In a landmark judgment aimed at curbing the practice of "forum shopping," the Supreme Court of India has clarified the territorial jurisdiction for filing cheque bounce cases under Section 138 of the Negotiable Instruments (NI) Act.
On November 28, 2025, a bench comprising Justices J.B. Pardiwala and R. Mahadevan ruled that for "Account Payee" cheques, the jurisdiction to try a complaint lies exclusively with the court within whose territorial limits the payee’s home branch is situated.
This ruling is set to have a significant impact on thousands of pending litigations across the country, as it restricts the ability of complainants to choose a court of their convenience by simply depositing a cheque in a different city.
The Supreme Court held that when a cheque is delivered for collection through an account, the "place where the payee maintains the account" is the only relevant factor for determining jurisdiction.
Even if a payee physically deposits a cheque at a different branch or a "service branch" for commercial convenience or while traveling, the law will deem the cheque to have been delivered to the home branch where the account is actually hosted.
The bench expressed strong concerns regarding "forum shopping"—a practice where a party chooses a court that is most inconvenient for the opponent or most favorable to themselves.
The Court cautioned that if jurisdiction were allowed to depend solely on where a payee physically chooses to drop a cheque into a collection box, it would grant the payee "unbridled power" to drag the accused to any corner of the country. This, the Court noted, would be an abuse of the legal process.
The Supreme Court also took the step of declaring its earlier decision in Yogesh Upadhyay v. Atlanta Ltd. (2023) as per incuriam (rendered without due regard to the law). The 2023 decision had suggested a more flexible approach to jurisdiction, which the current bench found to be contrary to the strict interpretation of Section 142(2)(b) of the NI Act.
Referring to the 2015 Amendment to the NI Act, the bench noted:
- For cheques not delivered through an account: Jurisdiction lies where the drawer (the person who wrote the cheque) maintains their account.
- For account payee cheques: Jurisdiction lies where the payee (the person receiving the money) maintains their account.
The Case Background: Jai Balaji Industries Ltd. v. M/s HEG Ltd.
The ruling came during the hearing of a transfer petition filed by Jai Balaji Industries Ltd. (the accused). The dispute dated back to 2014, involving a dishonoured cheque worth ₹19,94,996.
The timeline of the dispute:
- The Transaction: The cheque was drawn on a bank in Kolkata.
- The Deposit: The complainant, M/s HEG Ltd., deposited the cheque in Bhopal, where it maintained an account.
- The Initial Filing: The case was originally filed in Kolkata.
- The 2015 Amendment: Following changes in the law, the Kolkata Magistrate returned the complaint in 2016, directing the complainant to file it in Bhopal (since the payee's account was there).
- The Objection: The accused argued that since evidence had already started being recorded in Kolkata, the case should not have been shifted, citing the hardship of restarting a decade-old trial.
While the Supreme Court upheld the legal principle that Bhopal was the technically correct jurisdiction under the 2015 Amendment, it recognized a procedural dilemma.
The Magistrate in Kolkata had returned the complaint after the recording of evidence had already commenced. The Court noted that forcing the parties to restart the trial from scratch in Bhopal after years of litigation would be a "procedural impropriety" and highly prejudicial to the accused.
Invoking its powers to ensure the "ends of justice," the Supreme Court directed that the case be transferred back to the Metropolitan Magistrate in Kolkata. The Court ordered that the proceedings resume from the exact stage they were at before the complaint was returned in 2016.
This judgment brings much-needed clarity to a frequently debated area of law. Here are the key takeaways for businesses and individuals:
- Fixed Venue: You cannot choose a court by depositing a cheque in a random city. You must file the case where your "Home Branch" (where you opened your account) is located.
- Protection for the Accused: The ruling prevents "harassment" by complainants who might otherwise deposit cheques in remote locations to make it difficult for the accused to defend themselves.
- Advanced Stage Trials: If a trial has already reached an advanced stage (recording of evidence), the courts may prioritize the completion of the trial over technical jurisdictional shifts to avoid "starting from zero."
By emphasizing the "Home Branch" rule, the Supreme Court has struck a balance between the rights of the payee to recover money and the rights of the accused to a fair and predictable legal forum. The decision reinforces the 2015 legislative intent while ensuring that procedural technicalities do not become an engine of oppression in long-standing legal battles.
Case Title: Jai Balaji Industries Ltd. and Ors. Vs M/s HEG Ltd.
Bench: Justices J.B. Pardiwala and R. Mahadevan
Date of Judgment: November 28, 2025
Judgment Link : https://api.sci.gov.in/supremecourt/2025/24362/24362_2025_7_1501_66370_Judgement_28-Nov-2025.pdf