Home Legal News Bar Council of Delhi Opposes Centre’s Proposal of Decriminalizing Dishonour of Cheques; Highlights Possibility of Rampant ‘Institutional Damage’

Bar Council of Delhi Opposes Centre’s Proposal of Decriminalizing Dishonour of Cheques; Highlights Possibility of Rampant ‘Institutional Damage’

by Muskan
cheque dishonour

The Bar Council of Delhi has recently opposed the Central Government’s proposal to decriminalize minor economic offences including dishonour of cheque, stating that it will cause rampant “institutional damage”.

The co-chairman of the Council, Sanjay Rathi wrote a letter to Union Finance Minister Nirmala Sitharamanstating that the proposal to decriminalize 39 provisions contained in 19 different Acts relating to payments and security,

“Would for sure result in encouraging the minds of perpetrators to defraud and cheat innocent persons and there would be absolutely no fear in the minds of people.”

The Government had proposed to decriminalize Section 138, Negotiable Instruments Act, 1881, which as per the Council will certainly reduce pendency of cases of dishonor of cheque thereby reduce the burden on the courts however, it will also defeat the ultimate purpose behind its enactment.

ALSO READ- [Payment of Wages] Supreme Court passes interim directions for Payment of Wages during lockdown

The council said on case related to minor economic offences like dishonour of cheque,

“The fear of criminal litigation & imprisonment is one of the most vital and paramount precipitating factor for not only making timely payments of the cheques but for the judicial system as a whole,” the letter reads.  

On one hand the government has recently inserted certain Section 143A & 148 to make the N I Act more effective and powerful in providing redressal to the complainants with the further objective to strengthen the use of cheques and distinct them from other negotiable instruments. While, on the other hand, taking measures to decriminalize and dilute the said Act is itself self-contradictory and unwarranted by the government. 

…By decriminalizing such minor economic offences especially Section 138, all these sections would become nugatory, render toothless and the very purpose of enacting these Sections/Acts would be ultimately defeated.”

The Council has thus urged the Government to refrain from making any such changes in the NI Act which “blow” the sanctity of cheques, the banking sector, businesses and the common man who treat cheques as guaranteed payment. 

The Council has stated that while certain measures for dishonour of cheque are important to boost the economic growth post lockdown,decriminalizing these offences will certainly erode public confidence and legal security in the judicial system. 

It has further stressed that in case the Government proposes to amend or enact any law related to economic offences and dishonour of cheque, it is crucial that statutory bodies like the Bar Council of Delhi are consulted, so that expert opinion can be obtained on cases like dishonour of cheque from experienced Bar members.

The Union Ministry of Finance had on Wednesday invited comments from all stakeholders on a proposal to decriminalize several economic offences and dishonour of cheque including:

  • Section 12, Insurance Act, 1938.
  • Section 29, SARFAESI Act, 2002.
  • Section 16(7), 32(1),PFRDA Act, 2013.
  • Section 58B, RBI Act, 1934.
  • Section 26(1),26(4), Payment and Settlement Systems Act,2007 .
  • Section 56(1), NABARD Act, 1981.
  • Section 49, NHB Act, 1987.
  • Section 42, State Financial Corporations Act.1951.
  • Section 23, Credit Information Companies (Regulation) Act, 2005
  • Section 23, Factoring Regulation Act, 2011
  • Section 37, Actuaries Act, 2006.
  • Section 36AD(2), 46, Banking Regulation Act, 1949
  • Section 30, General Insurance Business (Nationalization) Act, 1972.
  • Section 40, LIC Act, 1956.
  • Section 21, Banning of Unregulated Deposit Schemes Act, 2019.
  • Section 76, Chit funds Act, 1982.
  • Section 47, DICGC Act, 1961.
  • Section 138, Negotiable Instruments Act, 1881.
  • Section 4 &5, Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

Related Articles

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

× Chat with us on WhatsApp