Legal Review and Analysis of Jai Balaji Industries Ltd & Ors vs Ms HEG Ltd 2025 INSC 1362
Case Synopsis
Jai Balaji Industries Ltd. & Ors. vs. M/s HEG Ltd. (2025 INSC 1362)
Synopsis: The Supreme Court delivered a definitive ruling to settle the contentious issue of territorial jurisdiction in cheque dishonour cases. It authoritatively held that for account payee cheques, the exclusive jurisdiction rests with the court where the payee's bank account is fundamentally maintained (the "home branch"), irrespective of the branch where the cheque was physically deposited. This interpretation, anchored in the deeming fiction of the 2015 Amendment, curtails forum shopping and establishes legal certainty. Notwithstanding this finding, the Court, in the interest of justice, transferred the specific case back to its original venue as the trial there had substantially progressed.
1. Heading of the Judgment
Case Title: Jai Balaji Industries Ltd. & Ors. vs. M/s HEG Ltd.
Citation: 2025 INSC 1362
Court: Supreme Court of India
Bench: Justice J.B. Pardiwala and Justice R. Mahadevan
Jurisdiction: Criminal Original Jurisdiction (Transfer Petitions)
2. Related Laws and Sections
This judgment primarily interprets and clarifies the territorial jurisdiction for trying offences under Section 138 of the Negotiable Instruments Act, 1881 (the "NI Act"). The key statutory provisions discussed are:
Section 138 of the NI Act: Defines the offence of dishonour of a cheque.
Section 142 of the NI Act: Pertains to the cognizance of offences. The judgment focuses extensively on Section 142(2)
Section 142A of the NI Act: Deals with the transfer of pending cases.
Sections 177 & 178 of the Code of Criminal Procedure, 1973 (CrPC): General provisions on the territorial jurisdiction of criminal courts.
The Negotiable Instruments (Amendment) Act, 2015: The amendment that introduced Sections 142(2) and 142A.
3. Basic Judgment Details
A. Facts of the Case
The Respondent, M/s HEG Ltd. (Complainant), received a cheque from the Petitioner, Jai Balaji Industries Ltd. (Accused), drawn on a bank in Kolkata.
The Complainant deposited the cheque in its bank account in Bhopal. The cheque was dishonoured.
The Complainant initially filed a case under Section 138 of the NI Act in Kolkata (where the accused's bank was located).
The trial in Kolkata progressed: charges were framed, the accused pleaded not guilty, and the affidavit of evidence-in-chief was recorded.
Subsequently, the Negotiable Instruments (Amendment) Act, 2015 came into force. The Metropolitan Magistrate (MM) in Kolkata, interpreting the new law, returned the complaint, stating it lacked jurisdiction. The court held that jurisdiction now lay where the payee's bank was located.
The Complainant then filed a fresh complaint in Bhopal (where its bank was located).
The Accused challenged the jurisdiction of the Bhopal court and filed these transfer petitions, seeking to move the case back to Kolkata, arguing that the Kolkata court could not have returned the complaint after evidence recording had commenced.
B. Issues for Determination
The Supreme Court framed the following two issues:
Whether, after the enactment of the Amendment Act, 2015, the court within whose local jurisdiction the drawee bank (the accused's bank) is situated has the jurisdiction to try a complaint under Section 138 of the NI Act?
Whether, after the 2015 Amendment, a complaint can be transferred to the court where the drawee bank is situated if the recording of evidence under Section 145(2) had already commenced in that court?
C. Ratio Decidendi (The Court's Reasoning)
The Court's reasoning is a detailed analysis of the evolution of the law on jurisdiction concerning cheque dishonour cases.
i. Historical Legal Backdrop (Pre-2015 Amendment)
K. Bhaskaran v. Sankaran Vaidhyan Balan (1999): This judgment held that the offence under Section 138 is composed of five acts (drawing, presentation, dishonour, notice, failure to pay). A complaint could be filed in any court within whose jurisdiction any one of these acts occurred. This gave a very wide choice of forum to the complainant.
Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. (2009): This judgment curtailed the width of Bhaskaran. It held that the cause of action for issuing the statutory notice arises not from the place of sending the notice, but from the place of its receipt by the accused, to prevent harassment.
Dashrath Rupsingh Rathod v. State of Maharashtra (2014): This landmark judgment dramatically narrowed the jurisdiction. It held that the "offence" is committed only at the place where the drawee bank (the accused's bank) is located, as dishonour is the core of the offence. It relegated other acts to being mere "concomitants" for prosecution. This judgment caused significant concern for complainants.
ii. The Legislative Intervention and Its Interpretation (Post-2015 Amendment)
The Parliament enacted the 2015 Amendment to address the difficulties created by the Dashrath Rupsingh judgment. The Court conducted an in-depth analysis of the newly inserted Section 142(2).
