Bhadramma v. State of Karnataka & Anr.
A cheque does not become invalid merely because the drawee bank merged into another bank, as the merged bank's accounts, assets and liabilities pass to the resultant bank.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-15
Bhadramma sought to quash a cheque-dishonour complaint on the ground that the cheque was drawn on Vijaya Bank, which had merged with Bank of Baroda, and the return memo said "no such bank". The Karnataka High Court disagreed with decisions of the Andhra Pradesh and Allahabad High Courts, held that the cheque remained valid after the merger, and left the alleged loss of the cheque to trial.
What happened
The second respondent filed a private complaint under section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 read with section 138 of the Negotiable Instruments Act, saying that a cheque issued by the petitioner had been dishonoured with the endorsement "no such bank". The petitioner did not reply to the notice, and the XVI Additional Chief Judicial Magistrate, Bengaluru took cognizance in C.C. No. 43740/2024 and issued summons. The petitioner sought quashing, saying that the cheque, drawn on an account with Vijaya Bank, had not been issued by the petitioner but had been misplaced and misused, with a police complaint filed, and that Vijaya Bank had merged with Bank of Baroda in 2019, so a cheque on a bank that no longer existed could not found an offence. The petitioner relied on Ganta Kavitha Devi v. State of Andhra Pradesh, a decision of the Allahabad High Court, and on Savithramma v. M. S. Ramachandra, concerning a bank under liquidation.
Questions before the court
- Is a cheque drawn on a bank that has merged into another bank invalid, so that its dishonour does not attract section 138?
Why the court ruled this way
The Court said that the allegation that the cheque was misplaced is a matter for trial and must be established by the petitioner there (paragraph 7). It was unable to agree with the Andhra Pradesh and Allahabad High Courts: on a merger, all the assets and liabilities of the merged bank are taken over by the resultant entity, so the account maintained with Vijaya Bank passed to Bank of Baroda and it cannot be said that the account vanished or that the cheque should not be honoured. A person who receives a cheque from the account holder and presents it is not at fault, and the return memo "no such bank" should not have been issued by Bank of Baroda, which had taken over the bank's accounts. A cheque on a merged bank cannot become invalid only on account of the merger (paragraph 8). The petitioner's statement that the account had been closed did not help the petitioner in the petition under section 528 of the BNSS (paragraph 9).
Controlling point
A cheque issued on a bank that has merged with another bank does not become invalid only because of the merger, and the question whether the cheque was lost or misused is a matter for trial.
Order and next steps
The petition was dismissed, with liberty to the petitioner to raise all the issues as defences in the pending proceedings.
Practical implications
A drawer cannot rely on the merger of the drawee bank to defeat a section 138 complaint, because the account and the bank's liabilities pass to the resultant bank. Defences such as loss or misuse of the cheque, with a timely police complaint, are for the trial court.
Limits of this ruling
- The ruling disagrees with decisions of other High Courts, and the decision of a bank under liquidation (Savithramma) was not applied; the Court did not decide any defence on the facts.
Law and judgment source
- Negotiable Instruments Act, 1881, section 138
- Bharatiya Nagarik Suraksha Sanhita, 2023, sections 223 and 528
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Source checked: 2026-10-15 · Judgment paragraphs: paragraphs 5–9 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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