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The new law on territorial jurisdiction for cheque bounce matters



  • The Gujarat High Court in its recent judgment of Brijendra Enterprise v. State of Gujarat and another explained the law relating to territorial jurisdiction for filing a complaint about dishonor of cheques.   

    As per the Negotiable Instruments Act, 2015 states you can file a complaint under Section 138 for dishonor of cheque at a court within whose local  jurisdiction

    • The branch of the bank is located

    • Payee or the holder maintains account

    In the view of this recent amendment, a complaint about dishonour of cheque under Section 138 of Negotiable Instruments Act can now only be filed in the court situated at a place where the bank, in which payee's account is situated.

    For better understanding, consider the following examples-

    1. Mr. A holds an account in Navrangpura Branch, Ahmedabad of “XYZ” Bank, issues a cheque payable at par in favour of B. B holds an account with the M.S University Road Branch, Vadodara of the “PQR” bank deposits the said cheque at Surat Branch of ‘PQR bank’ and the cheque is dishonoured. The complaint will have to be filed before the court having the local jurisdiction where the M.S University road branch is situated.

    2. A holds an account with the Navrangpura branch, Ahmedabad, of XYZ Bank issues a cheque payable at par in favour of B. B presents the cheque at the Vadodara Branch of the ‘XYZ’ Bank ( but B does not hold account in any branch of the XYZ bank) and the cheque is dishonoured. The complaint will have to be filed before the court having the local jurisdiction where Navrangpura branch, Ahmedabad, of XYZ Bank is located.

    To summarise, first when the cheque is delivered for collection through an account, the complaint is to be filed before the court  where the branch of the bank is located, where the payee or the holder in due course maintains his account and secondly, when the cheque is presented for payment over the counter, the complaint is to be filed before the court where the drawer maintains his account.         

     

     

    Send a legal notice for cheque bounce @ Rs. 1999/- only


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    These guides are not legal advice, nor a substitute for a lawyer

    These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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