Pre And Post-Summons Online Mediation, Summons Via SMS/WhatsApp, Disclosure Of Defence Before Trial [Read Amici Reports On Fast Disposal Of Cheque Cases]

Senior Advocate Sidharth Luthra and Advocate K Parameshwar, the amici curiae appointed by the Supreme Court to suggest steps to expedite the trial of cheque dishonour cases under Section 138 of the Negotiable Instruments Act, have submitted a preliminary report before the SC on October 11.

Yesterday, a bench headed by the Chief Justice of India sought the responses of all High Courts to the preliminary report of the amici in the suo moto case 'In Re :Expeditious Trial of Cases Under Section 138 NI Act'.

Some of the key suggestions made by the amici curiae are as follows :

Banks be asked to provide contact details of drawer of the cheque in the dishonour slip

The amici noted that many cases remained pending due to the inability to serve summons on the accused. More than 51 percent of the cases relating to cheque bounce are pending in the courts because of the solitary reason of non-presence of the accused.

To reduce this difficulty, the report has suggested that the banks be directed to provide the phone number and e-mail address of the drawer of the cheque in the dishonour slip.

"Given the fact that significant percentage of the cases are pending at the stage of service of summons, due to lack of current address and whereabouts of the Accused, it would be expedient to direct that Banks, while issuing a dishonour slips, under Section 146, to disclose the current mobile number, email address and postal address of the drawer of the Cheque". 

Electronic means to serve summons

Service of summons may be effected through SMS, WhatsApp, on the mobile number, email and postal address of the Accused. The Union of India, the Reserve Bank of India and the Indian Banks Association ought to create a Nodal Service Agency for effective service of summons through electronic processes. The e-committee of the Supreme Court may also be consulted in this regard.

Encourage pre-litigation mediation

The Lok Adalats under the Legal Services Act, 1987 ought to be empowered to conduct prelitigation mediation under Section 19(5) of the said Act in respect of cases under Section 138 NI Act.  The report suggests that legislative amendments might be required to the Negotiable Instruments Act, 1888, as there is a strict statutory timeline given for issuing notice, filing of complaint etc. Mediation may not be possible within such a short span of time.

"...in the case of Section 138, legal complications could arise due to the period of one month, prescribed under Section 142, for taking cognisance of the offence after the cause of action has arisen under Clause(c) to the Proviso to Section 138. In other words, pre-litigation mediation notices and the process would have to be completed within the said one month in order to comply with the period under Section 142. Therefore, in our considered opinion, unless and until suitable legislative amendments are made to the Negotiable Instruments Act, 1881, it may be difficult to effectively implement pre-litigation mediation in cases under Section 138", the report said. 

Till such a legislative intervention is made, the Magistrates could while issuing summons, direct the parties to resort to post-summons but pre-trial mediation. In such cases, the summons may reflect a date for mediation and also a date for trial. 

A Standard Operating Procedure for post-summons mediation will have to be developed in consultation with the relevant stakeholders keeping in mind that the mediation is time-bound, cost-effective and does not become another tool in the hands of the Accused to delay the trial. 

Attach bank accounts of absconding accused

If the person against whom a warrant has been issued has absconded or has concealed himself such that the warrant cannot be executed, Magistrates could order attachment of the bank accounts of the Accused to the extent of the cheque amount by passing an order under Section 83, CrPC.

Accused be asked to reveal the nature of defence before trial to avoid trial of frivolous cases

The Accused ought to be directed to disclose the nature of his defence before the trial is converted from a summary trial to a summons trial. This requirement ensures that the Accused is not permitted, for frivolous reasons, to prolong the trial.

The Magistrate ought to, while converting the case into a summons trial, record cogent and sufficient reasons for exercise of its discretion. The exercise of this discretion ought to be preceded by an order directing the Accused to not just disclose his plea in relation to the offence but also to disclose the grounds of his defence.

