Mathur, Anmol Kheta, Sheezan Hashmi, Akshat Kumar, Mrs. Neela Kedar Gokhle, P v. Yogeshwaran, Divyansh H. Rathi, B. V. Balaram Das, Raj Bahadur Yadav, Ms & Ors.

Tushar Mehta, Ld. SG., Vikramjit Banerjee, Ld. ASG., Neeraj, Mrs. Garima Prashad, AAGs., Sidharth Luthra, Mrs. Garima Prashad, Soumya Chakraborty, Sunil Kumar, P.H. Parekh, Thomas P. Joseph, Sr. Adv., K. Parameshwar, M.V. Mukunda, Ms. A. Sregurupriya, Rajat Mathur, Anmol Kheta, Sheezan Hashmi, Akshat Kumar, Mrs. Neela Kedar Gokhle, P. V. Yogeshwaran, Divyansh H. Rathi, B. V. Balaram Das, Raj Bahadur Yadav, Ms. Manisha Ambwani, G.S. Makker, Saumya Sinha, Piyush Beriwal, Dr. Monika Gusain, Aviral Saxena, Vishwa Pal Singh, Mahfooz A Nazki, Polanki Gowtham, Shaik Mohamad Haneef, T. Vijaya Bhaskar Reddy, Amitabh Sinha, Shrey Sharma, Shubhranshu Padhi, Ashish Yadav, Rakshit Jain, Vishal Banshal, Abhinav Agrawal, Harpreet Singh Gupta, Manish Kumar, Gaurav Agrawal, Raghvendra Kumar, Anand Kumar Dubey, Narendra Kumar, Anupam Raina, Sunando Raha, Naresh K. Sharma, S. Udaya Kumar Sagar, Ms. Sweena Nair, Abhimanyu Tewari, V.G. Pragasam, S. Prabhu Ramasubramanian, M. Yogesh Kanna, Raja Rajeshwaran S, Aditya Chadha, Ms. Uma Prasuna Bachu, Mrs. Jaspreet Gogia, Ms. Mandakini Singh, Karanvir Gogia, Ms. Shivangi Singhal, Ms. Ashima Mandla, Yashvardhan, Apoorv Shukla, Ms. Smita Kant, Ms. Ishita Farsaiya, Ms. Prabhleen Kaur, Ms. Garima Prashad, Avijit Mani Tripathi, T.K. Nayak, Pukhrambam Ramesh Kumar, Ms. Anupama Ngangom, Karun Sharma, Sachin Patil, Rahul Chitnis, Aaditya A. Pande, Geo Joseph, Jishnu M.L., Ms. Priyanka Prakash, Ms. Beena Prakash, G. Prakash, Ms. Aruna Mathur, Avneesh Arputham, For M/S. Arputham Aruna And Co, Shuvodeep Roy, Kumar Anurag Singh, Anando Mukherjee, Ms. Tulika Mukherjee, Vinay Garg, Upendra Mishra, Ashish Ranjan, Kunal Chatterji, Ms. Maitrayee Banerjee, Pravar Veer Misra, Gopal Jha, Shreyash Bhardwaj, Romy Chacko, Shakthi Chand Jaidwal, Ashwin Romy, Satish Pandey, Salim Ansari, Sameer Parekh, R. Nedumaran, Sharan Thakur, Mahesh Thakur, Siddhartha A B C D E F G H 260 SUPREME COURT REPORTS [2021] 4 S.C.R. Thakur, Ms. Vipasha Singh, Sanjai Kumar Pathak, Arvind Kumar Tripathi, Ms. Shashi Pathak, Jamnesh Kumar, Himanshu Shekhar, Ms. Eliza Bar, Pai Amit, Sameer Parekh, Kshatrashal Raj, Ms. Tanya Chaudhry, Ms. Pratyusha Priyadarshini, Ms. Nitika Pandey for M/S Parekh & Co., Siddhesh Kotwal, Ms. Bansuri Swaraj, Divyansh Tiwari, Ms. Ana Upadhyay, Ms. Manya Hasija, Nirnimesh Dube, V. N. Raghupathy, Ms. Rachana Srivastava, Ms. Rachna Gandhi, Suhaan Mukerji, Vishal Prasad, Nikhil Parikshith, Abhishek Manchanda, Sayandeep Pahari for M/S. PLR Chambers And Co., Shree Pal Singh, Abhimanyu Jhamba, Ashish Jhamb, Samir Ali Khan, Ms. Pragati Neekhra, Ms. Deepanwita Priyanka, Aniruddha P. Mayee, Apoorv Kurup, Ms. Nidhi Mittal, Ms. Uttara Babbar, Manan Bansal, Ms. Shweta Mohta, Sibo Sankar Mishra, V.K. Biju, Amlendu Kumar Akhilesh Kumar Jha, Shaji George, Ms. Rubina Jawed, Dr. Lalit Bhasin, Ms. Nina Gupta, Ms. Christi Jain, Ms. K. Enatoli Sema, Amit Kumar Singh, Apratim Animesh Thakur, Ms. Prachi Hasija, Arjun Garg, Ms. Shrutika Garg, Ms. Radhika Gautam, K. V. Jagdishvaran, Ms. G. Indira, Ms. Taruna Ardhendumauli Prasad, Parth Awasthi, Dr. Rajesh Pandey, Ms. Awasthi M.K., Ramesh Babu M. R., Ms. Manisha Singh, Ms. Nisha Sharma, Dr. Abhishek Atrey, Shibashish Misra, Shree Pal Singh, Advs. for the appearing Parties. Applicant-in-person. The following Order of the Court was passed: ORDER

