Deposit shortfalls do not arise only when the accused claims that he never issued the cheque. Frequently, a cheque bounce case turns bad because the accused has insufficient funds to honour the cheque in full. He may very well have issued the 10 lakh cheque against a bona fide business debt, but an unforeseen cash- crunch, layoff, business slump, family illness or any other contingency can prevent him from paying the amount on demand. Leaves us wondering- can one settle cheque bounce case for lesser amount? Yes. If the complainant is agreeable, it may be possible to compound a cheque bounce for less than the cheque value. The accused can’t unilaterally decide to pay a part of the cheque amount and request deletion of the case. Section 147 of the NI Act, 1881 deals with compounding of offences and allows the parties to settle matters between themselves. It has been consistently held by the Supreme Court that consent of the complainant is integral to compounding. Notice the difference. Just because you pay 6 lakh of a 10 lakh cheque, the amount will not be considered settled and the Section 138 complaint will not just go away. However, if the Yes. Parties are free to settle for a lesser amount than what was originally mentioned in the cheque. If the complainant agrees to take a lower amount. If a cheque of 8 lakh bounces, the accused pays up 5.5 lakh now. Civil settlement demands of 5.5 lakh as "immediate full and final settlement" can be made. The complainant may agree since he prefers the commercial certainty of instant recovery vs. litigation. The complainant may also demand the entire 8 lakh. Both are legally valid stances. Indian law on contracts allows that "the promisee may remit the whole performance, or any part of it; may extend the time for performance, or may accept in satisfaction thereof something else than what was due" Section 63, Indian Contract Act, 1872. It does not mean that an accused has the right to unilaterally reduce criminal liability under Section 138. Complainant still needs to agree to compound the cheque bounce. This is where many people err. They deposit a lesser amount in the complainant account. And then say the case amount should be dropped. That is not how it works. It can lead to another dispute. BK Singh Advocate can help you understand if a reduced payment being proposed to you is to be taken as a part payment or settlement of the entire cheque dispute. complainant provides a written statement that he accepts 6 lakh as “full and final settlement”, then the situation changes completely. BK Singh Advocate can go through the cheque, complaint, pending amount, payment made and the status of the case to advise if a compromise is a viable option. Yes. Parties are free to settle for a lesser amount than what was originally mentioned in the cheque. If the complainant agrees to take a lower amount. If a cheque of 8 lakh bounces, the accused pays up 5.5 lakh now. Civil settlement demands of 5.5 lakh as "immediate full and final settlement" can be made. The complainant may agree since he prefers the commercial certainty of instant recovery vs. litigation. The complainant may also demand the entire 8 lakh. Both are legally valid stances. Indian law on contracts allows that "the promisee may remit the whole performance, or any part of it; may extend the time for performance, or may accept in satisfaction thereof something else than what was due" Section 63, Indian Contract Act, 1872. It does not mean that an accused has the right to unilaterally reduce criminal liability under Section 138. The complainant still needs to agree to compound the cheque bounce. This is where many people err. They deposit a lesser amount in the complainant account. And then say the case amount should be dropped. That is not how it works. It can lead to another dispute. BK Singh Advocate can help you understand if a reduced payment being proposed to you is to be taken as a part payment or settlement of the entire cheque dispute. Financial inability cannot create legal entitlement for a discount. If an accused is unable to pay the entire demand he can consider negotiating commercial discount terms like a discounted lump-sum payment or a agreed installments. But what terms will be agreeable is up to the complainant. Typically an accused may offer : Language matters. Receipt in hand saying “Received 2 lakh as part payment” is very different than a settlement deed which specifies that a mutually agreed amount has been received towards full and final discharge. Such a bona fide settlement should also address what happens to the pending complaint, any appeal, costs, late installments, and payments already received. Read the webpage exclusively on settlement of cheque bounce cases for more on our approach to negotiated compromise and compounding in the context of the legal services we provide. BK Singh Advocate can examine the terms on your behalf before you pay so you know whether your payment will get you what you want legally. The settlement amount must be a record driven figure, not one arrived at due to pressure or presumption. Documents to have at hand: Section 138 also mandates that the cheque be issued for the discharge of any debt or other liability that is legally enforceable and lays down statutory requirements with respect to notice and failure to make payment. Documents may also establish that the amount being demanded now is not the correct/outstanding liability as some amount was paid earlier. BK Singh Advocate can analyze the paperwork before the accused person becomes cornered into accepting figures they will be hard pressed to argue against later. Legal guidance will be handy when the compromise negotiation begins to impact upon the existing proceedings. Seek consultation where the complainant is insisting upon the full cheque amount even after large payments made earlier, the accused does not have the ability to pay immediately or both parties are unable to agree as to what amount would be a full and final settlement. Legal advice should also be sought where : BK Singh Advocate can help you analyze both settlement and defence issues before one party enters into a compromise and prejudices their rights. BK Singh Clients who require more extensive representation can also analyze the verified service of complaint along with filing of bail application and defence for Section 138 NI Act. A sensible settlement offer is one that does not amount to the minimum amount. It must be specific enough to dispose of the dispute and be Performable. BK Singh Advocate will therefore initially look at the cheque amount, admitted liability, disputed portions, prior