SPECIAL TRIBUNAL FOR DISHONOUR OF CHEQUES *  

Facts to Note

Indian Judicial system is infested with the problem of delays in the trials. Over 38 lakhs cases are pending in India 's High Courts, and an astounding 26.3 million cases are pending in subordinate courts across the country. At the same time, there are almost a 0.25 million under-trials languishing in jails across the country. Of these, some 2,069 have been in jail for more than five years, even as their guilt or innocence is yet to be ascertained.

The Supreme Court of India has a total of over 48,000 civil and criminal pending cases and a backlog of over 38 lakh cases in various High Courts of which the Allahabad High Court had some 1.09 million pending cases. Madras High Court (4,06,958 pending cases) and Bombay High Court (3,62,949) were the others with a large number of pending cases. Sikkim is the lowest with just 51 pending cases. Of the pending cases in High Courts, 7,04,214 were criminal and 3.2 million were civil cases. This data was given by the Minister of Law and Justice, Sh. H. R. Bhardwaj in written reply to a question in Rajya Sabha.

Government has taken several steps to reduce the backlog which include:

1. Increasing the strength of Judges in the High Courts and the Supreme Court. In 2008, 152 new posts of High Court judges have be

en created and an increase in the number of judges in the Supreme Court is also being undertaken.

2. Setting up of Fast Track Courts.

3. Setting up of special tribunals like the Central Administrative Tribunal, Income Tax Appellate Tribunals, etc., for facilitating reduction of pendency of cases in the Courts.

4. Government also has under implementation a scheme of computerization of District and Subordinate Courts to facilitate speedier disposal of cases. More steps need to be taken in developing effectively the human resource potential and use of technology.

5. Alternative modes of disposal including mediation, negotiation and arbitration have been encouraged.

6. With a view to ensuring expeditious disposal of cases, the Civil Procedure Code has been amended, inter alia , limiting the number of adjournments that can be given to a party.

7. The concept of Plea Bargaining has been introduced through the Criminal Law (Amendment) Act, 2005 .

8. In the Gram Nyayalaya Bill, it is proposed to bring justice to the doorsteps of the rural people by creating over 5000 courts in the intermediate Panchayat level thereby reducing pendency.

9. Improving the judicial infrastructure.

The following are answers to interview questions:

Ques. No. 1

What, in your opinion, is largely responsible for delays in trial – adjournments or lack of adequate number of courtrooms and judges?

Ans. No. 1

According to me, the lack of adequate number of courtrooms and judges is largely responsible for the delays in trial as compared to the adjournments. There is a tendency of seeking adjournments by the lawyers in the courts for varying reasons and the judges have a tendency to grant adjournments to them so as to reduce their workload for a while. This problem can be solved by appointing more judges and by improving the judicial infrastructure. The ratio of number of pending cases to the number of judges is very less. Therefore, if more courtrooms are set up and more number of judges are appointed at all the levels the adjournments can be decreased and also the delay in the trials can be drastically minimised.

Ques. No. 2

What do you think prevents the Government from taking measures to ensure that the judiciary is well equipped to handle such a large number of cases?

Ans. No. 2

Various Committees of Parliament have time and again emphasized the need to urgently redress the situation of pending cases. The press and electronic media have also been highlighting the large number of cases pending for too longer periods of time. Now the question comes that why the government does not act accordingly and what are the factors which prevent the government from doing so? According to me the finances are a problem with the State Governments and even if they are being provided with the finances by the Central Government, the State Governments are not utilizing the funds properly so as to improve the judicial infrastructure. Moreover, there needs to be a Central Judicial Services Examination, the major part of the cost in selecting the candidates must be borne by the Central Government and the rest can proportionately be given by the States. The Judges selected by this process can be trained in various Judicial Academies set up in various States of the country and they can be trained in various laws prevalent in the States. The Central Government and the State Governments must realize their responsibility in decreasing the backlog.

Ques. No. 3

Don't you think speeding up the slow-moving wheel of justice beyond an extent might adversely affect the quality of judgments, thereby increasing the chances of innocents getting punished?

