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Prakash Chimanlal Sheth vs Jagruti Keyur Rajpopat 2025 INSC 897 (Criminal Appeal arising from S.L.P.(Crl.) Nos. 5540-5543 of 2024)
Case Name: Prakash
Chimanlal Sheth vs Jagruti Keyur Rajpopat
Case Number: 2025 INSC 897
(Criminal Appeal arising from S.L.P.(Crl.) Nos. 5540-5543 of 2024)
Court: Supreme Court
of India
Judges: Justice Sanjay
Kumar and Justice Satish Chandra Sharma
Judgment Date: July 25, 2025
Citation: 2025 INSC 897
Abstract
This landmark judgment by the Supreme
Court of India clarifies the territorial jurisdiction for filing complaints in
cheque bounce cases under Section 138 of the Negotiable Instruments
Act, 1881. The Court emphatically ruled that complaints must be filed where
the payee maintains their bank account, not where the cheque is presented for
collection. The case resolved a crucial jurisdictional conflict that had been
causing confusion among lower courts and legal practitioners. The judgment
reinforces the 2015 amendment to Section 142(2)(a) of the NI
Act and establishes clear guidelines for determining the appropriate court for
cheque dishonor complaints.
The Court set aside the erroneous
orders of both the Magistrate Court and Karnataka High Court, which had wrongly
assumed that jurisdiction lies where the cheque is deposited rather than where
the payee's account is maintained. This decision provides much-needed clarity
to the banking and legal fraternity, ensuring streamlined adjudication of
cheque bounce cases across India.
Table
of Contents
1. Background and Facts
of the Case
2. Legal Issues Raised
3. Arguments by the
Parties
4. Judicial Analysis and
Reasoning
5. Key Legal Provisions
Examined
6. Precedents Cited
7. Court's Decision and
Direction
8. Legal Implications
and Impact
9. Conclusion
Background
and Facts of the Case
The case arose from a financial
transaction where Prakash Chimanlal Sheth (appellant) lent Rs.
38,50,000 to Keyur Lalitbhai Rajpopat. The respondent, Jagruti
Keyur Rajpopat, being the wife of Keyur Lalitbhai Rajpopat, stood as
guarantor for the loan repayment. She also availed separate financial
assistance from the appellant.
In September 2023, four cheques were
issued by the respondent to discharge both her husband's liability and her own
obligations. These cheques were deposited by the appellant at Kotak
Mahindra Bank, Opera House Branch, Mumbai. However, all four cheques were
dishonored on September 15, 2023, due to insufficient funds in the respondent's
account.
Following the standard procedure
under Section 138 of the NI Act, the appellant filed four complaint
cases (C.C. Nos. 1258, 1259, 1260, and 1261 of 2023) before the Judicial
Magistrate First Class, Fifth Court, Mangalore. The complaints were filed
under Section 200 CrPC read with Section 138 of the NI
Act.
The jurisdictional dispute emerged when
the learned Magistrate, by order dated December 12, 2023, returned the
complaint cases for presentation before the jurisdictional court. The
Magistrate erroneously concluded that since the drawee bank was Kotak Mahindra
Bank at Mumbai, his court had no territorial jurisdiction to entertain the
complaints.
Aggrieved by this decision, the
appellant approached the High Court of Karnataka at Bengaluru under Section
482 CrPC through Criminal Petition Nos. 1237, 1720, 1769, and 1770 of
2024. Unfortunately, the High Court, proceeding on similar erroneous
assumptions, dismissed the petitions on March 5, 2024, confirming the
Magistrate's order.
Legal
Issues Raised
The primary legal question before the
Supreme Court was straightforward yet fundamental: Where should
complaints for cheque bounce cases under Section 138 of the NI Act be filed?
Specifically, the Court had to
determine whether territorial jurisdiction lies:
1. At the place where
the cheque is presented/deposited for collection (as interpreted
by the lower courts), or
2. At the place where
the payee maintains their bank account (as mandated by Section 142(2)(a)
of the NI Act)
This issue had significant implications
for the efficient administration of justice in cheque bounce cases, affecting
thousands of complainants and courts across the country.
Arguments
by the Parties
Appellant's
Contentions
The learned senior counsel for the
appellant presented compelling arguments:
1. Account Location
Clarification: The
appellant maintained his bank account with Kotak Mahindra Bank at its
Bendurwell, Mangalore Branch, not at the Opera House Branch in Mumbai.
2. Mere Presentation vs.
Account Maintenance: The
appellant had merely presented the respondent's cheques at the Mumbai branch
for crediting to his Mangalore account. This presentation did not establish
jurisdiction at Mumbai.
3. Erroneous Assumption
by Courts: Both
the Magistrate and High Court proceeded on the wrong assumption that the
appellant maintained his account at the Opera House Branch in Mumbai.
4. Clear Statutory
Mandate: Section
142(2)(a) of the NI Act clearly establishes jurisdiction where the
payee maintains their account, not where cheques are presented.
