Supreme Court Issues Directions For Speedy Disposal of Cheque Bounce Cases Suggesting Amendment to Sec.138 NI Act

Supreme Court Issues Directions For Speedy Disposal of Cheque Bounce Cases Suggesting Amendment to Sec.138 NI Act

A Constitution Bench of the Supreme Court (SC) issued a set of directions for expediting the trial of cheque dishonour cases u/s 138 of the Negotiable Instruments Act (NI Act).

The SC bench comprising Chief Justice of India SA Bobde, Justices L Nageswara Rao, BR Gavai, AS Bopanna, and S Ravindra Bhat gave certain directions for speedy disposal of cheque bouncing cases.

The SC gave the directions after accepting some of the recommendations made in the preliminary report by amici curiae Senior Advocates Siddharth Luthra, R Basant, and Advocate K Parameshwar. They had submitted a preliminary report after consulting various High Courts and States. Based on the said report the Apex Court issued certain directions.

The SC bench had formed a committee of experts headed by former Bombay High Court Judge Justice RC Chavan on 10 March 2021. The Committee was formed to suggest steps to expedite trial in cheque dishonour cases.

On 7 March 2021, the SC bench comprising of CJI Bobde and Justice L Nageswara Rao registered the suo moto case to devise methods for expeditious trial of Section 138 NI Act cases.

Directions given by the Top Court for speedy disposal of the case are discussed as under-

- Issuance of practice directions by High Courts to the Magistrates regarding the conversion of summary trial to summons trial.

- Inquiry u/s 202 of the Code of Criminal Procedure (CrPC) by the before issuance of summons to an accused who is residing beyond the territorial jurisdiction of the Court.

- Evidence on the affidavit is permitted for inquiry under Section 202 of CrPC. Suitable amendments to NI Act recommended allowing one trial for multiple cases arising out of the same transaction, notwithstanding the bar under CrPC.

- Practice directions are to be issued by High Courts to Magistrates to treat service of summons in one case as deemed service against the accused in all other complaints arising out of the same transaction.

- No inherent powers of the Magistrates to review or recall the issue of summons.

- Non-applicability of Section 258 CrPC to the proceedings initiated u/s 138 NI Act. Suggests that suitable amendments should be made to empower the Magistrate to recall and re-examine summons.

The Court further stated that the High Courts have to identify the pending revisions arising out of complaints filed under Section 138 of the NI Act and refer them to mediation. It further stated, "The Courts before which appeals against judgments in complaints under Section 138 of the Act are pending should be directed to make an effort to settle the disputes through mediation."

CJI Bobde said that the suggestions in the preliminary report, which have not been considered by the Court, will be subject to further deliberations by the Committee.

The Top Court noted prima facie that the Central Government has the obligation to create additional courts to ease the burden created on the judicial system by the NI Act, as per the mandate of Article 247 of the Constitution.