Mediation in a cheque bounce case

Mediation in a cheque bounce case

Date : 29 Jan, 2020

Post By Advocate Akash B. Shetty


Mediation is a negotiation facilitated by a third party, which is a neutral party. It is a procedure in which parties discuss their disputes and with the assistance of a trained impartial third person, reach an amicable solution. It is an informal, yet meticulous method and also is a structured process to assist the parties in reaching an agreeable solution. Parties can reach a solution cordially without approaching the court because it is an alternative dispute resolution mechanism. Pursuing a lawsuit can be costly so through a trained mediator, a dispute can be resolved. Mediation is built on the interaction between the parties and interaction leads to an amicable solution.


AFFORDABILITY- The charge of mediation is less than the average cost in time and money for the litigation of a dispute. The lawyer's hourly cost is generally higher than the hourly cost for a mediator. Also, mediation depends on the parties, the earlier they reach a solution, the more affordable it becomes.

CONFIDENTIALITY- Confidentiality is a crucial element of successful mediation. In order for the mediator, and the clients to understand the central issues, the pressure points, the motivations and the risks of litigation, the participants must be assured the discussions cannot and will not be disclosed to others so they can talk openly.

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IMPARTIAL, NEUTRAL, BALANCED- A mediator has a responsibility to be unbiased and neutral towards its clients thereby making mediation an impartial procedure. The mediator's role is to make sure that parties reach agreements in a voluntarily and informed manner, and not as a result of coercion or compulsion.

VOLUNTARY- In mediation, unlike in a lawsuit, the parties control the process because it is done with the consent of both the parties. This means that the parties have a much greater say in mediation and greater control over the outcome. 


Section 138 of the Negotiable Instrument Act is a penal provision wherein a person draws a cheque from a bank account maintained by him. The cheque is drawn for the payment, to be made to another person in discharge of a debt and that cheque is returned unpaid by the bank on the ground of insufficiency of money.

Nothing which is mentioned under Section 138 shall apply, unless-

- The cheque is presented to the bank within the period of its validity or within a period of six months from the date on which it is drawn, whichever is earlier;

 - The payee of the cheque, as the case may be, makes a demand for the payment of the mentioned amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

 - The drawer of such cheque fails to make the payment of the said amount of money to the holder of cheque, within fifteen days of the receipt of the said notice.


Delhi High Court has held that a cheque bounce case can be settled in mediation which can be proved through a recent judgement of Dayawati Vs. Yogesh Kumar Gosain (2017), where the Delhi High Court has held that an illegal compoundable offence as defined under section 138 of Negotiable Instruments can be referred to alternative dispute settlement methods like mediation, conciliation, arbitration. 


Once a complaint is received under Section 138 of the Negotiable Instrument Act, 1881, the Magistrate, it is satisfied that there exists an element of outside court settlement, shall inquire from the parties about their readiness towards a harmonious settlement.

The interested parties should be well-versed by the magistrate about the various settlement mechanisms available which are arbitration, Mediation as well as conciliation.

Once the parties choose a suitable mechanism to resolve their conflict, the Court shall refer the parties to such forum while stipulating the prescribed time period, within which the matter should be settled (ideally a period of six weeks) and the next date of hearing in order to monitor the progress and outcome of such mediation.

If the parties seek a settlement through mediation, the Court should list the matter before the concerned mediation centre or mediator on a fixed date directing the presentation of the parties before the mediator on the said date.

Once the parties enter into mediation, it is the responsibility of the mediator and the parties to enter into a healthy discussion and reach an amicable solution.


Criminal cases such as offences which arise from financial, partnership or commercial transaction with a civil background can be settled through an alternate dispute resolution mechanism. The court adopts a positive approach toward such settlement and promotes the settlement where there is an element of settlement through such processes. Settlements through such alternate procedures are effective, speedy, convenient and inexpensive and resolve disputes with dignity, mutuality, respect, and civility.

The author of this blog is Akash B Shetty having an experience of 6+ years in handling Recovery related matters from his experience he wants to share this beneficial information for the individuals having any issues with respect to money recovery related matters.

How can Lawtendo help?

Be it drafting of the cheque bounce notice to proceeding with litigation, or the statement of counterclaims/reply, Lawtendo provides at your fingertips an extensive list of experienced lawyers. So without wasting time and looking around, the clients can approach Lawtendo and contact the lawyer of their choice.

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