The Supreme Court on Monday issued notice to the Centre and the States on a writ petition filed by the Indian Banks’ Association for a direction to issue guidelines to the trial courts for summary trial of over 38 lakh cheque bouncing cases.

A Bench of Justices K.S. Radhakrishnan and Dipak Misra issued notice on the petition, which presented issues of public importance that had a nationwide impact on the working of the banking, financial and criminal justice systems.

The petitioner said, “In a large number of commercial transactions, it was noted that the cheques were issued even merely as a device not only to stall but also to defraud the creditors … Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback.”

It said, “The Parliament, in order to restore the credibility of cheques as a trustworthy substitute for cash payment, enacted provisions. The remedy available in a civil court is a long-drawn matter and an unscrupulous drawer normally takes various pleas to defeat the genuine claim of the payee. It inserted new Sections 143 to 147 in the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 with the aim, inter alia, for speedy disposal of cases relating to dishonour of cheque through their summary trial as well as making the offence compoundable. Punishment provided under Section 138 too was enhanced from one year to two years.”

The petitioner said, “These amendments were brought into force on February 6, 2003. Seeing that a large number of cases involving dishonour of cheques are choking the criminal justice system and putting an unprecedented strain on the judicial functioning, the Law Commission, in its report number 213, sent to the Union Minister for Law and Justice on November 24, 2008 advocated the setting up of Fast Track Magisterial courts for dealing with the huge pendency of dishonoured cheque cases. Over 38 lakh cheque bouncing cases are pending in various courts in the country. There are 7,66,974 cases pending in criminal courts in Delhi at the magisterial level as on June 1, 2008. Of this, a substantial portion is of cases under Section 138 of the Negotiable Instruments Act which alone count for 5,14,433 cases (cheque bouncing).

The petitioner said, “Despite legislative interventions and the clarity in respect of the procedure supplied by this Court’s judgment, the object of the Legislature remains unrealised since across the country magistrates continue to adopt a protracted procedure that defeats the object of speedy resolution of Section 138 of the Negotiable Instrument Act cases.”

“The magistrates are taking [an] unnecessarily long time and complaints remain pending for years. If this court issues effective guidelines to streamline the procedure then there will be a rendering of speedy justice not only in the cases involving dishonoured cheques but the improved functioning of Magistrates’ Courts will release valuable time and judicial resources for other criminal cases,” the petitioner added.

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