Whether fund transfer system RTGS has expanded concept of drawee bank in case of dishonour of cheque?

In a significant judgment, the Bombay high court has ruled that in cheque bounce cases, only the drawee bank's jurisdiction could be considered during criminal proceedings under Section 138 of Negotiable Instruments (NI) Act, 1881, even as the Real Time Gross Settlement (RTGS) system facility enabled citizens to draw/pay cheques at any branches all over the country.

Justice SB Shukre of the Nagpur bench of the HC observed: "There can be only one drawee bank and not several. When the RTGS cheques bear an endorsement payable at all our branches', it only means 'payment instructions expedited' enabling receipt thereof immediately."

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Whether system of funds transfer that is RTGS, has expanded concept of “drawee bank” in case of dishonour of cheque?

  From the above clarifications, it would be clear that RTGS 
only   contemplates   transfer   of   funds   from   one   branch   of   the   bank 
where they are actually and physically held to the other branch of the 
bank which has received the cheque for processing and payment of the 

amount thereunder and this transfer of funds must take place within a 
time which is of not more than 30 minutes and if there is no transfer of 
funds   from   the   bank ­branch   where   they   are   actually   and   physically 
held, the payment of the cheque amount cannot be made.   In   other 
words, refusal to transfer funds would be the factor determining what 
is considered as dishonour of cheque by the the Hon'ble Apex Court in 
the judgment in the case of  Dashrath Rupsingh Rathod.  It would then 
follow   that   when   funds   are   not   transferred   for   the   reason   of 
insufficiency of funds, etc. as contemplated under Section 138  of the 
N. I. Act by the drawee or remitting bank (the term used by Reserve 
Bank of India in it's above answer to describe the drawee bank), the 
essential ingredient of dishonour of cheque is fulfilled.  It means that 
dishonour   of   cheque   takes   place   because   of   failure   or   refusal   to 
transfer funds and therefore, it takes place at the place where the bank 
which   so   fails   or   refuses,   which   is   the   “drawee   bank”,   is   situated. 

Therefore, the petitioner cannot be allowed to say that the system of 
funds   transfer,   which   is   RTGS,   has   expanded   the   concept   of   the 
“drawee bank” by making all the branches of the drawee bank as the 
drawee bank themselves in their own right.  Even in the RTGS, there is 
a   transfer   of   funds,   though   through   paper   entries   from   the   drawee 
bank   to   its   another   branch   which   has   accepted   the   cheque   for 
processing and which makes payment on receiving approval or funds 
In this view of the matter, I find neither any illegality nor 

transfer.
arbitrariness in the order impugned herein by which the complaint has 
been returned to the complainant, which  order  has  been passed on 
03/11/2014 by learned Judicial Magistrate, First Class, Nagpur. The 
writ petition deserves to be dismissed.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH : NAGPUR
CRIMINAL WRIT PETITION NO. 951 OF 2014
Smt. Sangita wd/o Ajay Shah

.. Versus ..

  
 Judicial Magistrate, First Class..
(deleted vide order dtd. 5/12/2014).
 Sukrant s/o Harilal Shah,


 CORAM :  S. B. SHUKRE, J.
 DATED  :  13th JANUARY, 2015.

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