Of Cheques and Balances

Context: The government of India’s proposal to decriminalise certain minor offences is based on the conception that minor lapses do not impact national security or the public at large.

Arguments in Favour of Decriminalising minor offences:

• It is critical to evaluate the nature of non-compliance, i.e., fraud as compared to negligence or inadvertent omission’.
• Only Malafide intent should be punished: while other less serious offences should be compounded and penalties alone should be sufficient deterrence for them.
• For E.g. Amending  Section 138 of the Negotiable Instruments Act (NIA) 1881: to make dishonouring a cheque as a compoundable offence and not criminal liability.
• Providing Relief to the Business: Similar endeavour in the form of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020, this amendment is aimed to help corporate debtors amidst pandemic.

Negative Implications

• The burden for Judiciary: Proving a ‘Malafide’ intention would become difficult for criminal jurisprudence.
• Compounding of cheque related offence: Limited impunity could result in more cheques being dishonoured.

Way Forward

• Compounding of offences on the first (or second) instance but punish repeat offenders with harsher sentences.
• The procedure of applying to a nodal agency, or an ombudsman: in cheque related offences.
• Monetary limit: up to which a creditor may seek exemptions on payments.