Settlement-based cost directions are not inflexible precedent and may be set aside where facts do not justify continued payment.

In a Section 138 Negotiable Instruments Act matter settled at the revisional stage, the Supreme Court held that a cost direction payable to the Legal Services Authority could not be mechanically sustained merely because it followed an earlier settlement-based order. The Court noted that the earlier decision relied on was not an inflexible precedent applicable in every case, particularly where the complainant raised no objection and the accused was unable to comply. The cost direction was therefore set aside, and the acquittal on settlement was left undisturbed.

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Issues: Whether the cost imposed on the accused, payable to the Legal Services Authority pursuant to the settlement based on the earlier decision, was legally sustainable.

Analysis: The appellant had been convicted under Section 138 of the Negotiable Instruments Act, 1881, but the matter was later settled between the parties during the revisional stage and the appellant was acquitted subject to deposit of costs. The challenge before the Court was confined to the direction requiring payment of costs to the Legal Services Authority. The Court held that the earlier decision relied upon could not be treated as a binding precedent in the sense of laying down an inflexible mandate applicable to every case, particularly where the complainant had no objection and the appellant was unable to comply.

Conclusion: The direction imposing costs on the appellant could not be sustained and was set aside.

Ratio Decidendi: A settlement-based cost direction, though referable to Article 142 of the Constitution of India, does not operate as an inflexible binding precedent in every case, and such costs cannot be mechanically sustained where the facts do not justify their continuance.

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