Kathmandu. The Supreme Court (SC) has ruled that the person issuing the cheque in a case related to cheque bounce should pay the amount mentioned in the cheque along with the interest to the victim.

A division bench of Justices Bal Krishna Dhakal and Kumar Regmi issued the verdict overturning the Patan High Court’s verdict in a case of disrespect of cheque against Shakuntala Khadka.

This is the full text of the judgment issued on May 14, 2008. The case had reached the Supreme Court through the Kathmandu District Court, Patan High Court.

The Supreme Court has interpreted Section 107 (a) of the Exchange Instruments Act, 2034 (2034) and said that the cheque holder can recover the amount mentioned in the cheque if the cheque is dishonored due to lack of sufficient money in the account.

Section 107 (a) of the Letters of Exchange Act, 2034 states, “If any person knowingly withdraws a cheque and transfers it to someone knowing that he does not have a deposit in the bank or that the deposit is not sufficient and dishonours the cheque from the bank due to lack of sufficient deposit while presenting the cheque so transferred to the concerned bank for payment, the person cutting the cheque shall be punished with imprisonment for a term which may extend to three months or a fine not exceeding Rs 3,000 or both.” There is a legal provision for this.

The verdict states that the case of dishonour of cheque should not be limited to only fine or punishment and that the financial compensation actually suffered by the victim should also be ensured. According to the court, the person cutting the cheque cannot be exempted from legal liability if the cheque is issued despite knowing that there is no money in the account.

In this case, defendant Sangita Thapa had dishonoured a cheque of Rs 9 lakh issued to plaintiff Shakuntala Khadka. Earlier, the Patan High Court had concluded that the victim could not pay the cheque amount. However, the Supreme Court overturned the decision, saying it was not in line with the law.

The court further strengthened the rights of the cheque holders, explaining that both the amount and interest should be recovered from the victim in case of non-payment of the cheque. According to the judgment, the plaintiff has been ordered to pay the amount of Rs. 9 lakhs in cheque from the defendant and 10 percent of the interest charged on the said amount as per law.