2017 (10) TMI 218 - SC - Indian Laws

Compounding the offence under Section 138 of NI Act 1881 - compounding on payment of the cheque amount and in the alternative for exemption from personal appearance - Held that - We hold that where the cheque amount with interest and cost as assessed by the Court is paid by a specified date the Court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C. As already observed normal rule for trial of cases under Chapter XVII of the Act is to follow the summary procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) Cr.P.C. with sentence of less than one year will not be adequate having regard to the amount of cheque conduct of the accused and other circumstances. In every complaint under Section 138 of the Act it may be desirable that the complainant gives his bank account number and if possible e-mail ID of the accused. If e-mail ID is available with the Bank where the accused has an account such Bank on being required should furnish such e-mail ID to the payee of the cheque. In every summons issued to the accused it may be indicated that if the accused deposits the specified amount which should be assessed by the Court having regard to the cheque amount and interest/cost by a specified date the accused need not appear unless required and proceedings may be closed subject to any valid objection of the complainant. If the accused complies with such summons and informs the Court and the complainant by e-mail the Court can ascertain the objection if any of the complainant and close the proceedings unless it becomes necessary to proceed with the case. In such a situation the accused s presence can be required unless the presence is otherwise exempted subject to such conditions as may be considered appropriate. The accused who wants to contest the case must be required to disclose specific defence for such contest. It is open to the Court to ask specific questions to the accused at that stage. In case the trial is to proceed it will be open to the Court to explore the possibility of settlement. It will also be open to the Court to consider the provisions of plea bargaining. Subject to this the trial can be on day to day basis and endeavour must be to conclude it within six months. The guilty must be punished at the earliest as per law and the one who obeys the law need not be held up in proceedings for long unnecessarily. It will be open to the High Courts to consider and lay down category of cases where proceedings or part thereof can be conducted online by designated courts or otherwise. The High Courts may also consider issuing any further updated directions for dealing with Section 138 cases in the light of judgments of this Court.

Summary

Issues Involved:
1. Compounding of Offence under Section 138 of the Negotiable Instruments Act, 1881.
2. Exemption from Personal Appearance.
3. Procedural Aspects and Simplification of Trials under Section 138 of the Negotiable Instruments Act.

Issue-wise Detailed Analysis:

1. Compounding of Offence under Section 138 of the Negotiable Instruments Act, 1881:
The appellants sought to compound the offence under Section 138 of the Negotiable Instruments Act on payment of the cheque amount, referencing the Supreme Court's judgment in Damodar S. Prabhu vs. Sayed Babalal H. The High Court rejected this application based on the precedent set in JIK Industries Ltd. vs. Amarlal Jumani, which requires the complainant's consent for compounding. The Supreme Court acknowledged that the offence under Section 138 is primarily a civil wrong with a compensatory objective, emphasizing that compounding should be encouraged at the initial stage but is not barred at a later stage, provided appropriate compensation is agreed upon by the parties or determined by the court. The court clarified that even without the complainant's consent, the court could close proceedings if satisfied that the complainant has been duly compensated.

2. Exemption from Personal Appearance:
The appellants also sought exemption from personal appearance in court. The Supreme Court noted the hardship caused by personal attendance, especially when the accused is located far from the court's jurisdiction. The court highlighted provisions under Sections 205 and 317 Cr.P.C., which allow for the dispensation of personal appearance and conducting trials in the absence of the accused. The court reiterated that Magistrates should consider exercising jurisdiction under Section 205 Cr.P.C. to relieve the accused of hardship without prejudicing prosecution proceedings.

3. Procedural Aspects and Simplification of Trials under Section 138 of the Negotiable Instruments Act:
The Supreme Court discussed the legislative intent behind the 2002 amendment to the Negotiable Instruments Act, which aimed to simplify and expedite the trial process for cases under Section 138. The court outlined that trials under this section should normally be conducted summarily, with the flexibility to deviate as necessary for a speedy trial. The court emphasized the use of affidavits for evidence and the presumption of cheque dishonor based on bank slips. The court also highlighted the necessity for High Courts to issue updated directions for handling Section 138 cases, including the possibility of conducting proceedings online to reduce backlog and expedite justice.

Key Points and Directions:
- The court can close proceedings and discharge the accused if the cheque amount, along with interest and costs, is paid by a specified date.
- Compounding should be encouraged at the initial stage but can also be considered later with appropriate compensation.
- Trials under Section 138 should be summary unless the Magistrate deems a longer sentence necessary.
- Evidence can be given on affidavit, and the presumption of dishonor is based on bank slips.
- High Courts should consider issuing directions for online proceedings to expedite cases under Section 138.
- Summons should indicate that the accused can avoid appearance by paying the specified amount and informing the court and complainant.

The Supreme Court disposed of the appeals, allowing the appellants to move the Trial Court afresh for further orders in light of this judgment.