Background

In a letter addressed to the Finance Minister, Nirmala Sitharaman, the Confederation of All India Traders (CAIT), requested the expediency of cases relating to dishonour of cheques through the setting up of fast track courts and adequate amendments to the Negotiable Instruments Act, 1881 (“The Act”). The letter cited the 213th report of the Law Commission, which stated that there are over 38 lac cheque bouncing cases pending in Courts all over the Country. A recent order by the Supreme Court, In Re: Expeditious Trial of Cases under Section 138 of N.I. Act 1881 (“The Order”), involved the amicus curiae submitting a preliminary report regarding the pendency of cases. According to this report, as of 31.12.2019, the total number of pending criminal cases was 2.31 crores out of which 35.16 lac cases were related to Section 138 of the Act. The reason given for this pendency was that the rate of the institution of complaints far exceeded the rate of disposal of cases.

In the order passed by the Supreme Court, it was directed that a suitable provision be made in the Act so that a person can be tried in a single trial for offences of the same kind under Section 138 of the Act in the space of 12 months, notwithstanding any restrictions under Section 219 of the Code of Criminal Procedure, 1973 (“The Code”). Moreover, it was instructed that the High Courts should issue directions to treat the service of summons in one complaint under Section 138 of the Act as deemed service with regards to all the complaints filed before the same High Court concerning dishonour of cheques relating to the same transaction. This order comes in the light of the increasing docket of pending criminal cases with respect to the dishonour of cheques. We shall further analyse the applicability of Section 219 of the Code and whether it is right to do away with the provision when dealing with cases concerning the dishonour of cheques.

Section 219: An Impeding Provision?

By suggesting an amendment to the Act, the Court directed a method to bypass Section 219 of the Code, which might be considered a provision that might lead to sluggishness in the disposal of cases. Section 219 of the code provides for a single trial where a person is accused of more than one offence of the same kind committed within the space of twelve months. However, the bar in this provision limits the number of offences to three. When we consider the cases relating to the dishonour of cheques, it is a general observation that the number of cheques dishonoured normally breaches the limit of three within the period of twelve months. The application of Section 219 therefore would lead to a multiplication of trials even in a scenario where the payments through multiple cheques are a part of a larger transaction. In Sharma Contracts India Pvt. Ltd. v. State (2012), 14 out of 25 cheques, issued within a space of twelve months, were dishonoured in a transaction that involved payments against the supply of materials. A single complaint was filed with respect to the same, which was challenged before the Delhi High Court. The court dismissed the petition upholding the view that the application of Section 219 of the Code against the filing of a single complaint would be contrary to the spirit of Section 138 of the Act. 

If we look at Section 138 (b) of the act, it provides for the demand for payment through a notice sent by the payee to the drawer of the cheque. This clause is a proviso that requires the fulfilment of the condition for the application of the section, failing which proceedings cannot be initiated under the section. Where a complaint is filed under the section only after the notice has been issued, the said notice can be considered as the reason for the said complaint. This view was given by the Karnataka High Court in Tiruchandoor Muruhan Spinning Mills (P.) Ltd. v. Madanlal Ramkumar Cotton & General Merchants (2000), wherein it was held that Section 219 of the Code cannot be attracted to the proceedings under Section 138 as the cause of action giving rise to the complaint is upon the service of notice under Section 138(b) of the Act. This view further discourages the applicability of Section 219 of the Code as a bar on proceedings under Section 138 of the Act. Furthermore, the fact that the dishonoured cheques form a part of the same transaction forms a dilemma as to whether Section 219 is the right section to apply when considering the dishonour of cheques.

Section 220: The Expedient Provision

According to Section 220 of the Code, if a series of acts considered as offences committed by the same person form a part of the same transaction, he may be tried at one trial for every such offence. It was held by the Division Bench of the Madras High Court in Manjula v. Colgate Palmolive (India) (2006), that Section 220 is not controlled by Section 219 of the code and thus the bar regarding the number of offences does not apply to Section 220. This absence of bar to the said provision regarding the number of offences imply a single trial for the case under this section until they do not form a part of the said transaction or are not of the same kind. Although it was enunciated in the order by the Apex Court, there is no set definition of the expression “same transaction” defined in the statute or any judgement by any Court in India. However, this ambiguity does not discourage the applicability of the provision. In Unique Infoways Pvt. Ltd. v. MPS Telecom Private Limited (2019), the expression “same transaction” under Section 220 of the Code was deemed incapable of any exact definition. In the same order, the Supreme Court opined that the elements of the “same transaction” might be found in the proximity of time or place or unity of purpose and design, concurring with its ruling in State of Andhra Pradesh v. Cheemalapati Ganeswara Rao (1964). In Charashni Kumar Talwani v. Malhotra Poultries, the High Court of Punjab and Haryana held that Section 220 is an enabling provision, therefore separate trials in respect of the offence charged are not barred. It further held that where the series of acts are so intertwined that they form a part of the same transaction, the accused can be tried in one case by the Court.

If we look at the litany of offences under Section 138 of the act, there is a unity of purpose and design, coupled with the proximity of time with regard to the cheques dishonoured, so it can be said that the offences form a part of the same transaction. If we apply the logic that the cheques issued form a part of the same transaction, the offences of dishonour of more than three cheques can be tried in a single trial. According to Section 143 of the Act, all the cases relating to the dishonour of shall be tried summarily and in an expeditious manner:

(3) Every trial under this section shall be conducted as expeditiously as possible and an endeavour shall be made to conclude the trial within six months from the date of filing of the complaint.

Therefore, if we apply the method of the cases of dishonour of cheques in a single transaction being tried together, it will make a strong case for expediency regarding the same.

Conclusion: An order in the right direction?

When the whole country is hit by a major crisis due to the Covid-19 Pandemic which is affecting every institution to its core, the judiciary is no exception. The pendency of cases as of April 15, 2021, taking account of all the courts in India, increased to 4.4 crores at an alarming rate. It must be the foremost priority of all the courts to clear out this increasing docket at a faster pace and in a prudent manner. Therefore, the order comes as a relief considering the number of criminal cases in India fall relates to offences under Section 138 of the Act. Through the right enforcement of the directions in Trial Courts and legislative bodies, we can expect a faster rate of case disposal than at present. This order by the Supreme Court invokes Section 220 of the Code while requesting the High Courts to issue directions to the Trial Court to treat the service of summons as a deemed service for all complaints under Section 138 of the Act. By doing so, it sets a judicial precedent concerning the cases relating to the dishonour of cheques, which would not have to go through the litmus test put up by Section 219 of the code. Hence, it can be safely established that Section 219 of the Code can be overcome when considering the cases of dishonour of cheques. Furthermore, in the interests of judicial expediency, it is important to do so.


About the Author, Udayan [2019-24] is pursuing B.A.LLB (Hons.) from National Law University, Jodhpur.

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