Slowdown effect: Bounced cheques fill magistrates’ plate

Magistrates in Mumbai have an uphill task dealing with the enormous number of cheque-bouncing cases filed in the past six months.

Written by Sukanya Shetty | Mumbai | Published: March 2, 2009 1:04 am

Defaulters include many young execs with big firms

Magistrates in Mumbai have an uphill task dealing with the enormous number of cheque-bouncing cases filed in the past six months. Mumbai has seen a steep rise in the number of such cases in which defaulters have been booked under section 138 of the Negotiable Instruments Act. Only 58,753 cases were registered in 2007 but the number has gone up to 1,35,012 this year.

According to legal experts,the payment defaults increased from July when the slowdown started crippling the Indian economy. “For the past few months,I have had as many as 10 to 15 people approaching me every month for cases registered against them after their cheques furnished to their credit card company had bounced. Most of them are young executives with multinational companies,” said advocate Tej Bahadur Thakur.

Yogesh Datar,technical consultant with Diksha Investments,says he has an additional job profile to handle for the past few months — that of a recovery agent. “In the past eight-nine months,we have received at least thousands of dishonoured cheques. However,not one case has been disposed of so far and we are yet to be paid by our clients,” says Datar.

“On coaxing,many clients end up handing over dishonored cheques. It just adds up to our problem as we have to either move the court and wait or manage an out-of-court settlement.”

Interestingly,in just the last six months of 2008,74,532 cases of dishonoured cheques were registered,whereas the number was 58,753 in 2007.

Among others,the entertainment industry remains one of the main culprits in the defaulters’ list. “Many cases have been filed against the financiers and directors of movies. Director Gaurang Doshi has four cases registered against him while Afzal Khan,the producer and director of God Tussi Great Ho,has a pending case filed by Ashok Mehta,cinematographer of the movie,” said Advocate Vibhav Krishna who appears for both Doshi and Khan.

The office of the Chief Metropolitan Magistrate had last year sent a proposal to the Bombay High court,requesting additional designated courts to deal solely with cheque-bouncing cases. Though the Bombay High Court has decided to set up 20 more courts to deal with such cases in the city,it will take a while before they are set up.

The need for special designated courts for the purpose was felt as early as 2005. As many as 15 courts were set up in 2005. Though the disposal rate had then risen to around 90,000 cases,over 1,08,758 cases were pending by the year-end. However,only 35,519 cases were disposed of in 2006 while the pending cases increased to 1,27,585. In 2007,with 40,435 cases disposed of,the number of pending cases went up to 1,51,759. Last year around 41,599 cases were disposed of,but the pending cases went up to 2,28,750.

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