Pre-litigation settlement in cheque bounce cases is also under consideration by the court.(Pratik Chorge/HT Photo)
Pre-litigation settlement in cheque bounce cases is also under consideration by the court.(Pratik Chorge/HT Photo)

Are you willing to create more courts for cheque bounce cases: SC asks Centre

  • The law prescribes a six-month deadline for trial to complete but an analysis showed that on an average, a case of cheque bounce under Section 138 NI Act remained for three years and eight months in the judicial system.
By Abraham Thomas
PUBLISHED ON FEB 26, 2021 10:02 AM IST

The Supreme Court on Thursday contemplated guidelines to streamline disposal of cheque bounce cases clogging the judicial docket and sought Centre’s response on establishing additional courts with judicial officers to exclusively try these cases.

A three-judge bench headed by Chief Justice of India (CJI) SA Bobde remarked, “Tell us whether the Union of India is willing to create additional courts for Section 138 Negotiable Instruments Act cases (commonly referred to as cheque bounce cases) using power under Article 247.” This power provided under the Constitution allows Parliament to create additional courts for better administration of laws.

The observation came in a suo moto case pending since March 2020 where the Court is considering guidelines to be issued for expeditious disposal of cheque bounce cases punishable under Section 138 Negotiable Instruments Act. A preliminary report prepared by Court-appointed amici curiae, senior advocate Sidharth Luthra and advocate K Parameshwar, in October 2020 highlighted the urgent directions needed in this regard, one of them being creation of separate exclusive courts.

Additional Solicitor General (ASG) Vikramjeet Banerjee, representing Centre, sought time to take instructions in this regard. According to him, on creation of exclusive courts under Article 247, the Centre would require some time. However, on the other suggestions given by the amici curiae in their report, the Centre can give its inputs by the next date of hearing. The Court fixed the matter for hearing on March 3.

The extent of the problem could be gauged by its sheer numbers. The total criminal cases pending in the country as on January 1, 2020 were over 2.31 crore (over 20 million) of which cheque bounce cases were over 35.16 lakh (over 3.5 million), occupying almost 15% of the total criminal case pendency.

The Court was keen to consider establishing special courts and asked Luthra whether Article 247 was a power coupled with duty where Union was required to have a judicial impact assessment while enacting a law. “Whether there are additional courts or not, we will have to streamline the procedure,” observed the bench, also comprising justices L Nageswara Rao and S Ravindra Bhatt.

The amici curiae report threw light on the need for a comprehensive overhaul of the manner in which Section 138 cases are heard and tried by courts. “Unless the idea of exclusive courts is backed by a comprehensive plan from the Union to fund setting up of exclusive courts and an action plan is worked out to appoint Magistrates (for trial) and judges (for hearing appeals) for such courts, diverting existing resources would burden the system.”

Some states have established exclusive courts but they lack uniform and reasonable standards. For instance, West Bengal has one exclusive court to try Section 138 NI Act offences across the state. In Maharashtra, Pune district where more than 50,000 cheque bounce cases are pending, there is no exclusive court, while Amravati district with a pendency of 10,966 cases has five such courts. Similar is the case for Madhya Pradesh with Indore having no exclusive court despite pendency of over 54,000 cases while Bhopal having five such courts despite pendency being below 20,000.

The Negotiable Instruments Act prescribes a six-month deadline for trial to complete but an analysis in the report showed that on an average, a case under Section 138 NI Act remained for three years and eight months in the judicial system. This backlog was on account of two reasons – increase in institution of cheque bounce complaints and the failure to serve summons on the accused, who are often beyond the territorial jurisdiction of the court where the case gets instituted.

Luthra submitted an additional note to the Court stressing on the need for electronic service of summons. “Nowadays everything is linked with Aadhaar. There is no reason why electronic service of summons should not be done,” Luthra said. He also talked of summary trial of cheque bounce cases, compulsory mediation at the pre-trial stage, and attachment of property of the accused to the extent of the amount presented in the cheque.

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The bench asked Luthra to submit an additional note on creation of additional courts and the interplay of various provisions of Code of Criminal Procedure (CrPC) with NI Act, seen as a factor impeding trial of cheque bounce cases. One such instance given in the report was about Section 220 CrPC allowing joint trial of offences arising from the same offence while Section 219 CrPC restricting such joint hearing up to three cases only.

Reform in this direction would require judicial and legislative interventions, argued Luthra as he agreed to present an additional note in this regard before the next date of hearing.

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