Bouncing Cheques
It refers to recent verdict of three-member bench of Supreme Court wherein Apex Court has ordered filing of cases under section 138 of Negotiable Instrument Act only at places where cheque-books are issued, providing convenience to defaulters in preference to victims of cheque-bounce. Verdict will lessen fear-psychology amongst defaulters where victims will find it difficult to go to far-away places for filing cases for cheque-bouncing. But it also remains a bitter reality that the Act was being misused by Banks and Non-Banking-Financial-Companies (NBFCs) which flourished their lending-business tlirough the easy process of recovery on bouncing of cheques of Equated Monthly Instalments (EMIs). Such cases over-burdened criminal judicial system with a massive share of Banks and NBFCs in about 40 lakh such cases pending in the country which are about fifteen-percent of total pending court-cases. Union government should amend Negotiable Instrument Act to make it more practical:

1.    Provision should be there so that cases on cheque-bouncing may be filed at either of places of issue of cheque-books or cheque-bouncing so that defaulters may not get preference over victims of cheque-bounce.

2.   Since the defaulters at times avoid receiving summons, there should be a provision of summons deemed to have been served by publication and otherwise in the manner done in civil cases.

3.   Special court-fees should be applicable on cases filed under section 138 of Negotiable Instrument Act.

4. Fifty-percent amount of penalty imposable under section 138 of the Act should be for judicial system, and this amount may be compulsorily charged from the accused once the case is filed even if the cases are compromised/settled during or outside court-proceedings but after increasing notice-period to sixty days for enabling defaulter to arrange funds. This will make most defaulters settle the matters just after receiving the mandatory legal notice required before filing the complaint under the Act.

5.   Accused may be required to furnish a bank-guarantee of the amount of bounced-cheques at first appearance. Otherwise, bank-accounts and/or properties of defaulters may be attached till final disposal of the case and payment made as directed by courts in the order.

6.   Formality of summoning banks to verify bank-documents relating to cheque-bounce should be abolished. Complainants may be required to file affidavits about genuinety of filed documents. Action can be taken against complainants in case filed documents prove to be fake.

7.   Since number of cases relating to bouncing of cheques has jumped abnormally high especially after loans being generously distributed by banks and NBFCs on post-dated cheques towards EMIs, all such cases relating to returned EMI cheques of banks etc should be separated from other cases of cheque-bouncing including those of business-related ones. Separate courts should handle complaints from Banks and NBFCs for cases relating to bouncing of EMI cheques.

Suggestions above will not only be a boon for trader-community and judicial system of the country, but will also add to global creditability of country's internal financial system between individuals and firms. Global-business deals also require authenticity and creditability of cheques issued by Indian firms and citizens. And every step to effectively check bouncing of cheques issued by Indian firms and citizens will tend to increase India's share in the global trade.

Madhu Agrawal, New Delhi

Vol. 47, No.9, Sep 7 - 13, 2014