Supreme Court Direction on Section 138 Matters being heard expeditiously

The Supreme Court of India on 16th April 2021 took a revolutionary step to evolve a concerted and coordinated method to deal with the humongous pending cases relating to cheque bouncing. It took suo moto cognizance to devise a mechanism for expeditious adjudication of such cases under Section 138 of the Negotiable Instruments Act, 1881 (“the Act”).¹ It was during the trial of a cheque bounce case which lasted for sixteen years that added fuel to the already burning need to modify the unnecessary delay and pendency of such cases.

The five-judge bench headed by the then Chief Justice S.A. Bobde observed that “the gargantuan pendency of complaints filed under Section 138 of the Act has had an adverse effect in disposal of other criminal cases” and there is an immediate need for remedying the situation. Notices were issued in this regard to the state governments, union territories and the banking regulatory institutions for their insight on the same. Some of the reasons that could be identified for delay of cases were the issue of mechanical conversion of summary trial into summons trial without sufficient reasons, multiplicity of proceedings where cheques have been issued for the same purpose, postponement of issue of process, etc.

To ensure minimum delay in the administration of such cases, the bench observed that the High Courts should 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. Reliance was placed on the case of Adalat Prasad v. Rooplal Jindal and Ors.² which lays down that there is no inherent power of Trial Courts to review or recall the issue of summons.

The bench devised certain other notable recommendations like the High Courts were to identify the pending revisions arising out of complaints filed for cheque bounce and refer them to mediation at the earliest, amendments be made to the Act for provision of one trial against a person for multiple offences under Section 138 of the Act and that the power to stop proceedings at any stage without pronouncing any judgement cannot be applied to cases of cheque bounce.

The Court sought the Central Government’s opinion to create additional courts to ease the burden created on the judicial system by the Negotiable Instruments Act, 1881. The need for devising a mechanism for pre-litigation in cheque bounce cases was also felt and the National Legal Services Authority should come up with a scheme for settlement of dispute at pre-litigation stage was acknowledged. This would act as an aid to the already suggested reforms in the procedures and the Act.

The development of a distinct software-based mechanism to track and ensure the service of process on the accused in Section 138 cases is being looked at. Along with this, the Reserve Bank of India was suggested to consider evolving a new proforma of cheques so as to include the purpose of payment, along with other information to facilitate adjudication of issues. These reforms can be looked at to expediate the disposal of cheque bounce cases and provide on-time justice to the complainants.

There has been a rise in the number of Section 138 cases over the last few years and this has disrupted the ratio between the number of cases filed and the cases pending. The directives by the Supreme Court are a welcome step and are expected to discourage the number of illegal transactions that lead to cheque bounce cases. The formation of a Committee and separate tribunal to exclusively deal with cheque bounce cases will guide the judiciary for an expeditious administration of cases.