Advisory on territorial jurisdiction for filing Section 138 complaints
Section 138 of the Negotiable Instruments Act 1881 criminalises the dishonour of a cheque for insufficiency of funds or where the amount exceeds the arrangement with the bank, punishable with imprisonment up to two years or a fine up to twice the cheque amount, or both. A cheque is valid for three months from its date (RBI directive effective 1 April 2012, reducing the earlier six-month validity). The complainant must issue a demand notice within thirty days of the bank's return memo; if the drawer fails to pay within fifteen days, the complaint must be filed within thirty days of the cause of action. Section 143A (inserted by the 2018 Amendment) empowers the court to direct interim compensation of up to 20% of the cheque amount. The question of which court has territorial jurisdiction to entertain the complaint is pivotal — it determines where prosecution proceeds and, frequently, the strategic advantage.
Territorial jurisdiction was reshaped by two landmark developments. The Supreme Court in Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129 held that jurisdiction lies at the place where the cheque was delivered for collection, restricting earlier assumptions about the drawee-bank location. Parliament responded by inserting Section 142(2) through the Negotiable Instruments (Amendment) Act, 2015, which gives jurisdiction to the court of the area where the branch of the bank where the payee maintains the account is situated — effectively the payee's bank branch. Section 142A provides for transfer of pending cases to the court having jurisdiction under Section 142(2). The offence under Section 138 is compoundable with the permission of the court at any stage: the Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. (2010) 5 SCC 663 and JIK Industries Ltd. v. Amarlal V. Jumani (2012) 3 SCC 255 held that courts should ordinarily permit compounding, laying down guidelines including payment of the cheque amount with reasonable interest and costs. AMLEGALS represents both complainants and accused in Section 138 proceedings across India.
Drafting statutory demand notices under Section 138 proviso (b) and advising payees or drawers on response strategy within the fifteen-day period.
Filing Section 138 complaints with the Metropolitan Magistrate or Judicial Magistrate, with supporting documentation and affidavit evidence.
Defending the accused in trial proceedings, filing quashing petitions under Section 482 CrPC / Section 528 BNSS, and challenging vicarious liability under Section 141.
Applying for or opposing interim compensation under Section 143A, including computation of the 20% ceiling.
Negotiating compounding settlements at pre-trial or trial stage and recording the terms before the court.
Filing appeals against conviction or acquittal before the Sessions Court, and revision petitions before the High Court.
Under Section 138 of the Negotiable Instruments Act, the drawer of a dishonoured cheque may be punished with imprisonment for a term up to two years, or a fine up to twice the amount of the cheque, or both.
The payee must issue a demand notice within thirty days of receiving the bank’s return memo. If the drawer fails to pay within fifteen days of receipt of the notice, the payee must file the complaint within one month of the expiry of that fifteen-day period.
Yes. Under Section 141, every person who was in charge of and responsible for the conduct of the company’s business at the time of the commission of the offence is deemed guilty. However, the complaint must contain specific averments of the director’s active role; general and omnibus allegations may be quashed under Section 482 CrPC / Section 528 BNSS.
Section 143A empowers the court to direct the drawer to pay interim compensation of up to 20% of the cheque amount to the complainant at any time during the trial. If the accused is acquitted, the interim compensation must be refunded with interest.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing. An initial discussion is confidential and is used only to understand the matter and assess fit.
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