#1. Special Leave Petition (Criminal) No. 5464 of 2016 pertains to dishonour of two cheques on 27.01.2005 for an amount of Rs.1,70,000/ -. The dispute has remained pending for the past 16 years. Concerned with the large number of cases filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter ‘the Act’) pending at various levels, a Division Bench of this Court consisting of two of us (the Chief Justice of India and L. Nageswara Rao, J.) decided to examine the reasons for the delay in disposal of these cases. The Registry was directed to register a Suo Motu Writ Petition (Criminal) captioned as “Expeditious Trial of Cases under Section 138 of N.I. Act 1881”. Mr. Sidharth Luthra, learned Senior Counsel was appointed as Amicus Curiae and Mr. K. Parameshwar, learned Counsel was requested to assist him. Notices were issued to the Union of India, Registrar Generals of the High Courts, Director Generals of Police of the States and Union Territories, Member A B C D E F G H IN RE: EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. 261 Secretary of the National Legal Services Authority, Reserve Bank of India and Indian Banks’ Association, Mumbai as the representative of banking institutions.

#2. The learned Amici Curiae submitted a preliminary report on 11.10.2020 which was circulated to all the Respondents. On 19.01.2021, the learned Amici Curiae informed this Court that only 14 out of 25 High Courts had submitted their responses to the preliminary report. The Reserve Bank of India had also filed its suggestions. Seven Directors General of Police had filed their affidavits putting forward their views to the preliminary report. The parties who had not filed their responses were granted further time and the matter was listed on 24.02.2021 for final disposal. During the course of the hearing, it was felt by a Bench of three Judges, consisting of the Chief Justice of India, L. Nageswara Rao, J. and S. Ravindra Bhat, J. that the matter had to be considered by a larger bench in view of the important issues that arose for determination before this Court. The reference of the matter to a larger bench was also necessitated due to the submission made by the learned Amici Curiae that certain judicial pronouncements of this Court needed clarification. We have heard learned Amici Curiae, Advocates for some States, the learned Solicitor General of India, Mr. Vikramjit Banerjee, learned Additional Solicitor General of India, Mr. Ramesh Babu, Advocate for the Reserve Bank of India and Dr. Lalit Bhasin, Advocate for the Indian Banks’ Association.

#3. Chapter XVII inserted in the Act, containing Sections 138 to 142, came into force on 01.04.1989. Dishonour of cheques for insufficiency of funds was made punishable with imprisonment for a term of one year or with fine which may extend to twice the amount of the cheque as per Section 138. Section 139 dealt with the presumption in favour of the holder that the cheque received was for the discharge, in whole or in part, of any debt or other liability. The defence which may not be allowed in a prosecution under Section 138 of the Act is governed by Section 140. Section 141 pertains to offences by companies. Section 142 lays down conditions under which cognizance of offences may be taken under Section 138. Over the years, courts were inundated with complaints filed under Section 138 of the Act which could not be decided within a reasonable period and remained pending for a number of years.

