Chandigarh: Banks flood District Courts with ECS-bounce cases

If you have taken a personal loan or using credit cards and given the instruction/mandate to banks for electronic clearing service (ECS) of the EMI, then you must make sure that the auto debit should not bounce for any reason. The banks have now started filing ECS-bounce cases in District Courts for even one or two defaults under the Payment and Settlement Systems Act, 2007.

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A private bank has filed over 13, 000 cases under the Act in the past six months.

Rajesh Kumar Rai, an advocate, said the Act deals with cases of “electronic funds transfer”. It means any transfer of funds initiated by a person by way of instruction, authorisation or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sale transfers, automated teller machine transactions, direct deposits or withdrawal of funds, transfers by telephone, Internet and card payment.

He said earlier, the banks were not filing such types of cases in the courts for one or two defaults and tried to settle matter through various means, but now they are resorting to the legal course to put pressure on the defaulters.

Rai said as per the Act where an electronic funds transfer initiated by a person from an account maintained by him cannot be executed on the ground that the amount of money standing to the credit is insufficient or that it exceeds the amount arranged to be paid from that account by an agreement made with a bank, such person shall be deemed to have committed an offence. He or she shall, without prejudice to any other provisions of this Act, be punished with imprisonment for a term, which may extend to two years, or with fine which may extend to twice the amount of the electronic funds transfer, or with both.

The Chandigarh court has recorded the second highest pending cheque bounce cases among all union territories. The latest figures show 25, 437 cheque bounce cases are pending in the Chandigarh District Court at present. The cheque bounce cases are highest in the all categories of pending cases with 25 per cent share.

Rajesh Sharma, another advocate, said banks were putting pressure on the defaulters for paying the pending loan amount. He suggested that frequent Lok Adalats must be held to deal with such cases.

Advocate Ajay Jagga said to reduce the burden on the courts, a pecuniary limit should be set which can be Rs 50,000 or Rs 1 lakh for initiating prosecution. Even otherwise, for default on payment of petty amounts, prosecution is not a solution.