Dashrath Rupsingh Rathod v. State of Maharashtra: cheque-dishonour jurisdiction

The facts in brief

The matter reached the Supreme Court not as a single appeal but as a cluster of cheque-dishonour appeals and transfer petitions, all converging on a single recurring grievance: forum-shopping. Payees were instituting Section 138 complaints at the place of their own bank, or at the place from which they had issued the statutory demand notice — locations often far from where the drawer lived or banked. The practical consequence was that an accused person could be hauled across the country to defend a cheque-bounce prosecution in a distant state.

The grievance was not abstract. The cheque-dishonour offence has several constituent events — the drawing of the cheque, its presentation, dishonour for insufficiency of funds, service of the statutory demand notice, and the drawer's failure to pay within fifteen days. Under the prevailing law, a complainant could anchor jurisdiction to any of these events. A payee who collected a cheque through a bank branch in one city, then issued a notice from a lawyer's office in another, could choose the most inconvenient forum for the drawer and the most convenient one for himself.

The bench — Justices T.S. Thakur, Vikramajit Sen and C. Nagappan, with Thakur J. authoring — surveyed the statutory scheme of Sections 138 to 142 and the constituent ingredients of the offence, and asked whether the law could continue to treat each of those five "acts" as independently conferring territorial jurisdiction.

The jurisdictional question

The central question was where, as a matter of territorial jurisdiction, a Section 138 complaint may lawfully be filed. Behind that lay a doctrinal conflict between two ways of reading the statute.

The first reading traced to K. Bhaskaran v. Sankaran Vaidhyan Balan (1999) 7 SCC 510, which had treated each of the five constituent acts of the offence as a basis for jurisdiction — giving the complainant a generous menu of five competent forums. The second reading insisted that the ordinary venue rule of Section 177 of the Code of Criminal Procedure governs: an offence is "ordinarily" tried by a court within whose local jurisdiction it was committed. The question was whether the cheque-dishonour offence is "committed" at five places at once, or at one ascertainable place.

What the Court held

Jurisdiction fixed at the place of dishonour

The bench held that the offence under Section 138 is triable only at the place where the drawee bank is located — the place where, on presentation, the cheque is dishonoured. The Court reasoned that while the offence is in one sense complete only upon the drawer's failure to pay within fifteen days of the notice, the situs of the offence for the purpose of jurisdiction is fixed by where the dishonour occurs. Applying the ordinary rule in Section 177, the Court anchored trial to that single, ascertainable event.

This was a decisive narrowing of K. Bhaskaran. The five-act latitude was discarded; jurisdiction now lay at one place, the location of the bank on which the cheque was drawn.

The harassment rationale

The driving concern was abuse. The Court found that the Bhaskaran latitude let payees harass drawers by instituting complaints in distant, inconvenient forums — a multiplicity of competent courts that invited forum-shopping rather than serving the ends of justice. By tying jurisdiction to the drawee bank, the Court sought to remove the structural incentive to litigate cheque cases in oppressive venues.

Prospective effect and transitional savings

Recognising that a sudden change would derail a vast number of part-heard prosecutions across the country, the bench made the ruling expressly prospective and crafted transitional directions. Complaints that had already reached the stage of recording evidence — that is, where the post-summons evidentiary process under the NI Act had begun — were preserved and would continue in the courts then seised of them. All other pending complaints were to be returned to the complainant for filing before the court of competent territorial jurisdiction. This is a textbook deployment of prospective overruling with transitional savings, designed to avoid throwing settled litigation into chaos.

The disruption it caused

The transitional savings could not contain the practical shock. Cheque-dishonour litigation is high-volume, repetitive and geographically dispersed; a great many pending complaints were not yet at the evidence stage and therefore fell within the class that had to be returned and re-filed. For payees — particularly businesses that routinely collect cheques through a bank branch in their own city and issue demand notices from there — the ruling meant abandoning a forum they had treated as settled and instituting fresh proceedings wherever the drawer's bank happened to be.

The trade and banking bar reacted sharply. The rule rewarded a drawer's choice of a distant or inconvenient bank and penalised the payee for the geography of the transaction. A creditor in one city, holding a cheque drawn on a bank in another, now had to prosecute far from home — the mirror image of the harassment the judgment had set out to cure. What had been framed as a protection against forum-shopping looked, from the payee's side of the counter, like a fresh source of inconvenience and cost.