Respondent's
Position
The respondent filed a
counter-affidavit along with account details. Significantly, the respondent's
counsel fairly conceded that:
1. The appellant had
previously maintained his account at the Opera House Branch but had
subsequently transferred it to the Bendurwell, Mangalore Branch.
2. The appellant's
current account number (0412108431) was indeed with the Mangalore branch.
This concession was crucial in
establishing the factual matrix for the Court's decision.
Judicial
Analysis and Reasoning
Factual
Determinatio
The Supreme Court meticulously examined
the evidence regarding the appellant's bank account. The Court noted that:
1. Documentary Evidence: The appellant
provided a certificate from Kotak Mahindra Bank, Bendurwell, Mangalore Branch,
confirming his account number as 0412108431.
2. Respondent's
Admission: The
respondent's account statement also reflected the appellant's account number as
0412108431.
3. Fair Concession: The
respondent's counsel fairly admitted the account transfer from Mumbai to
Mangalore.
Legal
Interpretation of Section 142(2)(a)
The Court provided a definitive
interpretation of Section 142(2)(a) of the NI Act, emphasizing that
this provision, as amended in 2015, makes it abundantly clear that an offense
under Section 138 should be inquired into and tried only by a
court within whose local jurisdiction the branch of the bank where the payee
maintains the account is situated.
The Court specifically stated: "Section
142(2)(a) of the N.I. Act makes it clear that an offence under Section 138
thereof should be inquired into and tried only by a Court within whose local
jurisdiction, if the cheque is delivered for collection through an account, the
branch of the bank where the payee maintains the account is situated."
Precedential
Analysis
The Supreme Court relied heavily on its
previous decision in Bridgestone India Private Limited vs. Inderpal
Singh (2016) 2 SCC 75, which had affirmed the same interpretation
of Section 142(2)(a). The Court noted that this precedent had
already established that the provision "vests jurisdiction apropos an
offence under Section 138 thereof in the Court where the cheque is delivered
for collection, that is, through an account in the Branch of the Bank where the
payee maintains that account."
Key
Legal Provisions Examined
Section
138 of the Negotiable Instruments Act, 1881
This section deals with the dishonor of
cheques for insufficiency of funds. It creates a criminal offense when a cheque
drawn by a person on an account maintained by them in a bank for payment of
money to another person is returned unpaid due to insufficient funds or if it
exceeds the arrangement made with the bank.
Section
142(2)(a) of the Negotiable Instruments Act, 1881
This crucial provision, as amended in
2015, states: "Notwithstanding anything contained in the Code of
Criminal Procedure, 1973, every offence punishable 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 maintains the account is situated."
Section
482 of the Criminal Procedure Code, 1973
This section empowers High Courts to
exercise their inherent jurisdiction to prevent abuse of the process of any
court or to secure the ends of justice.
Section
200 of the Criminal Procedure Code, 1973
This provision deals with the
examination of complainants and witnesses in complaint cases before
magistrates.
Precedents
Cited
Bridgestone
India Private Limited vs. Inderpal Singh (2016) 2 SCC 75
This landmark case established the
foundational principle for territorial jurisdiction in cheque bounce cases. The
Supreme Court in Bridgestone had affirmed that Section 142(2)(a) of
the NI Act vests jurisdiction in the court where the cheque is delivered for
collection through an account in the branch where the payee maintains that
account.
The present judgment reinforces and
applies the Bridgestone precedent, demonstrating the consistency of the Supreme
Court's approach to this jurisdictional issue.
Court's
Decision and Direction
Primary
Holdings
1. Jurisdictional
Clarity: The
Supreme Court unequivocally held that territorial jurisdiction for Section
138 complaints lies where the payee maintains their bank account, not
where the cheque is presented.
2. Factual Finding: The Court
established that the appellant maintained his account at the Bendurwell,
Mangalore Branch of Kotak Mahindra Bank.
3. Legal Justification: Based on Section
142(2)(a) of the NI Act, the appellant was fully justified in filing
complaints before the jurisdictional court at Mangalore.
Orders
Passed
The Supreme Court:
1. Granted Leave: Converted the
Special Leave Petitions into Criminal Appeals.
2. Allowed the Appeals: Set aside both
the impugned order dated March 5, 2024, passed by the High Court of Karnataka
and the order dated December 12, 2023, passed by the Judicial Magistrate.
3. Directed
Adjudication: Ordered
the Judicial Magistrate First Class, Fifth Court, Mangalore, to entertain and
expeditiously adjudicate the complaint cases in accordance with law.
4. Closed Pending
Applications: All
pending applications were ordered to stand closed.
Legal
Implications and Impact
Clarity
for Legal Practitioners
This judgment provides much-needed
clarity to lawyers and legal practitioners handling cheque bounce cases. The
decision eliminates confusion about where to file complaints, potentially
reducing the number of cases being returned on jurisdictional grounds.
