Quashing Cheque Bounce Proceedings to be Quashed Upon Complainant’s Full and Final Settlement Acceptance : The Supreme Court of India

Introduction:

The esteemed justices, Justice Vikram Nath & Justice Satish Chandra Sharma have articulated their perspective in a recent Supreme Court order. The justices underscored the importance of settlements, declaring that when a complainant agrees to a specific amount in full and final settlement. The proceedings under Section 138 of the Negotiable Instruments Act (NI Act) should be promptly quashed.

Judicial Pronouncement: Quashing of Cheque Bounce Proceedings

The judges expressed a clear stance in their order. Emphasizing, “Once the settlement has been arrived at and the complainant has signed the deed accepting a particular amount in full and final settlement of the default amount and the fine amount awarded by the Trial Court. The proceedings under Section 138 of the NI Act need to be quashed.”

Legal Rationale:

Justice Vikram Nath and Justice Satish Chandra Sharma highlighted the legal significance of settlements, recognizing their binding nature. The judges asserted that once parties reach an agreement and the complainant formally accepts a predetermined sum as a complete settlement, continued legal proceedings, especially under Section 138 of the NI Act, become redundant and should be set aside.

Impact on Legal Precedent:

The justices’ pronouncement sets a legal precedent, emphasizing due respect for amicable settlements between parties. The order encourages a more expeditious resolution of cases and aligns with reducing unnecessary litigation.

Order in Criminal Appeal No of 2024-The Supreme Court of India:

Leave granted: In proceedings under Section 138 of the Negotiable Instruments Act (‘NI’ Act), 1881, the appellant was convicted & was further sentenced.

In the meantime, the parties have settled their scores and have filed a compromise deed dated 16th January 2018, according to which, the respondent-complainant agreed to accept the amount of Rs. 1,14,000/-(Rupees One Lakh and Fourteen Thousand) as full and final settlement 1 of the cheque amount and the fine imposed by the Trial Court, which had been confirmed by the High Court. The compromise deed is filed as Annexure P-6 to the special leave petition and a photocopy of the same is also filed along with a typed copy. Paragraph 2 of the said compromise deed mentions that the amount of Rs. 1,14,000/- (Rupees One Lakh and Fourteen Thousand) has been paid in two parts; initially Rs. 80,000/- (Rupees Eighty Thousand) was paid and Rs. 34,000/- (Rupees Thirty-Four Thousand) has been deposited in the bank account later.

Notices were issued and a stay was granted by this Court. However, no one has appeared on behalf of the respondents, which maybe the reason that there has been a settlement. This matter has been pending since 2018.

Considering the overall facts and circumstances of the case, we are of the view that once the settlement has been arrived at and the complainant has signed the deed accepting a particular amount in full and final settlement of the default amount and the fine amount awarded by the Trial Court, the proceedings under Section 138 of the NI Act need to be quashed.

Accordingly, the appeal is allowed. The proceedings under Section 138 of the NI Act, along with the impugned orders passed, stand quashed.

Pending applications stand disposed of accordingly

Conclusion in Quashing Cheque Bounce:

The views of Justices Vikram Nath and Satish Chandra Sharma guide legal practitioners and stakeholders. Emphasizing conclusive settlements underscores the necessity for honoring agreements, and promoting efficiency and fairness in the legal process.