India: Fair Trial Of Cheque Bounce Cases In The Light Of The Amendment

Last Updated: 17 July 2015
Article by Singh & Associates

Most Read Contributor in India, September 2016


The section 138 of the Negotiable Instruments Act, 1881, deals with the offence pertaining to dishonor of Cheque for insufficiency, etc, of funds in the drawers account on which the cheque is drawn for the purpose of discharge of any legally enforceable debt or other liability. This section prescribes for penalties in case of dishonor of Cheques. The object of the Act is to encourage the usage of cheque and enhance the credibility of the instrument so that the flow of normal business transactions and settlement of liabilities remain unobstructed.1

The parliament of India had given its approval on 13.6.2015 for the proposal to promulgate the Negotiable Instruments (amendment) Ordinance, 2015; and the President of India has promulgated the same. The said amendments are sought to be brought in the Act vide this amendment Bill, because of Court Order stating that – "cases against those having defaulted on their Cheque payments could only be filed in Courts under which jurisdiction the bank Account of the accused fell." Therefore the Finance Minister Mr. Arun Jaitley said while introducing the Bill that "to address the difficulties faced by the payee or the lender of the money in filing the case under section 138 of NI Act, because of which a large number of cases are stuck, the jurisdiction for offence has been clearly defined keeping in view the interest of complainants".

There are five separate actions that lead to Cheque Bouncing Case. These are: (1) Drawing of the Cheque, (2) Presentation of the Cheque to the bank, (3) Returning of the Cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the Cheque demanding payment of the amount within 30 days of the dishonoring of the Cheque, and (5) Failure of the drawer to make payment within 15 days of the receipt of the notice.2

After the Bill is passed the Cheque Bouncing Cases can only be filed in a court under whose jurisdiction the Bank Branch of the payee where the Cheque is presented, falls. While approving the amendment, the government had said it is aimed at fast tracking the resolution of Cheque bounce cases while removing ambiguities' on jurisdictional issues.


The ordinance seeks to amend the NI Act and overturn a judgment issued by a three judge Bench of the Supreme Court in last August in 2014 in the case of Dasrath Rup Singh Rathod Vs State of Maharashtra3 and ruled that "the place situs or venue of judicial inquiry and Trial of the offence must logically be restricted to where the drawee Bank is located." Supreme Court further said "We clarify that the place of the issuance or the delivery of the statutory notice or where the complainant chooses to present the Cheque for encashment by his Bank are not relevant for purposes of territorial jurisdiction of the complaints". This three member Bench of the Supreme court had actually overturned an earlier apex court ruling – the so called Bhaskaran Ruling delivered in 1999, which allowed the victims of 138 NI Act to file cases in a magistrate's court in any court having jurisdiction over the local areas where the five different actions took place". While doing so the Supreme Court said "the conclusion in Bhaskaran was influenced in large measure by curial compassion towards the unpaid payee/holder, whereas with the passage of two decades the manipulative abuse of territorial jurisdiction has become a recurring and piquant factor".

Therefore the proposed amendment is definitely going to bring in some relief to the victims. The present Ordinance proposes to inserts a new Sub Clause to the existing section 142 (sub-clause (2)), which reads as follows:

"(2) The offence under section 138 shall be inquired into and tried only by a court within whose local jurisdiction the Bank Branch of the payee, where the payee presents the Cheque for payment, is situated"4.

The Bill also introduces a new section (142A) in the NI Act, which reads as follows:

" (1) Notwithstanding anything contained in the code of Criminal Procedure, 1973 or any other 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, before the commencement of the Negotiable Instruments (amendment) Act, 2015, shall be transferred to the court having jurisdiction under sub section (2) of section 142 of 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 subsection (2) of section 142or the case has been transferred to that court under sub section (1), 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 presented for payment within the territorial jurisdiction of that Court.

(3) If, on the date of the commencement of the Negotiable instruments (amendment) Act, 2015, more than one prosecution filed by the same person against the same drawer of the 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 142(2) before which the first case was filed as if that sub-section had been in force at all material times."5

In order to create a suitable legal frame work for determination of the place of jurisdiction for trying cases of dishonor of Cheques under section 138 of NI Act, this new amendment Bill has been brought. The objective of the new amendments is to ensure that a fair trial is conducted keeping in view the interest of the complainant by clarifying the territorial jurisdiction for trying the cases for dishonor of Cheques.

The clarity on the jurisdictional issue for trying the cases of Cheque Bouncing would increase the credibility of the Cheque as a financial instrument. This would help the trade and commerce in general and allow the lending Institution, including banks, to continue to extend financing to the economy, without the apprehension of the loan default on account of bouncing of a cheque.6

This decision of the Union Cabinet has been widely welcomed throughout the country, and especially by the stake holders including industry associations and financial institutions.

In the absence of these new proposed provisions, the litigants were harassed for no cause, as they had to travel several times to a court in a different city to pursue the case adding to the cost of litigation. Sometimes there arose ridiculous situation where the litigants had to spend half of the Cheque amount or more than that on travel and hotel bills etc, in order to face the litigation and to get their own due amount.


Keeping the fact in view that about 21 Lac Cheque Bounce cases are pending in Indian Courts, the new law should help to consolidate the cases and quicken the judicial process. It will also be proved helpful for banking institutions which are battling the menace of bad loans. On the other hand, there arose some protest also against the new bill, giving their arguments that the new proposed laws in the NI Act could be used by the Corporate to harass the common man.

Answering the protest and questions arose to the new amendment bill, the Minister of State for finance - Mr. Jayant Sinha, insisted that it would boost the integrity of financial system and not lead to the harassment of the common man. The Hon'ble minister has further stated that "we need this law to strengthen the financial system. It will beef up the integrity of the system. We are moving towards a cashless society and we need this".7




3 2014(3)ACR2914,





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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.