Compounding Cheque Bounce Cases: Guidelines

Justice K.G. Balakrishnan
Supreme Court of India

The Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. has laid down guidelines for Courts while dealing with compounding offences under the Negotiable Instruments Act. The relevant extracts from the judgment are reproduced hereinbelow;

15. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:

THE GUIDELINES

(i) In the circumstances, it is proposed as follows: 

(a) That directions can be given that the Writ of Summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.

(b) 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 stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the Court deems fit.

(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.

(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.

Let it also be clarified that any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate’s Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority.

16. We are also in agreement with 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. For instance, in the same transaction pertaining to a loan taken on an installment basis to be repaid in equated monthly installments, several cheques are taken which are dated for each monthly installment and upon the dishonor of each of such cheques, different complaints are being filed in different courts which may also have jurisdiction in relation to the complaint. In light of this submission, 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.

17. 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 Law relating to Wills

'Will' as defined under Section 2(h) of the Indian Succession Act means 'the legal declaration of the testator with respect to his property which he desires to be carried into effect after his death'. The essential characteristic of a will, as is well known, is that it is a mere declaration of an intention so long as the testator is alive, a declaration which may be revoked or varied by the testator during his lifetime; it is a disposition that requires the testator's death for its consummation and is but ambulatory or without fixed effect until the happening of this event. The document is a will if it contains specific words of bequest to come into effect after the death of the testator.

A will is a solemn document. By it, a dead man entrusts to the living to carry out his wishes and since it is impossible that he can be called either to admit or deny his signatures or to explain the circumstances in which it was executed, duty of care is cast on the shoulders of the court while considering a probate case.

The rules governing the propounding of a will are two. First, the onus probandi lies in every case upon the party propounding the will and he must satisfy the conscience of the Court that the instrument so propounded is the last will of the testator. Second, if a party actively participates in the execution of a will under which he takes a benefit, it is a circumstance to excite the suspicion of the Court and calls upon the court to be vigilant and zealous in examining the evidence on record.

The strict meaning of the term 'onus probandi' is this, that if no evidence is given by the party on whom the burden is cast, the issue must be found against him. In all cases the onus is imposed on the party propounding the will. It is in general discharge by proof of capacity and the fact of execution from which the knowledge of and assent to the contents of the instrument are assumed.

The nature of proof required to prove a will is not different from those required to prove other documents except the requirement of attestation prescribed under Section 63 of the Indian Succession Act. The proof is to be tested on the usual satisfaction of a prudent mind. What distinguishes a will from other document is that the testator would not be available to testify the same as his last will. This introduces an element of solemnity in the decision. Even then the Court has to proceed with the enquiry in the same manner as is done in respect of any other document. The propounder is called upon to show by satisfactory evidence that (1) the will was signed by the testator in the presence of two attesting witnesses; (2) at the relevant time he was in sound and disposing state of mind; (3) he understood the nature and effect i.e., the content of the disposition; (4) he put the signature to the document of his own free will. The onus of the propounder can be said to be discharged on proof of the above essential facts.

However, in a case surrounded by suspicious circumstances viz.: the disposition may appear to be unnatural, improbable or unfair in the light of the relevant circumstances; or there may be indications that the disposition was not the result of the testator's free will and mind, such suspicious circumstances make the initial onus very heavy; and unless satisfactorily discharged, the Court would be reluctant to treat the document as the last will of the testator. Where the propounder takes a prominent part in the execution of the will conferring benefit upon him, that is a suspicious circumstance attending the execution of the will; the propounder is required to remove the doubt by clear and satisfactory evidence. In other words the propounder must satisfy the conscience of the Court that the document is the last will and testament of the testator.

Where the caveator alleges undue influence, fraud and coercion, the onus is on him to prove the same. Even if there is no such plea but the circumstances give rise to doubts, it is for the propounder to satisfy the conscience of the Court. If the propounder is able to satisfy the conscience of the Court, the Court shall grant the probate, even if the will cuts off, wholly or in part, near relations. It is the will of the testator that is reflected in the will. Being the testator's own property, he has the liberty to deal with it absolutely. It is not for the Court to find out justification or equity or otherwise in the action of the testator. It is not for the Court to make it fair or to sermonize. It is not for the Court to refuse the grant on account of the fact that the disposition is not just and fair or is unnatural or improbable when the conscience of the Court is clear about the proof of the execution of the will on the face of the evidence, satisfactorily sufficient, to remove the suspicious circumstances.

