Report
7. The proposed Decriminalisation will also cause
enormous suffering for investors, traders
and businessmen who would lose hopes
in the judicial and democratic system and
eventually resort to old modes of recovery.
The Decriminalisation will also erode public
and investor confidences since the entire
settled-business and trade-cycle works on
post-dated cheques.
8. The current law itself protects the interests of
honest and bona-fide Drawers/Defaulters at
different stages which are as under:
i] Section 138(c) in the Negotiable Instruments
Act contemplates issuance of statutory
notice before taking any action where the
drawer or defaulter is called upon and has
the opportunity to arrange the payment of
the amount covered by the cheque. It is only
when the drawer despite such notice and
the opportunity to make the payment within
the time stipulated under the statute does
not pay the amount that the dishonour would
be considered constituting an offence under
Section 138 of Negotiable Instruments Act
and will come into play.
ii] Furthermore to protect the interest of honest
and bona-fide drawers Hon’ble Supreme
Court has in a three Judge Bench Judgement
in the matter of C C Alavi Haji vs Palapetty
Muhammed, reported in (2007) 6 SCC 555
held as under:
Any drawer who claims that he did not receive
the notice sent by post, can, within 15 days
of receipt of summons from the court in
respect of the complaint under Section 138
of the Act, make payment of the cheque
amount and submit to the Court that he had
made payment within 15 days of receipt of
summons (by receiving a copy of complaint
with the summons) and, therefore, the
complaint is liable to be rejected.
9. Thus the Drawer of cheque will always have
a choice to make a payment upon demand
thereby avoiding being prosecuted.
10. Many of CMAI members already have civil
decrees in their favour but are not able
to execute the same in absence of any
attachable and unencumbered property in the
name of the defaulter. For years together the
same are lying idle, returned and unexecuted
on account of obvious reasons.
In conclusion, Mr Masand wrote that CMAI
strongly felt that such a situation is in fact the
right time to make the provisions of Sec 138
even stronger, so as to deter mischievous
businessmen from taking advantage of the
current economic crisis – failing which, the smaller
Manufacturers, members of the MSME Sector,
will have hardly any recourse to such cheating by
their customers, who will issue cheques and then
dishonour them with impunity. Therefore, instead
of protecting their rights it will demolish them.
Mr Masand also informed the Government
in his letter that decriminalisation efforts were
vehemently opposed by CMAI since it felt that this
amendment would certainly affect smooth and
healthy commercial activities, ultimately affecting
the economy of the country particularly post
Covid-19.
APPAREL I August 2020 I 17