2010 (5) TMI 380 - SC - Indian Laws

Section 138 complaints require sworn affidavit confirming no duplicate filing; multiple complaints go to first-filed; graded costs under Section 147

Damodar S. Prabhu Versus Sayed Babalal H.

SC directed that complaints under section 138 should be accompanied by a sworn affidavit confirming no other complaint for the same transaction has been ... Dishonour of cheques - Compounding of the offence as contemplated by section 147​​​​​​​ - Guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence - Held that:- 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. 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 complaint filed under section 200 of the CrPC. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first Court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively. We are also conscious of the view that the judicial endorsement of the above quoted guidelines could be seen as an act of judicial law-making and, therefore, an intrusion into the legislative domain. It must be kept in mind that section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under section 320 of the CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving section 138 of the Act. The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo, valuable time of the Court is spent on the trial of these cases and the parties are not liable to pay any Court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end. Even in the past, this Court has used its power to do complete justice under Article 142 of the Constitution to frame guidelines in relation to subject-matter where there was a legislative vacuum. The present set of appeals are disposed of accordingly. Issues Involved:1. Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881.2. Legislative intent and judicial interpretation of Section 147 of the Act.3. Guidelines for the compounding of offences at various stages of litigation.4. Control of multiple complaints related to the same transaction.5. Judicial law-making and legislative vacuum.Issue-wise Detailed Analysis:1. Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881:The appeals pertain to litigation involving the offence under Section 138 of the Negotiable Instruments Act, 1881, concerning the dishonour of cheques. The parties involved have reached a settlement and prayed for the compounding of the offence as contemplated by Section 147 of the Act. Consequently, the Court allowed the compounding of the offence and set aside the appellant's conviction in each of the impugned judgments.2. Legislative intent and judicial interpretation of Section 147 of the Act:Chapter XVII, comprising Sections 138 to 142, was inserted into the Act by the 1988 Amendment to enhance the acceptability of cheques in settlement of liabilities and to deter the high incidence of cheque dishonour. Section 147, inserted by the 2002 Amendment, makes offences under the Act compoundable. The Court noted that the legislative intent was to provide a strong criminal remedy to ensure the reliability of negotiable instruments and that the provision for imposing a fine serves a compensatory purpose.3. Guidelines for the compounding of offences at various stages of litigation:The Court recognized the need for guidelines to disincentivize delayed compounding of offences. The guidelines proposed by the learned Attorney General were accepted, which include:- No costs for compounding at the first or second hearing.- 10% of the cheque amount as costs if compounded at a subsequent stage before the Magistrate.- 15% of the cheque amount as costs if compounded before the Sessions Court or High Court.- 20% of the cheque amount as costs if compounded before the Supreme Court.These costs are to be deposited with the Legal Services Authority operating at the level of the Court where compounding takes place.4. Control of multiple complaints related to the same transaction:To prevent harassment and prejudice due to multiple complaints in different jurisdictions, the Court directed that complainants must disclose on a sworn affidavit that no other complaint has been filed in any other Court in respect of the same transaction. If multiple complaints are found, orders for transfer to the first Court should be given, generally by the High Court, with heavy costs imposed on the complainant.5. Judicial law-making and legislative vacuum:The Court acknowledged the potential view of judicial endorsement of guidelines as judicial law-making. However, given the legislative vacuum in Section 147 regarding the compounding process, the Court saw no hurdle in endorsing guidelines to discourage delayed compounding. The graded scheme for imposing costs aims to encourage early-stage compounding, thus reducing the burden on the judicial system. The Court emphasized that bona fide litigants should contest proceedings to their logical end and that the competent Court could adjust costs based on specific case circumstances, recording reasons for any variance.Conclusion:The appeals were disposed of with the compounding of the offence under Section 138, setting aside the appellant's conviction. The Court provided guidelines for the compounding process to deter delayed settlements and directed measures to control multiple complaints related to the same transaction. The decision addressed the legislative vacuum in Section 147, balancing the need for judicial intervention with the principles of justice and efficiency.