Gauhati High Court: No distinction between bearer and crossed cheques in NI Act

STAFF REPORTER

GUWAHATI: The Gauhati High Court has ruled that the Negotiable Instruments (NI) Act does not distinguish between bearer cheques and crossed (account payee) cheques and that the Act bestows jurisdiction upon the judicial authority of the area where the relevant cheque is presented for collection.

The High Court made this observation while setting aside a decision of the court of the Sub-Divisional Judicial Magistrate (SDJM), Hojai whereby the lower court had declined to adjudicate a matter pertaining to a dishonoured cheque worth Rs 9 lakh on the ground that it had no territorial jurisdiction under the NI Act because the cheque in question was a bearer cheque and not a crossed cheque. The High Court pointed out that the petitioner in question had a bank account at the SBI's Hojai branch where the cheque was presented and subsequently found to be dishonoured by the payer's bank of the ground of "account closed". As such, the court observed that since Section 142(2)(a) and Section 138 of the NI Act make the question of jurisdiction clear, hence the impugned order passed by the lower court "has failed to withstand the test of legality, propriety and correctness and the same requires interference of this (High) Court." The High Court has consequently directed the court of the SDJM, Hojai to take up the matter again and dispose of it "in accordance with law".

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