India: Comment On The Negotiable Instruments (Amendment) Ordinance, 2015


On 15.06.2015, the President of India promulgated the Negotiable Instruments (Amendment) Ordinance, 2015 (hereinafter referred to as the "Ordinance")1, amending the Negotiable Instruments Act, 1881 (hereinafter referred to as the "Act"). A perusal of the text of the Ordinance clarifies the impetus for such promulgation and the urgency thereof. While the Negotiable Instruments (Amendment) Bill, 2015 (hereinafter referred to as the "Bill") was passed by the Lok Sabha on 13.05.2015, the Bill is currently pending in the Rajya Sabha. The Parliament not being in session, the President was satisfied that circumstances rendering it necessary for him to take immediate action existed.


1. Judicial trajectory:

Section 138 of the Act provides that an offence will be deemed to have been committed in the event of dishonour of cheque for insufficiency, etc of funds in the account. Vide the decision in Dashrath Rupsingh Rathod v. State of Maharashtra and Another2, a three-judge bench of the Apex Court of India held that the territorial jurisdiction qua dishonour of cheques is restricted to the court within whose local jurisdiction the offence was committed, i.e. the bank on which it is drawn. The observations of the Apex Court in Dashrath Rupsingh marked a departure from the Apex Court's observations and findings in, inter alia, K. Bhaskaran v. Sankaran Vaidhyan Balan3 and Harman Electronics Pvt. Ltd. v. National Panasonic India Pvt. Ltd.4. As a consequence, complaints under Section 138 of the Act were to be filed/ returned (in the event filed prior to the judgment and wherein proceedings had not traversed the stage of Section 145(2) of the Act) for filing in the "proper court", i.e. the Court within whose jurisdiction the bank on which the cheque in question was drawn is situated.

2. Lacunae:

Consequential to the decision of the Apex Court in Dashrath Rupsingh, uncertainty with respect to the "proper court" in relation to institution of complaints qua at par cheques arose. The Bombay High Court dealt with this issue in the case of Ramanbhai Mathurbhai Patel v State of Maharashtra5. The Bombay High Court considered the scenario when at par cheques are dishonoured by a branch of the bank other than the drawee bank branch. The issue in this regard was whether "proper court" will be the Court within whose juridisction the cheque has been dishonoured or the Court within whose jurisdiction the drawee bank branch is situated. Dismissing the petition, the High Court held that the complaint will be tried by the Court within whose jurisdiction the cheque is dishonoured. The Bombay High Court surmised that by issuing at par cheque, the drawer has given the option to the banker of the payee to get the cheques cleared from the nearest available branch of the bank of the drawer.

While the Apex Court's decision in Dashrath Rupsingh provides that the jurisdiction shall vest with the court where the cheque is dishonoured; in the instance of at par cheques, there could be multiple places where the cheque can be dishonoured.

Consequentially, a Special Leave Petition6 was filed against this decision of the Bombay High Court. The Apex Court, vide its order dated 16.09.2014, stayed the order of the Bombay High Court. However, vide its order dated 20.03.2015, the Apex Court dismissed the SLP as withdrawn. Therefore, the lack of clarity pertaining to jurisdiction qua at par cheques prevailed.

Further, the aftermath of Dashrath Rupsingh witnessed procedural delays with regard to continuation of proceedings under the Act. These included delays associated with, inter alia, transfer formalities, oppositions to transfer requests, arguments upon the stage of evidence as envisaged in Section 145(2) of the Act. There was also express discontent over the transfer/initiation of the complaints, pursuant to the jurisdiction vesting with the court where the bank of the defaulter is situated.

The aforementioned lacunae, inter alia, led to representations by stakeholders, industry associations et al. to the Government of India as to the impact of the Dashrath Rupsingh decision upon business interests.7 In order to address the existing and contemplated difficulties in filing of complaints under Section 138 of the Act; the Government sought to introduce amendments to the relevant provisions of the Act by means of the Bill. Since the Bill is currently pending in the Rajya Sabha, the President promulgated the Ordinance as the circumstances rendering it necessary for him to take immediate action existed.


