SC seeks govt response on plea to quash cheque bounce case law

“It is an important issue which needs consideration,” the Bench told Attorney General G E Vahanvati who opposed the petition on the ground that it lacked proper data or material to justify the allegations.

The apex court had earlier issued notice to the Law Ministry on the issue.

Shenoy in his petition contended that in cases relating to bouncing of cheques there were differences between “unwillingness to pay” and “inability to pay”,as punishment is justifiable only in cases where there is unwillingness and no punishment can be or should be given for inability to pay.

He alleged that persons were taking advantage of this provision in various financial institutions who hold the personal liberty of the debtors in ransom until repayment of a debt.

Claiming that the provision violated personal liberty of a citizen under Article 21,the petition said,“Sec.138 of the Negotiable Instruments Act has miserably failed to pass the test of reasonableness for it does not guarantee liberty to an ‘honest drawer’ of a cheque who is subsequently hit by a fate of destiny making him unable to pay his debt.

“Sec.138 of the Negotiable Instruments Act is grossly violative of India’s international obligations under the International Covenant for Civil and Political Rights,1966 to which India is a signatory (Ratified by India on 10 April 1979),” it alleged.