Territorial Jurisdiction in Cheque Bounce Cases — Supreme Court Clarifies the Law (2025)

Territorial jurisdiction for cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 has been a long-debated issue. Over the years, conflicting judgments and varying interpretations have created confusion for complainants and accused persons across India.

In November 2025, the Supreme Court delivered an important judgment that once again settles the law and reinforces what Parliament intended through the 2015 amendments to the NI Act.

🔹 Background: Why Jurisdiction Became Complicated

Before the 2015 amendment, courts often disagreed on where a cheque bounce case should be filed. Some rulings allowed filing at:

• the place where the drawer’s bank was located,

• the place where the cheque was issued, or

• the place where the cheque was dishonoured.

This caused inconvenience for complainants and encouraged forum shopping.

To resolve these problems, Parliament amended the NI Act in 2015, adding Section 142(2), which made it clear:

The court having jurisdiction is the court within whose territorial area the payee’s bank branch is situated.

However, a 2023 Supreme Court judgment created confusion by interpreting the law differently and indirectly diluting the 2015 amendment.

🔹 The 2025 Supreme Court Judgment

In the case of Jai Balaji Industries Ltd. v. M/s HEG Ltd., decided on 28 November 2025, the Supreme Court finally restored clarity.

✔ The Court held that cheque bounce cases must be filed only where the payee maintains their bank account and where the cheque was presented for collection.

✔ It declared that the 2023 conflicting ruling was incorrect and stood overruled.

✔ It emphasized that the legislative intent of the 2015 amendment is unambiguous and must be strictly followed.

This judgment ensures consistent interpretation across India.

🔹 Key Points From the Judgment

1. Payee’s bank branch determines jurisdiction

The territorial jurisdiction lies exclusively with the court where the payee’s bank account is located.

2. Drawer’s bank branch is irrelevant

Where the drawer maintains the account or issues the cheque has no role in fixing jurisdiction.

3. Conflicting 2023 decision explicitly overruled

The Supreme Court clarified that the earlier deviation was legally unsustainable.

4. Restores the purpose of the 2015 amendment

Parliament’s intent was to protect the payee and prevent harassment by forcing them to file cases in distant places.

5. Retrospective effect under Section 142-A upheld

Pending cases filed at the payee’s bank location remain valid.

🔹 Why This Judgment Is Important

This decision is significant for several reasons:

✔ Ensures uniformity across all courts

No more conflicting interpretations.

✔ Prevents jurisdiction-related objections

Accused persons often challenge jurisdiction to delay cases. This ruling closes that window.

✔ Protects the payee

The complainant no longer needs to run around other cities simply because the drawer’s bank is elsewhere.

✔ Reduces case delays

Clear jurisdiction means faster progress in NI Act cases.

🔹 Relevant Legal Provision Reaffirmed

Section 142(2), NI Act

Defines that jurisdiction is based on the payee’s bank branch.

Section 142-A, NI Act

Gives retrospective effect and validates pending cases.

The 2025 ruling strongly supports the language and intent of these provisions.

⭐ Conclusion

The Supreme Court’s judgment in Jai Balaji Industries Ltd. v. HEG Ltd. (2025) ends years of confusion over territorial jurisdiction in cheque bounce cases. By firmly stating that only the payee’s bank location determines jurisdiction, the Court aligns the law with the 2015 amendment and ensures a predictable, fair, and efficient process for cheque dishonour prosecutions.

This decision protects payees, prevents misuse of the system, and strengthens the enforcement of financial liabilities under the NI Act.