Financial distress: Cheque bounce cases go up in lockdown

LUDHIANA: Within a span of just 10 days since the high court directed the lower courts to allow filing of urgent and non-urgent cases in a phased manner, as many as 800 cheque bounce cases were filed in Ludhiana between June 12 and 24.

Financial constraints and economic distress during the lockdown period coupled with a huge backlog has led to a higher than usual number of these cases, which are filed under Section 138 the Negotiable Instruments Act.

According to information available with the courts, around 100 cheque bounce cases are being filed every day since June 12 when the courts opened after almost three months since they were shut due to the Covid-19 outbreak.

The cases are filed under the non-urgent category. Before the lockdown, the monthly average of cheque bounce cases was 1,500. At the current rate, this average has doubled.

Already, 21% of all the pending cases in district courts pertain to cheque bounce cases. Prior to the lockdown, as many as five judicial magistrates were handling as many as 28,000 such cases. Each of the five judicial magistrate first class (JM1C) has a pendency of cases ranging from 4,100 to 6,500.

Advocate Gagan Anand, who has filed a number of cheque bounce cases on behalf of his clients, said the legal notices, which are a mandatory requirement before a case is filed in court, warrants a reply to be filed in 15 days under the Act.

“As soon as post offices opened during the lockdown, a lot many legal notices were sent to those whose cheques that were dishonoured by banks for ‘insufficient funds’.

As soon as the 15-day notice period expired, the litigants were waiting for courts to open to file the cases thus the huge number,” he said.

Anand further said that with people suffering losses during lockdown, these cases have risen.

A majority of these cases are that of default in repayments in loans given to acquaintances, a sizeable number have been filed by banks and other financial firms. In a large number of commercial transactions, cheques are issued as a device to defraud the creditors.