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Understanding Notice 138 Jurisdiction Under the NI Act
Cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) are common in India, often arising from business disputes or loan defaults. A critical aspect is Notice 138 jurisdiction—determining which court can try the case. Getting this wrong can lead to delays, quashing of complaints, or refiling in the correct court. This post breaks down the rules based on Supreme Court precedents, helping you navigate where to file or defend.
The query 'Notice 138 Jurisdiction' typically revolves around whether the place where the demand notice is issued gives a court territorial power. Spoiler: It usually doesn't. Let's explore step-by-step.
What Triggers a Section 138 Offence?
Under Section 138 NI Act, an offence completes through a chain of events:
- Drawing and delivery of the cheque.
- Presentation to the bank within validity.
- Dishonour (e.g., 'funds insufficient').
- Demand notice sent within 30 days of dishonour.
- Failure to pay within 15 days of notice receipt.
Concatenation of five acts viz, drawing of cheque, presentation of cheque to bank, returning of cheque, giving notice in writing and failure of drawer to make payment is sine qua non for completion of offence K. Bhaskaran VS Sankaran Vaidhyan Balan - 1999 8 Supreme 608.
Jurisdiction ties to where these acts occur, per CrPC Sections 177-179.
Core Rule: Drawee Bank Location Governs Jurisdiction
The Supreme Court has clarified that the court within whose jurisdiction the drawee bank (where the cheque is drawn) is situated typically has jurisdiction. The place of statutory notice issuance alone doesn't confer it.
- In a key ruling: Place of issuance of statutory notice does not confer jurisdiction under section 138. Sree Mahesh Stationaries VS Indiabulls Financial Services Mahesh Stationaries VS Indiabulls Financial Services Ltd. - 2014 6 Supreme 574
- Cheques drawn on a Bangalore bank, dishonoured there—Gurgaon courts (where notice issued) lack jurisdiction, even if response received there. Shivgiri Associates VS Metso Mineral (India) Pvt. Ltd.
Dishonour of cheque by drawee bank gives rise to cause of action – Place of the drawee bank will determine jurisdiction. Sree Mahesh Stationaries VS Indiabulls Financial Services
Post-2015 NI Act Amendment (Section 142(2)):
- Jurisdiction lies where the payee's bank branch (for collection) or drawee bank branch (drawer's account) is located.
- Payee can't choose by presenting at a distant branch for convenience. Jai Balaji Industries Ltd. VS HEG Ltd - 2025 8 Supreme 717
Demand Notice: Role and Myths
The demand notice under Section 138(b) must demand cheque amount only—not extras like interest or costs initially. Invalid notices vitiate complaints.
- A demand notice under section 138(b) of the Negotiable Instruments Act must be for the amount of the dishonored cheque only. Prasanta Agarwal VS S. K. Roy - 1996 Supreme(Cal) 333
- Notice via registered post presumes service (Section 27, General Clauses Act). If returned unclaimed, 15 days start from return date. K. Bhaskaran VS Sankaran Vaidhyan Balan - 1999 8 Supreme 608
Myth busted: Issuing notice from a city doesn't create jurisdiction there.
- Mere issuance of notice under Section 138 would not confer any jurisdiction on the court within whose jurisdiction the notice was issued. Viraj Steel and Energy Ltd. VS Skoda Sponge Iron & Steel Co.
- Courts at notice-issuance place (e.g., Delhi) can't try if dishonour was elsewhere (e.g., Vellore). Apex Distributors VS Timex Group India Ltd.
In Nishant Aggarwal v. Kailash Kumar Sharma (referred in Viraj Steel and Energy Ltd. VS Skoda Sponge Iron & Steel Co.), jurisdiction vests where the cheque is deposited for collection (payee's bank branch).
Landmark Supreme Court Cases on Jurisdiction
1. Bhaskaran Principles (Pre-Amendment)
Originally, five acts allowed filing where any occurred (K. Bhaskaran v. Sankaran Vaidhyan Balan, 1999). Notice issuance counted, widening options. But this led to forum shopping.
2. Post-2009 Shift: Focus on Dishonour
- Dashrath Rupsingh Rathod v. State of Maharashtra (2014) narrowed to drawee bank location.
- Overruled Bhaskaran partially; notice place irrelevant if not tied to core acts.
3. 2015 Amendment Clarification
Section 142(2): Trial only where:
- Cheque presented for collection (payee's bank), or
- Drawer maintains account (drawee bank).
Payee cannot select jurisdiction for trial of an offence under Section 138 by presentation of cheque at a location of his choosing. Jai Balaji Industries Ltd. VS HEG Ltd - 2025 8 Supreme 717
4. Recent Affirmations
- Nagpur court had jurisdiction as dishonour and notice both there. Mahindra & Mahindra Financial Services Ltd. VS Nitin - 2011 Supreme(Bom) 1442
- But Gurgaon notices for Bangalore dishonour? No jurisdiction—refile at Bangalore. Shivgiri Associates VS Metso Mineral (India)
Practical Tips for Complainants and Accused
For Complainants (Payee/Holder):
- File where drawee bank or your collection bank branch is.