The Ordinance amends the Act in order to regulate the jurisdiction of courts qua cheque bouncing vide the below mentioned modifications/ insertions:

  • Section 142 of the Act has been amended by the Ordinance via introduction of sub-section (2), the language whereof is reproduced hereunder for ease of reference:

    "(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction,—

    (a) if the cheque is delivered for collection through an account, the branch of the bank where the payee or holder in due course, as the case may be, maintains the account, is situated; or

    (b) if the cheque is presented for payment by the payee or holder in due course otherwise through an account, the branch of the drawee bank where the drawer maintains the account, is situated.

    Explanation.—For the purposes of clause (a), where a cheque is delivered for collection at any branch of the bank of the payee or holder in due course, then, the cheque shall be deemed to have been delivered to the branch of the bank in which the payee or holder in due course, as the case may be, maintains the account."
  • Section 142A has been inserted by means of the Ordinance, the language whereof is reproduced hereunder for ease of reference:

    "142A. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 or any judgment, decree, order or directions of any court, all cases arising out of section 138 which were pending in any court, whether filed before it, or transferred to it, before the commencement of the Negotiable Instruments (Amendment) Ordinance, 2015 shall be transferred to the court having jurisdiction under sub-section (2) of section 142 as if that sub-section had been in force at all material times.

    (2) Notwithstanding anything contained in sub-section (2) of section 142 or sub-section (1), where the payee or the holder in due course, as the case may be, has filed a complaint against the drawer of a cheque in the court having jurisdiction under sub-section (2) of section 142 or the case has been transferred to that court under sub-section (1), and such complaint is pending in that court, all subsequent complaints arising out of section 138 against the same drawer shall be filed before the same court irrespective of whether those cheques were delivered for collection or presented for payment within the territorial jurisdiction of that court.

    (3) If, on the date of the commencement of the Negotiable Instruments (Amendment) Ordinance, 2015, more than one prosecution filed by the same payee or holder in due course, as the case may be, against the same drawer of cheques is pending before different courts, upon the said fact having been brought to the notice of the court, such court shall transfer the case to the court having jurisdiction under sub-section (2) of section 142 before which the first case was filed and is pending, as if that sub-section had been in force at all material times."


Subsequent to the Ordinance, the jurisdiction to hear complaints under Section 138 of the Act now vests with the court within whose jurisdiction the bank branch of the payee is situated. Further, in terms of Section 142A of the Act, all subsequent complaints under Section 138 of the Act against the same drawer shall be filed before the same court, regardless of the place where the cheques were presented for payment. This position is a clear departure from the position laid down by the Apex Court in the Dashrath Singh.

In our opinion, the position pursuant to the Ordinance balances the interests of the payee and drawer. If the jurisdiction is determined by reference to the place where the cheque is presented for payment, in the event that the drawer issues several cheques drawn on different banks in different locations to the payee, the payee will not have to file complaints in all the courts within whose jurisdiction the cheques are drawn. Further, since the court under the amended Section 142 of the Act will have jurisdiction to try all subsequent complaints against the drawer, the interests of the drawer and the payee are thereby sufficiently balanced. The Ordinance also clarifies the position with respect to the cheques payable at par at all branches of the drawer bank, as the place where the bank of the accused is situated or where the cheque is dishonoured no longer holds relevance. It is also relevant to note that by amending Explanation I to Section 6 of the Act, the deficiencies relating to the meaning of the expression "a cheque in the electronic form" have been removed.


[1] The Negotiable Instruments (Amendment) Ordinance, 2015,

[2] Criminal Appeal No. 2287 of 2009

[3] (1999)7SCC510

[4] (2009) 1 SCC 720

[5] Criminal Writ Petition No. 2362 of 2014

[6] SLP (Criminal) No. 7251 of 2014

[7] Statement of Objects and Reasons, The Negotiable Instruments (Amendment) Bill, 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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