Presumably with a view to easing docket explosion, the Supreme Court has held that courts have the discretion to close punitive proceedings under Section 138 of the Negotiable Instruments Act, 1881, which deals with cheque bouncing..The same was held by a Bench of Justices AK Goel and UU Lalit in an appeal from a judgment of the Punjab & Haryana High Court..The matter had its genesis in July 2016, when a complaint was filed after a cheque of the appellant for Rs. 29,319 bounced for want of sufficient funds. When the matter came before the Magistrate, it was held that the case could not be tried summarily, as is generally the case for complaints under Section 138..At this point, the appellant company stated that they were willing to pay the cheque amount. However, the complainant declined to accept the demand draft. Then, in January 2017, the appellant filed an application under Section 147 of the Act, which provides for compounding of offences. By doing so, the appellant sought to escape punitive proceedings by paying compensation for the offence..However, the Magistrate, having considered the Supreme Court’s decision in Jik Industries v. Amarlal Jumani, held that compounding required the consent of the complainant, and therefore dismissed the application. The Punjab & Haryana High Court saw no reason to interfere with this order..The Supreme Court Bench went into the history of Section 138 cases decided by it over the years. Though it acknowledged its own decision in Jik Industries, it was held that consent of the complainant was not required in all cases..“Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.”.It also highlighted the burden these types of cases add to the pendency of cases in courts. It was noted that the 213th Law Commission report revealed that around 38 lakh cases (around 20% of the total pendency) related to cheque bouncing cases..“While the object of the provision was to lend credibility to cheque transactions, the effect was that it put enormous burden on the courts’ dockets…it appears to be necessary that the situation is reviewed by the High Courts and updated directions are issued…”.To this end, the Court suggested that technology be used for preventing as many of these cases from coming to court, as was possible..“Use of modern technology needs to be considered not only for paperless courts but also to reduce overcrowding of courts. There appears to be need to consider categories of cases which can be partly or entirely concluded “online” without physical presence of the parties by simplifying procedures where seriously disputed questions are not required to be adjudicated… Atleast some number of Section 138 cases can be decided online…”.The Court also held that courts have the discretion to decide whether the punitive element in cheque bouncing cases served any purpose..“Basic object of the law is to enhance credibility of the cheque transactions by providing speedy remedy to the complainant without intending to punish the drawer of the cheque whose conduct is reasonable or where compensation to the complainant meets the ends of justice. Appropriate order can be passed by the Court in exercise of its inherent power under Section 143 of the Act which is different from compounding by consent of parties….…The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.”.Moreover, the Court held that though cheque bouncing cases are usually tried summarily,.“where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) Cr.P.C. with sentence of less than one year will not be adequate, having regard to the amount of cheque, conduct of the accused and other circumstances.”.In closing, the Bench held that if the cheque amount with interest is paid by a specific date, the Court is entitled to bring the proceedings to an end in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C..Therefore, the Court granted leave to the appellants, allowing them to move the trial court for any order..Read judgment:.Click here to download the Bar & Bench Android App
Presumably with a view to easing docket explosion, the Supreme Court has held that courts have the discretion to close punitive proceedings under Section 138 of the Negotiable Instruments Act, 1881, which deals with cheque bouncing..The same was held by a Bench of Justices AK Goel and UU Lalit in an appeal from a judgment of the Punjab & Haryana High Court..The matter had its genesis in July 2016, when a complaint was filed after a cheque of the appellant for Rs. 29,319 bounced for want of sufficient funds. When the matter came before the Magistrate, it was held that the case could not be tried summarily, as is generally the case for complaints under Section 138..At this point, the appellant company stated that they were willing to pay the cheque amount. However, the complainant declined to accept the demand draft. Then, in January 2017, the appellant filed an application under Section 147 of the Act, which provides for compounding of offences. By doing so, the appellant sought to escape punitive proceedings by paying compensation for the offence..However, the Magistrate, having considered the Supreme Court’s decision in Jik Industries v. Amarlal Jumani, held that compounding required the consent of the complainant, and therefore dismissed the application. The Punjab & Haryana High Court saw no reason to interfere with this order..The Supreme Court Bench went into the history of Section 138 cases decided by it over the years. Though it acknowledged its own decision in Jik Industries, it was held that consent of the complainant was not required in all cases..“Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.”.It also highlighted the burden these types of cases add to the pendency of cases in courts. It was noted that the 213th Law Commission report revealed that around 38 lakh cases (around 20% of the total pendency) related to cheque bouncing cases..“While the object of the provision was to lend credibility to cheque transactions, the effect was that it put enormous burden on the courts’ dockets…it appears to be necessary that the situation is reviewed by the High Courts and updated directions are issued…”.To this end, the Court suggested that technology be used for preventing as many of these cases from coming to court, as was possible..“Use of modern technology needs to be considered not only for paperless courts but also to reduce overcrowding of courts. There appears to be need to consider categories of cases which can be partly or entirely concluded “online” without physical presence of the parties by simplifying procedures where seriously disputed questions are not required to be adjudicated… Atleast some number of Section 138 cases can be decided online…”.The Court also held that courts have the discretion to decide whether the punitive element in cheque bouncing cases served any purpose..“Basic object of the law is to enhance credibility of the cheque transactions by providing speedy remedy to the complainant without intending to punish the drawer of the cheque whose conduct is reasonable or where compensation to the complainant meets the ends of justice. Appropriate order can be passed by the Court in exercise of its inherent power under Section 143 of the Act which is different from compounding by consent of parties….…The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.”.Moreover, the Court held that though cheque bouncing cases are usually tried summarily,.“where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) Cr.P.C. with sentence of less than one year will not be adequate, having regard to the amount of cheque, conduct of the accused and other circumstances.”.In closing, the Bench held that if the cheque amount with interest is paid by a specific date, the Court is entitled to bring the proceedings to an end in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C..Therefore, the Court granted leave to the appellants, allowing them to move the trial court for any order..Read judgment:.Click here to download the Bar & Bench Android App