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SC Constitutes Committee to Deal with Pendency of Cases Under Section 138, NI Act

Section 258 of the Code is not applicable to complaints under Section 138 of the Act and findings to the contrary in Meters and Instruments (supra) do not lay down correct law. To conclusively deal with this aspect, 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 (Para.24(7)).

In Re: EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881.

Suo Motu Writ Petition (Crl.) No.2 of 2020

Decided on April 16 2021


This order comes from a Constitution Bench of the Supreme Court consisting of Chief Justice SA Bobde, Justice L Nageshwara Rao, Justice BR Gavai, Justice AS Bopanna and Justice S Ravindra Bhat.


This judgment of the Supreme Court pertains to the high amount of cases filed and pending in the Court, in relation to Section 138 of the Negotiable Instruments Act, 1881. It arises out of a special leave petition regarding the dishonor of two cheques in 2005, for an amount of Rs.1,70,000. This dispute has remained pending in Court for 16 years. This order examines the reasons for the delay in disposal of these cases.


The learned Amici Curiae identified seven major issues from the responses filed by the State Governments and Union Territories which are as under:

a) Service of summons

b) Statutory amendment to Section 219 of the Code

c) Summary trials

d) Attachment of bank accounts e) Applicability of Section 202 of the Code

e) Mediation

f) Inherent jurisdiction of the Magistrate [Para 6].


The Court formed a committee with Justice RC Chavan as the Chairman. This Committee shall consider the suggestions and recommendations made by the learned Amici Curiae, in addition to other related issues which may arise during such consideration.


The Amici Curiae submitted that the proviso under Sections 262-265 empowers the Magistrate to convert the summary trial to a summons trial. He stated that summary trials are routinely converted to summons trials in a mechanical manner. He suggested that High Courts should issue practice directions to the Trial Courts for recording sufficient reasons before such conversion. This was accepted by the Supreme Court.


Section 202 of the Code mandates the Magistrate to conduct an inquiry for the purpose of deciding whether sufficient grounds justifying the issue of process are made out. There has been a divergence of opinion amongst the High Courts relating to the applicability of Section 202 in respect of complaints filed under Section 138 of the Act. Certain cases under Section 138 have been decided by the High Courts upholding the view that it is mandatory for the Magistrate to conduct an inquiry, as provided in Section 202 of the Code, before issuance of process in complaints filed under Section 138. Contrary views have been expressed in some other cases.


The Amici Curiae referred to the judgments of the Supreme Court in Vijay Dhanuka V. NalimaMamtaj and Abhijit Pawar V. Hemant Nimbalkar, where it was held that inquiry must be held by the Magistrate before issuance of summons to the accused residing outside the jurisdiction of the Court. Only when there are sufficient grounds found to proceed against the accused, shall the Magistrate initiate proceedings.


Section 219 of the Code provides that when a person is accused of multiple offences of the same kind, he may be tried at one trial for a maximum of three such offences. If more than one offence is committed by the same person in one series of acts so committed together as to form the same transaction, he may be charged with and tried at one trial, according to Section 220.In his preliminary report, the learned Amici Curiae suggested that a legislative amendment is required to Section 219 of the Code to avoid multiplicity of proceedings where cheques have been issued for one purpose.


With regard to Section 220, it was argued by the learned Amici Curiae that Section 220 (1) of the Code is not controlled by Section 219 and even if the offences are more than three in respect of the same transaction, there can be a joint trial. This was also held in Balbir V. State of Haryana, that all offences alleged to have been committed by the accused as part of the same transaction can be tried together in one trial, even if those offences may have been committed as part of a larger conspiracy.


The Court agreed, and stated that to reduce the burden on the docket of the criminal courts, a provision should be made in the Act to the effect that a person can be tried in one trial for offences of the same kind under Section 138 in the space of 12 months, notwithstanding the restriction in Section 219 of the Code.


The learned Amici suggested that one way of reducing the time spent on service of summons is to treat service of summons served in one complaint pertaining to a transaction as deemed service for all complaints in relation to the said transaction.


Another question raised was whether the Magistrate who initiates the process also has the power to recall his order. This was held in the affirmative in KM Matthew V. State of Kerala. However, this judgment was held to be against the scheme of the Code in Adalat Prasad V. Rooplal Jindal, wherein it was observed that there is no power of review conferred on the Trial Courts by the Code.


It was contended by learned Amici Curiae that a holistic reading of Sections 251 and 258 of the Code, along with Section 143 of the Act, should be considered to confer a power of review or recall of the issuance of process by the Trial Court in relation to complaints filed under Section 138 of the Act. He referred to the case of Meters and Instruments Pvt Ltd V. Kanchan Mehta, which said that Section 143 of the Act confers implied power on the Magistrate to discharge the accused.


The Court, however, disagreed with this on the basis of the fact that Section 258 of the Code is not applicable to a summons case instituted on a complaint. And Section 143 mandates that the provisions of summary trial of the Code shall apply “as far as may be” to trials of complaints under Section 138.The words “as far as may be” in Section 143 are used only in respect of applicability of Sections 262 to 265 of the Code and the summary procedure to be followed for trials under Chapter XVII.


However, the Court stated that amendment to the Act empowering the Trial Court to reconsider/recall summons may be considered on the recommendation of the Committee.


Another submission made by the learned Amici Curiae relates to the power of the Magistrate under Section 322 of the Code, to revisit the order of issue of process if he has no jurisdiction to try the case. We are in agreement with the learned Amici Curiae that in case the Trial Court is informed that it lacks jurisdiction to issue process for complaints under Section 138 of the Act, the proceedings shall be stayed and the case shall be submitted to the Chief Judicial Magistrate or such other Magistrate having jurisdiction [Para 22].


The Court also requested the High Courts to identify the pending revisions arising out of complaints filed under Section 138, and refer them to mediation at the earliest.


7) Section 258 of the Code is not applicable to complaints under Section 138 of the Act and findings to the contrary in Meters and Instruments (supra) do not lay down correct law. To conclusively deal with this aspect, 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.

8) All other points, which have been raised by the Amici Curiae in their preliminary report and written submissions and not considered herein, shall be the subject matter of deliberation by the aforementioned Committee. Any other issue relating to expeditious disposal of complaints under Section 138 of the Act shall also be considered by the Committee.(Para.24)



Navyaa Shukla


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