The Supreme Court flagged the “staggeringly high” pendency of cheque bounce cases in metro courts and issued fresh guidelines for quicker resolution. The new rules allow voluntary compromises, graded penalties, and probation benefits to ease the strain on the judicial system.
New Delhi: The Supreme Court has expressed serious concern over the extremely high number of cheque bounce cases pending in district courts across the country, especially in big cities.
To reduce this growing burden on the justice system, the court has come out with fresh guidelines, which include provisions for voluntary compromises and even releasing the accused on probation.
The case was heard by a bench of Justices Manmohan and N V Anjaria, which was dealing with matters where the Bombay High Court had reversed the concurrent findings of the district courts to release the accused.
The Supreme Court decided to update the 15-year-old guidelines on compounding of offences under the Negotiable Instruments (NI) Act.
The bench observed,
“This court takes judicial notice of the fact that despite repeated directions by this court in various judgments but pendency of cheque bouncing cases under the NI Act in district courts in major metropolitan cities of India continues to be staggeringly high.”
Citing official figures from the National Judicial Data Grid, the bench highlighted that as of September 1, the pendency of Section 138 cases in Delhi district courts stood at 6,50,283, in Mumbai at 1,17,190, and in Calcutta at 2,65,985.
The court noted, “This pendency is putting an unprecedented strain on the judicial system as in some States, cases under Section 138 of the NI Act constitute nearly fifty per cent of the pendency in trial court (in Delhi section 138 NI Act cases constitute 49.45 per cent of total trial court pendency).”
Because of this heavy backlog and falling interest rates in recent years, the court decided to tweak the existing guidelines.
According to the revised norms:
- “If the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the trial court may allow compounding of the offence without imposing any cost or penalty on the accused.”
- “If the accused makes the payment of the cheque amount post the recording of his evidence but prior to the pronouncement of judgment by the trial court, the magistrate may allow compounding of the offence on payment of additional 5 percent of the cheque amount with the legal services authority or such other authority as the court deems fit.”
- “Similarly, if the payment of cheque amount is made before the sessions court or a high court in revision or appeal, such court may compound the offence on the condition that the accused pays 7.5 per cent of the cheque amount by way of costs.”
- “Finally, if the cheque amount is tendered before this court, the figure would increase to 10 per cent of the cheque amount.”
The Supreme Court further explained that the nature of the offence under Section 138 of the NI Act is not purely criminal.
The order noted,
“In its recent verdict it was held that the offence under Section 138 of the NI Act was quasi-criminal in character and compoundable for the proceeding was essentially a civil proceeding and open to the parties to enter into a voluntary compromise.”
The court added,
“Not only a voluntary compromise can bring the proceedings under Section 138 NI Act to an end, but the accused under the said offence are entitled to benefit under the Probation of Offenders Act, 1958.”
Another major hurdle in these cases has been the service of summons on the accused, which causes a significant delay. The bench remarked,
“The service of summons on the accused in a complaint filed under Section 138 of the NI Act continued to be one of the main reasons for the delay in disposal of the complaints.”
The court also clarified the true purpose of punishment under the NI Act, saying,
“The punishment under the NI Act was not a means of ‘seeking retribution’ but more a means to ensure payment of money and promote credibility of cheques as a trustworthy substitute for cash payment.”
Finally, the Supreme Court linked the procedural changes with the new criminal law – the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). It directed that summons should not be restricted to traditional methods alone.
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The order stated,
“Under Section 138 of the NI Act, service of summons shall not be confined through prescribed usual modes but shall also be issued dasti that is summons shall be served upon the accused by the complainant in addition.”
With these updated guidelines, the Supreme Court aims to ease the massive burden of cheque bounce cases, ensure faster resolution, and strengthen the credibility of cheques in India’s financial system.
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