Supreme Court has ruled on 01 August 2014 in response to various appeals filed before it, that a complaint about a bounced cheque must only be filed at the place where the bank dishonoured it, settling doubts raised by its own earlier conflicting judgments on the jurisdiction of a magistrate.
Some judgments had specified the place where the cheque was issued, others from where the notice of dishonour was sent and still others the place of receipt. Owing to this confusion in law, the matter was referred to a larger bench of the SC.
A three-judge bench headed by T S Thakur unanimously laid down that the place of dishonour is the right place to file a complaint. However, to avoid inconvenience to persons already prosecuting such cases, the new rule is to come into force only with respect to cases in the future. Those in which trials have begun will remain in the same courts.
The judgment was delivered on a large number of appeals, including those moved by Videocon Industries and Kitchen Appliances Ltd, which raised the question of jurisdiction of the magistrate who can try cases under Section 138 of the Negotiable Instruments Act. According to this provision, it is an offence to issue cheques without a sufficient balance in the account, if the payment is made to discharge a debt or liability. If the amount is not paid within two weeks, the payee can file a criminal complaint.
This is the second major ruling in recent months dealing with this Act. There are a little more than four million cheque-bounce cases at courts. In April, another bench issued a series of guidelines, including issuance of summons through e-mails and completion of evidence within three months.
P.S. The relevant Judgment would be updated as soon as it is available… source for the above is BusinessStandard.com.
Subhash Adlakha says
This article has cleared the confusion over cheque bounce law. There was confusion regarding cheque bounce cases already in the court and many advocate were of the view that Supreme Court judgement will be enforced for the cases already in the court.
anil says
This is a ridiculous judgement to file cheque case the place of dishonour is the right place to file a complaint. , this is the most outrageous judgement by any means. Suppose a company has head quarters in mumbai and supplies to all over india to dealers against cheque, on dishnonour of cheque should it file cheque cases in the particulator or respective place where the dealer has issued the cheque, this is most ridiculous , it will rather hurt the companies , legal fees , travelling and staying expenses
( assuming the nature of trial it takes to close one case its a life time of expenses to be borne by the complaintaint against the defaulter) the amount may exceed the receivable. why dont the judges use common sense like these small changes in law will bring a windfall in cheque cases such as
01) Arrest warrant should be issued against the defaulter at the local police station itself after no compromise or settlement is arised after issuance of notice.
02) after 3 cheque return by a person the bank should close the account of the issuer or the person issuing such a cheque.
These simple small changes will change the scenario of credit, finance and genuine customers can make benefit of such simple changes. A person with the intention to cheat will think 2 to issue a cheque.
genuine customers can transact will goodwill of honoring the cheque at the post dated time.
Business is done with good faith but the person borrowing using such loopholes in the law and harassing the system, the person trusting him and etc.