- Ensure notice demands exact cheque amount; serve properly (RPAD).
- Check limitation: Complaint within 1 month of 15-day notice period.
For Accused (Drawer):
- Challenge jurisdiction early via S. 482 CrPC petition.
- Prove notice not received or invalid (rebut presumption).
- If transferred post-evidence, seek continuation to avoid prejudice. Jai Balaji Industries Ltd. VS HEG Ltd - 2025 8 Supreme 717
| Factor | Confers Jurisdiction? | Example Citation |
|--------|-----------------------|------------------|
| Cheque Drawing | Sometimes | K. Bhaskaran VS Sankaran Vaidhyan Balan - 1999 8 Supreme 608 |
| Presentation | Yes (payee bank) | Viraj Steel and Energy Ltd. VS Skoda Sponge Iron & Steel Co. |
| Dishonour | Primary (drawee bank) | Shivgiri Associates VS Metso Mineral (India) Pvt. Ltd. |
| Notice Issuance | No | Sree Mahesh Stationaries VS Indiabulls Financial Services |
| Failure to Pay | Drawer's residence/business | K. Bhaskaran VS Sankaran Vaidhyan Balan - 1999 8 Supreme 608 |
Special Scenarios
- Partnership Firms: Notice to one partner suffices (S.24 Indian Partnership Act). Golden Agro Foods VS Sahil Trading Company - 2023 Supreme(P&H) 3475
- Post-Amendment Transfers: If evidence recorded elsewhere, transfer back for continuation, not fresh trial. Jai Balaji Industries Ltd. VS HEG Ltd - 2025 8 Supreme 717
- Inquiry Mandatory: Before summoning out-of-jurisdiction accused, conduct S.202 CrPC inquiry. Rakesh Chandra Rastogi VS State of Uttarakhand - 2024 Supreme(UK) 593
Key Takeaways
- Notice 138 jurisdiction hinges on drawee/payee bank location, not notice issuance.
- Avoid forum shopping; Supreme Court curbs it via amendments.
- Always verify bank branches for accurate filing.
In cheque bounce matters, precision matters. Cases like K. Bhaskaran VS Sankaran Vaidhyan Balan - 1999 8 Supreme 608 emphasize the full chain for offence completion, while rulings like Sree Mahesh Stationaries VS Indiabulls Financial Services protect against misuse.
Disclaimer: This is general information based on judicial precedents. Legal outcomes vary by facts. Consult a qualified lawyer for advice tailored to your situation. Not legal advice.
Search Results for "Notice 138 Jurisdiction: Key Court Rulings"
1990 0 Supreme(SC) 740 • India - Supreme Court
S.R.PANDIAN, K.JAYACHANDRA REDDY
Indian Penal Code,1860 - Section 307- Prevention of Corruption Act, 1947- Appeal Against Conviction - First ... light of the above decisions of this Court, we feel that the said observations made in the impugned judgment are unwarranted and ... the historical anecdote is out of context and inappropriate. ... by taking judicial notice of the same. ... competent police officer, clo....
2006 5 Supreme 547 • India - Supreme Court
S.B.SINHA, P.P.NAOLEKAR
For the said purpose, the courts of law may also take judicial notice of the practice prevailing in such business. ... to be an appeal against acquittal, it was in fact exercising the revisional jurisdiction. ... example, if a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of .......
1986 0 Supreme(SC) 115 • India - Supreme Court
D.P.MADAN, A.P.SEN
section, it does not follow that it thereby ceases to be an instrumentality or agency of the State. ... UNDER THIS SECTION IS “THE STATE” WITHIN THE MEANING OF ARTICLE 12 - ... ... International Airport Authority of India, AIR 1979 SC 1628 : (1979) 3 SCR 1014/a ... amenable to the writ jurisdiction both of this Court and the High Court. ... " by giving him thi....
2010 8 Supreme 353 • India - Supreme Court
DALVEER BHANDARI, K.S.P.RADHAKRISHNAN
by the Constitution Bench of court in Sibbia’s case that the courts should not impose restrictions on the ambit and scope of section ... on the provision of anticipatory bail under section 438 Cr.P.C. limits the personal liberty of the accused granted under Article ... Bench in Sibbia’s case.The restriction on the#HL....
2014 8 Supreme 225 • India - Supreme Court
RANJAN GOGOI, ROHINTON FALI NARIMAN
, 1996 – Section 34 – Clause 10C of contract – Concerns itself with the price of material incorporated ... (a) Arbitration and Conciliation Act, 1996 – Section 34(2)(a) – Grounds for challenge ... Neither any authority is cited nor any legal basis is suggested for importing the doctrine of Hindu Law into the domain of contracts ... The construc....
