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Section 138 NI Act : Supreme Court Seeks Centre's Views On Creation Of Additional Courts For Cheque Dishonour Case
LIVELAW NEWS NETWORK
25 Feb 2021 8:30 AM GMT
The Supreme Court on Thursday sought the views of the Central Government on the creation of additional courts for the trial of cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881.A bench comprising Chief Justice of India S A Bobde, Justices L Nageswara Rao and S Ravindra Bhat asked the Additional Solicitor General Vikramjit Banerjee if the Union of India was...
The Supreme Court on Thursday sought the views of the Central Government on the creation of additional courts for the trial of cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881.
A bench comprising Chief Justice of India S A Bobde, Justices L Nageswara Rao and S Ravindra Bhat asked the Additional Solicitor General Vikramjit Banerjee if the Union of India was willing to create additional courts for Section 138 NI Act cases, using powers under Article 247 of the Constitution.
Article 247 of the Constitution speaks of the power of the Parliament to provide for the establishment of certain additional courts in respect of matters under the Union List.
Article 247 reads as follows :
"Notwithstanding anything in this Chapter, Parliament may by law provide for the establishment of any additional courts for the better administration of laws made by Parliament or of any existing laws with respect to a matter enumerated in the Union List"
The bench also sought to know if the power under Article 247 is coupled with a duty. The bench said that there are observations in some judgments that the legislature is duty-bound to conduct a "judicial impact assessment" before creating a new offence. Since the offence relating to cheque dishonour was created by a Union legislation, the bench sought to know if Union has an obligation to establish additional courts to deal with cases arising out of Section 138.
ASG Banerjee submitted that he will file a response to the bench's query.
The bench also observed that even if additional courts are created, there was still a need to streamline the trial procedure.
The bench was considering the suo moto case taken by it to lay down guidelines for expediting trial of Section 138 NI Act cases (In Re Expeditious Trial of Cases Under Section 138 of the N.I Act).
Senior Advocate Sidharth Luthra, an amicus curiae appointed in the case, informed the bench about the suggestions made in the preliminary report prepared by him along with other amicus in the case Senior Advocate R Basant and Advocate K Parameshwar.
The suggestions were summarized as follows :
1. E-service of summons
Luthra submitted that summons in private complaints are the last to be served. Many cheque bounce cases are stuck due to delay in service of summons.
"There is a suggestion for a nodal agency for electronic service of summons. Nowadays everything is linked with Aadhaar. There is no reason why electronic service of summons should not be done", Luthra submitted.
2. Attachment of bank accounts
If the person against whom a warrant has been issued has absconded or has concealed himself such that the warrant cannot be executed, Magistrates could order attachment of the bank accounts of the Accused to the extent of the cheque amount by passing an order under Section 83, CrPC.
3. Summary trial
Luthra next submitted that there is lack of clarity as to whether the trial in Section 138 cases are to be done following the summary trial procedure or summons trial procedure.
He pointed out that the provisions of the NI Act Sections 143 and 145, envisage a summary trial. The Supreme Court also directed in the 2017 decision "Meters and Instruments Pvt Ltd v Kanchan Gupta' that summary trial procedure must be adopted in cheque cases. However, practice directions by High Courts are necessary.
4. Mandatory mediation
Mediation must be encouraged at every stage, right from post-cognizance stage.Cases pending at appellate or revisional stage must be send for mandatory mediation at least once.
"If it can be resolved(through mediation), why not?", Luthra said.
5. Resolve the judicial confusion on Section 202 CrPC
Luthra next spoke about the urgent need to settle the judicial confusion regarding the applicability of Section 202 of Cr. PC to cheque bounce cases. The Section mandates that the Magistrate shall postpone the issue of process against the Accused, if the Accused is residing in a place beyond its territorial jurisdiction, until an enquiry is made for the purpose of deciding whether there are sufficient grounds for proceeding.
The SC in K S Joseph v. Philips Carbon Black, left this question open to be decided in an appropriate case. He submitted that trial in many cases numerous across the country are stayed on account of this confusion.
6. Joint trial of multiple cheque bounces relating to same loan transaction
Luthra submitted that Section 219 of the CrPC allows the joining of only three cases against an accused arising within one year. However, Section 220 CrPC allows the joint trial of offences arising out of the same transaction.
The bench had an engaging discussion with Luthra on the provisions of Sections 218, 219 and 220 of the Code of Criminal Procedure. Luthra said that a "wholesome interpretation" of these provisions is necessary to provide for joint trial of multiple cheque cases.
The bench then sought a written note from Luthra on this aspect and adjourned further hearing till March 3.
"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.
In October last year, the amici curiae submitted the preliminary report. After that, the bench had sought the responses of all High Courts and State Governments to the preliminary report.
The preliminary report submitted by amici curiae may be read here.
