TMI Blog2024 (4) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... t-Complainant who had initiated the proceedings under Section 138 of the Negotiable Instruments Act, 1881, has received his cake then, no useful purpose will be achieved in continuing the criminal proceedings, against the accused-petitioner who has discharged/liquidated his liability. Notably, the object of Section 147 of the Negotiable Instruments Act, 1881, is that in case the accused under the aforesaid enactment remits/discharges or liquidates his liability then such a person can be absolved of the criminal action-prosecution by permitting compounding of offence in proceedings under Section 138 of the Act. Moreover, once the petitioner-accused has discharged/liquidated his liability towards Respondent- Complainant, therefore, the continuance of criminal proceedings will not serve any purpose. The compounding of an offence would enable both the parties to lead life of respect and dignity in the society. Once, no dispute remains between the parties to the lis, then obviously the law cannot be so harsh so as to stand as a wall between the parties notwithstanding the amicable settlement inter se the parties - The power to do complete justice is the very essence of every judicial ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1- Complainant/non-applicant does not intend to pursue the matter/proceedings under Section 138 of the Negotiable Instruments Act and states that he has no objection to the aforesaid application. 3. Moreover, since respondent No.2-State is a formal party-respondent in the instant proceedings, originating under the statute i.e. Negotiable Instruments Act, 1881 [hereinafter referred to as Act ] therefore, the respondent No.2 not file any reply or objection to the said application. The application stands disposed of. 4. In these circumstances, the instant application i.e. Cr.MP(M) No. 628 of 2024, is allowed and the delay of 1 year 7 months and 26 days is condoned. Cr.MP No. 1173 of 2024 5. This is an application by the petitioner-accused [Sunil Kumar] under Section 482 Cr.P.C. praying for quashing the impugned judgment dated 27.11.2018 passed by the Learned Trial Court which was, affirmed by the Learned Appellate Court 08.07.2022, that the matter has been settled with the Respondent No.1-Complainnat [as per Paras No.3 and 5 of application] just to maintain good relations inter se the parties. On listing of the case today, on 8th April, 2024, Mr. Anubhav Chopra, learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who confirms that the matter has been settled and the impugned Judgments may be compounded/quashed. Likewise, the Respondent No.1- Complainant [M/s Anand Automobile, NH-20 Bodh, Tehsil Nurpur, District Kangra] has filed a Cr.MP No.1153 of 2024 confirming the averments made by petitioner-accused in Cr.MP No.1173 of 2024 and stating in Para 3 that the cheque amount has been received by the Respondent No.1- Complainant. In this background, it is prayed that the offence may be compounded and the impugned Judgments may be quashed and set-aside. 10. Heard Mr. Amit Sharma, Learned Counsel for the petitioner, Mr. Anubhav Chopra, Learned Counsel for Respondent No.1 and Mr. Prashant Sen, Learned Deputy Advocate General, for Respondent No.2. 11. In order to appreciate the controversy involved in the instant case, it is relevant to have a recap of the statutory provisions i.e. Sections 138 and 147 of the Negotiable Instruments Act, which read as under:- 138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court, in Meters and Instruments Private Limited and another Versus Kanchan Mehta, (2018) 1 SCC 560 has also held as under:- 6. The object of introducing Section 138 and other provisions of Chapter XVII in the Act in the year 1988 [Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988] was to enhance the acceptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonour of cheque with safeguards to prevent harassment of honest drawers. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to amend the Act was brought in, inter alia, to simplify the procedure to deal with such matters. The amendment includes provision for service of summons by speed post/courier, summary trial and making the offence compoundable. 7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. Dishonour of cheque causes incalculable loss, injury and inconvenience to the payee and credibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osts and interest is paid and if there is no reason to proceed with the punitive aspect. 18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court. 18.3. Though compounding requires consent of both parties, even in absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused. 18.4. Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the court has jurisdiction under Section 357(3) CrPC to award suitable compensation with default sentence under Section 64 IPC and wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies 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. 