2018 0 Supreme(P&H) 1791 • India - Punjab and Haryana
AJAY KUMAR MITTAL, AVNEESH JHINGAN
(A) Punjab Municipal Corporation Act, 1926, S.138--House Tax--Notice--Writ Jurisdiction--Petitioner have an alternative efficacious ... remedy of appeal against the impugned notice--Writ held to be not maintainable--Constitution of India, 1950, Art. 226 ... (B) Constitution of India, 1950, Art. 226--Writ Jurisdiction--Alternative Remedy ... The respondent No.3 issued notice dated 26.06.2018 under Section 138 of the Punjab Municipal Corporation Act, 1....
1996 0 Supreme(Cal) 333 • India - Calcutta
A.B.Mukherjee
DUE TO IMPROPER DEMAND NOTICE AND LACK OF JURISDICTION. ... NEGOTIABLE INSTRUMENTS ACT - SECTIONS 138, 142 - DEMAND NOTICE - JURISDICTION - COURT QUASHES COMPLAINT FOR DISHONOUR OF CHEQUES ... A demand notice under section 138(b) of the Negotiable Instruments Act must be for the amount of the dishonored cheque only. ... In terms of section 142 (b), a complaint for an offence under section 138, Neg....
• India - Crimes
T.S.THAKUR, VIKRAMAJIT SEN
Negotiable Instruments Act, 1881 – Section 138 – Jurisdiction of court – Place of issuance of notice – Not relevant to criminal territorial ... jurisdiction u/s 138 – Bankers located at Bangalore – Cheque dishonoured at Bangalore – Merely by issuing notices from Gurgaon, ... u/s 138 is not relevant to criminal territorial jurisdiction. ... jurisdiction under Section 138 of the NI....
• India - Dishonour Of Cheque
T.S.THAKUR, C.NAGAPPAN
does not confer jurisdiction under section 138. ... – Issuance of statutory notice – Does not give rise to cause of action – Place of issuance of statutory notice will not confer jurisdiction ... Negotiable Instruments Act, 1881 – Section 138 – Jurisdiction of ... notice under Section 138 of the N.I. ... from any such place do not constitute ingredients of the offence under #HL_S....
2014 6 Supreme 574 • India - Supreme Court
T.S.THAKUR, C.NAGAPPAN
does not confer jurisdiction under section 138. ... – Issuance of statutory notice – Does not give rise to cause of action – Place of issuance of statutory notice will not confer jurisdiction ... Negotiable Instruments Act, 1881 – Section 138 – Jurisdiction of ... notice under Section 138 of the N.I. ... from any such place do not constitute ingredients of the offence under #HL_S....
2011 Supreme(Online)(Bom) 4 • India - Bombay High Court
J. H. Bhatia, J.
Question before this Court is only whether the Metropolitan Magistrate at Mumbai has jurisdiction to entertain the complaint under S.138 of the Negotiable Instruments Act, 1881. S.138 of the Negotiable Instruments Act reads as follows: ... "138. ... As it is only on receipt of the notice the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to S.138 therefore must be read together. Issuance of notice would not by itself give ris....
2025 8 Supreme 717 • India - Supreme Court
J. B. PARDIWALA, R. MAHADEVAN
The High Court held that the issuance of statutory notice being one of the acts mandatory for the completion of an offence under Section 138, the court in Delhi exercising territorial jurisdiction over the place from which the statutory notice was issued, would have the jurisdiction to try the complaint ... This Court, while applying the principles relating to jurisdiction as laid down in Bhaskaran (supra), explained the legal effect of the act of sending the statutory notice....
2014 Supreme(Online)(Chh) 117 • India - Chattisgarh High Court
P. Sam Koshy, J.
Subsequently, the petitioner issued a legal notice to the respondent through his lawyer at Raipur and, finally, after the issuance of the notice, the respondent failed to make the payment to the drawer who resides at Bhatapara within 15 days, which gave rise the offence under S.138 of the NI Act. ... Sankaran Vaidhyan Balan and Another, 1999 (7) SCC 510 : AIR 1999 SC 3762, dealing with the issue of jurisdiction has laid down certain broad guidelines by which it could be determine as to which Court would have territorial ....
2012 Supreme(Online)(Chh) 111 • India - Chhattisgarh High Court
Manindra Mohan Shrivastava, J.
ICICI Bank Branch Bhilai, therefore, the Court at Korba had territorial jurisdiction to take cognizance of offence in view of the provisions contained in S.138 of the Act of 1881. ... Amar Singh Harika, AIR 1966 SC 1313, it was held that for constituting offence under S.138 of the Act, the notice must be received by the accused. ... As it is only on receipt of the notice that the accused at his own peril may refuse to pay the amount. Clauses (b) and (c) of the proviso to S.138 therefor....
2026 Supreme(Online)(HP) 278 • India - IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
HON'BLE MR. JUSTICE RAKESH KAINTHLA
issue of such notice, such demand notice is deemed to have been served on expiry of the period of 30 days from the date of issue of such notice and the cognizance of the offence punishable under Section 138 of the N.I. ... Merely because at the time of taking cognizance by the court, the period of 15 days has expired from the date on which notice has been served on the drawer/accused, the court is not clothed with the jurisdiction to take cognizance of an offence under Section #HL_STA....
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