Where to File a Cheque Bounce Case: The Section 138 Jurisdiction Rule From Dashrath Rathod

The single most litigated question in India's cheque-bounce jurisprudence is not whether an accused is guilty. It is a prior, procedural one: in which town's court can the complaint even be filed? On 1 August 2014, a three-judge bench of the Supreme Court answered that question in Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129, and in doing so unsettled fifteen years of practice. The ruling held that a complaint under Section 138 of the Negotiable Instruments Act, 1881 could be filed in only one place: the court within whose territory the cheque is dishonoured by the drawee bank. Within thirteen months, Parliament reversed the position. This explainer traces that arc, because the two rules still govern different complaints depending on their date.

The Statutory Question

Section 138 of the Negotiable Instruments Act, 1881 makes the dishonour of a cheque for insufficiency of funds a criminal offence punishable with imprisonment up to 2 years, or a fine up to twice the cheque amount, or both. It is a document-driven offence with a strict clock: the payee must issue a written demand notice within 30 days of receiving the bank's dishonour memo, the drawer gets 15 days from that notice to pay, and only on the failure to pay does the cause of action crystallise. Section 142 of the same Act then requires the complaint to be filed within 1 month of that cause of action, and only by the payee or holder in due course.

Nowhere in Section 138 or Section 142, as they stood in 2014, did Parliament say where the complaint must be filed. That silence is the statutory question Dashrath Rathod had to answer. Ordinary criminal procedure under Section 177 of the Code of Criminal Procedure, 1973 says an offence is tried where it is committed. But a Section 138 offence is a composite one, stitched together from at least five distinct acts: drawing the cheque, presenting it, its dishonour by the bank, the demand notice, and the drawer's failure to pay within 15 days. Each act can occur in a different city. If each generates jurisdiction, a Mumbai payee holding a cheque drawn on a Guwahati account could sue in Mumbai, Guwahati, or anywhere the notice was posted. Before 2014, courts read the statute exactly that way.

That earlier, expansive reading came from K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510, where the Supreme Court held that any of the five component acts could confer territorial jurisdiction, giving a complainant up to five forums to choose from. For fifteen years, payees used that latitude to file close to home. Dashrath Rathod asked whether that convenience had a statutory basis, or whether it had quietly rewritten the offence.

What the Court Held

The three-judge bench in Dashrath Rupsingh Rathod, decided on 1 August 2014, held that territorial jurisdiction for a Section 138 complaint lies only with the court within whose local limits the drawee bank is situated, that is, the branch of the bank on which the cheque is drawn, where the dishonour actually occurs. The other four acts, drawing, presentation, notice, and non-payment, were held to be preparatory or consequential; they do not, on their own, complete the offence and therefore do not found jurisdiction.

In substance, the Court departed from the five-forum latitude of K. Bhaskaran (1999) and collapsed it to a single forum. The reasoning was that the offence under Section 138 is complete, and criminality attaches, only when the drawer fails to pay within the 15-day window after the notice; but the situs of the offence for jurisdictional purposes is the place of dishonour, because that is where the cheque's payment obligation is refused. The Court also directed, in a transitional measure, that complaints then pending at courts lacking such jurisdiction be returned for filing at the correct court, subject to a limited protection for cases where recording of evidence had already begun.

The holding was, for payees, a hardship. A Delhi trader who accepted a cheque drawn on a Kochi branch now had to prosecute in Kochi, travelling roughly 2,700 kilometres for every hearing in a case that might run for years. The commercial logic of a negotiable instrument, that it should be as good as cash and enforceable where the holder sits, had been subordinated to the letter of Section 138.

Reasoning

Why the place of dishonour became the anchor

The Court's central move was to identify the offence's essential ingredient. It reasoned that the acts of drawing a cheque, presenting it, and issuing a notice are not themselves offences; a person commits no crime by writing a cheque that later bounces, nor by sending a demand letter. The offence under Section 138 fastens only on the drawer's failure to make payment within 15 days of the notice, and the physical event that makes that failure legally cognisable is the dishonour by the drawee bank. Because the dishonour is the act that transforms a civil default into a criminal one, the Court located the situs of the offence at the drawee bank's branch.

This was a deliberately narrow reading. It treated Section 177 of the Code of Criminal Procedure, 1973, the ordinary rule that an offence is tried where committed, as the default, and declined to stretch the "constructive presence" doctrine that Bhaskaran had used to spread jurisdiction across five towns.

The five-act theory, cut down

Under K. Bhaskaran (1999), the offence was seen as a chain of five acts, each capable of grounding jurisdiction. Dashrath Rathod accepted that the five acts exist but rejected the inference that each confers a forum. The bench reasoned that allowing a complainant to pick any of the five forums invited forum shopping: a payee could deliberately present a cheque, or post a notice, from a distant city solely to drag the drawer into an inconvenient court. Anchoring jurisdiction to the single, non-manipulable fact of where the drawee bank dishonours the cheque removed that discretion. The place of dishonour is fixed by where the drawer keeps the account; it cannot be engineered by the complainant after the fact.

The transitional carve-out

Recognising that thousands of complaints had been filed on the Bhaskaran understanding, the Court did not void them wholesale. It directed that pending complaints in courts without territorial jurisdiction be returned to the complainant for presentation before the proper court. Cases in which the recording of evidence under Section 145(2) of the Act had commenced were, however, allowed to continue where they were, to avoid restarting trials that were already advanced. This carve-out limited the disruption but still meant a large number of matters had to migrate to the drawee bank's location.

