All Cheque Dishonor Cases Must Be Referred To Mediation After Accused Is Served: Punjab & Haryana High Court

The Punjab and Haryana High Court has directed that in all cheque bounce cases under the Negotiable Instruments Act, 1881, trial courts must refer matters to mediation immediately after service of the accused, emphasising that such disputes are primarily compensatory and better resolved through negotiated settlement.The Court said that every trial court and sessions court dealing with NI Act cases must proactively send such disputes for mediation unless the parties decline the process before the mediator.Justice Anoop Chitkara said, "in all NI Act matters, every Trial Court (CJM/JMFC) shall, immediately after the service of the accused in new cases and in cases not sent for Mediation, refer the matter to Mediation, and it shall be for the parties to decline Mediation before the mediator. Similarly, all Sessions Courts shall, immediately upon the service of the opposite party in all pending appeals and revisions, and in all pending matters not sent for Mediation, refer those for Mediation. Needless to say, the State cannot be made a party in the NI Act case, because it is a private dispute."For a custody certificate and confinement, there is no need for the State to be arraigned as a party before the Sessions Court, and if it is, its name shall be deleted. This is required to avoid unnecessary delay of Mediation by impleading the State as a party in an NI Act matter, the Court added.State Need Not Be Made Party in Cheque Bounce CasesThe Court also clarified that the State should not ordinarily be impleaded in cheque bounce proceedings as such disputes are essentially private in nature.“Needless to say, the State cannot be made a party in the NI Act case, because it is a private dispute,” the Court observed, adding that if the State has been unnecessarily impleaded in such matters, its name should be deleted to prevent delays in mediation."When you are at the edge of a cliff, sometimes progress is a step backwards"The Court emphasised that when the cheques are dishonored, the predominant objective is recovery and compensation, which the Mediation naturally furthers more efficiently than an adversarial trial. "Mediation enables parties to negotiate not only the principal cheque amount but also interest, additional compensation, or structured instalments, thereby directly addressing the erosion of money value caused by prolonged litigation and aligning outcomes with commercial realities."Looking at the other side of the coin, one consequence of sending these cases to Mediation is that, while it may help clear the bottleneck plagued with waves of cheque bounce complaints, it is likely to reduce the Court's workload in some cases. When the case involves a failed settlement or a feigned Mediation by the accused, it can unnecessarily prolong the trials. Given that the primary goal is restoration rather than punishment of the wrongdoer, the risk of delay in failed Mediation is worth taking, despite black-swan failures, it added.The Court opined that, In the continuous tsunami of criminal cases being filed against the dishonor of the cheque, the proverb, “When you are at the edge of a cliff, sometimes progress is a step backwards,” needs adherence.BackgroundThe Court was hearing a revision petition filed by the accused seeking to set aside an order of the Judicial Magistrate First Class, Ludhiana, which had rejected his application to examine a handwriting and fingerprint expert.The underlying case arose from a complaint under Section 138 of the NI Act filed by the complainant alleging dishonour of a cheque amounting to ₹19,49,230 issued in connection with business dealings. The cheque had been returned unpaid after the drawer issued instructions to stop payment.During the trial, the accused sought permission to examine a handwriting expert to compare the complainant's alleged signatures on a power of attorney with signatures appearing in the notary register.The trial court rejected the request noting that the accused had already been granted 15 opportunities to lead defence evidence and that the application was filed at the final stage of the trial. It also noted that the accused had not raised any plea regarding forged signatures when his statement was recorded under Section 313 CrPC.High Court Upholds Trial Court OrderAfter examining the record, the High Court found no illegality in the trial court's decision.Justice Chitkara noted that the application appeared to be an attempt to delay the trial since it was filed at the final stage and sought comparison with a photocopy rather than the original document.The Court therefore refused to interfere with the order and dismissed the revision petition.State Truly Never A LooserThe Court pointed that whenever a product or service is sold, the government derives revenue in the form of tax at the point of sale. This tax has to be paid whether the seller ultimately makes a profit, incurs a loss, or even fails to recover the consideration. The sale of goods leads to...

All Cheque Dishonor Cases Must Be Referred To Mediation After Accused Is Served: Punjab & Haryana High Court

Aiman J. Chishti

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