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To clear dishonoured cheque cases, SC Bench proposes fast-track courts

Krishnadas Rajagopal New Delhi | Updated on March 04, 2021

Retired judges could preside over these temporary additional courts, suggests five-judge Bench

A Constitution Bench of the Supreme Court, on Thursday, proposed the setting up of fast-track courts for a limited time to clear dishonoured cheque cases, which form over 30 per cent of the backlog in courts across the country.

The five-judge Bench, led by Chief Justice of India Sharad A Bobde, termed the pendency of cheques cases a “grotesque” problem. The Bench suggested that even retired judges could preside over these temporary additional courts to clear pending cheque cases.

Solicitor General Tushar Mehta welcomed the the proposal of additional courts from the Bench, but said the idea would require “wide-ranging consultations” at the highest level. Mehta’s submission indicated a softening of its earlier position against the setting up of additional courts to exclusively hear cheque cases.

Other alternatives

On March 2, the Ministry of Finance had issued a memorandum suggesting other alternatives to curb pendency in cheque dishonour disputes.

But, on March 3, a three-judge Bench, led by Chief Justice Bobde, dismissed the Ministry’s memorandum, and reminded the government that it had both power and an obligation under Article 247 of the Constitution to set up additional courts to better the administration of laws enacted by the Parliament, including the Negotiable Instruments Act, which deals with cheques. The CJI, to buttress the importance of the issue, overnight placed issue before a Constitution Bench.

Taking cue, on Wednesday, Mehta, who was asked to be present before the Constitution Bench, said the government was open to the idea, but would need time to hold detailed consultations on the court’s proposal.

The court agreed and scheduled a hearing for March 10. The apex court had registered a suo motu case last year to evolve a concerted and coordinated mechanism for expeditious disposal of cheque cases.

The court had found that over 35 lakh cheque bounce cases were pending in courts all over.

The court had appointed senior advocate Siddharth Luthra and advocate K Parameshwar as amici curiae in the suo motu case.

In their report, Luthra and Parameshwar made various suggestions for preventing delay in cheque dishonour cases.

Nodal service agency

These include having the Centre, Reserve Bank of India and the Indian Banks Association create a nodal service agency for effective service of summons through electronic process.

They have also recommended empowering local Magistrates to order attachment of the bank account of an absconding accused to the extent of the cheque amount.

“Since bank accounts are linked to Aadhar, the court can always issue directions to the bank concerned to attach all bank accounts to the extent of the cheque amount,” their report in the Supreme Court explained.

One of their other suggestions was generating a unique number for a dishonour memo, which when fed into a system, would reveal the details of the account holder.

“The online banking platform may also be modified to ensure that once there is a dishonour on grounds of insufficient funds, a computer-generated notice may automatically be sent to the account holder stating that the cheque has been dishonoured due to insufficient funds,” their report said.

Published on March 04, 2021

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