In my two earlier blog posts, I wrote Why our Law of check bounce looks unconstitutional and why other countries’ laws are better.

It seems that Pakistan’s Law 489F of Pakistan’s Penal Code also looks far better than our Sec.138 of Negotiable Instrument Act.

Pakistan’s Law says that only those who DISHONESTLY  issue check and the check is BOUNCED, then you are liable to Criminal Law.

This position was also so in India upto 1.4.1989.

Till then, only those persons, who DISHONESTLY issue check and if Check is bounced, then Criminal Proceedings under Sec.420 of Indian Penal Code could lay.

After 1989, Indian Parliament dispensed with word DISHONESTLY, and said even if you have honestly issued a check, it will be deemed be dishonestly issued check and you are liable in criminal law if your check is bounced and you are unable to cough up dues in 15 days.

So by now, we all are deemed to be dishonest citizens if we are unable to pay check!!!! A strange law of Parliament where our people represent us!

Though we may have honestly issued check, sometimes we are unable to pay, because of circumstances beyond our control.

For examples; Sudden Crash in Share Market, Sudden death of an earning member of family, cash flow locked because some money which we were to receive are delayed… There are many natural and accidental incidents happen in our life because which we are sometimes not able to pay check.

The normal remedy for creditor, is to File a Civil Suit under Order 37 of CPC. Money decree follows. And if you have any property, money, car or valuable item left, decree holder can recover money from you any time in next 12 Years. In next 12 years, if you get money,Car, Property, LCD TV, etc this creditor can recover money from you.

So far this was fine and worked for all of us.

Then Foreign Banks and Foreign Companies came to India.

They wanted to sell their products in India. They saw that there are 3 Crorres arrears of cases. It takes time for people of India to get justice.

“But we foreigners cannot wait that much. We have come here to make quick bucks and then we want to move to other country where we can make still more bucks.” They said.

They talked with Power That Be in India.

And Lol! Since 24 years we are trapped in Sec.138 of Act and lakhs and Lakhs of cases are filed all over country. Most of the people facing jail are middle class who are unable to pay due to some genuine reasons.

And even after 24 Years, constitutional validity of this Act is yet to be checked by Supreme Court though there are already some settled laws on this issue.

1) In 1980, in Jolly George Case, Justice Krishna Iyer said, “This is a Land of Daridranarayan (poors). Here  you cannot keep any one in Jail on ground that he is poor and unable to pay.

2) In an Income Tax Penalty case, Supreme Court said, if the man has no money to pay, you cannot keep him in jail on the ground that he is unable to pay dues payable under Income Tax Act.

At present, It seems that India is the only country in world where even Honestly issued check becomes a criminal offence if it is bounced for inability to pay!!!!!!!!!!!!!!!!

And comes the worst part.

One High Court upheld this law and said, even if you are reduced to abject poverty and adjudged by a court as INSOLVENT (Having nothing more than utensils and clothes and less than Rs.1000), even then you will be tried for a bounced check and you will be sent to jail!

I think we are all suffering an unconstitutional law.

We need to be more aware about how our laws are passed and how we can seek remedy from Supreme Court. We need to do all we can do about it.

Haresh Raichura
25/2/2012

DISCLAIMER: Nothing here is a legal advice or authentic statement. Plz take legal advice of your lawyer for legal advice. This is only an academic discussion, not supposed to be a legal advice.