbai.

But on 15 September 2023 all the four cheques were dishonoured because due insufficient fund in the respondent’s account. Even despite reminder and request was given by appellant but still no response from respondent’s side, so appellant filed all the four complaint cases (C.C. Nos. 1258, 1259, 1260, and 1261 of 2023) before the Judicial Magistrate First Class, Fifth Court, and Mangalore.[1]

The complaint has filed the case under Section 200 CRPC / 223 BNSS, 2023 [2]which is read with Section 138 of Negotiable Instrument Act, 1881. The learned magistrate has returned complaint cases, for presentation to jurisdictional court which was been ordered on 12 December 2023. The magistrate mistakenly believed that since drawee bank was Kotak Mahindra Bank, Mumbai so the court has no jurisdictional to entertain the complaints. The appellant displeased with this ruling filed Criminal Petition No.s1237, 1720, 1769, 1770 of 2024 with the Karnataka High Court in Bengaluru under Section 482 CRPC/528 BNSS, 2023. Regretfully, on March 5, 2024, the High Court dismissed the petitions, upholding the Magistrate’s judgment, based on identical incorrect assumptions.[3]

Legal Issues Raised

The main question before the Supreme Court of India was:-

1. Which court has the territorial jurisdiction for the cheque dishonour cases under Section 138 of the NI Act, 1881 can be filed?

The court has to decide whether which jurisdictions lies:-

1. Either at the location where the cheque was presented or deposited for collection (which was interpreted by lower courts)?
2. Either at the place where the payee or the holder in due course maintain his bank account under the Section 142 (2) (a) of the NI Act, 1881?
3. Whether the magistrate and High Court were correct in holding that Mangalore court lacked territorial jurisdiction?

The administration of justice in check bounce cases has been significantly impacted by these concerns, which have led to thousands of complaints in the courts.[4]

Argument by the Parties

Appellant’s Contentions

The learned senior counsel for the appellant presenting the compelled arguments:-

1. Appellant also tells that both Judical Magistrate and High Court committed that there was serious mistake or error which lead to interpreting the territorial jurisdiction under Negotiable Instruments Act, 1881. These arguments were based on incorrect bank’s branch.
2. Verification of Account’s location- The appellant was able to provide proof that his bank account was in Kotak Mahindra Bank, Bendurwell Branch, Mangalore and not with Opera House Branch, Mumbai. As appellant bring all the official document and his bank statement.
3. Mere Presentation .V. Maintenance of Account- The appellant in his defence brought the cheques of respondent from the Mumbai branch which lead to clarification for crediting his account in Mangalore. Bank statement copy was being presented in the court which is proof of respondent maintaining such account in Mangalore. The place where a cheque is physically deposited cannot, by itself, determine territorial jurisdiction under Section 138 proceedings. This represent that Mumbai’s jurisdiction was not established by his presentation.
4.  Error Assumptions- Both the magistrate and High Court have proceed with wrong facts and evidence as the appellant’s account was in Kotak Mahindra Bank Bendurwell Branch, as the court assumed that his bank account was in Opera House Branch, Mumbai.
5. Statuary Mandate– Relying upon Section 142(2)(a) of the Negotiable Instruments Act, the appellant emphasized that the legislature has specifically provided that jurisdiction shall lie before the court within whose local limits the branch of the bank where the payee or holder in due course maintains the account is situated. Therefore, the relevant consideration was the location of the appellant’s bank account and not the location where the cheques were presented.

On these grounds appellant prayed that the orders passed by the Magistrate and High Court to be set aside for that complaints have been restored provided with the file of competent court at Mangalore for adjudication with accordance to the law.[5]

Respondent’s Contentions

The contentions of respondent are as follows:-

1. Submission of counter- affidavit and Bank Records- The respondent has filed a detailed counter-affidavit along with all the relevant bank document, account details to place correct factual position before the court. These documents were initially to clarifying the location of appellant’s bank account.
2. Clarification on the Appellant’s Accounts- When the arguments were going, the respondent fairly acknowledged that the appellant have previously mentioned in the proceeding that he had opened an account in Opera House Branch of Kotak Mahindra in Mumbai. But however now it was being admitted that the appellant’s bank account was being transferred in Bendurwell Branch, Mangalore.
3. Confirmation of Mangalore Account- Furthermore respondent claimed that the appellant’s operative account bearing No. 0412108431 was maintained at the Mangalore branch at the relevant time. The admission clarified that appellant’s banking relationship existed with Mangalore Branch not with the Mumbai Branch.
4. Correction of Lower Court’s Assumptions- Although the respondent had initially supported the orders of the Magistrate and the High Court, the facts disclosed in the counter-affidavit showed that the assumption that the appellant maintained his account in Mumbai was incorrect. Thus, the factual basis of the lower courts’ decisions was found to be erroneous.
5. Relevancy to Territorial Jurisdiction- The respondent’s application were admitted and become important which lead to determine the territorial jurisdiction under Section 142(2)(a) of the Negotiable Instruments Act, 1881. As the appellant’s account was there in Mangalore so the case should fell in the jurisdiction of the court at Mangalore.
6. Supreme Court’s Decision Impact- The original position which was established through own respondent’s records which played a significant role in the Supreme Court’s consideration of the case. These admissions helped the court to determine either Magistrate and High Court have correctly applied the laws relating to the territorial jurisdiction in the cheque dishonour cases which under Section 138 of the Negotiable Instruments Act, 1881.[6]