Judicial
Efficiency
By establishing clear jurisdictional
guidelines, the judgment promotes judicial efficiency and reduces the burden on
courts dealing with preliminary jurisdictional objections.
Precedential
Value
The judgment reinforces the Supreme Court's
consistent approach to interpreting Section 142(2)(a) of the
NI Act, providing strong precedential value for future cases.
Impact
on Banking Operations
The decision clarifies that the
location of cheque presentation (which might be done for operational
convenience) does not determine jurisdiction. This understanding is crucial for
banks and financial institutions in advising their customers.
Protection
of Payee Rights
The judgment ensures that payees can
file complaints in courts convenient to them (where they maintain their
accounts) rather than being forced to approach distant courts based on where
they might have presented cheques for collection.
Conclusion
The Supreme Court's decision in Prakash
Chimanlal Sheth vs. Jagruti Keyur Rajpopat represents a significant
clarification in the law relating to territorial jurisdiction in cheque bounce
cases. The judgment removes any ambiguity regarding the interpretation of Section
142(2)(a) of the Negotiable Instruments Act, 1881 and provides
definitive guidance for determining the appropriate court for filing Section
138 complaints.
The Court's reasoning is impeccable,
based on a clear reading of the statutory provision and consistent with
established precedent. The decision will undoubtedly reduce jurisdictional
disputes and contribute to the efficient resolution of cheque bounce cases
across the country.
This case serves as an excellent
example of how the Supreme Court continues to provide clarity on important
legal issues, ensuring that the administration of justice remains both
accessible and efficient. The judgment's emphasis on the payee's account
location rather than the place of cheque presentation reflects a practical and
legally sound approach that protects the interests of genuine complainants
while maintaining the integrity of the judicial system.
The legal fraternity can now
confidently advise clients on jurisdictional matters in cheque bounce cases,
knowing that the Supreme Court has definitively settled this important question
of law.
Friday, August 1, 2025
key legal precedents and citations that support your submission that the complaint is a counterblast and an abuse of the process of law
Here are key legal precedents
and citations that support your submission that the complaint is a
counterblast and an abuse of the process of law, along with brief extracts you
can include in your petition or oral submissions:
1.
State of Haryana v. Bhajan Lal
Citation: 1992 Supp (1) SCC 335
Principle: The Supreme Court laid down illustrative categories under
which criminal proceedings may be quashed under Section 482 CrPC.
Relevant Extract:
"Where a criminal proceeding is
manifestly attended with mala fide and/or where the proceeding is maliciously
instituted with an ulterior motive for wreaking vengeance on the accused and
with a view to spite him due to private and personal grudge."
✅ Use this to argue that the
complaint is a counterblast and intended to harass the petitioner
with a malicious motive.
2.
Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors.
Citation: (1998) 5 SCC 749
Principle: The Supreme Court emphasized that criminal law should not be
used as a tool for harassment.
Relevant Extract:
"Criminal law cannot be set
into motion as a matter of course. It is not that the complainant has to bring
only two witnesses to support his allegations to have the criminal law set into
motion. The Magistrate has to carefully scrutinize the evidence brought on
record and may even himself put questions to the complainant to elicit answers
to find out the truth."
✅ Use this to support your
contention that frivolous or retaliatory complaints should be carefully
scrutinized and not permitted to proceed without proper basis.
3.
Madhavrao Jiwajirao Scindia v. Sambhajirao Chandrojirao Angre
Citation: (1988) 1 SCC 692
Principle: The Court must consider whether the allegations made in the
complaint are absurd and inherently improbable.
Relevant Extract:
"The legal process should not
be misused for settling scores or as a weapon of harassment. When the
allegations made in the FIR or complaint are so absurd and inherently
improbable that no prudent person can ever reach a just conclusion that there is
sufficient ground for proceeding against the accused, then the Court may
exercise its inherent powers."
✅ Use this where the complaint
appears absurd or improbable and filed with a vengeful motive.
4.
Kapil Agarwal & Ors. v. Sanjay Sharma & Ors.
Citation: (2021) 5 SCC 524
Principle: Courts should intervene where criminal proceedings are
instituted as a pressure tactic or to abuse process.
Relevant Extract:
"The High Court should not
hesitate to exercise its jurisdiction under Section 482 CrPC to quash the
proceedings where the same are manifestly attended with mala fide and
instituted with an ulterior motive."
✅ This reinforces the argument that
courts must nip such abuse in the bud.
5.
G. Sagar Suri v. State of U.P.
Citation: (2000) 2 SCC 636
Principle: Filing criminal complaints to exert pressure in civil
disputes is not permissible.
Relevant Extract:
"It is to be seen if a matter,
which is essentially of a civil nature, has been given a cloak of a criminal
offence. Criminal proceedings should not be permitted to degenerate into a
weapon of harassment."
✅ If there’s a civil background or
earlier complaint, this supports the abuse of criminal law theory.