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Jurisdiction of court under 138 NI Act Case

Jurisdiction of court under 138 NI Act Case

The Negotiable Instruments Act, 1881 (NI Act) is an act of the Indian Parliament which defines and regulates negotiable instruments in India, such as cheques and bills of exchange. Section 138 of the NI Act specifically deals with dishonor of cheques.

Under Section 138 of the NI Act, if a cheque is presented to the bank and dishonored (i.e. returned by the bank unpaid), the payee or holder of the cheque can file a complaint against the drawer (i.e. the person who issued the cheque) for the offence of "dishonor of cheque". In order to file a complaint, the payee must prove that the cheque was presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier, and that the cheque was returned by the bank unpaid.

In terms of jurisdiction, the complaint under Section 138 of the NI Act can be filed before the court within whose local jurisdiction:

  • the bank branch where the cheque was presented for payment is situated;
  • the branch of the bank where the cheque was drawn is situated;
  • the residence of the accused is situated.

In simple words, if a person issued cheque and it is dishonoured or bounced, the holder of cheque can file a complaint in the court under whose jurisdiction the bank branch where the cheque was presented for payment is situated, the branch of the bank where the cheque was drawn is situated, or the residence of the accused is situated.

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