The Supreme Court has refused to extend the period of validity of a cheque, while holding that a decision on the same may be taken by the Reserve Bank of India, in its discretion.
"We do not consider it appropriate to interfere with the period prescribed by the Reserve Bank of India, particularly, since the entire banking system functions on the basis of the period so prescribed. The Reserve Bank of India may in its discretion, alter such period as it thinks fit. Ordered accordingly. The instant applications are disposed of accordingly," a bench led by Chief Justice SA Bobde said in the order passed on July 10(released on Tuesday, July 14).
The bench, also including Justices R. Subhash Reddy and AS Bopanna, accordingly disposed of the interlocutory application which sought a direction that the period of validity of cheques be increased, amid the COVID-19 pandemic crisis. The application was filed in the suo moto case taken by the SC to extend the period of limitation for filing of cases in Courts/Tribunals on account of national lockdown.
All cheques are valid for a period of three months, from the date of issue.
The court noted that this validity period is not been prescribed by any Statute but it is a period prescribed by the Reserve Bank of India under Section 35-A of the Banking Regulation Act,1949.
It thus held that the RBI should be given the discretion to extend or to not extend the same since, the entire Banking System relies on the same.
Last month, the Supreme Court had declined to entertain a PIL which sought a relief to exclude the time period of lockdown for calculating the limitation for presentation of cheques/demand drafts.
"In our considered view, this is a policy decision to be taken by the Reserve Bank of India regarding which the court can not issue any direction. The writ petition filed under Article 32 of the Constitution of India is dismissed as not maintainable," a bench comprising Justices R Banumathi, Indu Malhotra and Aniruddha Bose had said.
The Delhi High Court has also sought the response of the RBI on the issue, after observing that expiry of cheque on account of the sealing of the branch of bank where it was deposited amid lockdown was 'unfortunate'.
Case Title: In Re Cognizance For Extension Of Limitation