SC to evolve mechanism for expeditious disposal of cheque bounce cases

The apex court has registered a suo motu case (on its own) in this regard and sought responses from the Centre and other stakeholders, including the Reserve Bank of India.

A bench of Chief Justice S A Bobde and Justice L N Rao, which passed the order while dealing with a plea related to dishonour of two cheques in January 2005, noted that a dispute of this nature has remained pending for 15 years in various courts and taken judicial time.

"Despite many changes brought through legislative amendments and various decisions of this court mandating speedy trial and disposal of these cases, the trial courts are filled with a large number of pendency of these cases," the bench said in its March 5 order.

"A recent study of the pending cases, reflects pendency of more than 35 lakh, which constitutes more than 15 percent of the total criminal cases pending in district courts. Further, there is a steady increase in the docket burden," the bench said.

The top court has issued notices to the Centre, registrar general of all high courts, director general of police of all states and union territories, member secretary of the National Legal Services Authority, RBI and Indian Bank Association, Mumbai, and asked them to file their response on the issue.

"These are some indicative aspects in addition to what may come on board after hearing the relevant duty-holders. To work out mechanism for expeditious and just adjudication of cases relating to dishonour of cheques, fulfilling the mandate of law and reduce high pendency, various duty-holders like banks, police and legal services authorities may be required to take measures and prepare schemes," the bench said.

"Thus, we find it necessary to hear them for evolving a concerted, coordinated mechanism for expeditious adjudication of these cases as per the legal mandate," it said.

The bench, which appointed senior lawyer Siddharth Luthra and advocate K Parameshwar as amicus curiae to assist it in the matter, has listed the case for hearing on April 16.

The bench noted that dishonour of cheque was criminalised in 1988 and the legislative intent was to "ensure faith in the efficacy of banking operations and credibility in transacting business on cheques."

"It was to provide a strong criminal remedy in order to deter the high incidence of dishonour of cheques and ensure compensation to the complainant," the bench said, adding, "Subsequent amendments in the Act (Negotiable Instrument Act) and the pronouncements of this court reflect that it was always perceived that these cases would be disposed speedily so as to preserve the object of criminalisation of the act."

The bench noted that as per the legal mandate, endeavour must be made to conclude the trial in cheque bounce case within six months from the date of filing of complaint.

"One of the major factors for high pendency is delay in ensuring the presence of the accused before the court for trial. As per recent study, more than half of the pending cases, i.e. more than 18 lakh cases, are pending due to absence of accused," the bench said.

It said a mechanism may be developed to ensure the presence of the accused even by way of coercive measure, if required, including attachment of property.

It observed that banks, being an important stakeholders in cheque bounce cases, have the responsibility of providing requisite details and facilitate an expeditious trial.

"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 NI Act," it said.

"With ensuring the credibility 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 information mentioned above to facilitate adjudication of real issues," it said.

The top court also said there is a need of developing a mechanism for pre-litigation settlement in cheque bounce cases and National Legal Services Authority may evolve a scheme for settlement of dispute at pre-litigation stage.