An Economic Analysis of Check Bounce Cases : In India Check Bounce | 页面 11

Suppose the Plaintiff is certain about his victory, then after 3 years he’ll get back Rs 2,00,000/-
along with another Rs 2,00,000/- as compensation (as the plaintiff gets double the amount as com-
pensation, in case of dishonour under Section 138 of Negotiable Instrument Act) and hence the sur-
plus of Defendant reduces to +2 only whereas the Plaintiff’s surplus increases to +10. But in case
where the plaintiff looses the case, which also has some certainty in it, the defendant increases to
+8, whereas the plaintiff gets a reduction in the same surplus to +2.
Applying the certainty principle in mind, we find that both the parties, applying a traditional game
theory situation would end up accepting the Arbitration amount such that Plaintiff is at although a
big loss but in the end receives a certain amount in his hand, whereas the same becomes a dominant
strategy of the Defendant as discussed before.
Hence law must correct such outcome where the Plaintiff suffers a huge loss, through game theory
we came to know the following loophole in the court process:
1. Time consuming process
2. Uncertainty of the result
3.
Arbitration Certainty
4. Depletion of surplus by Lawyer’s fees
All the above 4 externalities give incentives for the offender to commit check bounce, and in case
of a company which already has well skilled and trained lawyers, a small or middle class person can
never get his full money back, he’ll too end up in the trap of Arbitration, to settle for an illegitimate
amount and the same would relieve the company of its burden from the litigation at a low cost.
Hence the legislators must look at the above loopholes, as we find the reasons as to why so much of
the Section 138 cases are pending in the court of law, and the main reasons as to why so many cases
are pending and not get easily disposed off.