payments and financial position. That allows you to get a realistic starting point for negotiation. If both parties are willing to compromise, BK Singh Advocate can help you review or draft terms of settlement which would include the agreed upon amount, payment terms, confirmation of any prior payments made and how the Section 138 proceeding will be dealt with. Seeking closure of Court. One should also consider closure of Court. If parties arrive at a private settlement out of Court, the accused should not think that a pending complaint goes away by itself. Clients can consult Cheque Bounce Lawyer for help on issues related to settlement, legal notice, complaint filing and defence in cheque bounce cases. BK Singh Advocate can also help you determine if the matter is still ripe for settlement or if contested liability and documentary concerns mean you must adopt a more defence-oriented strategy. Your lawyer cannot promise you that the complainant will agree to settle for a lesser amount. It all depends on willingness to settle, facts and commercial realities. Yes. Providing that the complainant agrees to accept the lower amount as full and final settlement voluntarily. While Section 147 NI Act allows for compounding, Suprme Court authority has read in the necessity of complainant consent. In other words, the accused cannot unilaterally conclude that a lesser amount must lead to termination of complaint. Not normally. Since a lesser amount is only payable upon agreement, such agreement must be voluntary. The Supreme Court has gone so far as to say that courts will not “direct the complainant to consent to compounding” just because repayment/opposition was made by the accused. Ideally, no part payment should be made unless it is documented carefully. Part payment may extinguish the portion of the amount which is actually paid, but does not necessarily indicate that the complainant agreed to allow the drawer to get out of Section 138 proceedings. BK Singh Advocate can review the record of payment and correspondence to assess how part payment may impact parties’ positions. Yes, it is possible. Provided that the complainant voluntarily agrees to accept 7 lakh as amount paid towards full and final satisfaction of the claim against the accused and the criminal complaint is compounded in compliance with law (or otherwise disposed of). Section 63 of Indian Contract Act even contemplates a promisee may “remise performance, in whole or in part” Compromise can still play a role after conviction. The Supreme Court quashed a conviction under Section 138 in 20L5 after parties entered into a compromise “which was held to be voluntary and on which the complaint agreed to accept the amount as full and final.” The mechanism would be different if there is a conviction. Individual circumstances matter. Sure. The offer of installment payment can be made. However, the complainant is under no obligation to accept your terms and can counter offer or reject the proposal. Matters such as payment dates, total amount to be settled and effects of missing an installment should be discussed. BK Singh Advocate can provide a review of the terms before being agreed to. No. While financial hardship such as unemployment, business loss or cash-flow crunch can be the reason for accused to seek compromise, the hard fact is that financial hardship does not obligate the complainant to settle for a lesser amount. Settlement is a two way negotiation. It is advisable to have the compromise in writing. A written compromise helps record all the details such as amount of consideration, payment terms if any, part payment made (if any) and whether the compromise is intended to be a full and final settlement of the dispute. BK Singh Advocate can help review the wording such that none of the parties are later confused as to what sum is left unpaid or what happens to the pending proceedings. It depends on the facts. If the compromise is voluntary, supports compounding and is cleared with the Court, it can be used to defend the continued prosecution. The Supreme Court has affirmed the validity of a compromise in Section 138. Counsel familiar with Section 138 can help assess the complaint, history of payment, underlying liability and stage of Court proceedings prior to launching into negotiations. Cheque bounce settlement is one of the many services BK Singh Advocate can provide to clients in Delhi NCR and outside. Particularly if there is a need to manage both compromise terms and pending NI Act court matter. Cheque bounce case need not necessarily end up with payment of full amount mentioned in the cheque. However the discounted amount should ordinarily be by way of true compromise with the complainant. The accused will not be allowed to make a token payment and say that the matter is compromised. Section 147 treats offences under NI Act as compoundable. The SC has upheld the position that consent of complainant is required. Indian Contract Act law also allows a creditor or promise to sueFor acceptance of any satisfaction less than what is originally due to him if that is done bona fide. So play safe. Differentiate between payment (part) settlement and compromise and final closing of the case. BK Singh Advocate can suggest on the claimed amount, amount already paid, your finances, stage of complaint and the compromise you want to arrive at before the parties enter into any final agreement.Can a Cheque Bounce Case Be Settled Without Paying the Full Amount?
Quick Facts About Cheque Bounce Settlement
Can a Cheque Bounce Case Be Settled for Less Than the Cheque Amount?
What If the Accused Can Pay Only Part of the Amount?
What Documents Should Be Checked Before Negotiating?
When Should You Consult a Cheque Bounce Lawyer?
How Can Cheque Bounce Lawyer Help With a Reduced Settlement?
Frequently Asked Questions
1. Can accused compromise a cheque bounce case by paying lesser than cheque amount?
2. Can court invoke powers to make complainant accept a lower settlement?
3. What if I make a part payment against cheque amount without any settlement deed?
4. Can I compromise a 10 lakh cheque bounce case for 7 lakh
5. Is it possible to settle after the cheque bounce case is convicted?
6. Can I request for payment through installment in cheque bounce case?
7. If I am in financial hardship, does that reduce the amount of the cheque?
8. Should Cheque Bounce be settled through a compromise deed?
9. Can the complainant still continue the case after he accepted the money?
10. Who can help me out with negotiating a cheque bounce settlement in Delhi NCR?
Final Thoughts
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