Practical Takeaways

The critical thing to understand is that Dashrath Rathod is no longer the operative rule for cheques presented after 15 June 2015. Reacting to the hardship the judgment caused payees, Parliament enacted the Negotiable Instruments (Amendment) Act, 2015 (Act 26 of 2015), which inserted Section 142(2) and Section 142A into the Act and took effect from 15 June 2015. The amendment shifted jurisdiction back towards the payee: a complaint now lies where the payee's bank branch, at which the cheque was delivered for collection, is situated.

The 2015 amendment did more than change the forum going forward. Alongside Section 142(2), Parliament inserted Section 142A to validate and consolidate proceedings: where a payee has multiple complaints against the same drawer arising from a common transaction, all of them are to be tried together by the court that first acquires jurisdiction, and cases pending on 15 June 2015 were realigned to the new rule. That transitional design was Parliament's answer to the migration disruption Dashrath Rathod had created only a year earlier, and it explains why complaints filed in mid-2015 were sometimes transferred twice within twelve months, once to comply with the 2014 judgment and again to comply with the 2015 statute.

The result is that the correct forum today depends on which regime a complaint falls under:

For different readers, the operative points are:

• For businesses and traders accepting cheques: For any cheque deposited after 15 June 2015, you file at the court covering your own bank branch where the cheque was presented for collection. Retain the deposit slip and the dishonour memo; both fix the collecting branch and the date the 30-day notice clock starts.
• For drawers and guarantors: You can no longer assume the case will be filed in a distant town near your own bank. Under the 2015 regime the complaint follows the payee's branch, so the venue is usually where the payee banks, not where you do.
• For NRIs and cross-border payees: If a cheque routed through a resident payee's Indian branch bounces, jurisdiction attaches to that branch. Recovery economics, currency conversion, and the tax treatment of any settlement received abroad are worth modelling before you litigate; our NRI repatriation calculator and NRI tax calculator help estimate what actually reaches you after a recovered sum is remitted.
• For anyone weighing criminal versus civil recovery: Section 138 is a fast-track criminal remedy, but a parallel civil suit or a settlement through a Lok Adalat may resolve the debt faster. The same discipline that protects borrowers under statutes like SARFAESI, examined in our note on Mardia Chemicals and the fall of the 75 percent pre-deposit, applies here: know the exact statutory clock before you act.

The procedural clock under Section 138 is unforgiving, and missing any step forfeits the criminal remedy:

If you have unrecovered dues secured against property rather than a cheque, the recovery route and the 30-day compliance obligations differ again, as we set out in our explainer on the RBI 30-day rule for releasing title deeds.

FAQ

Is Dashrath Rathod still good law in 2026?

No, not for current cheques. The Negotiable Instruments (Amendment) Act, 2015 (Act 26 of 2015), effective 15 June 2015, inserted Section 142(2) and superseded the "drawee bank only" rule for cheques presented on or after that date. Dashrath Rupsingh Rathod, (2014) 9 SCC 129 still governs the narrow window of complaints where the cause of action arose between 1 August 2014 and 14 June 2015, but for everyday cheque-bounce cases today the payee's collecting-branch rule applies.

Where do I file a cheque bounce case now?

Under Section 142(2) of the Negotiable Instruments Act, 1881, as amended in 2015, you file in the court within whose jurisdiction the branch of the payee's bank is located, where the cheque was delivered for collection. Keep the deposit slip: it identifies the collecting branch that fixes the venue. This lets a payee prosecute close to home rather than travelling to the drawer's bank city.

What exactly did Dashrath Rathod decide?

Decided 1 August 2014, the three-judge bench held that a Section 138 complaint could be filed only at the court where the drawee bank, the drawer's own bank branch on which the cheque was drawn, dishonoured the cheque. It cut down the earlier five-forum latitude from K. Bhaskaran, (1999) 7 SCC 510, treating the place of dishonour as the sole situs of the offence.

What is the penalty under Section 138?

Section 138 of the Negotiable Instruments Act, 1881 provides for imprisonment up to 2 years, or a fine up to twice the amount of the cheque, or both. It is a compoundable offence, so parties frequently settle, but the criminal liability is real and the accused must generally deposit a portion of the cheque amount as a condition for suspending sentence pending appeal.

How long do I have to file a cheque bounce complaint?

The clock is strict. After the dishonour memo, you must send a written demand notice within 30 days. The drawer then has 15 days to pay. If payment fails, the cause of action arises, and under Section 142(1)(b) the complaint must be filed within 1 month of that date. Courts can condone delay only on sufficient cause shown, so treat the 1-month window as firm.

Does the drawee bank rule affect cheques given as security or for EMIs?

Yes, the same Section 138 framework applies to any cheque that is dishonoured for insufficiency of funds, including post-dated cheques handed over for loan instalments, provided the cheque represents a legally enforceable debt on the date of presentation. The jurisdiction rule turns only on which bank branch was involved and the date of presentation, not on the underlying purpose of the cheque.

Can I file in more than one place if the drawer has accounts in several cities?

No. Under the post-2015 regime, jurisdiction is fixed by the branch where you, the payee, deposited the cheque for collection, not by where the drawer banks. The five-forum choice of K. Bhaskaran (1999) no longer exists. Filing in a court that lacks territorial jurisdiction risks the complaint being returned, costing you the strict Section 142 limitation window.