Madras High Court Issues Directions To Resolve Issue Of Pending Cheque Dishonourment Cases In Magistrate Courts
|The Madras High Court, Madurai Bench was dealing with a batch of Criminal Original Petitions filed under Section 482 of the CrPC.
The Madras High Court has issued certain directions to resolve the issue of pending cheque dishonourment cases in the Magistrate Courts.
The Madurai Bench was dealing with a batch of Criminal Original Petitions filed under Section 482 of the Criminal Procedure Code (CrPC) against the pending cases before the Judicial Magistrate Aruppukottai, Viruthunagar District.
A Single Bench of Justice N. Anand Venkatesh observed, “To remedy this very unfortunate state of affairs, this Court has thought it fit to issue the following directions, consolidating the earlier directions of the Supreme Court in Indian Bank Assn. v. Union of India, (2014) 5 SCC 590, Meters and Instruments (P) Ltd. v. Kanchan Mehta, (2018) 1 SCC 560 and Re: Expeditious Trial of Cases Under Section 138 of NI Act, 1881, In re, (2021) 16 SCC 116.”
Advocate K.A. Raamakrishnan appeared on behalf of the Petitioners while Advocate M. Jothibasu appeared on behalf of the Respondents.
Factual Background
The Petitions were filed in this case to quash the proceedings pending before the Judicial Magistrate and the Respondent in each quash Petition filed a Private Complaint against the Petitioners for the offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) on the ground that the Respondent supplied materials to the Petitioners and there was an enforceable liability towards which cheques were issued and when these cheques were presented, it was dishonoured with endorsement “exceeds arrangement”. Thereafter, legal notice was issued and in some cases, it was refused and in other cases, it was received and no reply notice was given nor the cheque amount was paid. The same resulted in the filing of individual private Complaints which were put to challenge in these quash Petitions.
Court’s Directions
The High Court after hearing the contentions of the counsel, noted, “… when a part-payment of the debt in the cheque is paid by the drawer of the said cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made can only be used to negotiate the balance amount. It is thus clear that the amounts that are paid must be relatable to the concerned cheque which is sought to be put against the accused persons.”
The Court, therefore, did not find any ground to quash the proceedings pending before the lower Court and said that the Petitioners can raise all the grounds before the lower Court and the same will be considered on its own merits and in accordance with law.
“Before parting with these cases, this Court cannot help but observe that this case has now remained pending on the file of the Magistrate for nearly 3 years. Judicial notice can be taken of the fact that cases under Section 138 of the Negotiable Instruments Act, 1881 are clogging the Magistrate Courts for years on account of various reasons. The very purpose of the introduction of Chapter XVII of the Negotiable Instruments Act, 1881 would be defeated on account of the delay involved in the disposal of such matters”, it further remarked.
The Court also took note of the fact that as per the data available on November 8, 2021, the NI Act cases contribute to 8.81% of the total criminal cases pending in the Courts and 11.82% of the total criminal cases that are stagnating are due to appearance/service-related issues in NI Act cases.
The Court, therefore, issued the following directions –
I. ENTERTAINING COMPLAINTS
● Upon filing of the Complaint and supporting documents, the Court shall scrutinize the Complaint under Section 138 of the NI Act and the accompanying affidavit and documents.
● The Registry of the Court shall ensure that the complaint and documents are also accompanied by a process memorandum under Rule 29(13) of the Criminal Rules of Practice, 2019 with sufficient number of copies of complaint for service on each accused together with duly stamped envelopes and acknowledgement cards/proof of delivery bearing the address of the accused persons as shown in the complaint for the purpose of dispatching the same by Speed Post with proof of delivery or Registered Post with Acknowledgment Due.
● At the stage of numbering the complaint, scrutiny must be limited to examining whether the complaint is as per the prescribed format with necessary averments to constitute an offence under Section 138, and is accompanied by the requisite documents and process memorandum. The Court is not required to conduct a roving enquiry into any other aspect(s).
● The practice of receiving complaints and adjourning the same for long periods under the pretext of “check and call” shall be strictly avoided. If scrutiny cannot be completed by the next working day, it should be completed in no more than 7 working days thereafter.
