Bounced cheques: Decriminalising offences a good idea, but needs to be thought carefully

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Published: June 12, 2020 5:15 AM

Making a bounced cheque a civil offence will, once again, clog the courts and make recoveries difficult

An argument is made that there are genuine reasons for cheques bouncing and having a penal provision causes unnecessary harassment

Under normal circumstances, decriminalising offences is a good idea, but it needs to be thought thorough carefully. Right now, a cheque bouncing attracts penal provisions and, thanks to this, people are very careful to ensure their cheques don’t bounce. Once the penal provisions are removed, however, the only remedy is, as in the past, to file civil suits and, as with all other cases, it can be years before a solution is found.

An argument is made that there are genuine reasons for cheques bouncing and having a penal provision causes unnecessary harassment; in most cases, people are given time to ensure the cheque is honoured once it is presented again.

Given that a very large number of cases—40 lakh as per a Law Commission report—relate to Section 138 of the Negotiable Instruments Act, it is clear that they will clog up the civil courts and add to delays in settlement. Ideally, of course, whether a case is civil or criminal in nature, the solution lies in fast-tracking hearings and judicial orders.

Courts have made a beginning with video hearings—thanks to the pandemic—and ways have to be found to ensure the system is used more extensively to fast-track cases. Other solutions include better case management. Going back to a situation where cheque-bouncing becomes a routine way to delay payments will set India back again on the Doing Business ranking.

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