SC: No exclusion of Lockdown Period for Limitation Purposes of Bank Instruments- RBI should issue directions

The Supreme Court on June 3, 2020 dismissed a PIL of Advocate Harsh Nitin Gokhle  to exclude the time period of lockdown for calculation of  limitation for presentation of cheques.

It was petitioned  that during the nationwide lockdown, people did not have access to the bank and as a result were unable to present the instruments for encashment within the stipulated period of 3 months from the date of issuance.

The petitioner relied on recent Supreme Court order passed in suo moto proceedings wherein the period of limitation for filing of proceedings under the Arbitration and Conciliation Act & Negotiable Instruments Act etc. were extended by the Supreme Court.

The 3 member bench of the Apex Court observed that this is a policy decision to be taken up by the Reserve Bank of India and the Court cannot interfere and refrained from issuing any direction in this regard and accordingly the Court dismissed the writ petition filed under Article 32 of the Constitution of India as not maintainable.

It is noteworthy that the Reserve Bank of India had issued a  notification on 04.11.2011 wherein it directed that the banking instruments should be presented for encashment within 3 months from the date of issuance else they would be invalid. Thus, the inadvertent delay in presenting the cheque during  the lockdown had frustrated the redressal mechanism provided under section 138 of the NI Act. In case the cheque had been dishonoured during the lockdown period, the delay in filing the proceedings in the Court could be condoned in view of the closure/ disruption of the Courts due to Covid pandemic but if the cheque could not be presented for encashment during the period of validity, there could be no redressal under the NI Act.

N I Act 1881 provides for an early mode for redressal where a cheque, for discharge of debt or liability, is dishonored due to paucity of funds or where it exceeds arrangement. Section 138 mandates that “such person shall be deemed to have committed an offence and shall, without prejudice to the other provisions of this Act, be punished with imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque, or with both.” This section applies only when the cheque is presented within 3 months from the date on which it is drawn & notice is given within 30 days of the receipt of information of return of cheque by the bank & the drawer does not make payment within 15 days of the receipt of such notice.

Thus, the affected person would not able to take advantage of the provisions of section 138 & and the newly inserted Sections 143A & 148 of the NI Act. He would only be left with the option of filing regular suit for recovery in the civil court for which he would be required to pay hefty stamp duty and the suit takes decades to decide. Thus, the affected person is denied the effacaious remedy under section 138 of NI Act and relegated to a costly and time consuming course of filing regular suit in the civil court for none of his fault.

The Reseve Bank of India is earnestly requested to look into the matter and in order to mitigate unnecessary prolonged litigation & to provide respite to the affected persond issue necessary directions for exclusion of Lockdown Period for computation of limitation period of such instruments by increasing the validity of the cheques from 3 months to 6 months during the lockdown period.

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