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Report No. 213

Fast Track Magisterial Courts for Dishonoured Cheque Cases

1. Introduction

1.1 The law relating to negotiable instruments is not the law of one country or of one nation; it is the law of the commercial world in general, for, it consists of "certain principles of equity and usages of trade which general convenience and common sense of justice had established to regulate the dealings of merchants and mariners in all the commercial countries of the civilized world".

Even now the laws of several countries in Europe are, at least so far as general principles are concerned, similar in many respects. Of course, on questions of detail, different countries have solved the various problems in different ways, but the essentials are the same, and this similarity of law is a pre-requisite for the vast international transactions that are carried on among the different countries.1

1.2 A cheque is an acknowledged bill of exchange that is readily accepted in lieu of payment of money and it is negotiable. However, by the fall in moral standards, even these negotiable instruments like cheques issued, started losing their creditability by not being honoured on presentment. It was found that an action in the civil court for collection of the proceeds of a negotiable instrument like a cheque tarried, thus defeating the very purpose of recognizing a negotiable instrument as a speedy vehicle of commerce. It was in that context that Chapter XVII was inserted in the Negotiable Instruments Act.1

1.3 Over the years there have been many important changes in the way cheques are issued/bounced/dealt with. Commercial globalization has resulted in giving big boost to our country. With the rapid increase in commerce and trade use of cheque also increased and so the cheque bouncing disputes.

1.4 Inclusion of additional forms of crime, for example, section 138 cases under the Negotiable Instruments Act or section 498A cases under the Indian Penal Code, contributed a large number of cases in the criminal courts. To deal with these types of cases we do not have additional number of courts, we do not have additional infrastructure. In many States sufficient budgetary provisions are not made for improving the infrastructure of the subordinate courts, including additional improvement of existing courts, court complexes.2

1.5 Over 38 lac cheque bouncing cases are pending in various courts in the country.3 There are 7,66,974 cases pending in criminal courts in Delhi at the Magisterial level as on 1st June, 2008. Out of this huge workload, a substantial portion is of cases under section 138 of the Negotiable Instruments Act which alone count for 5,14,433 cases (cheque bouncing).4

According to Gujarat High Court sources, there are approximately two lac cheque bouncing cases all over the State, with the majority of them (84,000 cases) in Ahmedabad, followed by Surat, Vadodara and Rajkot.5 73,000 cases were filed under section 138 of the Negotiable Instruments Act (cheque bouncing) on a single day by a private telecom company before a Bangalore court, informed the Chief Justice of India, K. G. Balakrishnan, urging the Government to appoint more judges to deal with 1.8 crore pending cases in the country.6

The number of complaints which are pending in Bombay Courts seriously cast shadow on the credibility of our trade, commerce and business. Immediate steps have to be taken by all concerned to ensure restoration of the credibility of trade, commerce and business.7

1.6 Very recently, while allowing the appeal of an accused in a cheque bouncing case, the Supreme Court has ruled that speedy trial is a fundamental right of an accused.8

1.7 The purpose of this Report is to recommend setting up of Fast Track Courts at Magisterial level with high-tech facilities. Huge backlog of cheque bouncing or dishonoured cheque cases need to be speedily disposed of through this measure, lest the litigants lose faith in the judicial system. Unless there is sufficient number of courts for resolving cheque bouncing disputes speedily and efficiently, the problem will continue to be alarming. Commercial circles in India and abroad must be assured a fast and efficient judicial system in India.

Fast Track Magisterial Courts for Dishonoured Cheque Cases Back

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