REPORT WITH OBJECTION AGAINST DECRIMINALIZATION OF SECTION 138 UNDER NEGOTIABLE INSTRUMENTS ACT 1881 BY S.PRABAKARAN SENIOR ADVOCATE CO-CHAIRMAN, BAR COUNCIL OF INDIA Upon Decriminalization of Section 138 and 143(1) of Negotiable Instruments Act 1881, the entire scheme and purpose of the Negotiable Instruments act and its subsequent amendment for the purpose of using cheque as an instrument shall stand frustrated such a stand will demoralize the usage of Cheque as a negotiable instrument across all sectors.
by
Sekar Reporter
·
June 16, 2020
REPORT WITH OBJECTION AGAINST DECRIMINALIZATION OF SECTION 138 UNDER NEGOTIABLE INSTRUMENTS ACT 1881 BY S.PRABAKARAN SENIOR ADVOCATE CO-CHAIRMAN, BAR COUNCIL OF INDIA Upon Decriminalization of Section 138 and 143(1) of Negotiable Instruments Act 1881, the entire scheme and purpose of the Negotiable Instruments act and its subsequent amendment for the purpose of using cheque as an instrument shall stand frustrated such a stand will demoralize the usage of Cheque as a negotiable instrument across all sectors. Furthermore, Decriminalization of section 138 and 143(1) will encourage several fraudsters to adopt measures for several illegalities that may follow which were only addressed under the Negotiable Instruments Act 1881. If such punishable offences are repealed/decriminalized, illegalities are morefully in the form of cheating will crop up abundantly in the name of business and transactions. Instead of making the Law Stringent and strict on the persons who have intention to cheat and purposefully and deceitfully subsequently criminalization will increase and it will be a modus operandi adopted by several cheaters and schemers to deceive persons whom have to be duly paid. In Such decriminalization, the entire legal process is vitiated. As it frustrates the legal process, there is no alternative remedy under section 138. The purpose of Negotiable instrument is to sue. There cannot be any alternative remedy if Section 138 and 142 are removed as the entire act becomes redundant. Decriminalization of Cheque bounce/dishonor will mainly benefit Companies, organizations, who have no fear of civil litigation, and with personal criminal liability of Directors and like being done away with, with no fear of arrest or of seeking bail or of attending court proceedings or of paying fine to the extent of double the amount or without fear of two years imprisonment clause, and with only civil case/litigation to deal with, which can be attended by their employees and which can be stretched for years together and which attracts court fee which every person/payee to whom cheque was issued not being able to expend, it will be of great benefit to Companies and will give them a blanket license to issue cheques, and upon dishonor, happily face civil litigation which is an ordeal for the payee as compared to the swift Negotiable Instrument Act proceedings. Even order 37(Summary Procedure)of the Civil Procedure Code gives no leave to defend if reply is not filed within 10 days, by defendant, but proceedings are of a civil nature, attracting no fear of criminal liability. Under Section 141 Negotiable Instruments Act, Directors of Companies, etc and many similarly placed who were at helm of affairs and whose consent, connivance was there in issuance and bounce of cheque were made liable and were subject to arrest. They were required to obtain bail and were required to attend court hearings and there was pressure on the payer/issuer to pay the cheque bounce amount and in some cases even double the amount coupled with interest could also be asked to be paid and along with 2 years imprisonment clause and with liability of Directors, being there, often to compromise issuer/payer was forced to pay interest on the amount. All this acted as a deterrent to the issuer as the threat of dishonor looms prosecution against them and further optingthe issuer to compromise in the Court in a 138 Negotiable Instruments matter in a few dates and the complainant was able to seek and get effective remedy. Now with decriminalization, payee party who already is in distress will be further burdened by mounting rounds of litigation expenses, while the issuer/payer Company and its directors will sit upon the bounced money and reap it’s benefits/interests. This move will help the Companies in a big way. Already the Country faces the brunt of several high value bank frauds in one form or the other and as per reports the country stood at an all time high of Rs.71,543 Crores being defrauded in the year 2018-19 as per RBI reports as it increases greater operational risks with minimum deterrence involved. Now Decriminalizing will altogether take away the threat and fear of prosecution from fraudulent activities. The number of NPA Non Performing Assets in banks are increasing alarmingly and this move can further lead to increase