II. ISSUANCE OF PROCESS
● Before issuing process, the Magistrate is not bound to call upon the complainant to remain present before the Court and to examine him upon oath. As a rule, the Magistrate may rely upon the verification in the form of affidavit filed by the complainant in support of the complaint, which shall be treated as a sworn statement, to issue process.
● Section 225(2) of the Code is inapplicable to complaints under Section 138 in respect of examination of witnesses on oath.
● The Court should adopt a pragmatic and realistic approach while issuing process.
● The procedure of hearing the accused at the stage of taking cognizance as prescribed in the proviso to Section 223 BNSS shall not apply to complaints under Section 138 of the N.I Act, 1881.
III. SUMMONS
● Upon issuance of process, summons shall be issued through RPAD. In addition, the Court may issue summons to the email address of the accused and witness, if available, as contemplated under Rule 29(20) of the Criminal Rules of Practice, 2019.
● In exceptional cases, the Court may direct service of summons through the police.
● For notice of appearance, a short date, no later than 4 weeks must be fixed. If the summons is received unserved, immediate follow up action must be taken by directing the complainant to pay the process charges afresh within one week. If no steps are taken, the complaint shall be dismissed under Section 226 BNSS.
● If summons is returned with the endorsement that the accused or the witness refused to take delivery of summons, the Court issuing the summons may declare under Section 144 (2) of the N.I Act that the summons has been duly served.
● Where multiple complaints forming part of a transaction are filed against the same accused in the same Court, the Court may treat service of summons in one complaint under Section 138 forming part of a transaction, as deemed service in respect of all the complaints filed before the same court relating to dishonor of cheques issued as part of the said transaction.
IV. INTERIM COMPENSATION
● Where interim compensation is sought for, the Court shall consider the same expeditiously keeping in mind the guidelines issued in Rakesh Ranjan Shrivastava v. State of Jharkhand, (2024) 4 SCC 419. V. 17/24 APPEARANCE OF THE ACCUSED
● Upon appearance of the accused, the Court shall obtain a bond under Section 91 of the BNSS for his appearance.
● In view of Section 145(1) of the N.I Act, 1881, the evidence of the complainant, tendered on affidavit may, subject to all just exceptions, be read in evidence in any enquiry, trial or other proceeding.
● The Court may inform the accused on the first date of hearing that he has the option of settling the dispute with the complainant by tendering the cheque amount, provided that the complainant is willing for such settlement.
● If the matter is settled before the Mediation Centre or before the Court, an order compounding the offence shall be passed in terms of Section 147 of the N.I Act, 1881.
VI. TRIAL
● Procedure for trial of cases under Chapter XVII of the Act must, in the first instance, be summary in nature.
● While following the summary trial procedure, where the accused does not plead guilty, the Court is only required to record the substance of the evidence followed by a judgment containing a brief statement of the reasons for the finding.
● The statutory scheme is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of more than one year may have to be awarded and compensation under Section 395 BNSS is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other attendant circumstances.
● Should it become necessary to convert a summary trial into a summons case, the Magistrate must record an order to that effect as required by the second proviso to Section 143 of the N.I Act.
● Upon the appearance of the accused, the Court shall pass an order fixing dates for examination of defense witnesses, if any, after hearing the parties or their counsel.
● The Court concerned must ensure that examination-in-chief, cross examination and re-examination of the complainant must be conducted within three months from the date of commencement of trial.
● As pointed out by the Supreme Court in V. Baharuni v. State of Gujarat, (2014) “all the subordinate courts must make an endeavour to expedite the hearing of cases in a time-bound manner which in turn will restore the confidence of the common man in the justice-delivery system.
The Court ordered that the above directions shall come into force from March 3, 2025 and shall hold the field until appropriate practice directions are issued by the High Court pursuant to the directions of the Supreme Court in Expeditious Trial of Cases Under Section 138 of NI Act, 1881, In re, (2021).
Accordingly, the High Court dismissed the Petitions and issued directions.
Cause Title- M/s. Ultimate Computer Care & Anr. v. M/s. S.M.K. Systems