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Stiff penalty for cheque bounce cases, says SC

Last updated: 04 May, 2010
New Delhi: May 4,DH News Service:

In a move to save the lower courts from lakhs of cheque bounce cases, the Supreme Court has said that the defaulters would be subjected to more stringent punishment in terms of fine and interest for the offence if the case went on and on.

At least 30 lakh cases pertaining to bounced cheques pending across the country.

Delivering a judgment, a bench headed by Chief Justice K G Balakrishnan said delay in settling cheque bounce cases would cost the defaulter dear, by up to 20 per cent of the cheque amount.

“If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the magistrate at a subsequent date, compounding can be allowed subject to the condition that the accused will be required to pay 10 per cent of the cheque amount…’’ said the judgement on a Section 138 case between Damodar S Prabhu and Sayed Babalal.
The penalty for delayed settlement of the cheque amount, after conviction in the trial court, would rise steadily from 10 per cent in district courts, 15 per cent in high courts to 20 per cent in the Supreme Court.

Out of the pending 2.5 crore cases, 30 lakh cases pertain to bounced cheques.
Attorney General G E Vahanvati in his suggestion had told the apex court to make the punishment stringent so that the cheque bounce cases of the lending banks, financial institutions and others are compounded against the same defaulter which in turn will lessen the burden on the courts.

The judgment indicated that defaulters going for early settlement before the trial court would have to pay just the principal amount with applicable interest.
The apex court has posted the hearing of AIADMK General Secretary J Jayalalitha’s plea seeking quashing of proceedings against her in a 14-year-old disproportionate assets case to May 11.

The former Tamil Nadu chief minister has challenged the March 10 order of the Karnataka High Court which held that the trial court order taking congnisance of the complaint on June 5, 1997, did not suffer from any illegality or irregularity.
After a brief hearing during the mention hour, a bench headed by Justice B Sudershan Reddy said it would hear the petition on May 11.
DH News Service


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