Bar Council of Maharashtra and Goa opposes the proposal to decriminalize Section 138 of NI Act, writes to Finance Ministry
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Bar Council of Maharashtra and Goa opposes the proposal to decriminalize Section 138 of NI Act, writes to Finance Ministry

The proposed decriminalization, if effectuated, would affect the livelihoods and careers of practising lawyers, the letter written by the Bar Council of Maharashtra and Goa to the FinMin says.

Shruti Mahajan

The Bar Council of Maharashtra and Goa has written letter to the Finance Ministry registering its protest against the proposed move to decriminalize the offence of dishonour of cheque under Section 138 of the Negotiable Instruments Act (NI Act).

In its letter written to the Finance Ministry (FM), the Council has said that, if effectuated, the proposed move would have an adverse effect on the livelihoods and careers of many practising lawyers and "their survival will be put to great stake."

"...majority of the lawyers are practicing in this field of the law. That proposed move to Decriminalization will certainly affect their livelihood, careers and their survival will be put to great stake."
The letter to FM says

In a bid to improve ease of doing business and consequently improve economic growth in the country, the Union Finance Ministry had invited suggestions earlier this month on the decriminalization of certain minor offences under various Acts which included Section 138 of the NI Act.

The Council has objected to the offence of cheque bounce being termed as a "minor offence" or "procedural lapse" by the government in its bid to decriminalize the same, saying that the same goes against the judicial pronouncements and legislative intent to set a deterring effect. The letter reads,

"The proposed move virtually tends to negate the very basic scope and object of Section 138 of the Negotiable Instruments Act which was brought into action to inculcate the faith and confidence of trading community in the commercial transaction. The proposal is inconsistent with the letter and spirit of the very provisions of the Section 138 of the Negotiable Instruments Act and the amendments therein from time to time."

This move would have a "cascading effect" on the ease of doing business and an entire well-established system of negotiable instruments will be rendered futile, it is said in the letter.

The NI provides for safeguards of the bona fide defaulters, the letter says and points out that the offence is also compoundable, that too, without the leave of the Court, thereby granting enough security net for bona fide drawers of cheques. The Act provides for protection of interests of the drawers of cheque, before and after the launch of criminal proceedings.

The letter goes on to say that while the move is likely to protect the defaulters, it will adversely affect honest traders, business persons etc. Moreover, practicing lawyers who practise in this field of law are also likely to be affected adversely through this move.

Also invoking the judicial and legislative intent behind making bouncing of cheque a criminal offence the Council in its letter says that "it is absolutely just proper and reasonable not only to scrap/drop the proposal of Decriminalization but rather make it more stringent and deterrent".

Earlier this year, the Apex Court had registered a suo motu case for evolving a mechanism to dispose of cheque bounce cases expeditiously noting the burden on judicial system caused due to over 35 lakh pending cases under Section 138 NI Act.

Read Bar Council of Maharashtra and Goa's letter:

BCMG's letter to Ministry of Finance reg. Negotiable Instruments Act.pdf
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