Ans. No. 3

The increase in the number of judges and the infrastructure will help in coping up with the problem of increasing pendency. It is learnt from a reliable source that a larger number of cases are being registered than the number of cases being disposed of. Pendency will, therefore, continue to increase unless special measures are taken to liquidate the pending cases at a much faster pace. I agree to it that there is a chance that increasing the speed of the justice delivery system may lead to:

1. Decrease in the quality of judgments.

2. Increase the chances of innocents being punished.

But this can be avoided by speeding up the system slowly i.e. , a step by step increasing of the speed of the judicial system and up to a certain accepted extent. Proper training can be given to the judges in the judicial academies set up for these purposes specifically. There can be special courts which deal with only some specific matters such as the family courts, the consumer courts and by also setting up of the various tribunals in various areas of law and appointing specialised judges.

Ques. No. 4

Some lawyers have argued that section 138 of the Negotiable Instruments Act was a reckless provision formulated by Parliament without going into the ground realities. Your view?

Ans. No. 4

Dealings in cheques are vital and important not only for banking purposes but also for the commerce, industry and the economy of the country. But pursuant to the rise in dealings with cheques also rises the practice of giving cheques without any intention of honouring them. Before 1988 there was neither any effective legal provision to restrain people from issuing cheques without having sufficient funds in their account nor any stringent provision to punish them in the event of such cheque not being honoured by their bankers and the cheques were returned unpaid.

On dishonour of cheques there is a civil liability accrued. However, in reality, the processes to seek civil justice becomes dilatory and recovery by way of a civil suit takes an inordinately long time. To give a remedy against defaulters and to ensure credibility of the holders of the negotiable instrument a criminal remedy of penalty was inserted in Negotiable Instruments Act, 1881 in the form of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 which were further modified by
the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. 

If we give a reading to section 138 of the Negotiable Instruments Act, 1881 and the amendment to the Act made in 2002, it is evident that the section 138 of the Act was introduced with a view to avoid the malignant trade practices of indiscriminately issuing cheques without funds and the amendment to the section is introduced with a view to curb instances of issuing such cheques indiscriminately. It must be noted that even if penalty is imposed on drawer, he is still liable to make payment of the cheque which was dishonoured. Thus, the fine/imprisonment is in addition to his liability to make payment of the cheque. 

As observed by the Supreme Court in Electronic Trade & Technology Development Corporation Ltd. v. Indian Technologists & Engineers (Electronics) Pvt. Ltd., AIR 1996 SC 2339: (1997) 2 Bank LJ 296: (1996) 2 SCC 739:

“ The object of bringing section 138 in the statute book is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. The provision is intended to prevent dishonesty on the part of the drawer of negotiable instrument in issuing cheques without sufficient funds or with a view to inducing the payee or holder in due course to act upon it.”

Scope of section 138

The cheque holders of the bounced cheque have a legal remedy to recover the cheque amount, if the dishonoured cheque is issued towards debt or legal liability. They can file a criminal complaint under section 138 of the amended Negotiable Instrument Act in the jurisdictional criminal court which will punish the person/s who have drawn/signed the bounced cheques, to pay fine or to undergo imprisonment up to two years or both, for the offence committed. The fine imposed may be up to the double the bounced/dishonoured cheque amount and a whole or a part of it will be awarded to the cheque holders as compensation. If
the accused is incapable or
refuses to pay fine and prefers imprisonment in civil prison, the Cheque holder will not get any money under this complaint. The alternative for him is to file a separate suit for recovery of the cheque amount.

The remedy under section 138, is available only if:

1. The cheques are issued to clear debt or liability,

2. A notice is sent properly demanding the payment of cheque amount, and

3. The demanded amount is not paid within time by the cheque drawer.

A complaint under this section will not succeed if the bounced cheques have been issued to pay donations, to advance loan or towards allotment of shares, in short, not issued towards debt or liability. However, when the cheque is issued, it will be presumed that it is towards the debt or liability and it is left to cheque drawers to establish in Courts otherwise. They can avoid punishment only if they establish that the dishonoured cheques are not issued towards debt or liability and the filing of complaint is not in order. Otherwise they will be liable for punishment.

