Most of the cases relate to recovery of loan defaults which are less than Rs 10 lakh.

Most of the cases relate to recovery of loan defaults which are less than Rs 10 lakh.

MUMBAI, DEC. 6: 

To cut down the number of cheque-dishonour cases, the Finance Ministry is looking at an alternative dispute resolution mechanism, such as a Lok Adalat.

The idea is to consider prosecution under Section 138 of the Negotiable Instruments (NI) Act only if the alternative mechanism too fails. Section 138 deals with penalties in case of dishonour of cheques due to insufficient funds in the bank account of the drawer.

Further, cheques taken as security without stating the amount of debt may be excluded from the purview of the Section.

These measures were suggested to the Finance Ministry by a committee constituted by the Ministry of Law and Justice.

Under Section138, the drawer of the cheque, which has been returned unpaid by a bank because money in the account is insufficient, is deemed to have committed an offence that is punishable with imprisonment up to two years, or with fine that may be up to twice the amount of the cheque, or both.