Cheque bouncing cases: Supreme Court orders High Courts to respond within 4 weeks

Cheque bouncing cases: Supreme Court orders High Courts to respond within 4 weeks

The Supreme Court on 19th January, 2021 directed the High Courts to submit their response within four weeks in the suo motu cognizance of the issue relating to the expeditious trial of cheque bounce cases under Section 138 of Negotiable Instruments Act (NI Act). The Court has enquired the High Courts who have not responded yet to file appropriate affidavit. (In Re: Expeditious Trial of Cases Under Section 138 of N.I. Act 1881).

A three-judge bench of Hon'ble Chief Justice of India (CJI) S.A. Bobde and Justices L. Nageswara Rao and Vineet Saran were hearing the matter. During the hearing, Senior Advocate Siddharth Luthra, appointed as the Amicus Curiae, informed the Court that eleven High Courts are yet respond. He recommended that interim orders can be passed to ask the High Courts who have not responded yet, to file their response in two or three weeks.

National Legal Services Authority (NALSA) which submitted a report on pre-litigation mediation said that it would not be possible unless cognizance is taken of the case. It further suggested that it has to be done post-cognizance and not pre-cognizance.

The Chief Justice commented that Supreme Court took suo motu cognizance of the matter in March 2020. There was an order for taking steps to reduce high pendency of cases relating to dishonoured cheques.

It was then found that the status of the matter since it took up the matter suo motu in March 2020, the Court said, "Amicus Curiae has made submissions and NALSA has submitted a report. Reserve Bank of India (RBI) has filed a reply to the preliminary report. By 27thOctober, 2020, Director General Police (DGP) of states were directed to respond with respect to service of summons. Only 7 DGPs have submitted response. Some High Courts have not filed response".

Notwithstanding, many changes are brought through legislative amendments and various decisions of the Supreme Court mandating speedy trial and disposal of these cases however, trial courts are filled with large number of pending cases.

The Court had recommended to develop a separate software-based mechanism to track and secure the service of process on the accused in cases relating to offences under Section 138 of NI Act. The RBI was also reportedly suggested to consider developing a new proforma of cheques so as to include the purpose of payment, along with other information to facilitate adjudication of real issues.

Erstwhile, the division bench of CJI Bobde and Justice Nageswara Rao had taken up the suo motu case in March 2020 asserting that with the ever-increasing number of cheque bounce cases, there is a need to develop a mechanism for pre-litigation settlement in these cases.

The Apex Court ordered, "In case the High Courts and states do not submit response, the Registrar General of the High Courts and DGP of states who did not respond shall remain present in this Court with necessary authorization from their government to take steps in the matter."

With respect to pre-litigation mediation for cheque bouncing cases, CJI Bobde was in agreement with the stance taken by Luthra. He said, "Negotiable Instruments Act does not lay down steps to be taken for dishonoured cheques. Therefore, it would not be advisable to consider for pre-litigation mediation. However, it may be possible to have it post cognizance is taken by criminal court."

NALSA has been directed to modify its suggestions accordingly. The matter will be taken up after four weeks.