Speeding up Cheque Cases: SC Guidelines

A set of guidelines have been issued by the Supreme Court (SC) in speeding up cheque cases, in a judgement delivered on 5th March 2020 in Makwana Mangaldas Tulsidas v State of Gujarat and Ors.

Banks should provide cheque details

The SC points out that it is the responsibility of the banks to provide requisite details to facilitate an expeditious trial in cheque cases. The banks should develop an information dissemination mechanism to share all the requisite details of the accused, who is the account holder, with the complainant and the police for the purpose of execution of court process.

The bank, for this purpose, may print relevant information such as the email id, registered mobile number and permanent address of the account holder, on the cheque or dishonour memo informing the holder about the dishonour.

Ensure electronic mechanism to issue process

The Reserve Bank of India may also evolve guidelines for banks to facilitate providing of information required for the trial of such cases. An electronic mechanism may be developed to track and ensure the service of process on the accused in cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881 (N I Act).

New cheque may show the purpose

In order to ensure the credibility of cheques, the misuse of the cheques should not be allowed which may lead 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 issues in cheque cases.

Attach property to ensure presence of the accused

A mechanism may be developed to ensure the presence of the accused even by way of coercive measures, if required, under Section 83 of Code of Criminal Procedure, 1973 (CrPC), which allows attachment of property, including movable property.

A similar coordinated 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 the CrPC.

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.

Need for pre litigation settlement

There is also a need for developing a mechanism for pre-litigation settlement in cheque cases. The award passed by Lok Adalats is deemed to be a decree of a civil court. This gives the award finality. Even if a matter is referred by a criminal court Under Section 138 of the N I Act and by virtue of the deeming provisions, the award passed by the Lok Adalat based on a compromise has to be treated as a decree capable of execution by a civil court. So 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 (NLSA) 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 can go a long way in settling the cases before they come to Court, thereby reducing docket burden.

Need for exclusive courts for cheque cases

The High Courts may also consider setting up of exclusive courts to deal with cheque dishonour cases, especially in establishments where the pendency is above a standard figure. Special norms for assessment of the work of exclusive courts may also be formulated giving additional weightage to disposal of case within the time-frame as per legal requirement.

Explore online disposal of cheque cases

The SC says the use of modern technology needs to be considered not only for paperless courts but also to reduce overcrowding of courts. There is also a need to consider categories of cases which can be partly or entirely concluded “online” without physical presence of the parties by simplifying procedures where seriously disputed questions are not required to be adjudicated.

The SC says some of the cheque dishonour cases can at least be decided online. If the complaint, along with affidavits and documents, can be filed online, process issued online and accused pays the specified amount online, it may obviate the need for personal appearance of the complainant or the accused.

Only if the accused contests, the need for appearance of parties may arise. That can also be through Counsel or video conferencing. Personal appearances can be dispensed with on suitable self operating conditions. This is a matter to be considered by the High Courts and wherever viable, appropriate directions can be issued.

HCs may bring suitable mechanism

In the light of above guidelines the High Courts may bring a best suited mechanism in this matter.

Additional reading

Judgement in Makwana Mangaldas Tulsidas v State of Gujarat and Ors, is available at https://indiankanoon.org/doc/41019885/