SC issues fresh guidelines to reduce ‘staggeringly high’ backlog of cheque dishonour cases

As lakhs of dishonour of cheque cases await disposal in district courts across India, the Supreme Court has issued fresh guidelines to reduce the ‘staggeringly high’ backlog of such cases.

As on September 1, the pendency of dishonour of cheque cases under Section 138 of the Negotiable Instrument (NI) Act in Delhi district courts stood at 6,50,283, followed by Mumbai district courts (1,17,190) and Calcutta district courts (2,65,985).

“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 (50%) of the pendency in Trial Court (in Delhi Section 138 NI Act cases constitute 49.45% of total Trial Court pendency),” a Bench of Justice Manmohan and Justice NV Anjaria lamented.

Tweaking the existing guidelines, the Bench underlined the necessity owing to a huge pendency of such cases and the falling interest rates in the last few years.

“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, " the top court said.

“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% of the cheque amount with the Legal Services Authority or such other Authority as the Court deems fit,” it said.

“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% of the cheque amount by way of costs,” the Bench said.

“Finally, if the cheque amount is tendered before this Court, the figure would increase to 10% of the cheque amount,” it added.

The top court issued fresh guidelines taking note of the fact that despite repeated directions by it in various judgments, pendency of cheque bouncing cases under the NI Act in District courts in major metropolitan cities of India continued to be staggeringly high.

The Bench said in a 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.

“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,”it said.

The Bench issued fresh guidelines saying 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.