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Negotiable Instruments Act Does Not Classify Cheques As Bearer Or Account Payee: Jurisdiction Lies Where Cheque Is Delivered For Collection: Gauhati High Court

Anila Sabu ,
  04 August 2022       Share Bookmark

Court :
The Gauhati High Court
Brief :

Citation :

Case Title:
Nadress TU Vs The State Of Assam And Anr

Date Of Order:
2nd Aug 2022

Honourable Mr Justice Robin Phukan

Petitioner: NADRESS TU
Advocate for the Petitioner: MR A W AMAN
Advocate for the Respondent: PP, ASSAM


The territorial jurisdiction of the Court in cases brought under Section 138 of the Negotiable Instruments Act would be the location where the check is presented for collection, according to the Gauhati High Court.

Important Provisions

1. Negotiable Instruments Act

A. Section 138

B. Section 142(2)

Brief Facts

  • Business partners, the petitioner and respondent No. 2 Mr Abdul Resak K.C. Respondent No. 2 had written a check for Rs. 9,00,000/drawn on the Canara Bank's Thamarassery Branch with the number 237847 on November 8, 2021, to pay off a debt.
  • On November 25, 2021, the petitioner placed the money in his State Bank of India account at the Hojai Branch for collection.
  • However, the same was returned dishonoured with the note, "Account closed." After that, the petitioner sent a demand notice.
  • However, the respondent was unwilling to accept the same. The petitioner then made a complaint in accordance with section 138 of the N.I. Act.
  • But on the grounds of lack of territorial jurisdiction, the learned court below had dismissed the case.
  • To pay off a debt, the defendant gave the petitioner, who had a bank account with the SBC Hojai Branch, a check. With an endorsement of the closed account, it was assumed that the same was dishonoured.
  • The case was consequently returned to the lower court with the instruction to handle it in conformity with the law.

Questions Raised

  1. 1. Whether negotiable instruments act classify cheques as bearer or account payee.
  2. 2. Whether jurisdiction lies where the cheque is delivered for collection

Arguments Advanced by The Appellant

  • The appellant claims that the honourable court below dismissed the case on the grounds that it lacked jurisdiction under section 142(2) of the N.I. Act since the in question check is a bearer check, which, in Mr Nawas' opinion, is the result of misunderstanding the relevant clause. The complaint should not be dismissed because the cheque in question is a bearer cheque since, according to Mr Nawas, there is no distinction between a cross cheque and a bearer cheque for purposes of launching a case under the N.I. Act.
  • It was further argued that the petitioner has one account with the State Bank of India, Hojai Branch and that as the owner of the check, he presented it in his bank in Hojai.
  • Accordingly, the impugned order suffers from manifest illegality, and it is argued to be set aside in light of Section 143(2)(a) of the N.I. Act and the learned court below's jurisdiction to hear the case.

Arguments Advanced by The Respondent

  • In his customary fairness, the respondent also agreed with the petitioner's learned attorney's argument that the learned court below has jurisdiction to hear the case because of an express clause in section 142(2)(a) of the N.I. Act.
  • It is requested to dismiss this petition at this motion stage itself because it simply raises a legal question, as agreed to by the knowledgeable counsel.

Cases Referred to By the Court

The Hon'ble Supreme Court also addressed a related issue in the case of M/S Bridgestone India Pvt. Ltd. vs. Inderpal Singh, Criminal Appeal No. 1557 of 2015 (arising out of SLP(Crl.) No. 7850 of 2011), and made the following rulings:

The argument put forth by the knowledgeable appellant's attorney received unanimous support from the court.

The court asserted that it was convinced that Section 142(2)(a), as amended by the Negotiable Instruments (Amendment) Second Ordinance, 2015, vests jurisdiction for starting legal proceedings for the violation of Section 138 of the Negotiable Instruments Act, among other things, in the territorial jurisdiction of the Court where the check is delivered for collection (through an account of the branch of the bank where the payee or holder in due course maintains an account).

Analysis By the Court

  • The finding was issued concerning a revision petition that contested the trial court's decision to dismiss the petitioner's complaint because the court with jurisdiction over the accused's account had jurisdiction because the petitioner's check was a bearer cheque.
  • According to the trial court, in instances involving cross-checks or account payee checks, the court where the complainant has an account has jurisdiction, and in situations involving bearer checks, the court where the accused has an account will have jurisdiction.


The court is of the considered judgement that the impugned order, as passed by the learned court below, has failed to pass the test of legality, appropriateness, and correctness and that this court's intervention is necessary given the factual and legal position. The contested order is therefore annulled.

The case is returned to the lower court's learned division, with instructions to handle it legally. Each party is responsible for its own expenses.

Click here to download the original copy of the judgement

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