#4. This gargantuan pendency of complaints filed under Section 138 of the Act has had an adverse effect in disposal of other criminal A B C D E F G H 262 SUPREME COURT REPORTS [2021] 4 S.C.R. cases. There was an imminent need for remedying the situation which was addressed by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. Sections 143 to 147 were inserted in the Act, which came into force on 06.02.2003. Section 143 of the Act empowers the court to try complaints filed under Section 138 of the Act summarily, notwithstanding anything contained in the Code of Criminal Procedure, 1973 (hereinafter, ‘the Code’). Sub-section (3) of Section 143 stipulates that an endeavour be made to conclude the trial within six months from the date of filing of the complaint. Section 144 deals with the mode of service of summons. Section 145 postulates that the evidence of the complainant given by him on affidavit may be read as evidence in any inquiry, trial or other proceeding under the Code. Bank’s slip or memo denoting that the cheque has been dishonoured is presumed to be prima facie evidence of the fact of dishonour of the cheque, according to Section 146. Section 147 makes offences punishable under the Act compoundable. The punishment prescribed under the Act was enhanced from one year to two years, along with other amendments made to Sections 138 to 142 with which we are not concerned in this case.

#5. The situation has not improved as courts continue to struggle with the humongous pendency of complaints under Section 138 of the Act. The preliminary report submitted by the learned Amici Curiae shows that as on 31.12.2019, the total number of criminal cases pending was 2.31 crores, out of which 35.16 lakh pertained to Section 138 of the Act. The reasons for the backlog of cases, according to the learned Amici Curiae, is that while there is a steady increase in the institution of complaints every year, the rate of disposal does not match the rate of institution of complaints. Delay in disposal of the complaints under Section 138 of the Act has been due to reasons which we shall deal with in this order.

#6. The learned Amici Curiae identified seven major issues from the responses filed by the State Governments and Union Territories which are as under: a) b) c) d) Service of summons Statutory amendment to Section 219 of the Code Summary trials Attachment of bank accounts A B C D E F G H IN RE: EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. 263 e) f) g) Applicability of Section 202 of the Code Mediation Inherent jurisdiction of the Magistrate

#7. Service of summons on the accused in a complaint filed under Section 138 of the Act has been one of the main reasons for the delay in disposal of the complaints. After examining the responses of the various State Governments and Union Territories, several suggestions have been given by the learned Amici Curiae for speeding up the service of summons. Some of the suggestions given by him pertain to dishonour slips issued by the bank under Section 146 of the Act, disclosing the current mobile number, email address and postal address of the drawer of the cheque, the details of the drawer being given on the cheque leaf, creation of a Nodal Agency for electronic service of summons and generation of a unique number from the dishonour memo. The Union of India and the Reserve Bank of India were directed to submit their responses to the suggestions made by the learned Amici Curiae on these aspects. After hearing the learned Solicitor General of India and Mr. Ramesh Babu, learned counsel for the Reserve Bank of India, on 10.03.2021, it was considered appropriate by this Court to form a Committee with Hon’ble Mr. Justice R.C. Chavan, former Judge of the Bombay High Court, as the Chairman to consider various suggestions that are made for arresting the explosion of the judicial docket. The recommendations made by the learned Amici Curiae relating to attachment of bank accounts to the extent of the cheque amount, pre-summons mediation and all other issues which are part of the preliminary note and the written submissions of the learned Amici Curiae shall be considered by the aforementioned Committee, in addition to other related issues which may arise during such consideration. The Committee is directed to deliberate on the need for creation of additional courts to try complaints under Section 138 of the Act. MECHANICAL CONVERSION OF SUMMARY TRIAL TO SUMMONS TRIAL

#8. The learned Amici Curiae submitted that Section 143 of the Act provides that Sections 262 to 265 of the Code shall apply for the trial of all offences under Chapter XVII of the Act. The second proviso empowers the Magistrate to convert the summary trial to summons trial, if he is of the opinion that a sentence of imprisonment exceeding one A B C D E F G H 264 SUPREME COURT REPORTS [2021] 4 S.C.R. A B C D E F G H year may have to be passed or that it is undesirable to try the case summarily, after recording reasons. The learned Amici Curiae has brought to the notice of this Court that summary trials are routinely converted to summons trials in a mechanical manner. The suggestions made by him in his preliminary note that the High Courts should issue practice directions to the Trial Courts for recording cogent and sufficient reasons before converting a summary trial to summons trial have been accepted by the High Courts.

