CRGB Officers' Organisation

One for All and All for One


Supreme Court Doesn't Like Bouncing Cheques

Posted by drgorg on May 5, 2010 at 1:03 PM

Section 138 Will Be More Penal Now

As the news says..Read it friends..we will have to face a lot of these cases ..

Delay in settling cheque bounce cases will now cost the defaulter dearly ,up to 20% of the cheque amount. The penalty for delayed settlement of the cheque amount, after conviction in the trial court, would rise steadily from 10% in district courts, 15% in high courts to a whopping 20% in the Supreme Court.

The SC on Monday took this radical step through a pioneering judgment which aims to curb the tendency among defaulters to sit over the amount tendered through a bounced cheque.

Saddled with 30 lakh cheque bounce cases, the SC accepted most of the suggestions offered by attorneygeneral G E Vahanvati.

A Bench comprising Chief Justice K GBalakrishnan and Justices P Sathasivam and J M Panchal also laid down guidelines for early settlement in cheque dishonour cases under Section 138 of the Negotiable Instrument Act. 

The judgment, authored by Chief Justice KG Balakrishnan, indicated that defaulters going for early settlement before the trial court would have to pay just the principal amount with applicable interest.

But if they approched the district court for settlement after being convicted by the trial court, they would have to pay 10% of the cheque amount to avoid going to jail. So if a chque amount is for Rs 1 lakh, then to compound the offence before the district court, the defaulter has to pay an additional Rs 10,000 to avoid going to jail.

Similarly, if the defaulter agrees for settlement and compounding of the offence at the HC stage,then he would have to pay 15% of the cheque amount. The amount so collected would be given to Legal Aid Authorities of the respective states which provide free legal assistance to poor litigants in various forums, the SC said.

This judgment will go a long way in reducing the pendency of over 30 lakh cheque bounce cases which have jammed the wheels of justice already slowed down by pendency of 2.7 crore cases.

During the hearing of a Section 138 case between Damodar S Prabhu and Sayed Babalal, the Bench observed that there had been an enormous rush of cases after cheque bounce was made a penal offence in1989, followed by the amendment in 2002 providing for summary trial for early resolution of the dispute.

So Be very careful when you casually write a cheque..more now since the SUPREME COURT has passed a verdict about it..

Have a very Hot and fulfilling summer

Till we meet again with another issue to discuss

Take good care of yourself



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