Thousands of cases are being filed every day in Indian courts under the section 138 since the success is almost guaranteed and there is no court fee/expenses, apart from advocate's fee. Most of these cases are settled amicably before the final judgment for various reasons. Accused will come for settlement when he has no records to disprove legal liability and the complaint filed, is in order.

A point to note here is that the complainant agrees to settlement when he realizes that either it will take long time to get his money or he may not get it if the accused prefers imprisonment, opting not to pay fine. Our courts also encourage amicable settlements by the parties. It was held in Vinay Devanna Nayak v. Ryot Seva Sahakari Bank Ltd. :

‘Taking into consideration even the said provision (section 147) and the primary object underlying section 138, in our judgment, there is no reason to refuse compromise between the parties. We, therefore, dispose of the appeal on the basis of the settlement arrived at between the appellant and the respondent.'

My view

Though insertion of the penal provisions have helped to curtail the issue of cheque light-heartedly or in a playful manner or with a dishonest intention, the people now feel more secure in receiving the payment through cheques. Both these provisions go side by side i.e. , they are co-extensive. However, there being no provision for recovery of the amount covered under the dishonoured cheque, in a case where accused is convicted under section 138 and the accused has served the sentence but, unable to deposit the amount of fine, the only option left with the complainant is to file civil suit. The provisions of the Act do not permit any other alternative method of realization of the amount due to the complainant on the cheque being dishonoured for the reasons of “insufficient fund” in the drawer's account. The proper course to be adopted by the complainant in such a situation should be to file a suit before the competent civil court, for realization/recovery of the amount due to him as mentioned above.

 Hence according to me, section 138 is the most appropriate provision. When the provision was first made it was not according to the ground realities but with the two amendments of 1988 and 2002, the provisions of section 138 have become effective. But still the provisions need to be strengthened so that the recovery of the complainant's money is guaranteed in a civil suit. 

Ques. No. 5

Should such provisions be enacted only after proper appraisal of the pressures they are likely to exert on the implementers, both in terms of finances and manpower?

Ans. No. 5

Yes, it is very necessary that the provisions like section 138 of Negotiable Instruments Act must be enacted only after looking into the burden it will put on the implementers and also by evaluating the manpower available to perform such functions. Finances needed for implementing these provisions are sometimes cumbersome and there is a need for planning and foresight in such cases. This is the function of the Law Commission of India.

Ques. No. 6

Do you think the proposed tribunals to settle the Negotiable Instruments cases would be as successful as the Fast Track Courts?

Ans. No. 6

The Fast Track Courts were set up based on the recommenda-tions of the Eleventh Finance Commission. These were intended to take up sessions cases pending for two years and more and the cases of under trial in jails on priority basis. This Scheme had ended on 31.3.2005. The Government accorded its approval for the continuation of 1562 Fast Track Courts that were operational as on 31.3.2005 for a further period of 5 years i.e. , up to 31.3.2010 with provision of Rs. 509 crores 100% central funding basis.

It is believed that there are over 38 lakhs cheque bounce cases pending in various courts in the country. In Delhi alone there are 5 lakhs cases of cheque bounce which are pending and the number is still increasing. It is certain that the setting up of tribunals will help in lessening the burden of the judiciary. The success of the Fast track courts set up for various purposes like the one for the settlement of the environmental disputes (set up in 2006 on recommendation of the Law Commission in its 186th report), others for the economic offences, etc., will surely be repeated in the case of the proposed Tribunals. These are being set up specifically for the purpose of settlement of the Negotiable Instrument cases. Hence, we can say that there is no doubt that the proposed tribunals will surely relieve the already existing judicial system.

Ques. No. 7

After Voice of Justice , is there another book in the offing?

Ans. No. 7

Yes certainly, ‘Voice of Justice' was a book written by me in my capacity as a Judge. But now my role in the society has changed. In the capacity of the Chairman of the Law Commission of India now my work is not only to see what the need of the hour is but also to foresee what will be the need of the future judicial system in India and to give possible solutions to the problems. And being the Chairman of the Law Commission, it is my duty to go ahead with the idea of another book which educates the public opinion on certain future legal issues so as to have a more informed and empowered civil society.

*Interview with Purnima Arora