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1. Mens rea (malafide/ criminal intent) plays an important role in imposition of criminal
liability, therefore, it is critical to evaluate nature of non-compliance, i.e. fraud as compared
to negligence or inadvertent omission;
2. The habitual nature of non-compliance;
3. Decrease the burden on businesses and inspire confidence amongst investors; and
4. Focus on economic growth, public interest and national security should remain
paramount.
CONCLUSION
Section 138 of Negotiable Instruments Act, 1881 governs cheque bounce matters due to
insufficiency of funds in the bank account. The provision provides that any person who has
committed an offence under Section 138 the offence shall be imprisoned for a term which
may extend up to 2 years or with fine which may extend to twice the amount of the cheque
amount, or with both. The section is one of the most common provisions invoked by lender in
the event of default due to dishonor of cheque.
However, on one hand the government has tried inserting Section 143, 148 to name a few in
the NI Act to make it more operative for providing redressal and on the other hand, the
government is trying to dilute the act by decriminalizing the provision.
Co-Chairman of Bar Council of Delhi, Mr. Sanjay Rathi, issued a letter recently to Smt.
Nirmala Sitharaman, Union Minister of Finance, Government of India stating that the Bar
Council of Delhi strongly opposes the decriminalization of provisions of the legislations as
put forward by the notification.
The statutory body representing lawyers, referred the 213th Law Commission Report along
with Sec 138 of NI Act and a few recent databases and mentioned that a certain stipulated
percentage of litigation pending in the courts comprise of cheque dishonor cases. The
notification regarding decriminalization would certainly aid in bringing down the chart
regarding number of cases but would never serve the main object of Section 138 of the NI
Act.
Adding to this, Bar Council of India’s Member Mr. Ved Prakash Sharma has said in his
statement via his Social media handle that the Bar Council of India will oppose the action of
government regarding decriminalizing the particular sections through a General Council
meeting to be held on 14th June, 2020.
The action put forward by the government is self-contradictory. Even though this step will
definitely attract a number of investors, provide relief to those who considered this criminal
liability as a big concern and will help in reviving the economic growth post COVID 19 but
this could also lead to a situation where there would be fear of criminal litigation and
imprisonment in the minds of the perpetrators committing such offences.