in NPA’s The District judges and State Bar Councils should be asked to furnish a report on the statistical position of 138 Negotiable Instruments Cases with regards to offences by Companies, organization and by Individuals. This will give an idea which category of Cheque bounce matters are more. Companies will be surely more and now it will increase manifold once decriminalization is done. Most importantly a huge percentage of lawyers are 138 NI Lawyers and earn their bread and butter from 138 cases. It is the right of a citizen to live with dignity. It is the duty of state to provide food, clothes, shelter, uphold law, my right, if so, is it not my right to get my rightful dues back in an easy convenient manner. Is it not the duty of the State to ensure that Cheque dishonor amounts and my rightful dues be retrieved, given back to me at the earliest without me having to spend further money on court fee and which if retrieved will aid in my procurement of food, clothes, medicines etc and also aid my right to live with dignity. It is such things taken together which determine my way of life and it is linked to my right to live with dignity, my right to food, clothes and shelter with such due retrieved money. That was from the point of view of the payee who is the sufferer if his/her rightful dues are not retrieved and if the State makes it more difficult by removing an established laid down law which made it easier to retrieve my rightful dues. A vast majority of lawyers earn livelihood only from 138 matters. Decriminalization will also deprive them of earning their source of livelihood, which State should try and provide and not look for means to take away/reduce It is a glaring fact and should not be ignored Lawyers duly understand that they should give their opinion vociferously on behalf of common clients/affected parties that 138 NI Act decriminalization will lead to increase in breach of the rule of law, will increase Cheque bounce, cheque non honor matters, aid Companies, put common man into more trouble and burden him/her more. All public and other opinion may be brushed under the carpet when Lawyers agitate this issue, it will it be heard. Decriminalizing only leads to increase in criminal action willfully. Now, as the government proposes to decriminalize section 138 of Negotiable instruments Act it will create an unprecedented move and unfavorable situation between client and lawyer, How? 1. You have to give alternative solutions under penal code to keep threat to the criminally intended person. 2. Without finding alternative solution the penal codes under the Negotiable Instruments Act 1881 cannot be decriminalized as well as the criminals liable under section 138, 142 of the Negotiable Instruments Act 1881 cannot be decriminalized. 3. Even though there is no dependent by lawyers on these petty case the government as initiated so many measures to fast track the proceedings under Negotiable Instruments Act 1881, There are special courts created by JUDICARY as well as central Government to get instant remedy with fixed time limit. All these actions will be defeated once it is decriminalized. 4. The courts existing to look after petty cases such as Metropolitan Magistrate and there are several lakhs of lawyers practicing in those courts to help general public to get the justice. This decriminalization will affect the lawyers as well as the general public/litigants in a large which cannot be cured at any point of time and you have no solution except the sustaining the existing system otherwise it would only cause a severe damage to the legal system. Such looming questions remain unanswered. If need be, provide for two or three opportunities to Payer, for instance his/her cheque can be presented for encashment by payee thrice, once for the first time, 2nd time after 10 days and 3rd time after 20 days or so, from the 2nd presentation, before payee can issue the notice under Negotiable Instrument Act asking the payer to pay the amount of the bounced cheque, and even then if the payer is unable to pay the cheque bounce amount, then criminalize the issue. Thereafter, the payee be given time to file a 138 NI Act, within the stipulated time period. A genuine Payer will get enough opportunity to pay the amount during such time, or if the cheque issued is being misused by the Payee to approach the court or police before decriminalization of the same. So if need be, time for criminalization of cheque bounce as an criminal offence may be extended, but by no means should criminalization be done away with. The action of decriminalizing Section 138 and 143(1) of Negotiable Instruments Act 1881 will pave the path for a bleak economic future of the nation encouraging perpetrators to defraud money lenders in one form or the other and go Scott free.Sd/- S.PRABAKARAN SENIOR ADVOCATE CO-CHAIRMAN BAR COUNCIL OF INDIA