Thaindian News

New Delhi, May 4 (IANS) The Supreme Court has issued fresh guidelines imposing stiff penalties on defaulters who delay settlement of cheque bounce cases against them.
These provide for graded rise in the cost to be imposed on a defaulter as he moves from a lower court to the high court and then to the Supreme Court, challenging verdicts against him in an apparent bid to delay settlement.

The guidelines based on the suggestions of Attorney General G.E. Vahanvati are aimed at facilitating early settlement of cheque dishonour cases.

The apex court said the delay in compounding or settling cheque dishonour cases contributes to huge backlog of matters in courts.

A bench of Chief Justice K.G. Balakrishnan, Justice P. Sathasivam and Justice J.M. Panchal Monday said, “In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the compounding of the offence involving section 138 of Negotiable Instrument Act, 1881.”

The section 138 of the act deals with dishonour of a cheque due to insufficient funds in the bank account of a person who issues the cheque.

However, the apex court said, “Bona fide litigants should of course contest the proceedings to their logical end.”

In order to discourage filing of multiple complaints in different courts over one case, the bench said: “We direct that it should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction.”

The court said, “The graded scheme for imposing costs is a means to encourage compounding (of offences) at an early stage of litigation.”

The order said: “In the status quo (where there is no compounding of offences) valuable time of the court is spent on the trial of these cases and the parties are not liable to pay any court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties.”

The order added, “Even though the imposition of costs by the competent court is a matter of discretion, the scales of costs has been suggested in the interest of uniformity.”

However, the order said, “the competent court can reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance.”

Under the graded scheme of imposing costs, a defaulter will have to pay 10 percent of the cheque amount as costs if the compounding of offences is sought at a later stage of trial in a lower court.

However, there would be no cost if the compounding is sought in the first or the second hearing of the case.

Cost of compounding offences before a sessions court or high court will be 15 percent of the cheque amount.

Before the Supreme Court, this cost will increase to 20 percent of the cheque amount.

The penalties collected from defaulters will be deposited with the concerned legal services authority operating at the level of the court before which the case will be settled.

The bench said, “We are also conscious of the view that the judicial endorsement of the guidelines could be seen as an act of judicial law making and therefore an intrusion into the domain of the legislative domain”.