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Supreme Court constitutes committee to speed up disposal of cheque bounce cases across India

The CJI directed that the Centre will allocate space for the functioning of the committee and provide allowances that may be required for travelling. He directed the Committee to submit a report within 3 months.

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The Supreme Court five-judge Constitution Bench has constituted a committee headed by Justice (Retd) R.C. Chauhan in order to accelerate the disposal of cheque bounce cases across India. It directed the Committee to submit its suggestion within three-months, detailing the steps to be taken after considering all the submissions made by stakeholders. 

During the hearing of case on Wednesday, March 10, Chief Justice of India S.A. Bobde directed the constitution of a committee headed by Justice (Retd) RC Chauhan. He said other members of the Committee will be an Officer from the Dept of Financial Services not below the rank of Additional Secretary, an Officer from Department of Justice, Department of Corporate Affairs, Dept of Expenditure, Ministry of Home. Another member will be nominated by the RBI Governor and another member by the IBA chairman. 

Senior Advocate Siddharth Luthra asked whether a NALSA member be part of the committee, since it’s an issue of post cognizance mediation, he said. 

The CJI told him that member of NALSA will be Secretary of committee. Solicitor General Tushar Mehta will be there, he said. 

The CJI directed that the Centre will allocate space for the functioning of the committee and provide allowances that may be required for travelling. He directed the Committee to submit a report within 3 months.

The submissions of the parties made to this court shall be made available to the committee, he said. 

The Bench, also comprising Justices L. Nageswara Rao, B. R. Gavai, A. S. Bopanna and S. Ravindra Bhat,

SUPREME COURT OBSERVATION VIS A VIS SUO MOTU NOTICE ON 5.3.2020

Vide order dated 5th of March 2020, the apex court took cognizance and inclined to issue notice to Union of India, Registrar General of all High Courts, the Director-General of Police of all states and Union Territories, Member-secretary of National Legal Service Authority (NALSA), RBI, and Indian Bank Association as to set up mechanisms and appropriate steps to be taken in reducing the pendency cases of dishonoured cheques. The directions were issued to various High Courts to submit their responses on the preliminary report submitted by Amicus Curiae and also to draft scheme of NALSA concerning to disposal of case even before trial proceeds.

The court further observed that only 14 High Courts have filed their responses while some of them have not tendered yet, which include (1) Punjab & Haryana High Court, (2) High Court of Jammu & Kashmir, (3) High Court of Himachal Pradesh, (4) High Court of Uttarakhand, (5) Patna High Court, (6) High Court of Tripura, (7) Calcutta High Court, (8) Bombay High Court, (9) High Court of Manipur, and (10) High Court of Rajasthan.

The apex court was not in favour of suggestion made by NALSA of having pre-litigation mediation since such is in conflict with the provisions of Negotiable Instrument Act, 1881 as such the complainant/ drawee proceed as per law mandates , taking into factor of limitation as well. However, the court hints the possibility to consider post litigation mediation and directs NALSA to alter such suggestions raised herein and to make necessary recommendations.

PRELIMINARY REPORT OF AMICUS CURIAE –

Following suggestions /recommendations were inculcated by amicus curiae which is given as follows –

a. Empowering the Lok Adalats under the Legal Services Act, 1987 in conducting prelitigation mediation under Section 19(5) of the said Act in cheque bouncing cases under section 138, NI Act.

b. Magistrates at time of issuing summons, direct the parties to opt for alternative recourse which is defined as post-summons mediation, until a legislative mechanism is in place for pre-trial mediation. A Standard Operating Procedure in this regard will have to be formulated.

c. The concerned magistrate at the stage of service of summons, having insufficient address, or whereabouts of the Accused is untraceable, it shall direct the Banks to issue dishonour slips in accordance with Section 14 and to disclose the mobile number, email address and postal address of the drawer of the Cheque.

d. Service of summons may be proceeded via SMS, WhatsApp on the mobile number, email and postal address of the Accused. The Union of India, the Reserve Bank of India and the Indian Banks Association ought to create a Nodal Service Agency for effective service of summons through electronic processes. The e-committee of the Supreme Court may also be consulted in this regard.

e. If the person has absconded against whom warrant has been issued or any other unknown reason, and as such warrant cannot be executed, Magistrates could order attachment of the bank accounts of the Accused only limited to the cheque amount by issuing an order under Section 83, CrPC;

f. Issue necessary directions to the accused to disclose the nature of his defence before the trial is converted from a summary trial to a summons trial. This requirement ensures that the Accused is not permitted, for frivolous reasons, to prolong the trial;

g. The Magistrate must provide cogent reasons and speaking order to be mentioned in the order while converting the case into a summons trial. The exercise of this discretion ought to be preceded by an order directing the Accused to not just disclose his plea in relation to the offence but also to disclose the grounds of his defence;

h. Discretion is manifested under Section 145(2) of the NI Act to summon any person giving evidence, ought to be exercised by the Magistrate only if the Accused pleads a plausible defence.

i. Directions to formulate a scheme for online mediation of pending cases at the trial/appeal/revisional stages for expediting the disposal of case and to permit the accused to appear through online platform. Consideration for mediation to organise on non-working days and hours

k. Online mediation to be initiated after granting consensus of litigants and lawyers should be made prerequisite in  Pending cases under 138 cases listed before this Hon’ble court .

l. Exclusive and independent courts to be set up for fast disposal of such cases.

m. In view of the limitations contained in Section 219 of the Code of Criminal Procedure, 1973, a legislative amendment may be required to address the issue of multiplicity of proceedings where cheques have been issued for one purpose but multiple complaints, summons and trials have to be undertaken;

n. Considering issuing directions to High Courts to amend their Criminal Rules of Practice to ensure that complaints arising out of the same transaction, but resulting in dishonour of multiple cheques be clubbed together and a common process evolved for service of summons and joint trial.

RATIONALE BEHIND ISSUING SUO MOTU NOTICE

It is essential to know the rationale behind issuing of notice dated 5th March 2020 to Union of India, Registrar General of all High Courts, the Director General of Police of all states and Union Territories , Member secretary of National Legal Service Authority , RBI, and Indian Bank Association, by the  Division bench presided by CJI S.A.Bobde and Justice L. Nageswara Rao , Supreme Court in the matter of Makwana Mangaldas Tulsidas v. The State of Gujarat , SLP (Crl.) No. 5464 of 2016), wherein two cheques for a sum of Rs 1,70,000 bounced in 2005, trial was prolonged for 15 years including the time when an petition was filed before the Supreme Court. The court was dismayed at the trial procedure disparity and observed that such delay has defeated the purpose of summary trial. The court further cited its own judgments i.e. of Indian Bank Association & others v. Union of India and ors., (2014) 5 SCC 590 and Meters and Instruments Private Limited and anr. v. Kanchan Mehta, (2018) 1 SCC 560 wherein certain directions were issued regard to the expeditious trial of 138 cases.

In Meters and Instruments Private Limited (supra), this Court had also observed that “ the nature of offence under Section 138 mainly relates to a civil wrong. Meanwhile, criminalisation of dishonour of cheques  happened in the year 1988 taking into account the magnitude of economic transactions today, decriminalisation of dishonours of cheque of a small amount may also be considered, leaving it to be dealt with under civil jurisdiction”.

Moreover, Senior Advocate Siddharth Luthra,  K. Parmeshwar, advocate were appointed amicus curiae by the apex court subsequently vide order dated 5.3.2020

Read Also: Kerala High Court directs land revenue officer to consider application for land assignment

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