Supreme Court Rules: Complaint for Account-Payee Cheque Dishonour Must Be Filed Only at Payee’s Home Branch Jurisdiction

New Delhi | Updates: 28.11.2025

The Court clarifies that the place of deposit is irrelevant; legal complaints under Section 138 of the NI Act must be filed strictly where the payee maintains their bank account.

In a significant ruling that reshapes how cheque dishonour cases will be handled across India, the Supreme Court has held that complaints for the dishonour of account-payee cheques must be filed only in the court that has jurisdiction over the payee’s home branch — the branch where the payee’s bank account is maintained. The Court has emphasized that it does not matter where the cheque was deposited, presented, or collected.

This judgment settles a long-standing ambiguity and brings much-needed uniformity to cheque bounce litigation under the Negotiable Instruments Act, 1881 (NI Act).

Why Was This Clarification Necessary?

For years, cheque bounce cases suffered from confusion regarding jurisdiction. Complainants often filed cases in:

The city where the cheque was deposited

The city where the bank returned the cheque

The drawer’s city

Or anywhere they found convenient

This led to rampant forum shopping, unnecessary harassment of parties, and a lack of consistency in how courts across India handled Section 138 cases.

Although Parliament amended the NI Act in 2015 to streamline this, the application of the amendment remained uneven. Different courts interpreted jurisdiction differently, especially in cases involving account-payee cheques, which are meant strictly for direct credit into the payee’s bank account.

The Supreme Court’s 2025 ruling finally removes all remaining ambiguity.

What Exactly Did the Supreme Court Say?

The Court held unequivocally that:

“For account-payee cheques, the legally competent court is the one within whose territorial jurisdiction the payee maintains the bank account into which the cheque was intended to be credited.”

This means the location where the cheque was physically deposited — whether a different city, branch, or collection centre — does not create legal jurisdiction.

The Court further observed that since an account-payee cheque can only be credited into the payee’s own bank account, its legal linkage is naturally tied to the payee’s home branch. Therefore, any complaint must originate from that place alone.

What Does This Mean Practically?

This ruling reshapes how cheque bounce cases must be filed from now on:

✔ Only one correct place to file

A complaint under Section 138 NI Act can be filed exclusively at the court covering the area where the payee’s bank account is located.

✔ Deposit location does not matter

Even if the payee deposits the cheque in a different city — for example, while travelling — the jurisdiction still remains with the home branch.

✔ Incorrectly filed complaints can be dismissed

If a complainant files a case in a wrong jurisdiction, the court is bound to dismiss or return the complaint.

✔ Eliminates forum shopping

The ruling stops parties from choosing courts that they find convenient or strategically favourable.

Simple Example to Understand the Ruling

Imagine a payee who lives in Mumbai and has their bank account in a Mumbai branch.
They travel to Delhi and deposit an account-payee cheque there.
The cheque gets dishonoured.

Under this new ruling:

The complaint must be filed in Mumbai

It cannot be filed in Delhi or any other city

Only the payee’s home branch jurisdiction is legally valid

Why the Court Believes This Rule Is Necessary

The Supreme Court highlighted three major reasons behind this decision:

1. Legal Consistency

Different interpretations across states were creating contradictory judgments. A single nationwide standard was needed.

2. Preventing Abuse of Process

Forum shopping allowed complainants to file cases far away from the drawer’s location, creating hardship and misuse of law.

3. True Intent of The Law

The 2015 amendment clearly intended to tie jurisdiction to the payee’s account, not the deposit location. The Court has now reinforced that intention.

What This Means Going Forward

This ruling is expected to:

Reduce unnecessary litigation

Ensure that the accused is not dragged to distant courts

Bring uniformity to lower courts

Help both banks and litigants understand jurisdiction clearly

Speed up cheque dishonour cases by avoiding technical disputes

Overall, the decision marks an important step in simplifying India’s cheque bounce legal framework and making procedures clearer for millions of bank customers and businesses.

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