#9. Section 143 of the Act has been introduced in the year 2002 as a step-in aid for quick disposal of complaints filed under Section 138 of the Act. At this stage, it is necessary to refer to Chapter XXI of the Code which deals with summary trials. In a case tried summarily in which the accused does not plead guilty, it is sufficient for the Magistrate to record the substance of the evidence and deliver a judgment, containing a brief statement of reasons for his findings. There is a restriction that the procedure for summary trials under Section 262 is not to be applied for any sentence of imprisonment exceeding three months. However, Sections 262 to 265 of the Code were made applicable “as far as may be” for trial of an offence under Chapter XVII of the Act, notwithstanding anything contained in the Code. It is only in a case where the Magistrate is of the opinion that it may be necessary to sentence the accused for a term exceeding one year that the complaint shall be tried as a summons trial. From the responses of various High Courts, it is clear that the conversion by the Trial Courts of complaints under Section 138 from summary trial to summons trial is being done mechanically without reasons being recorded. The result of such conversion of complaints under Section 138 from summary trial to summons trial has been contributing to the delay in disposal of the cases. Further, the second proviso to Section 143 mandates that the Magistrate has to record an order spelling out the reasons for such conversion. The object of Section 143 of the Act is quick disposal of the complaints under Section 138 by following the procedure prescribed for summary trial under the Code, to the extent possible. The discretion conferred on the Magistrate by the second proviso to Section 143 is to be exercised with due care and caution, after recording reasons for converting the trial of the complaint from summary trial to summons trial. Otherwise, the purpose for which Section 143 of the Act has been introduced would be defeated. We accept the suggestions made by the learned Amici Curiae in consultation with the High Courts. The High Courts may issue practice directions to IN RE: EXPEDITIOUS TRIAL OF CASES UNDER SECTION 138 OF N.I. ACT 1881. 265 the Magistrates to record reasons before converting trial of complaints under Section 138 from summary trial to summons trial in exercise of power under the second proviso to Section 143 of the Act. INQUIRY UNDER SECTION 202 OF THE CODE IN RELATION TO SECTION 145 OF THE ACT

#10. Section 202 of the Code confers jurisdiction on the Magistrate to conduct an inquiry for the purpose of deciding whether sufficient grounds justifying the issue of process are made out. The amendment to Section 202 of the Code with effect from 23.06.2006, vide Act 25 of 2005, made it mandatory for the Magistrate to conduct an inquiry before issue of process, in a case where the accused resides beyond the area of jurisdiction of the court. (See: Vijay Dhanuka & Ors. v. Najima Mamtaj & Ors.1, Abhijit Pawar v. Hemant Madhukar Nimbalkar and Anr.2and Birla Corporation Limited v. Adventz Investments and Holdings Limited & Ors.3). There has been a divergence of opinion amongst the High Courts relating to the applicability of Section 202 in respect of complaints filed under Section 138 of the Act. Certain cases under Section 138 have been decided by the High Courts upholding the view that it is mandatory for the Magistrate to conduct an inquiry, as provided in Section 202 of the Code, before issuance of process in complaints filed under Section 138. Contrary views have been expressed in some other cases. It has been held that merely because the accused is residing outside the jurisdiction of the court, it is not necessary for the Magistrate to postpone the issuance of process in each and every case. Further, it has also been held that not conducting inquiry under Section 202 of the Code would not vitiate the issuance of process, if requisite satisfaction can be obtained from materials available on record.

#11. The learned Amici Curiae referred to a judgment of this Court in K.S. Joseph v. Philips Carbon Black Ltd & Anr.4where there was a discussion about the requirement of inquiry under Section 202 of the Code in relation to complaints filed under Section 138 but the question of law was left open. In view of the judgments of this Court in Vijay Dhanuka (supra), Abhijit Pawar (supra)and Birla Corporation (supra),the inquiry to be held by the Magistrate before issuance of