Jai Balaji Industries v. HEG (2025): the payee's home branch is the sole forum for account-payee cheque cases

A decade after Parliament rewrote the jurisdiction rules for cheque-dishonour prosecutions, the Supreme Court has resolved a quiet but consequential split over how the new provision applies to account-payee cheques. In Jai Balaji Industries Ltd. v. HEG Ltd., a Bench of Justices J.B. Pardiwala and R. Mahadevan held that s.142(2)(a) of the Negotiable Instruments Act 1881 fixes jurisdiction at the court where the payee maintains its account — the "home branch" — and that an earlier decision reading the provision differently, Yogesh Upadhyay v. Atlanta Ltd., was rendered per incuriam. The Court allowed the transfer petition, but on the specific facts directed that the prosecution continue before the Metropolitan Magistrate at Kolkata for a procedural reason — evidence having already been recorded there — even though the payee's home branch, and so the jurisdictionally correct forum, lay at Bhopal.

The facts in brief

The dispute arose from a single dishonoured cheque. The accused company drew a cheque on the State Bank of Bikaner and Jaipur at Kolkata. The payee, HEG Ltd., deposited it for collection on 19 June 2014 into its account maintained with the State Bank of India at Bhopal. When the cheque was returned unpaid, the question that surfaced was not the merits of the offence but where the complaint could lawfully be tried — a question that, post-2015, turns entirely on the text of the amended s.142(2).

The petitioners invoked the Court's transfer jurisdiction, contending that the matter belonged before the court at Kolkata, where the drawee bank was situated and where the dishonour notionally occurred. The respondent's position rested on a line of authority that had located jurisdiction at the place where the cheque was delivered for collection. Resolving the petition therefore required the Court to settle, definitively, the meaning of s.142(2)(a) and its Explanation.

The question

The 2015 Amendment introduced s.142(2) (and s.142A) precisely to end the forum confusion that the earlier law had produced. Section 142(2) splits into two limbs. Clause (a) governs a cheque "delivered for collection through an account" — the account-payee cheque — and vests jurisdiction where the branch of the bank in which the payee maintains the account is situated. Clause (b) governs a cheque "presented for payment" otherwise than through an account, and vests jurisdiction where the drawee bank's branch is situated.

The narrow but decisive question was how clause (a) interacts with its Explanation, which deems a cheque delivered at any branch of the payee's bank to have been delivered at the home branch. Did the operative event remain the physical place of delivery, or did the deeming fiction relocate jurisdiction, in every case, to the home branch where the payee holds its account?

What the Court held

The Court anchored its reasoning in the Explanation's legal fiction. A cheque delivered for collection at any branch of the payee's bank is deemed to have been delivered at the home branch — the branch where the payee maintains the account — so that the court with local jurisdiction over that branch is the forum for the complaint. The convenience of the payee in lodging a cheque at any branch is preserved, but the forum is fixed and not left to the accident of where the instrument was physically tendered.

Applying that construction, the Court rejected the argument that jurisdiction lay where the drawee bank stood and the cheque was dishonoured. Section 142(2), as special legislation, occupies the field over the general procedural scheme of the Code of Criminal Procedure. The Court further held that the contrary interpretation in Yogesh Upadhyay v. Atlanta Ltd. — which had given primacy to the place where the cheque was "delivered for collection" without accounting for the deeming fiction in the Explanation — was per incuriam, because it failed to take into account that delivery at any branch is statutorily deemed to be delivery at the home branch. On these facts the payee's home branch was at Bhopal, so the court with jurisdiction under clause (a) was the Magistrate at Bhopal, and the Court held that the Magistrate at Kolkata — where only the drawee bank stood — had no jurisdiction to try the complaint. The proceedings were nonetheless directed to continue at Kolkata: applying the procedural carve-out recognised in Dashrath Rupsingh Rathod, because evidence under s.145(2) had already been recorded there, the Court transferred the case to Kolkata to spare the accused a fresh trial rather than because Kolkata was the correct forum.

Analysis

The decision completes a doctrinal arc that began with Dashrath Rupsingh Rathod v. State of Maharashtra, where the Court had confined jurisdiction to the place of the drawee bank and unsettled thousands of pending complaints. Parliament responded with the 2015 Amendment, restoring the complainant's convenience by tying jurisdiction to the payee's banking arrangements rather than the drawer's. Jai Balaji now reads the amended provision on its own terms, and in doing so disciplines the intervening case law that had blurred the statutory line.

The significance lies in the Court's insistence that the Explanation is not decorative but operative. Earlier formulations — including the paraphrase the Court traced to Bridgestone India and relied upon in Yogesh Upadhyay — had treated "delivered for collection" as the jurisdictional fact, which risked re-opening forum disputes whenever a cheque was deposited at a non-home branch. By holding that the deeming fiction converts every such delivery into a home-branch delivery, the Bench produces a single, predictable forum for account-payee cheques and a clean parallel with clause (b)'s drawee-branch rule for account-bearer cheques. The per incuriam label is doctrinally pointed: it signals that Yogesh Upadhyay is not to be followed on this question, without the matter being referred to a larger Bench.

Why it matters

For litigants, the rule is now mechanical and easy to apply. A complainant prosecuting the dishonour of an account-payee cheque must file before the magistrate having territorial jurisdiction over the branch where it maintains the account, regardless of which branch physically received the cheque for collection. That removes a recurring threshold objection and forecloses tactical attempts to shift venue by routing deposits through distant branches.

For drawers and their advisers, the decision narrows the scope to challenge jurisdiction: the place of dishonour at the drawee bank is no longer the touchstone for clause (a) cheques. And for the lower judiciary, the Court's illustrative contrast between clause (a) and clause (b) — payee's home branch for account-payee cheques, drawee bank's branch for account-bearer cheques — supplies a ready test, reinforced by the Court's direction that the judgment be circulated to all High Courts. The net effect is greater certainty in a high-volume class of litigation where jurisdictional skirmishing has long delayed trials on the merits.

Related on Valkya

• Dashrath Rupsingh Rathod v. State of Maharashtra: cheque-dishonour jurisdiction
• In Re: Expeditious Trial of s.138 NI Act Cases: the Constitution Bench's pendency reforms
• Meters and Instruments v. Kanchan Mehta: s.138 as a compensatory offence
• Mediaone Global v. Ad Bureau (2026): Section 138 as a compensatory, not punitive, jurisdiction

Sources

• Supreme Court Observer, "Territorial Jurisdiction for Cases under Section 138 of the NI Act"
• Verdictum, "Jai Balaji Industries Ltd. v. HEG Ltd. (judgment, 2025 INSC 1362)"