Rationale of the Judgement

1. Correct Interpretation- Here Supreme Court held that Section 142 (2) (a) of the Negotiable Instrument Act, 1881 which states that the territorial jurisdiction lies where the payee has maintain the bank account. Therefore the location of payee’s bank account will be determining the territorial jurisdiction.
2. Mere Presentation does not suffer- As by this court observed that mere presenting the cheque at the particular bank branch for collection does not give jurisdiction to the courts of that place. What is relevant is the branch where the payee’s account is maintained.
3. Mistake By Magistrate and High Court- As the court founded that both Magistrate and High Court started proceedings of the case with incorrect assumption that appellant’s account was being maintained at Opera House Branch, Mumbai but it was his account was being maintained in Bendurwell Branch, Mangalore.
4. Admission by Respondent- The respondent himself agreed that the appellant’s operative account was in Mangalore. The admission here are stated with true fact factual position and supported the appellant’s contention regarding jurisdiction.
5. Legislative Intent- the Court emphasized that Section 142(2) (a) was inserted to remove confusion regarding territorial jurisdiction in cheque dishonour cases and to provide convenience to the payee. Therefore, the provision must be applied according to its plain language.

Judgement

The Supreme Court granted the appellant’s request to seek an appeal after rendering a decision in their favour. The court further stated that the location of the payee’s bank account will determine the territorial jurisdiction under Section 142(2) (a) of the Negotiable Instrument Act, 1881. [7]The court determined that his account was located in Mangalore’s Bendurwell Branch.

The court eliminated uncertainty about where complaints under Section 138 should be submitted by adopting a clear and intentional interpretation of the legislation. Because a check was provided or processed through a different branch, the court must make sure that legitimate complainants are not forced to start legal procedures at remote locations.

Because the rulings which were established under Negotiable Instrument Act, 1881 where it reduces jurisdictional disputes, and promotes speedy disposal of cheque bounce cases. It also provides valuable guidance to courts and legal practitioners, thereby contributing to greater certainty and uniformity in the administration of justice.

Orders passed by Supreme Court

The Supreme Court held that:-

1. Leave Granted- As Supreme Court granted leave and converted the Special Leave Petitions (SLP) into criminal appeals.
2. Appeal- The Court allowed the appeals filed by the appellant. It set aside the order dated 5 March 2024 passed by the High Court of Karnataka. It also set aside the order dated 12 December 2023 passed by the Judicial Magistrate First Class, Fifth Court, and Mangalore.
3. Direction to Trial Court- As the court provided direction to Judicial Magistrate Mangalore, to entertain the complaint cases.
4. The Supreme Court ordered that all the pending applications if any, shall closed.

Deflect of Law

As in the case where the court has used deflect of law where they interpret the application under Section 142(2) (a) of the Negotiable Instrument Act, 1881 by Magistrate and High Court. Both the court wrongly assumed that territorial jurisdiction depended on the place where the cheque was presented for collection rather than the place where the payee maintained his bank account. Another defect was the failure to properly appreciate the factual evidence, particularly the bank records showing that the appellant’s account was maintained at the Bendurwell Branch, Mangalore. The lower courts also failed to give effect to the legislative intent behind Section 142(2)(a), which was enacted to remove confusion regarding jurisdiction and provide convenience to the payee. As a result, the complaints were wrongly returned, leading to unnecessary delay and litigation.

Inferences

In the significant decision on the issue of territorial jurisdiction under Section 138 of the Negotiable Instrument Act, 1881 which is also read with case of Bridgestone India Pvt. Ltd. V. Inderpal Singh, where the Supreme Court lies within whose territorial limits the payee maintains his bank account, as provided under Section 142(2) (a) of the Act, and not where the cheque is merely presented for collection. By setting aside the orders of the Magistrate and the High Court, the Court ensured that the legislative intent behind the provision is effectively implemented and that genuine complainants are not subjected to unnecessary hardship. [8]

This judgment strengthens legal certainty, promotes uniformity in judicial decisions, and reduces avoidable jurisdictional disputes. As in the future courts should be more careful to verify banking records before deciding judicial issues, strictly follows the principles which were laid down by Supreme Court, and avoid technical interpretations that delay the adjudication of cheque dishonour cases.

Conclusion

This case makes an important mark toward the legal remedies under NI Act, 1881 are more accessible and effective. The Supreme Court’s approach ensures that procedural hurdles do not prevent genuine claimants from seeking justice. By providing a clear framework for determining jurisdiction, the judgment is likely to streamline cheque dishonour proceedings and contribute to faster resolution of commercial disputes, thereby enhancing confidence in financial transactions.

AUTHOR,

RIYA PAWAR

BHARATI VIDYAPEETH INSTITUTE OF MANAGEMENT AND RESEARCH, NEW DELHI.

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[1] Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat, 2025 INSC 897 (India).

[2] Bharatiya Nagarik Suraksha Sanhita, No. 46 of 2023, § 223 (India).

[3]Bharatiya Nagarik Suraksha Sanhita, No. 46 of 2023, § 528 (India).

[4] Negotiable Instruments Act, No. 26 of 1881, § 142(2)(a) (India)

[5]Siddhant Kuwad, SC Ruled That Complaints Under S.138 NI Act Must Be Filed Where the Payee Maintains Their Bank Account, Not Where the Cheque Is Deposited, The EduLaw, theedulaw.in (last visited July 2, 2026)

[6] Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat, 2025 INSC 897 (July 25, 2025), www.casemine.com/judgement/in/6883bf6fd5db5620988600c5.

[7] Negotiable Instruments Act, No. 26 of 1881, § 142(2)(a) (India).

[8] Bridgestone India Pvt. Ltd. v. Inderpal Singh, (2016) 2 SCC 75.