Bar Council Of Delhi Opposes Centre's Proposal To Decriminalize Dishonour Of Cheques Under Sec 138 NI Act, Other Economic Offences

The Bar Council of Delhi has opposed the Central Government's decision to decriminalize minor economic offences, stating that the same will cause rampant "institutional damage".

In a letter address to Union Finance Minister Nirmala Setharaman, Co-chairman of the Council, Sanjay Rathi, has said that the proposal to decriminalize 39 provisions contained in 19 different Acts relating to payments and security,

"Would for sure result in encouraging the minds of perpetrators to defraud and cheat innocent persons and there would be absolutely no fear in the minds of people."

The Government has proposed to decriminalize inter-alia, Section 138, Negotiable Instruments Act, 1881, which as per the Council will certainly unburden the courts by reducing pendency of cases of dishonor of cheque however, it will also defeat the ultimate purpose behind its enactment.

"The fear of criminal litigation & imprisonment is one of the most vital and paramount precipitating factor for not only making timely payments of the cheques but for the judicial system as a whole," the letter reads.

The Council further said,

"On one hand the government has recently inserted certain Section 143A & 148 to make the N I Act more effective and powerful in providing redressal to the complainants with the further objective to strengthen the use of cheques and distinct them from other negotiable instruments. While, on the other hand, taking measures to decriminalize and dilute the said Act is itself self-contradictory and unwarranted by the government.

…By decriminalizing such minor economic offences especially Section 138, all these sections would become nugatory, render toothless and the very purpose of enacting these Sections/Acts would be ultimately defeated."

In view thereof the Council has urged the Government to refrain from making any such changes in the NI Act which "blows" the sanctity of cheques, the banking sector, the businesses and the common man who treat the cheques as a guaranteed payment.

The Council has stated that while certain measures are necessary to boost the economic growth post lockdown, but decriminalizing these offences will certainly erode public confidence and legal security in the judicial system.

It has also stressed that in case the Government proposes to amend or enact any law, it is crucial that statutory bodies like the Bar Council of Delhi are consulted, to obtain expert opinion from experienced Bar members.

The Union Ministry of Finance had on Wednesday invited comments from all stakeholders on its proposal to decriminalize several economic offences, viz. the following:

• Section 12, Insurance Act, 1938.

• Section 29, SARFAESI Act, 2002.
• Section 16(7), 32(1),PFRDA Act, 2013.
• Section 58B, RBI Act, 1934.
• Section 26(1),26(4), Payment and Settlement Systems Act,2007 .
• Section 56(1), NABARD Act, 1981.
• Section 49, NHB Act, 1987.
• Section 42, State Financial Corporations Act.1951.
• Section 23, Credit Information Companies (Regulation) Act, 2005
• Section 23, Factoring Regulation Act, 2011
• Section 37, Actuaries Act, 2006.
• Section 36AD(2), 46, Banking Regulation Act, 1949
• Section 30, General Insurance Business (Nationalization) Act, 1972.
• Section 40, LIC Act, 1956.
• Section 21, Banning of Unregulated Deposit Schemes Act, 2019.
• Section 76, Chit funds Act, 1982.
• Section 47, DICGC Act, 1961.
• Section 138, Negotiable Instruments Act, 1881.
• Section 4 &5, Prize Chits and Money Circulation Schemes (Banning) Act, 1978.