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TMI Blog2010 (5) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Verma for the Respondent. ORDER 1. Leave granted. 2. The present appeals are in respect of litigation involving the offence enumerated by section 138 of the Negotiable Instruments Act, 1881 (hereinafter Act ). It is not necessary for us to delve into the facts leading up to the institution of proceedings before this Court since the appellant and the respondent have arrived at a settlement and prayed for the compounding of the offence as contemplated by section 147 of the Act. It would suffice to say that the parties were involved in commercial transactions and that disputes had arisen on account of the dishonour of five cheques issued by the appellant. Thereafter, the parties went through the several stages of litigation before their dispute reached this Court by way of special leave petitions. With regard to the impugned judgments deli- vered by the High Court of Bombay at Goa, the appellant has prayed for the setting aside of his conviction in these matters by relying on the consent terms that have been arrived at between the parties. The respondent has not opposed this plea and, therefore, we allow the compounding of the offence and set aside the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrates 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 as of October, 2008. This is putting an unprecedented strain on our judicial system. 5. Mr. Goolam E. Vahanvati, Solicitor General (now Attorney-General for India) had appeared as amicus curiae in the present matter and referred to the facts herein as an illustration of how parties involved in cheque bounce cases usually seek the compounding of the offence at a very late stage. The interests of justice would indeed be better served if parties resorted to compounding as a method to resolve their disputes at an early stage instead of engaging in protracted litigation before several forums, thereby causing undue delay, expenditure and strain on part of the judicial system. This is clearly a situation that is causing some concern, since section 147 of the Act does not prescribe as to what stage is appropriate for compounding the offence and whether the same can be done at the instance of the complainant or with the leave of the court. The learned Attorney General stressed on the importance of using compounding as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te - Statement of Objects and Reasons. -The Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. These provisions were incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. The existing provisions in the Negotiable Instruments Act, 1881, namely, sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the Courts to deal with such matters has been found to be cumbersome. The Courts are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure contained in the Act. . . . [Emphasis supplied] In order to address the deficiencies referred to above, section 10 of the 2002 amendment inserted sections 143, 144, 145, 146 and 147 into the Act, which deal with aspects such as the power of the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in past decisions, this Court took the following position (C.K. Thakker, J. at Para 17) :- . . . This provision is intended to prevent dishonesty on the part of the drawer of negotiable instruments in issuing cheques without sufficient funds or with a view to inducing the payee or holder in due course to act upon it. It, thus, seeks to promote the efficacy of bank operations and ensures credibility in transacting business through cheques. In such matters, therefore, normally compounding of offences should not be denied. Presumably, Parliament also realised this aspect and inserted section 147 by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (Act 55 of 2002). . . . In the same decision, the Court had also noted (Para 11) :- . . . Certain offences are very serious in which compromise or settlement is not permissible. Some other offences, on the other hand, are not so serious and the law may allow the parties to settle them by entering into a compromise. The compounding of an offence signifies that the person against whom an offence has been committed has received some gratification to an act as an inducement for his abstaining from procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the society and the State. Therefore, any compromise between the accused person and the individual victim of the crime should not absolve the accused from criminal responsibility. However, where the offences are essentially of a private nature and relatively not quite serious, the Code considers it expedient to recognize some of them as compoundable offences and some others as compoundable only with the permission of the Court. . . . In a recently published commentary, the following observations have been made with regard to the offence punishable under section 138 of the Act [Cited from : Arun Mohan, Some thoughts towards law reforms on the topic of section 138, Negotiable Instruments Act - Tackling an avalanche of cases (New Delhi : Universal Law Publishing Co. Pvt. Ltd., 2009) at p. 5] . . . Unlike that for other forms of crime, the punishment here (insofar as the complainant is concerned) is not a means of seeking retribution, but is more a means to ensure payment of money. The complainant s interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid defence such as a mistake, forgery or coercion among other grounds, then the matter can be litigated through the specified forums. 14. It may be noted here that section 143 of the Act makes an offence under section 138 triable by a Judicial Magistrate First Class (JMFC). After trial, the progression of further legal proceedings would depend on whether there has been a conviction or an acquittal. u In the case of conviction, an appeal would lie to the Court of Sessions under section 374(3)( a ) of the CrPC; thereafter a Revision to the High Court under section 397/401 of the CrPC and finally a petition before the Supreme Court, seeking special leave to appeal under article 136 of the Constitution of India. Thus, in case of conviction, there will be four levels of litigation. u In the case of acquittal by the JMFC, the complainant could appeal to the High Court under section 378(4) of the CrPC, and thereafter for special leave to appeal to the Supreme Court under Article 136. In such an instance, therefore, there will be three levels of proceedings. 15. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority. 16. We are also in agreement with the learned Attorney General s suggestions for controlling the filing of multiple complaints that are relatable to the same transaction. It was submitted that complaints are being increasingly filed in multiple jurisdictions in a vexatious manner which causes tremendous harassment and prejudice to the drawers of the cheque. For instance, in the same transaction pertaining to a loan taken on an instalment basis to be repaid in equated monthly instalments, several cheques are taken which are dated for each monthly instalment and upon the dishonour of each of such cheques, different complaints are being filed in different Courts which may also have jurisdiction in relation to the complaint. In light of this submission, 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. Such a disclosure should be made on a sworn affidavit which should accompany the com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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