Expeditious Trial Of Section 138 NI Act Cases : Supreme Court Seeks High Courts' Responses To Amici Curiae Report

The Supreme Court on Thursday sought the responses of all High Courts to the preliminary report submitted by Amici Curiae with suggestions for expeditious trial of cheque bounce cases under Section 138 of the Negotiable Instruments Act, 1881.

A bench comprising Chief Justice of India S A Bobde and Justice L Nageswara Rao passed the order in the suo moto case In Re Expeditious Trial of Cases Under Section 138 of the N.I Act.

The Court also sought the responses of State Police Chiefs of all states regarding measures, including coercive steps, to ensure the appearance of accused in cheque dishonour cases.

"Major hitch is the service of summons", the CJI remarked.

Senior Advocate Siddharth Luthra, one of the amicus curiae appointed by the top court, told the bench that a preliminary report was submitted on October 11. He added that only three High Courts - the HCs of Rajasthan, Madhya Pradesh and Sikkim- have responded to the report.

Advocate K Paremeshwar, another amicus curiae appointed in the case, submitted the report was sent to Registrar Generals of all High Courts and the Standing Counsels of all State Governments.

Advocate Guarav Agarwal, appearing for the National Legal Services Authority, submitted that the NALSA has framed a draft scheme of mediation in Section 138 case. Since there is a strict time frame given by the statute for service of notice, filing of complaint etc, mediation may not be possible in a short time, he added.

Senior Advocate Luthra submitted that mediation may not be possible at a pre-litigation stage, as the Act provides a strict timeline to file the complaint.  So the mediation scheme has to be recalibrated, he suggested.

At the end, the bench passed the following order :

"There is on record a preliminary report by the amici curiae dated 11.10.2020. We are informed that response to the preliminary report  has been filed only by the High Courts of Madhya Pradesh, Rajasthan and Sikkim. Other HCs have not given their responses. Issues are very vital and require the views and future participation of the High Courts in the matter. We therefore direct that the High Courts to file their response on the preliminary report by the next hearing of the case".

Further, the Court also asked the High Courts to give their response to the draft scheme formulated by the NALSA.

"The DGPs of various states may give specific suggestions in response to the reprot, particularly with reference to the service of summons and coercive processes on the accused", the order stated further.

The matter will be listed after four weeks.

It was on March 7 this year that the bench 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.

"A matter which is supposed to be disposed of summarily by the trial court in six months, it took seven years for this case to be disposed of at the trial court level. A dispute of such nature has remained pending for 15 years in various courts, taking judicial time and space up till this Court", the SC had observed then.

The Court had then made the following suggestions/observations

Non Execution of Process

Despite service of summons issued through aforesaid mediums, the problem of non-execution of further process persists. While summon may be issued through aforementioned modes, bailable warrants and non-bailable warrants are to be executed through police as per Section 72 of Cr.P.C. Many a time, police as serving agency, does not give heed to the process issued in private complaints. Courts also remain ambivalent of this fact, requiring the complainant to pay unjustified process fee, repeatedly and avoid to take action against negligent police officers. The coercive methods to secure the presence of accused viz. attachment indicated in Section 82 and 83 Cr.P.C., are seldom resortedWe find that there is a need to evolve a system of service/execution of process issued by the court and ensuring the presence of the accused, with the concerted efforts of all the stakeholders like Complainant, Police and Banks.

Role of Banks

"Banks, being an important stakeholders in cases of this nature, it is their responsibility 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. This may include a requirement to print relevant information, viz the 6 email id, registered mobile number and permanent address of the account holder, on the cheque or dishonour memo informing the holder about the dishonour. The Reserve Bank of India, 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. 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 N.I. Act".

Misuse of Cheques

"It is equally important that cheques are not allowed to be misused giving cause to frivolous litigation. The Reserve Bank of India may consider developing a new proforma of cheques so as to include the purpose of payment, along with other informations mentioned above to facilitate adjudication of real issues".

A mechanism to ensure the presence of the accused even by way of coercive measure,

"A mechanism may be developed to ensure the presence of the accused even by way of coercive measure, if required, taking effect from Section 83 of Cr.P.C. which allows attachment of property, including movable property. A similar co-ordinated effort may be evolved to recover interim compensation under Section 143A of the N.I. Act as well as fine or compensation to be recovered as per Section 421 of Cr.P.C. The Bank may facilitate mechanism for transferring requisite funds from the bank account of the accused to the account of the holder in due course, as may be directed by the Court".

Pre Litigation Settlement

"With ever growing institution of N.I. cases, there is a need of developing a mechanism for pre-litigation settlement in these cases. The Legal Services Authorities Act, 1987 provides for a statutory mechanism for disposal of case by Lok Adalat at pre-litigation stage under Sections 19 and 20 of the Act. Further, Section 21 of the Act, recognises an award passed by Lok Adalats as a decree of a civil court and gives it a finality.

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 prelitigation ADR process can go a long way in settling the cases before they come to Court, thereby reducing docket burden".

Decriminalisation of Cheque cases (small amounts)

"In Meters and Instruments Private Limited (supra), this Court had also observed the nature of offence under Section 138 primarily relates to a civil wrong. While 9 criminalising of dishonour of cheques took place in the year 1988 taking into account the magnitude of economic transactions today, decriminalisation of dishonours of cheque of a small amount may also be considered, leaving it to be dealt with under civil jurisdiction".

Read the report submitted by amici curiae here