Maharashtra and Goa bar council places strong objection and protest on proposed Decriminalistaion of Section 138 of Negotiable Instrument Act.

“The proposed Decriminalization will cause enormous suffering, hardship on investors, traders and businessmen at large, who would lose hopes in the judicial and democratic system and which will eventually encourage them to resort to old modes of recovery. On the contrary, proposed Decriminalization will erode public and investors confidence since the entire settled business and trade cycle which works of post dated cheque will be totally hampered”, reads their letter to the Ministry of Finance.

It is contended that existing mechanisms and inbuilt safeguards in NIA are ignored while making the proposal.
The court says that the law itself protects the interest of honest and bonafide Drawers /Defaulters at different stages which are as under :

i] Section 138(c) in the Negotiable Instruments Act which contemplates issuance of statutory notice before taking any action where the drawer/defaulter is called upon and has the opportunity to arrange the payment of the amount covered by the cheque. It is only when the drawer despite such a notice & despite the opportunity to make the payment within the time stipulated under the statute does not pay the amount that the dishonour would be considered a dishonour constituting an offence under Section 138 of Negotiable Instruments Act will come into play, hence punishable.

ii] To protect the interest of honest and bonafide drawers Hon’ble Supreme Court in C. C. Alavi Haji vs. Palapetty Muhammed, reported in (2007) 6 SCC 555 held as under: Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the che within 15 days, and in that case the complaint is liable to be rejected.”

iii] Section 147 of the Negotiable Instruments Act already makes offence Compoundable at any stage even without permission of the court ;

iv] Accordingly it is pertinent to note that after 2002 amendment, Section 147 of the Act confers implied power on the Magistrate to discharge the accused if the complainant is compensated to the satisfaction of the Court, where the accused tenders the cheque amount with interest and reasonable cost of litigation as assessed by the Court.

v] Hon’ble Supreme Court in Meters & Instruments Private Limited V/s. Kanchan Mehta answered the question “as to how proceedings for an offence under Section 138 of the Act can be regulated where the accused is willing to deposit the cheque amount.” The Court held that it is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C.”

vi] Thus it is pertinent to note that before launch of criminal prosecution as well even later on at different stages sufficient opportunities are afforded and interest of honest and bonafide drawers are totally safeguarded by the Act itself.

vii] Thus the Drawer of cheque always have been given a choice to make payment upon demand thereby avoiding being prosecuted.

viii] In view thereof the concern raised in the statement of reason for decriminalization about the alleged “risk of imprisonment for actions or omissions that aren’t necessarily fraudulent or the outcome of malafide intent is a big hurdle in attracting investments. ” is already taken care of.

ix] That the conduct of the unscrupulous drawers who are determined to withhold / retain the amount of dishonoured cheque clearly disentitles them from claiming any leniency in the matter of imposition of deterrent sentence.

With this the court held that the Section 143 of NIA is proper and reasonable, not to scrap proposal of decriminalisation which could put livelihood, career and survival at stake. It is so stringent and deterrent that such matters could be resolved expeditiously as per Section 143 of the Negotiable Instruments Act

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