Supreme Court takes Suo Moto action for expeditious trial of cases under Section 138 of the Negotiable Instruments Act, 1881
By : Legal Era
Update: 2020-03-16 12:46 GMT
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The Supreme Court registered a Suo Moto petition for “Expeditious trial of cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).”The action was taken in relation to dishonour of two cheques in January 2005, for a total amount of Rs. 1,70,000/-, took a period of 15 years to reach the Apex Court. The matter which was supposed to be disposed of summarily by the trial court...
The Supreme Court registered a Suo Moto petition for “Expeditious trial of cases under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).”
The action was taken in relation to dishonour of two cheques in January 2005, for a total amount of Rs. 1,70,000/-, took a period of 15 years to reach the Apex Court. The matter which was supposed to be disposed of summarily by the trial court in six months, took seven years for the case to be disposed of at the trial court level.
A Supreme Court Bench of Chief Justice Sharad Bobde and Justice L Nageswara Rao held that with ever growing institution of N.I. cases, there is a need of developing a mechanism for pre-litigation settlement in these cases.
The Court held that despite many changes brought through legislative amendments and various decisions of the Supreme Court mandating speedy trial and disposal of these cases, the Trial Courts are filled with large number of pendency of these cases.
According to the Court, “A recent study of the pending cases, reflects pendency of more than 35 lakh, which constitutes more than 15 % of the total criminal cases pending in the District Courts. The effect of above legal proposition is that an Award passed at the pre-litigation stage or pre-cognizance stage shall have an effect of a civil decree. The National Legal Services Authority, being the responsible Authority in this regard, may evolve a scheme for settlement of dispute relating to cheque bounce at pre-litigation i.e. before filing of the private complaint. This measure of pre-litigation ADR process can go a long way in settling the cases before they come to Court, thereby reducing docket burden.”
The Court also observed that Banks, being an important stakeholders in cases of this nature are responsible to provide requisite details and facilitate an expeditious trial mandated by law. An information sharing mechanism may be developed where the banks share all the requisite details available of the accused, who is the account holder, with the complainant and the police for the purpose of execution of process. The Reserve Bank of India (RBI), being the regulatory body may also evolve guidelines for banks to facilitate requisite information for the trial of these cases and such other matters as may be required.
The Court also suggested that a separate software-based mechanism may be developed to track and ensure the service of process on the accused in cases relating to an offence under Section 138 of NI Act. With ensuring the credibility of cheques, it is equally important that cheques are not allowed to be misused giving cause to frivolous litigation. The Court also suggested that the RBI may consider developing a new proforma of cheques so as to include the purpose of payment, along with other information mentioned above to facilitate adjudication of real issues.
According to the Apex Court, with the ever growing institution of cases under the NI Act, there is a need of developing a mechanism for pre-litigation settlement in these cases. The Legal Services Authorities Act, 1987 (the Act) provides for a statutory mechanism for disposal of cases by Lok Adalat at pre-litigation stage under Sections 19 and 20 of the Act. The Court also held that Section 21 of the Act recognizes an award passed by Lok Adalats as a decree of a civil court and gives it finality.
The Supreme Court went on to hold that the High Courts, in addition to the above, may also consider setting up of exclusive courts to deal with matters relating to Section 138, especially in establishments where the pendency is above a standard figure. Special norms for assessment of the work of exclusive courts may also be formulated giving additional weightage to disposal of cases within the time-frame as per legal requirement.
Finally, the Court ruled that working out a mechanism for expeditious and just adjudication of cases relating to dishonour of cheques, fulfilling the mandate of law and reduce high pendency, various duty-holders like Banks, Police and Legal Services Authorities may be required to take measures and prepare schemes. The Court is ready to hear them for evolving a concerted, co-ordinated mechanism for expeditious adjudication of these cases as per the legal mandate.