Jurisdiction for “at par” cheque dishonour – SLP against Bombay High Court decision dismissed by Supreme Court

In a previous article, I had explained as to how recently, on 1 August 2014, the Supreme Court had settled the issue of territorial jurisdiction in cases under Section 138 of the Negotiable Instruments Act (cheque bouncing cases) bringing uniformity and certainty on the issue where such cases can be filed [Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129]; however, within one month of that decision, a decision of the Bombay High Court (see here) in the case of Ramanbhai Mathurbhai Patel v. State of Maharashtra [in Criminal Writ Petition No. 2362 of 2014] had created the same uncertainty again in respect of multi-city cheques payable at par in all branches of the bank. The above decision of the Bombay High Court was challenged in the Supreme Court vide SLP (Criminal) No. 7251 of 2014. This SLP has now been dismissed by the Supreme Court as withdrawn on 20 March 2015. This means that the Bombay High Court decision has become final, though there are certain other legal implications as explained below.

Update [ 17 June 2015]: Please read: Jurisdiction in cheque bouncing cases is changed by new Ordinance, superseding SC judgment.

It may be recalled that in the aforesaid Dashrath Rupsingh Rathod case, a 3-Judge bench of the Supreme Court had held that a cheque bouncing case can be filed only in a court which has the territorial jurisdiction over the place where the cheque is dishonoured by the bank on which it is drawn. Thus, if a cheque is drawn by a person on his bank account at Mumbai, the cheque dishonour case in respect of this cheque can be filed only in a court at Mumbai within whose territorial jurisdiction the said bank is located. Such a case cannot be filed in any other court at any other place. Thus, the uncertainty about the place where such a case can be filed was removed. As per this judgment, the payee of a cheque could not unnecessarily harass the drawer of the cheque by filing the cheque bouncing case at the place of his choice by deliberately choosing a different place for presenting the cheque or for sending the notice, etc.

As mentioned in my aforesaid article, unfortunately, in the aforesaid Dashrath Rupsingh Rathod case, the issue of “multi-city at par” cheques was not considered. It is common knowledge that, nowadays, most of the cheques are multi-city cheques that can be encashed at par in any branch of the bank on which it is drawn. The question in such a case would be: if a multi-city cheque can be presented in any branch of the bank and if it can be cleared / encashed by that branch without sending it to the local branch where the drawer of the cheque actually has his account, does it not mean that dishonour of the cheque can also take place in the branch of the bank where it was actually presented and which dishonoured it without referring it to the local branch where the drawer of the cheque has his account? So where does the dishonour take place? Is it at the branch where the cheque is presented for clearing (but which cannot clear it due to non-availability of sufficient funds, etc.), or is it at the branch where the drawer has his account (though the cheque is not referred to this branch for clearing)?

This question was answered by the Bombay high court in the aforesaid case of Ramanbhai Mathurbhai Patel v. State of Maharashtra. It held that the payee of a multi-city cheque, which is payable at par in all branches of the bank, can choose the place where he wants to present the cheque, and thereafter when it is sent for clearing to the nearest branch of the bank in that city, the court having jurisdiction over that clearing branch has the territorial jurisdiction of the cheque bouncing case. The relevant observations of the Bombay High Court were as under:

“8. It is thus clear that in the present case by issuing cheques payable at all branches, the drawer of the cheques had given an option to the banker of payee to get the cheques cleared from the nearest available branch of bank of the drawer. It, therefore, follows that the cheques have been dishonoured within the territorial jurisdiction of Court of Metropolitan Magistrate at Kurla. In view of judgment of Hon’ble Supreme Court in the matter of Dashrath v. State of Maharashtra cited (supra), the learned Metropolitan Magistrate of Kurla Court has jurisdiction to entertain and decide the complaint in question.”

So, in respect of the multi-city cheques, the old problem of uncertainty about territorial jurisdiction of cheque bouncing cases was again created by the Bombay high court merely within one month of the authoritative decision of the Supreme in the aforesaid case of Dashrath Rupsingh Rathod.

As mentioned in the beginning of this article, the above decision of the Bombay high court was challenged in the Supreme Court vide SLP (Criminal) No. 7251 of 2014. This SLP has now been dismissed by the Supreme Court as withdrawn on 20 March 2015 by a 2-judge bench of Justice Fakkir Mohamed Ibrahim Kalifulla and Justice Shiva Kirti Singh. The operative part of the Supreme Court states as under:

“Learned counsel appearing for the petitioner seeks leave to withdraw this petition. The petition for special leave is dismissed as withdrawn.”

Thus, it means that the Bombay High Court decision in the aforesaid case of Ramanbhai Mathurbhai Patel v. State of Maharashtra has now become final. Therefore, if one goes by this decision from the Bombay High Court, the payee again gets the choice of place where he wants to file the cheque bouncing case, if the cheque being dishonoured is a multi-city cheque payable at par in all branches of the bank.

However, it may be noted that the Supreme Court has merely dismissed the above SLP on the basis of the fact that it was withdrawn by the petitioner. Thus, the SLP has been dismissed in limine. The dismissal was not on the basis of a detailed hearing after examination of all legal principles. Therefore, there is at least a theoretical possibility that this legal issue may again be raised in some other case before the Supreme Court in future. Since a very large number of cheque bounce cases keep coming to courts, it is possible that this issue may again reach the Supreme Court in near future for an authoritative pronouncement. Till that is done, the above Bombay high court decision may apply in respect of a multi-city cheque payable at par in various branches of a bank.