Section 138 of the N.I. Act: Territorial jurisdiction to entertain complaints lies with the Court where account was maintained & not where cheques were deposited: Supreme Court

General
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Case note summarizing the Supreme Court judgment dated 25 July 2025 in the matter of Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat:

Case Note

Case Title:

Prakash Chimanlal Sheth v. Jagruti Keyur Rajpopat
Criminal Appeal Nos. ___ of 2025 (@ S.L.P. (Crl.) Nos. 5540–5543 of 2024)

Court:

Supreme Court of India

Coram:

Justice Sanjay Kumar
Justice Satish Chandra Sharma

Date of Judgment:

25 July 2025

Citation:

2025 INSC 897

Facts:

  • The appellant, Prakash Chimanlal Sheth, had lent ₹38,50,000 to Keyur Lalitbhai Rajpopat.
  • The respondent, Jagruti Keyur Rajpopat (Keyur’s wife), stood as a guarantor and had also availed financial assistance from the appellant.
  • In discharge of both liabilities, she issued four cheques in September 2023.
  • The cheques were deposited at Kotak Mahindra Bank, Opera House Branch, Mumbai, but were dishonoured due to insufficient funds.
  • The appellant filed four complaints under Section 138 of the Negotiable Instruments Act, 1881 before the Judicial Magistrate First Class, Fifth Court, Mangalore.

Procedural History:

  • The Magistrate returned the complaints, holding lack of territorial jurisdiction since the drawee bank was in Mumbai.
  • The Karnataka High Court upheld this decision in a Section 482 Cr.P.C. petition filed by the appellant.
  • The matter was then appealed to the Supreme Court.

Issue:

Whether the Court at Mangalore had territorial jurisdiction to entertain complaints under Section 138 of the N.I. Act when the cheques were deposited in Mumbai but the appellant’s account was maintained in Mangalore.

Held:

Yes. The Court at Mangalore had jurisdiction.

Rationale:

  • As per Section 142(2)(a) of the Negotiable Instruments Act, jurisdiction lies where the payee’s bank branch (i.e., the account maintained by the complainant) is located.
  • Although the cheques were deposited at Mumbai, the appellant’s account was with Kotak Mahindra Bank, Bendurwell Branch, Mangalore.
  • The earlier assumption by the Magistrate and High Court that the appellant held his account in Mumbai was incorrect.
  • The Bridgestone India Pvt. Ltd. v. Inderpal Singh [(2016) 2 SCC 75] precedent was relied on to reinforce the interpretation of Section 142(2)(a).

Decision:

  • Appeals allowed.
  • Orders of the Karnataka High Court and the Judicial Magistrate set aside.
  • The Judicial Magistrate at Mangalore was directed to entertain and expeditiously adjudicate the complaint cases.

Significance:

The judgment reaffirms the importance of the location of the payee’s bank branch for determining jurisdiction in cheque dishonour cases under the N.I. Act and corrects a factual error that led to a miscarriage of justice.

A pdf copy of the judgement is available