Core Interpretation of Section 142(2): The Court held that for a cheque "delivered for collection through an account" (an account payee cheque), the jurisdiction lies exclusively with the court where the branch of the bank in which the payee maintains his account is situated. This is termed the "home branch" of the payee.
Significance of the Explanation: The Court gave paramount importance to the Explanation to Section 142(2)(a). It creates a legal fiction. Even if the payee, for commercial convenience, deposits the cheque at any other branch of his bank (not the home branch), it shall be deemed to have been delivered to the home branch for determining jurisdiction.
Clarification on Conflicting Precedents:
The Court approved the principle in Bridgestone India (P) Ltd. v. Inderpal Singh (2016) but cautioned that its paraphrasing of the law had led to confusion.
The Court explicitly overruled the position in Yogesh Upadhyay v. Atlanta Ltd. (2023), declaring it per incuriam (decided in ignorance of the law). Yogesh Upadhyay had incorrectly held that jurisdiction lies where the cheque was physically delivered for collection, which the Supreme Court found would lead to forum shopping and misuse, defeating the purpose of the 2015 Amendment.Final Position on Jurisdiction: The Supreme Court conclusively held that the 2015 Amendment has created a special regime that overrides the general provisions of the CrPC. Jurisdiction for account payee cheques is firmly anchored to the location of the payee's home branch.
4. Core Principle of the Judgment
Title: Anchoring Jurisdiction to the Payee's Home Branch: A Curb on Forum Shopping
The central issue addressed by the Supreme Court was the persistent ambiguity and litigation surrounding the territorial jurisdiction for trying cases of cheque dishonour under Section 138 of the NI Act. The core of the judgment is its definitive interpretation of the amendments made in 2015, which were intended to simplify the law but had themselves become a source of conflicting interpretations.
The Main Issue and the Court's Resolution
The primary legal conflict was between two interpretations:
The "Place of Presentation" Theory: That jurisdiction lies where the payee physically presents or deposits the cheque for collection (as per Yogesh Upadhyay).
The "Payee's Account Branch" Theory: That jurisdiction lies where the payee's bank account is fundamentally maintained, i.e., the home branch.
The Supreme Court resoundingly endorsed the second theory. It held that the legislature, through the deeming fiction in the Explanation to Section 142(2)(a), intended to provide a single, certain, and predictable forum for litigation. This forum is the court having jurisdiction over the payee's home branch. This interpretation:
Prevents Forum Shopping: It takes away the complainant's arbitrary power to choose a jurisdiction by simply depositing a cheque in a strategically located branch.
Provides Certainty: Both parties—the drawer and the payee—can easily ascertain the correct court right at the outset.
Balances Convenience: It respects commercial reality (allowing deposit at any branch) while ensuring legal predictability (deeming it a transaction at the home branch).
5. Final Outcome and Supreme Court's Direction
On Jurisdiction (Issue No. 1): The Court held that the MM, Kolkata (where the drawee bank was located) does not have jurisdiction. The JMFC, Bhopal (where the payee's bank account was maintained) is the court of competent jurisdiction.
On Transfer (Issue No. 2): Despite the above finding, the Court allowed the transfer petition. Relying on the principle of convenience and the precedent in Dashrath Rupsingh itself, the Court directed that the case be transferred back to the MM, Kolkata. This exceptional relief was granted because the trial in Kolkata had already reached the advanced stage of recording evidence under Section 145(2) before the complaint was returned. Requiring the parties to start afresh in Bhopal would cause undue hardship and procedural impropriety, especially for the accused who had already defended the case to that stage.
Result: The Transfer Petitions were allowed. The proceedings were ordered to be transferred to the Court of the Metropolitan Magistrate, Kolkata, to be resumed from the stage just before the order returning the complaint.
MCQs Based on the Judgment
1. As per the Supreme Court's judgment in Jai Balaji Industries vs. M/s HEG Ltd. (2025 INSC 1362), for an account payee cheque dishonoured under Section 138 of the Negotiable Instruments Act, 1881, territorial jurisdiction to try the case lies with the court where?
(a) The drawer maintains its account and the cheque was dishonoured.
(b) The statutory demand notice was issued by the payee.
(c) The branch of the bank in which the payee maintains its account is situated.
(d) The cheque was physically delivered by the payee for collection.
2. The Supreme Court declared its earlier judgment in Yogesh Upadhyay v. Atlanta Ltd. to be per incuriam because it?
(a) Incorrectly interpreted the meaning of "drawer" under the NI Act.
(b) Failed to correctly apply the deeming fiction created in the Explanation to Section 142(2)(a) of the NI Act.
(c) Ignored the provisions of the Code of Criminal Procedure, 1973.
(d) Upheld the legal position established in the Dashrath Rupsingh case.
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