Upgrad LLM

cheque bouncing


where an out of court settlement is reached between the parties and post dated cheques are issued in furtherance of settlement and the matter is disposed of in terms of settlement, whether subsequent dishonour of one of the cheques constitutes "contempt of court"?
 
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Advocate

No, it will not amount to contempt of Court, as out of court
settlement will generally arrived between the parties and upon
a petition filed the parties the court will pass an order stating that
as per the MUTUALLY AGREED terms the parties are withdrawing their
case/claim. Here no where the court directs either party to do or not
to do any thing as per the terms of settlement. In plain words the
court will only show the agreement as a clause to close the case.


The only option is to file a case under negotiable instruments act.

as well as a civil suit for recovery of amounts
 
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n/a

thank you very much for your quick clarification.

 
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advocate/legal consultant

thanks brother for the informaion

 
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lawyer

rightly said by brother sriniwas

 
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Advocate

NO. NI Act is the remedy.

 
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Advocate

I think it will amount to contempt of court.

 
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No, it does not amount to contempt of court.  Contempt of Court is deliberately violating the direction of the court and not implementing the directions of the court.  Consent Order by the party amounts to decree in the eye of law.  In the criminal court proceedings are closed and the accussed is acquitted, the court is seized of the matter and there is no contempt in the criminal proceedings.  In the given situation, the matter is settled out of court and in pursuance of the settlement post dated cheques were given.  It is the settlement arrived between the parties and the same is recognized by the court.  Hence, in the event of failure by one party to perform his part of the obligation in the settlement, gives a fresh cause of action to the other party to approach the competent court of law for his reddressal.  In the given situation, he has option  either to file a suit for recovery of money or lodge a complaint u/s 138 of the Negotiable Instruments Act.  But, he cannot file the application for contempt of court.

 
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Legal/ Advocate

No, it is not meaned as Contempt of Court, as the general practice applies....


Secondly for the dishonoured cq. , it attracts the proceedings U/s 138 of N. I. Act, so kindly proceed with the same.

 
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Advocate

Sec.2(b) of the Contempt of Courts Act,1971 defines "civil contempt" and Sec.2(c) defines "criminal contempt". It has clearly been mentioned therein that "wilful breach of an undertaking given to a court will amount to contempt".I quote a judgment of the Supreme Court over the issue:Rama Narang v/s Ramesh Narang & another reported in 2006(3)PLJR(SC) 227 .So,I am of the view that if the terms of settlement were incorporated in the judgment, breach thereof will lead to contempt proceeding.However, another remedy is not excluded either.


 

 
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