Bounced cheques choke courts

 Bulk Of Cases Relate To Skipped EMIs

 Manoj Mitta | TNN

 New Delhi: The evening courts launched in Delhi on Wednesday just to deal with cheque bounce cases are the latest sign of how the judiciary, for all its reservations, has been reduced to playing a recovery agent for financial institutions.
   Although finance as such has become scarce after the global meltdown, there is no let up in the flood of cheque bounce cases arising mostly from the loans and credit cards that had been issued liberally in the boom years.
   The initiative of evening courts followed a report given three months ago by a committee of three high court judges revealing that cheque dishonour complaints under section 138 of the negotiable instruments Act constitute almost twothirds of the entire workload of magistrates in Delhi.
   Out of the 7.67 lakh criminal cases pending in the magisterial courts as on June 1, the incidence of bounced cheque alone accounted for 5.15 lakh cases. And as many as 4.28 lakh of those cases were filed by financial institutions, a pattern that links the explosion in cheque bounce cases to the proliferation of EMIs in recent years.
   If the docket of the criminal courts has gone awry, one major reason is that a reform in the criminal law made in 2002 has made the old civil remedy of filing a suit for recovering the cheque amount pretty much redundant. Violations of Section 138 — the criminal provision — are now punishable not only with imprisonment up to two years but also monetary penalty up to twice the cheque amount, which is then paid to the complainant.
   The vast difference in the court fee is another reason for cheque bounce cases inundating magistrates.

LEGAL BOUNCER


^Of 7.67 lakh pending criminal cases in Delhi, bounced cheques account for 5.15 lakh

4.28 lakh of those cases were filed by financial institutions

BIGGEST COMPLAINANTS

ICICI Bank 83,523 Citi Financial 51,827 State Bank of India 30,490

MOST COMPLAINTS FILED AT

Connaught Place 1.12 lakh Preet Vihar 31,033
More cheques bouncing due to proliferation of EMIs in recent years FIs can make lawyers work for a contingency fee. Lawyer gets paid (generally 1% of realized amount) only if he succeeds in making offender pay

Most cheque bounce cases in Patiala House


New Delhi: The vast difference in court fee is the reason for cheque bouncing cases piling up before magistrates.
   Consider the criminal complaint filed by Bank of India against Delhi businessman C S Ahluwalia for two dishonoured cheques amounting to Rs 1.04 crore. For the case in which a magistrate framed charges last month, all that the bank had to pay as court fee was Rs 1.25.
   This is because the court fee for all criminal cases is fixed at Rs 1.25 irrespective of the quantum of money involved. Had Bank of India instead filed a civil suit to recover the same cheque amount, it would have had to pay court fee of Rs 1.4 lakh.
   Besides being exempted from paying a hefty court fee for cheque bounce complaints, financial institutions have devised a method that saves them even lawyer’s fee as the bar is also being used as a recovery agent. Since these cases are handled in bulk, financial institutions typically have the leverage to make lawyers work for a contingency fee (a practice prevalent in the US).
   This means that the lawyer dealing with a cheque bounce case gets paid only when he succeeds in putting pressure on the offender to pay the due amount, whether at the pre-litigation stage (on the basis of his legal notice) or as a settlement before the court. The contingency fee is generally 1% of the realized cheque amount.
   The August 27 report of the high court committee shows that as on February 29, the three financial institutions that filed the most number of complaints were ICICI Bank (83,523), Citi Financial (51,827) and SBI (30,490).
   Of the four existing court complexes, Patiala House, which covers the Lutyens’ zone and south Delhi, has the heaviest workload of check bounce cases (1.88 lakh).
   Going by the jurisdiction of police stations, Connaught Place accounts for the most number of complaints (1.12 lakh) followed by Preet Vihar in east Delhi (31,033).

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