Section 138 NI Act - Magistrates Should Record Reasons Before Converting Summary Trial To Summons Trial: Supreme Court

A Constitution Bench of the Supreme Court has directed that Magistrates have to record reasons before converting trial of complaints under Section 138 of Negotiable Instruments Act from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act.

"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", a Constitution Bench headed by Chief Justice of India SA Bobde stated.

The court noted that such conversion from summary trial to summons trial is being done mechanically without reasons being recorded and the same is contributing to the delay in disposal of the cases.

This observation was made in the order passed today by the Constitution bench, also comprising Justices L Nageswara Rao, BR Gavai, AS Bopanna and S Ravindra Bhat,in the suo moto case In re Expeditious Trial of Cases Under Section 138 NI Act.

Section 143 of the Act provides that Sections 262 to 265 of the Code shall apply for the trial of all offences under Chapter XVII of the Act. The second proviso empowers the Magistrate to convert the summary trial to summons trial, if he is of the opinion that a sentence of imprisonment exceeding one year may have to be passed or that it is undesirable to try the case summarily, after recording reasons.'

Amicus Curiae Senior Advocate Siddharth Luthra submitted before the Court that summary trials are routinely converted to summons trials in a mechanical manner and therefore the High Courts should issue practice directions to the Trial Courts for recording cogent and sufficient reasons before converting a summary trial to summons trial.

"From the responses of various High Courts, it is clear that the conversion by the Trial Courts of complaints under Section 138 from summary trial to summons trial is being done mechanically without reasons being recorded. The result of such conversion of complaints under Section 138 from summary trial to summons trial has been contributing to the delay in disposal of the cases.

Further, the second proviso to Section 143 mandates that the Magistrate has to record an order spelling out the reasons for such conversion. The object of Section 143 of the 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.

The discretion conferred on the Magistrate by the second proviso to Section 143 is to be exercised with due care and caution, after recording reasons for converting the trial of the complaint from summary trial to summons trial. Otherwise, the purpose for which Section 143 of the Act has been introduced would be defeated.

We accept the suggestions made by the learned Amici Curiae in consultation with the High Courts. The High Courts may issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act", the bench observed.

The bench issued the following directions to expedite the trial of cheque dishonour cases under Section 138 NI Act:

1. 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.
   
2. 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.
3. For the conduct of inquiry under Section 202 of the Code,evidence of witnesses on behalf of the complainant shall be permitted to be taken on affidavit. In suitable cases, the Magistrate can restrict the inquiry to examination of documents without insisting for examination of witnesses
4. We recommend that suitable amendments be made to the Act for provision of one trial against a person for multiple offences under Section 138 of the Act committed within a period of 12 months, notwithstanding the restriction in Section 219 of the Code.
5. The High Courts are requested to issue practice directions to the Trial Courts to treat service of summons in one complaint under Section 138 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.
6. Judgments of the Court in Adalat Prasad v Rooplal Jindal and others (2004) 7 SCC 338 and Subramanium Sethuraman v State of Maharashtra (2004) 13 SCC 324 have interpreted the law correctly and we reiterate that there is no inherent power of Trial Courts to review or recall the issue of summons.This does not affect the power of the Trial Court under Section 322 of the Code to revisit the order of issue of process in case it is brought to the court's notice that it lacks jurisdiction to try the complaint.
7. Section 258 of the Code is not applicable to complaints under Section 138 of the Act and findings to the contrary in Meters and Instruments Private Ltd and Another v Kanchan Mehta and others (2018) 1 SCC 560 do not lay down correct law. To conclusively deal with this aspect, amendment to the Act empowering the Trial Courts to reconsider/recall summons in respect of complaints under Section 138 shall be considered by the Committee constituted the Court on 10.03.2021

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