The Supreme Court registered a suo motu writ petition to evolve a mechanism for expeditious adjudication of cheque bounce cases. This issue was raised after an appeal was brought up before the bench which is pending for nearly 15 years in which it took 7 years for a the trial to conclude in the trial court.
An appeal relating to the dishonor cheque was listed before the division bench of the Supreme Court comprising of Chief Justice of India, Justice S.A.Bobde and Justice L.Nageshwara Rao, which is being contested for nearly 15 years. The judges opined that a case of this nature pending before various courts for nearly 15 years is eating the time and space of judiciary. Hence the court was of the opinion that a new mechanism should be evolved for speedy disposal of the cases relating to dishonor of cheques. The highlights of the judgment are as follows:
- The court stated that the dishonor of cheques which was originally a civil cause was criminalized under section 138 of NI Act with an intent to secure the credibility of banking transaction and to deter high incidence of dishonour of cheques. The various amendments and the pronouncements of the court indicate that the cases relating to dishonor of cheques are to be speedily disposed.
- The Supreme Court in Meters and Instruments Private Limited and anr. v. Kanchan Mehta, (2018) 1 SCC 560, ruled that
- The trial of dishonor of cheques must be conducted summarily.
- The evidence of the complainant must be conducted within 3 months from the date of assigning of case.
- The trial must be concluded within 6 months from the date of filing of complaint.
- As far as possible the trial must be conducted on day to day basis.
in order to dispose the cases relating to dishonor of cheques expeditiously
- The court opined that nearly half of the pending cases are delayed due to the absence of accused though the magistrate has the power to opt any of the methods of service under section 144, section 62, section 66 and section 67 such as speed post, courier, e-mail or police officer or courts having territorial jurisdictions.
- The court further opined that the problem also exists in non-execution of further process. The police officers often do not pay attention to private complaints. And further the courts instead of taking coercive steps to ensure the presence of accused directs the complainant to pay heavy process fees.
- Hence the court felt the need to evolve a new mechanism to speedily dispose the cheque bounce cases with the co-operation of the stakeholders, banks and police officers. One such measure was adopted by the Supreme Court in Meters and Instruments Private Limited and anr. v. Kanchan Mehta, (2018) 1 SCC 560 wherein the court directed the bank to provide information related to the accused to the payee.
- The court stated that the banks have an important role to play in facilitating the court for speedy disposal of cases in cheque bounce complaints by providing the information of the accused so as to complete the execution process which includes the facility to print the relevant information. The court further directed the RBI to develop certain software to facilitate the same and issue guidelines with regard to providing information of the accused.
- Further it directed the Reserve Bank of India to consider issuing of new proforma of cheques which include the relevant information and the purpose of payment so as to ensure the credibility of banking transactions thereby avoiding misuse of cheques that cause to the filing of false litigations.
- The court was of the opinion to develop a mechanism that ensures the presence of accused through attachment of property, interim compensation or any other reliefs which may require the banks to transfer the money from accused’s account to the complainant’s account as per court’s direction.
- The court also suggested employing pre-litigation settlement of cases with regard to dishonour of cheques by Lok Adalat Legal service Authorities Act. Further the decree of the Lok Adalat shall be considered final under section 21 of Legal services Authorities Act which also have the effect of civil decree.
- The court further directed the High courts to consider setting up of exclusive courts in order to reduce the weightage of pending cases relating to dishonor of cheques.
- The court also suggested developing the usage of modern technology that reduces overcrowding in the courts. The court suggested the mechanism of filing complaints online without requiring the physical presence of the parties. Further suggested that the matter which can be settled or matters that do not require adjudication can be disposed through online mode. Further technology such as video conferencing can be employed that dispenses the physical presence in the court.
- The court also suggested for decriminalizing the dishonor of cheques for smaller amounts.
Thus the court taking note of the fact that there is a need to develop a mechanism to facilitate speedy disposal of dishonour of cheques directed the matter to be registered as a separate writ petition under the caption ‘Expeditious trial of cases under section 138 of NI Act, 1881’. The court appointed the senior Advocate, Shri Sidharth Luthra to act as amicus curiae and also appointed Shri K.Parameshwar, Advocate as amicus curiae to assist him.
The court issued notice to the Union of India through Law Secretary, Registrar General of all the High Courts, the Director General of Police of all the States and Union Territories, Member Secretary of the National Legal Services Authority, Reserve Bank of India and Indian Bank Association, Mumbai as the representatives of banking institutions. Both the petitions are to be listed on 16th April, 2020 for further hearing.
Edited by Pragash Boopal
Approved & Published – Sakshi Raje
Special Leave Petition (Criminal) No. 5464 OF 2016, The Supreme Court of India, Order dates 5th March, 2020.