"It must be noted that under Section 251 of the Code of Criminal Procedure, 1973, the Magistrate is empowered, in summons cases, to enquire from the Accused, the nature of his defence. Therefore, it would be logical that the Accused is directed to disclose the nature of his defence before the trial is converted from a summary trial to a summons trial. This requirement ensures that the Accused is not permitted, for frivolous reasons, to prolong the trial", the report stated.

Legislative amendment to Section 219 CrPC to enable joint trial of multiple cases arising out of the same transaction

The amici said that their experience has shown that a single financial transaction may lead to the dishonour of multiple cheques. However, under Section 219, CrPC, only 3 offences and therefore, the dishonour of only 3 cheques could be tried together.

A legislative amendment may be required to address this issue of multiplicity of proceedings where cheques have been issued for one purpose but multiple complaints, summons and trials have to be undertaken.

Until the statutory amendments are in place, the Supreme Court may issue directions under Article 142 of the Constitution to High Courts to amend their Criminal Rules of Practice (by whatever name called) to ensure that complaints arising out of the same transaction, but resulting in dishonour of multiple cheques be clubbed together and a common process evolved for service of summons and joint trial

High Courts to prepare a scheme for expeditious trial of cases under their jurisdiction

All the High Courts may be directed to prepare and submit a draft scheme to be executed in their jurisdiction with regard to expeditious disposal of cases relating to Section 138. The scheme must also contain specific measures to be taken to identify cases under Section 138 and fast-track their trials. Apart from this, the scheme must contain goals in respect of cases that have been pending for three bloc-periods viz., pendency for two to four years, four to six year, six years and above.

The High Courts must also be directed to formulate a scheme for online mediation of pending cases at the trial/appeal/revisional stages so that pending cases could be effectively disposed off. In fact, this scheme may act as a guide for pre-summons mediation to be adopted through an online platform rather than summon the Accused physically, for the purposes of mediation. The High Courts must be directed to identify the technical platform and other resources required in this regard. The High Courts may also consider mediation on non-working days and hours so that court processes are not affected.

Pending cases under Section 138 before this Hon'ble Court may also be directed to be placed for online mediation after obtaining consent of the parties and lawyers before they are disposed off on merits. 

Settle the question  on applicability of Section 202 CrPC 

The amici said that it is desirable that the applicability of Section 202 of Cr. PC, in regard to the amendment carried out by Act 25 of 2005, to cases under Sectoin 138, NI Act, be judicially settled by the Supreme Court. The aforesaid amendment mandates that the Magistrate shall postpone the issue of process against the Accused, if the Accused is residing in a place beyond its territorial jurisdiction, until an enquiry is made for the purpose of deciding whether there are sufficient grounds for proceeding.

The SC in K S Joseph v. Philips Carbon Black, left this question open to be decided in an appropriate case.

"Invariably, in cases under Section 138, NI Act, the cheque is presented in a territorial jurisdiction where the Accused does not ordinarily reside. This, coupled with the fact that Section 142(2) of the NI Act, as amended by Act 26 of 2015, results in the Accused being resident outside the jurisdiction of the summoning Magistrate. The High Courts have taken conflicting views as regards the applicability of this procedure to cases under Section 138, NI Act. Since a large number of cases are pending across the country awaiting a final word in this regard and the trials are invariably stayed on this ground, it might be desirable that this Hon'ble Court settle this question of law, which has serious ramifications for issues of pendency", the report said. 

On exclusive courts for NI Act cases

Unless the idea of exclusive courts is backed by a comprehensive plan from the Union to fund setting up of exclusive courts, and an action plan is worked out to appoint Magistrates(for trials) & judges (for appeals) for such courts, diverting existing resources would burden the system, the amici opined.

The report also mentioned that the Central Government had invited suggestions last June on the decriminalization of cheque dishonour cases.

In this connection, the report stated :

"In our opinion, it would be profitable to await the completion of this exercise by the Union and suggestions in this regard may be directed to the Union Government. Any discussion in a judicial forum as regards the desirability of decriminalisation of cheque dishonour would pre-empt legislation, which would not be desirable".

Click here to download the preliminary report of the amici curiae

Read the preliminary report of the amici curiae