2021 (4) TMI 702 - SC - Indian Laws

Dishonor of two cheques - dispute remained pending for past 16 years - humongous pendency of complaints under Section 138 of the Act - service of summons - Statutory amendment to Section 219 of the Code - Summary trials - Attachment of bank accounts - Applicability of Section 202 of the Code - Mediation - Inherent jurisdiction of the Magistrate. Service of summons - HELD THAT - Service of summons on the accused in a complaint filed under Section 138 of the Act has been one of the main reasons for the delay in disposal of the complaints - several suggestions have been given by the learned Amici Curiae for speeding up the service of summons. Some of the suggestions given by him pertain to dishonour slips issued by the bank under Section 146 of the Act, disclosing the current mobile number, email address and postal address of the drawer of the cheque, the details of the drawer being given on the cheque leaf, creation of a Nodal Agency for electronic service of summons and generation of a unique number from the dishonour memo. The Union of India and the Reserve Bank of India were directed to submit their responses to the suggestions made by the learned Amici Curiae on these aspects. Mechanical conversion of Summary Trial to Summons Trial - HELD THAT - The object of Section 143 of the Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent possible. The discretion conferred on the Magistrate by the second proviso to Section 143 is to be exercised with due care and caution, after recording reasons for converting the trial of the complaint from summary trial to summons trial. Otherwise, the purpose for which Section 143 of the Act has been introduced would be defeated. We accept the suggestions made by the learned Amici Curiae in consultation with the High Courts. The High Courts may issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act. Inquiry u/s 202 of the Cods in relation to section 145 of the act - HELD THAT - Section 145 had been inserted in the Act, with effect from the year 2003, with the laudable object of speeding up trials in complaints filed under Section 138. If the evidence of the complainant may be given by him on affidavit, there is no reason for insisting on the evidence of the witnesses to be taken on oath. On a holistic reading of Section 145 along with Section 202, we hold that Section 202 (2) of the Code is inapplicable to complaints under Section 138 in respect of examination of witnesses on oath. The evidence of witnesses on behalf of the complainant shall be permitted on affidavit. If the Magistrate holds an inquiry himself, it is not compulsory that he should examine witnesses. In suitable cases, the Magistrate can examine documents for satisfaction as to the sufficiency of grounds for proceeding under Section 202. Sections 219 and 220 of the Code - HELD THAT - The High Courts are requested to issue practice directions to the Trial Courts to treat service of summons in one complaint forming part of a transaction, as deemed service in respect of all the complaints filed before the same court relating to dishonour of cheques issued as part of the said transaction. Inherent powers of the Magistrate - HELD THAT - Section 143 of the Act mandates that the provisions of summary trial of the Code shall apply as far as may be to trials of complaints under Section 138. Section 258 of the Code empowers the Magistrate to stop the proceedings at any stage for reasons to be recorded in writing and pronounce a judgment of acquittal in any summons case instituted otherwise than upon complaint. Section 258 of the Code is not applicable to a summons case instituted on a complaint. Therefore, Section 258 cannot come into play in respect of the complaints filed under Section 138 of the Act. The High Courts are requested to issue practice directions to the Magistrates to record reasons before converting trial of complaints under Section 138 of the Act from summary trial to summons trial. Inquiry shall be conducted on receipt of complaints under Section 138 of the Act to arrive at sufficient grounds to proceed against the accused, when such accused resides beyond the territorial jurisdiction of the court - amendment to the Act empowering the Trial Courts to reconsider/recall summons in respect of complaints under Section 138 shall be considered by the Committee constituted by an order of this Court dated 10.03.2021. List the matter after eight weeks. Further hearing in this matter will be before 3-Judges Bench.

Issues Involved:
1. Service of summons
2. Statutory amendment to Section 219 of the Code
3. Summary trials
4. Attachment of bank accounts
5. Applicability of Section 202 of the Code
6. Mediation
7. Inherent jurisdiction of the Magistrate

Detailed Analysis:

Service of Summons:
The delay in the service of summons has been identified as a primary reason for the backlog of cases under Section 138 of the Negotiable Instruments Act. Suggestions to expedite the process include the inclusion of the drawer's current mobile number, email address, and postal address on the dishonour slip issued by the bank, the creation of a Nodal Agency for electronic service of summons, and the generation of a unique number from the dishonour memo. The Union of India and the Reserve Bank of India were directed to respond to these suggestions. A Committee chaired by Hon’ble Mr. Justice R.C. Chavan was formed to consider these recommendations.

Statutory Amendment to Section 219 of the Code:
Section 219 of the Code limits the trial of a person to a maximum of three offences of the same kind committed within 12 months. The learned Amici Curiae suggested a legislative amendment to Section 219 to avoid multiplicity of proceedings where cheques have been issued for one purpose. The Court recommended an amendment to allow one trial for multiple offences under Section 138 committed within 12 months, notwithstanding the restriction in Section 219.

Summary Trials:
Section 143 of the Act mandates summary trials for offences under Chapter XVII of the Act, with the proviso that the Magistrate can convert the trial to a summons trial if a sentence exceeding one year may be necessary. It was found that summary trials are often converted to summons trials without adequate reasons, contributing to delays. The High Courts were requested to issue practice directions to ensure Magistrates record reasons before converting summary trials to summons trials.

Attachment of Bank Accounts:
The Committee chaired by Hon’ble Mr. Justice R.C. Chavan was directed to consider the recommendations regarding the attachment of bank accounts to the extent of the cheque amount. This measure aims to ensure the recovery of the cheque amount and expedite the resolution of cases.

Applicability of Section 202 of the Code:
The amendment to Section 202 of the Code requires the Magistrate to conduct an inquiry before issuing process if the accused resides outside the jurisdiction of the court. There has been a divergence of opinion among High Courts on this matter. The Court held that an inquiry under Section 202 is mandatory before issuing summons to an accused residing outside the jurisdiction. The evidence of witnesses on behalf of the complainant may be taken on affidavit, and the Magistrate can restrict the inquiry to examination of documents in suitable cases.

Mediation:
The Court acknowledged the potential of mediation in resolving cases under Section 138. High Courts were requested to identify pending revisions and appeals arising from complaints under Section 138 and refer them to mediation at the earliest opportunity.

Inherent Jurisdiction of the Magistrate:
The Court reiterated that Trial Courts do not have inherent power to review or recall the issuance of process, as established in Adalat Prasad v. Rooplal Jindal and Subramanium Sethuraman v. State of Maharashtra. However, the Court suggested that an amendment to the Act empowering Trial Courts to reconsider/recall summons may be considered by the Committee.

Conclusion:
1. High Courts to issue practice directions for recording reasons before converting summary trials to summons trials.
2. Inquiry under Section 202 of the Code is mandatory for accused residing outside the jurisdiction.
3. Evidence of witnesses on behalf of the complainant can be taken on affidavit for inquiries under Section 202.
4. Recommendation for legislative amendment to allow one trial for multiple offences under Section 138 within 12 months.
5. High Courts to issue practice directions treating service of summons in one complaint as deemed service for all related complaints.
6. No inherent power for Trial Courts to review or recall summons; this requires legislative amendment.
7. Section 258 of the Code is not applicable to complaints under Section 138.
8. Remaining issues to be deliberated by the Committee.

The matter is to be listed after eight weeks for further hearing before a 3-Judges Bench. The Court appreciated the assistance of the Amici Curiae.

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