Make judicial impact assessment must for every law

As lakhs of cheque bounce cases continue to clog subordinate courts across India, the Supreme Court has issued a fresh set of directions to address the crisis.

A Bench led by Justice Manmohan recently emphasised that punishment under the Negotiable Instruments Act, 1881, which deals with dishonour of cheques, was not intended as a means of retribution but rather as a mechanism to ensure payment of money and to promote the credibility of cheques as a trustworthy substitute for cash. It issued directions to expedite trials and encourage early settlement.

The top court directed district courts to set up online payment facilities through secure QR codes or UPI links to enable an accused in cheque bounce cases to directly pay the cheque amount at the initial stage. Once payment was confirmed, the court could pass appropriate orders for closure of proceedings, it said.

If an accused pays the cheque amount before the recording of defence evidence, the case may be compounded without imposing any cost or penalty. If payment is made after the evidence stage but before judgment, the accused would pay an additional 5 per cent of the cheque amount. Payments made at the revision or appeal stage before a Sessions Court or High Court would attract 7.5 per cent costs, and settlements reached in the Supreme Court would attract a 10 per cent cost, the Bench said.

Section 138 of the Negotiable Instruments Act, 1881, in its current form, stems from a 2002 amendment that made cheque bounce an offence. Since then, it has been widely used and misused, leading to drastic changes in the number and nature of cases before the subordinate judiciary. By 2008, the amendment had already added over 25 lakh cases in district courts across the country.

According to the National Judicial Data Grid, pendency of cheque bounce cases under the Act in district courts of major metropolitan cities remains staggeringly high. As on September 1, 2025, the pendency of Section 138 cases stood at 6,50,283 in Delhi district courts, 1,17,190 in Mumbai and 2,65,985 in Calcutta.

In December 2024, the government informed the Lok Sabha that 43,05,932 cheque bounce cases were pending in various courts nationwide.

Such pendency places an unprecedented strain on the judicial system, with cheque bounce cases constituting nearly 50 per cent of trial court pendency in some states. In Delhi, dishonour of cheque cases account for 49.45 per cent of total trial court pendency.

The 2002 amendment to the Negotiable Instruments Act is often cited as a classic example of enacting and enforcing a law without a proper judicial impact assessment, a tool that helps determine the workload likely to be generated by new legislation. Properly implemented, such an assessment can enable the government and the judiciary to anticipate the cost of implementing a law and ensure timely justice.

A task force on Judicial Impact Assessment, appointed by the government under the chairmanship of Justice M Jagannadha Rao, had recommended setting up a 'Judicial Impact Office' in Delhi under the Department of Justice for estimating the extra case load and additional expenditure arising from Central legislation on subjects in the Union and Concurrent Lists. A similar recommendation was made for state laws.

"Judicial Impact Assessments must be made on a scientific basis for the purpose of estimating the extra case-load which any new Bill or Legislation may add to the burden of the courts and the expenditure required for adjudication of such cases must be estimated by the government and adequate budgetary provision must be made therefor," it recommended.

However, a Committee of Experts constituted in September 2013 to examine the methodology for Judicial Impact Assessment concluded in January 2015 that the exercise was neither feasible nor desirable as a method of proper budgetary planning and allocation of funds for the judiciary.

Given that more than five crore cases are pending at various levels of the court system, the government may need to re-examine the issue of Judicial Impact Assessment to avoid situations like the one created by the 2002 amendment to the Negotiable Instruments Act.