2021 (4) TMI 702 - Supreme Court

2022 (5) TMI 1024 - SUPREME COURT

Dishonor of Cheques- A study of the interrelation between the provisions of Code of Criminal Procedure, 1973 and Negotiable Instruments Act, 1881.

Dishonor of two cheques - dispute remained pending for past 16 years - humongous pendency of complaints under Section 138 of the Negotiable Instruments Act, 1881 - service of summons - Statutory amendment to Section 219 of the Code of Criminal Procedure, 1973 - Summary trials - Attachment of bank accounts - Applicability of Section 202 of the Code of Criminal Procedure, 1973 - Mediation - Inherent jurisdiction of the Magistrate.

Service of summons.

Service of summons on the accused in a complaint filed under Section 138 of the Negotiable Instruments Act,1881 has been one of the main reasons for the delay in disposal of the complaints.

Long wait time can be curbed by:

Cumbersome practice of dishonour slips issued by the bank need to be shortened, disclosure of the current mobile number, email address and postal address of the drawer of the cheque, the details of the drawer being given on the cheque leaf, creation of a Nodal Agency for electronic service of summons and generation of a unique number from the dishonour memo.

The Union of India and the Reserve Bank of India were directed to submit their responses to the suggestions on these aspects.

Mechanical conversion of Summary Trial to Summons Trial.

The object of Section 143 of the Negotiable Instruments Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent possible. 

A discretion is conferred on the Magistrate by the second proviso to Section 143, to be exercised with due care and caution, after recording reasons for converting the trial of the complaint from summary trial to a summons trial. 

Inquiry u/s 202 of the Code of Criminal Procedure,1973 in relation to section 145 of the Negotiable Instruments Act, 1881. 

Inquiry u/s 202 of the Code of Criminal Procedure,1973 in relation to section 145 of the Negotiable Instruments Act,1881. If the evidence of the complainant may be given by him on affidavit, there is no reason for insisting on the evidence of the witnesses to be taken on oath.

If the Magistrate holds an inquiry himself, it is not compulsory that he should examine the witnesses on oath.

In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under section 202 of the Code of Criminal Procedure,1973  for examining on oath though it is a time consuming process.

Sections 219 and 220 of the Code of Criminal Procedure, 1973.

The High Courts are requested to issue practice directions to the Trial Courts to treat service of summons in one complaint forming part of a transaction, as deemed service in respect of all the complaints filed before the same court relating to dishonour of cheques issued as part of the said transaction.

Inherent powers of the Magistrate.

Section 143 of the Act mandates that the provisions of summary trial of the Code shall apply “as far as may be” to trials of complaints under Section 138. Section 258 of the Code empowers the Magistrate to stop the proceedings at any stage for reasons to be recorded in writing and pronounce a judgment of acquittal in any summons case instituted otherwise than upon complaint. 

Section 258 of the Code is not applicable to a summons case instituted on a complaint.

The High Courts are requested to issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 of the Act from summary trial to summons trial. Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the court.

The legislature has incorporated sufficient provisions to ensure the efficacious functioning of Negotiable Instruments Act,1881.                                                                                                                                                                  

 

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Full Text:

2021 (4) TMI 702 - Supreme Court

Dishonor of cheques procedure: streamline service of summons and preserve magistrate discretion on trial conversion. Dishonour of cheques proceedings require prompt service of summons and retention of summary-trial procedures; reforms include shortening dishonour-slip practices, mandatory contact disclosure, creating a nodal agency for electronic service and issuing unique dishonour identifiers. Magistrates must record reasons when converting summary trials into summons trials; summary-trial procedure applies as far as may be. Inquiry mechanisms under the Code permit affidavits and document examination to test sufficiency of grounds. High Courts should direct that service in one complaint arising from the same transaction be treated as deemed service for related complaints and encourage use of inherent powers and mediation to reduce pendency.