Section 138 NI Act Jurisdiction Lies With Court Where Payee Maintains Bank Account: Supreme Court

"The jurisdiction to try a complaint filed under Section 138 of the NI Act in respect of a cheque delivered for collection through an account, i.e., an account payee cheque, is vested in the Court within whose local jurisdiction the branch of the bank in which the payee maintains the account is situated." Supreme Court, in a significant ruling, held that the territorial jurisdiction to try a complaint under Section 138 of the Negotiable Instruments Act, 1881, vests exclusively with the court where the payee’s bank account is situated.

A bench comprising Justice Manmohan and Justice K. Vinod Chandran observed that the High Court erred in transferring the proceedings to a different district merely because criminal cases related to the same subject matter were pending there.

High Court Transferred Complaints From Bhilwara To Ajmer Based On IPC Cross-Cases

The present appeals were filed challenging an order passed by the Rajasthan High Court at Jodhpur, which had transferred several complaints under Section 138 of the NI Act from Bhilwara to Ajmer. The High Court’s reasoning was based on the fact that a charge sheet had been filed against the appellant in Ajmer for offences under Sections 403 (Dishonest misappropriation) and 417 (Cheating) of the IPC in relation to the same cheques.

Jurisdiction Vests In The Court Where Payee's Home Branch Is Situated

The primary question before the court was whether the filing of an IPC charge sheet against a complainant in a different jurisdiction justifies the transfer of NI Act complaints from the court where the payee maintains his bank account. The court was also called upon to determine the correct territorial jurisdiction for cheque bounce cases in light of statutory provisions and established precedents.

Supreme Court Reiterates Settled Law On Territorial Jurisdiction Under NI Act

The Supreme Court noted that it is settled law that the court within whose jurisdiction the branch of the bank where the payee maintains the account is situated will have the jurisdiction to try the offence. The appellant maintained his account at Kotak Mahindra Bank in Bhilwara, where the cheques were delivered for collection, thereby establishing the cause of action in that district.

Court Relies On Recent Precedent To Affirm Jurisdictional Principles

The bench placed heavy reliance on the coordinate bench decision in Jai Balaji Industries Ltd. v. M/s HEG Ltd. (2025), which held that for account payee cheques, jurisdiction is vested in the court within whose local limits the payee’s bank is located. The bench observed that since the appellant’s home branch is in Bhilwara, the jurisdiction naturally vests with the courts in that region.

"Jurisdiction vests in the Court where the payee's home branch is situated."

Transfer Of Case Found Improper As Trial Had Already Commenced In 2019

The Court further observed that the trial in the appellant's complaints had already commenced in Bhilwara as early as 2019. Despite this, the Transfer Petitions were only filed in 2022, and the subsequent transfer by the High Court ignored the progress of the trial. The bench emphasized that the Courts in Bhilwara have exclusive jurisdiction to enquire into and try the alleged offences.

"The Courts in Bhilwara have the exclusive jurisdiction to enquire into and try the offences under Section 138 of NI Act alleged to have been committed by the appellant."

In conclusion, the Supreme Court allowed the appeals and set aside the Rajasthan High Court’s order dated March 06, 2024. The bench restored the jurisdiction to the Bhilwara courts, affirming that the statutory mandate regarding the place of trial for NI Act offences must be strictly followed regardless of related IPC proceedings in other districts.

Date of Decision: July 01, 2026