8/13/2019 Cheque Bounced Cases - Compounding - SC Guidelines
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SC's Guidelines on Compounding Cheque Bounce Cases
NEW DELHI | MAY 04, 2010
With over 38 lakh cheque bounce cases clogging the courts, the
Supreme Court has framed a series of guidelines for out-of-court
settlement of the offenceas in most instances the parties seek this
after years of litigation.
A bench of Chief Justices K G Balakrishnan and Justices P
Sathasivam and J M Panchal clarified it was not making any
legislation but was constrained to
issue the guidelines as Section 147 of the Negotiable
Instruments Act does not specify the timeframe within which the
offence could be compounded(settled out of court).
"So much so, that at present, a disproportionately large number
of cases involving the dishonour of cheques is choking our criminal
justice system,especially at the level of magistrates' courts.
"As per the 213th Report of the Law Commission of India, more
than 38 lakh cheque bouncing cases were pending before various
courts in the country asof October 2008. This is putting an
unprecedented strain on our judicial system," the bench said in an
order.
According to the guidelines, (a) directions can be given by
court that the Writ of Summons be suitably modified making it clear
to the accused that he couldmake an application for compounding of
the offences at the first or second hearing of the case and that if
such an application is made, compounding maybe allowed by the court
without imposing any costs on the accused.
(b) if the accused does not make an application for compounding,
then if an application for compounding is made before the
magistrate at a subsequentstage, compounding can be allowed subject
to the condition that the accused will be required to pay 10% of
the cheque amount to be deposited as acondition for compounding
with the Legal Services Authority or such authority as the court
deems fit.
(c) similarly, if the application for compounding is made before
the sessions court or a High Court in revision or appeal, such
compounding may be allowedon condition that the accused pays 15 per
cent of the cheque amount by way of costs.
(d) finally, if the application for compounding is made before
the Supreme Court, the figure would increase to 20% of the cheque
amount.
The apex court also said high courts should impose heavy costs
on those who file multiple cases arising out of a single
transaction like bouncing ofcheques issued in EMI-related
transactions.
But before imposing the penalty, an opportunity should be given
to the complaint to transfer all the cases to one competent court
of jurisdiction, the apexcourt said.
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