SUPREME COURT EMPHASIZES ON PRIORITIZING COMPENSATION OVER PUNISHMENT IN CHEQUE BOUNCE CASES
Category: Legal News
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In one of the recent case the Supreme Court has spotlighted the laws regarding the cheque bounce case, the main to criminalize these cases is to enhance the reliability of financial transactions through cheque. This deters the individuals to misuse the issuing of the cheques without having sufficient balance.
The court has emphasized the priority of compensation over punishment, according to the Negotiable Instruments Act 1881 the primary focus should be ensuring that the aggrieved party receives the due amount rather that just punishing the offender.
In the case of M/S. New Win Export & Anr v. A Subramaniam, this principle was used
The facts of the case are as follows: The case stemmed from the complaint under section 138 of the Negotiable Instruments Act. In 2006 the accused borrowed Rs, 5,25,500 from the complainant but failed to repay the mount. To settle the debt, the accused issued a cheque for Rs 5,25,000 in the name of his partnership firm. When the cheque was dishonoured due to insufficient funds, the complainant filed a complaint under section 138.
There are a rising number of cheques bounce cases, the Supreme Court addressed several issues regarding the nature of offense, judicial system strain, emphasis on compensation, encouraging settlements, rational for settlements etc.
This reaffirmation by the Supreme Court serves to guide lower courts and stakeholders in the proper application of the law. It emphasises that while cheque bouncing is indeed a criminal offence, the primary aim of the law is to protect the aggrieved persons interest and maintain the reliability of the cheques in the commercial transactions. There has to be amicable resolutions in cheque dishonour cases. The judges emphasises that the judicial system should actively encourage parties to seek settlements. There has to be a balance in the legal requirements with practical dispute resolution. Which will hence reduce the burden on the court system while ensuring that justice is being served. This was held by a division bench comprising of Sudhanshu Dhulia and Justice Ahsanuddin Amanullah.
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WRITTEN BY: JAMILA DALAL
GUIDED BY: ADVOCATE ANIK