As the wills are too frequently made by the sick and dying, the degree of understanding and memory which the law requires is such as may be reasonably expected from persons in that condition. therefore, it is wrong to suppose that those qualities of mind should be possessed by the testator in the highest degree, position or to the same extent as before the illness in order to enable him to validly make his will. Section 59 of the Indian Succession Act requires that the testator should have a sound mind. The sound mind referred to does not mean that the testator should have his mental faculty in their fullest vigour, but means that he should have the capacity to understand the nature of his property; memory to remember the relations and persons normally having claims on his bounty and has also a judgment. As observed by their Lordships of Privy Council in the decision reported as Judah v. Isolyne MANU/PR/0028/1945, the fact that the testator was unwell when he executed the will is a long way from saying that he had no testamentary capacity. The testator does not have to be found in perfect state of health to have his will declared valid. It is sufficient to prove that he was able to outline the manner in which his estate was to be disposed of.

The general principles governing the presumption of due execution and attestation are, if a will appears on the face of it to have been duly executed and attested in accordance with the requirements of the Act, the maxim 'omnia presumuntur rite esse acta' applies, unless it is clearly proved that the will in fact, was not duly executed. The Court of probate has long being accustomed to give great weight to the presumption of due execution arising from the regularity ex facie of the testamentary paper produced where no suspicion of fraud has occurred.

Where once it has been proved that a will has been executed by a person of competent understanding, the burden of proving that it was executed under undue influence is on the party who alleges it. The Privy Council laid it down in the decision reported as Mst. Gomtibai v. Kanchhedilal MANU/PR/0018/1949 that undue influence in order to invalidate a will must amount to coercion or fraud. Its extents must be established and it must also appear that it was actually exercised on the testator.

The burden of proving undue influence is not discharge by merely establishing that the person had power unduly to overbear the will of the testator. It must be shown that in any particular case that power was, in fact, exercised and that it was by means of exercise of that power that the will was obtained. This was observed by the Calcutta High Court in the decision reported as Chandra Majumdar v. Akhil Chandra Majumdar MANU/WB/0150/1960 : AIR1960Cal551 . Relying upon the decision of the Hon'ble Supreme Court in the decision reported as Naresh Charan Das Gupta v. Paresh Charan Das Gupta and Anr. MANU/SC/0113/1954 : [1955]1ITR1035(SC) it was observed that it is elementary that law does not regard or charactize every interest which is brought to bear upon a testator as undue. It is open to a person to plead his case before the testator and to persuade him to make a disposition in his favor and if the testator retains his mental capacity and there is no element of fraud or coercion, the will cannot be attacked on the ground of undue influence. Not all importunities are undue influence. While making said observation, the Hon'ble Supreme Court in Naresh Charan Das Gupta's case (supra) quoted the observation of Lord Penzance in the decision reported as Hall v. Hall 1868 (1) P & D 481 "but all influences are not unlawful. Persuasion, appeals to the affections or ties of kindred, to a sentiment of gratitude for past services, or pity for future destitution, or the like - these are all legitimate and may be fairly pressed on a testator. On the other hand, pressure of whatever character, whether acting on the fears or the hopes, if so exerted as to overpower the volition without convincing the judgment, is a species of restraint under which no valid will can be made.... In a word, a testator may be led, but not driven; and his will must be the offspring of his own volition, and not the record of some one else's".

The golden rule in interpreting a will is to give effect to the testator's intention as ascertained from the language, which he has used. The overriding duty of a Court is to construe the language which the testator has in fact employed giving due weight to all the words and rejecting none to which a meaning can reasonably be assigned. The Court is entitled to put itself into the testator's arm chair to construe a will and to form an opinion apart from the decided cases and then, to see whether those decisions require any modification of that opinion and not to beckon by considering as to how far the will in question resemble other will upon which the decisions have been given. The proposition that the will has to be read as a whole cannot be disputed. Whether there is a will on the basis of the document, the probate Court certainly will not proceed to consider as to whether or not the disposition of the property was good or bad. The primary duty of the probate Court is to see first whether prima facie, the document constituted a will.

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