It was this asymmetry — relief for drawers purchased at the expense of bona fide payees — that supplied the political and commercial impetus for Parliament to act. The legislative correction that followed was not a rejection of the Court's concern about harassment; it was a reweighting of the same competing interests, this time in favour of the party the cheque-dishonour regime exists to protect.

The doctrinal architecture

Dashrath Rupsingh Rathod accomplishes three things at the level of doctrine.

First, it establishes — at least for the period it governed — that Section 138 jurisdiction is fixed at the place of dishonour, displacing the five-act jurisdictional menu of K. Bhaskaran. The case is a clean illustration of how the same statutory offence can be read either expansively (every constituent act confers jurisdiction) or restrictively (one constituent event is the situs), and how that choice carries enormous practical consequences for litigants.

Second, it anchors NI Act prosecution to the general venue rule of Section 177 of the Criminal Procedure Code — the principle that an offence is "ordinarily" tried where it is committed. The judgment treats the cheque-dishonour offence as falling within the ordinary scheme of the Code rather than enjoying a special, payee-elected jurisdiction.

Third, and most instructively, it frames a policy tension that Parliament — not the courts — ultimately resolved. The judgment protected drawers from forum-shopping harassment, but in doing so it exposed bona fide payees, especially those collecting cheques through their own bank in a different city, to fresh inconvenience: they would now have to chase the drawer's bank's location. That trade-off set the stage for legislative correction.

The legislative reversal

This is the case's defining feature. Dashrath Rupsingh did not last.

Within months, Parliament promulgated the Negotiable Instruments (Amendment) Ordinance, 2015, later enacted as the Negotiable Instruments (Amendment) Act, 2015, with retrospective effect from 15 June 2015. The amendment inserted Sections 142(2) and 142A into the Act. It relocated jurisdiction to the court within whose local limits the branch of the bank where the payee or holder maintains the account to which the cheque was delivered for collection is situated; and, for cheques presented over the counter, to the location of the drawee-bank branch. The effect was to restore the payee-friendly position and to supersede the very basis of Dashrath Rupsingh.

The Supreme Court confirmed the amended position in Bridgestone India Pvt. Ltd. v. Inderpal Singh, (2016) 2 SCC 75, reading the new provisions as displacing the Dashrath Rupsingh rule. The Madras High Court, in turn, upheld the constitutional validity of Section 142(2), articulating the principle that legislation can validly take away the basis of a judgment without trespassing on judicial power.

The result is that Dashrath Rupsingh is today studied chiefly as a holding overtaken by statute — a leading example of legislative reversal in Indian commercial criminal law. Its reasoning on the situs of the offence retains academic interest, but the operative rule it laid down no longer governs where a cheque-bounce complaint may be filed.

Why it still matters

Though superseded, the case remains pedagogically and doctrinally important. It is the standard illustration of the limits of judicial law-making in a field where Parliament has a clear and competing policy preference. It also marks the high point of the drawer-protective reading of Section 138 — a reading that the legislature deliberately reversed in favour of payees and the commercial credit that the cheque-dishonour regime exists to protect. For practitioners, the lesson is procedural and precise: jurisdiction in a cheque-dishonour case is now governed by Sections 142(2) and 142A as read in Bridgestone, not by Dashrath Rupsingh.

Related on Valkya

• Meters and Instruments v. Kanchan Mehta: closing cheque cases on compensation
• MSR Leathers v. S. Palaniappan: re-presentation and successive cause of action
• In Re: Expeditious Trial of s.138 NI Act cases: the Constitution Bench's pendency reforms

Sources

1. LiveLaw — "Dishonour of cheque cases can be filed only in the court within whose local jurisdiction the offence was committed": https://www.livelaw.in/breaking-dis-honour-cheque-cases-can-filed-court-within-whose-local-jurisdiction-offence-committed
2. SCC Times — "Bhaskaran case on dishonour of cheque stands overruled": https://www.scconline.com/blog/post/2014/08/08/bhaskaran-case-on-dishonour-of-cheque-stands-overruled/
3. BarandBench — "Legislation can take away basis of judgment; Madras HC upholds validity of Section 142(2) NI Amendment Act": https://www.barandbench.com/news/litigation/legislation-can-take-away-basis-of-judgment-madras-hc-upholds-validity-of-section-1422-ni-amendment-act
4. SCC Times — "Compilation of important judgments regarding Section 138 of the Negotiable Instruments Act, 1881": https://www.scconline.com/blog/post/2023/01/04/compilation-of-important-judgments-of-supreme-court-and-high-courts-regarding-section-138-of-the-negotiable-instruments-act-1881/