65. In a recent judgment in M. Abbas Haji v. T.N. Channakeshava, (2019) 9 SCC 606, this Court held : 6. It is urged before us that the High Court overstepped the limits which the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition No. 176956 of 2019 seeking modification of the Order dated 27.09.2019 stating therein that the matter has been compromised between the parties. The appellant as per Settlement Agreement dated 05.09.2019 made payment of entire sum of Rs.3,16,000/- to respondent No. 1-complainant. It has further been stated in the said application that respondent No. 1- complainant on his own after having been received a sum of Rs. 3,16,000/- along with Rs. 50,000/-, as interest, from the appellant, filed an application under Section 147 of the Negotiable Instruments Act, 1881, for compounding of offence before the Chief Judicial Magistrate, 1st Class, Durg, Chhattisgarh. 8. It has been averred in the above-mentioned application that when the Order dated 27.09.2019 was passed by this Court, the appellant had already paid Rs.3,16,000/- to respondent No. 1-complainant, vide Settlement Agreement dated 05.09.2019, along with interest amounting to Rs.50,000/- and respondent No. 1 is completely satisfied with the amount received, which he has received wilfully, and he does not wish to continue the proceedings further. 9. Respondent No. 1-complainant has also filed an affidavit dated 08.11.2019 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State being subsumed in the victim alone moving a court in cheque bouncing cases, as has been seen by us in the analysis made hereinabove of Chapter XVII of the Negotiable Instruments Act. 54. In Goaplast (P) Ltd. v. Chico Ursula D Souza, the object sought to be achieved by Section 138 is succinctly set out in paragraph 3 thereof: 3. The learned counsel for the appellant has submitted that mere writing of letter to the bank stopping payment of the post-dated cheques does not take the case out of the purview of the Act. He has invited our attention to the object behind the provision contained in Chapter XVII of the Act. For appreciating the issue involved in the present case, it is necessary to refer to the object behind introduction of Chapter XVII containing Sections 138 to 142. This chapter was introduced in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1988) with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations. With the policy of liberalisation adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purview of Section 138 of the Act, it will amount to allowing the party to take advantage of his own wrong. 55. In Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., a Division Bench of this Court referred to the object of Section 138 thus: 16. Section 138 of the Act was inserted by the Banking, Public Financial Institutions and Negotiable Instruments Law (Amendment) Act, 1988 (Act 66 of 1988) to regulate financial promises in growing business, trade, commerce and industrial activities of the country and the strict liability to promote greater vigilance in financial matters. The incorporation of the provision is designed to safeguard the faith of the creditor in the drawer of the cheque, which is essential to the economic life of a developing country like India. The provision has been introduced with a view to curb cases of issuing cheques indiscriminately by making stringent provisions and safeguarding interest of creditors. 17. As observed by this Court in Electronics Trade Technology Development Corpn. Ltd. v. Indian Technologists Engineers (Electronics) (P) Ltd. [(1996) 2 SCC 739 : 1996 SCC (Cri) 454] the object of bringing Section 138 in the statute book is to inculcate fait ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 Cr.PC which states that No offence shall be compounded except as provided by this Section . A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) CrPC, especially keeping in mind that Section 147 carries a non obstante clause. xxx xxx xxx 15. The compounding of the offence at later stages of litigation in cheque bouncing cases has also been held to be permissible in a recent decision of this Court, reported as K.M. Ibrahim v. K.P. Mohammed wherein Kabir, J. has noted as follows:- 13. As far as the non obstante clause included in Section 147 of the 1881 Act is concerned, the 1881 Act being a special statute, the provisions of Section 147 will have an overriding effect over the provisions of the Code relating to comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conviction on the other, we will find that the bulk was settled and only a miniscule number continued. 18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. 21. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:- THE GUIDELINES (i) In the circumstances, it is proposed as follows: (a) That directions can be given that the Writ of Summons be suitably modified m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a misdemeanour); i.e. to bargain, for value, to abstain from prosecuting the offender who has committed a crime. You commit this offence if you promise a thief not to prosecute him if only he will return the goods he stole from you; but you may lawfully take them back if you make no such promise. You may show mercy, but must not sell mercy. This offence of compounding is committed by the bare act of agreement; even though the compounder afterwards breaks his agreement and prosecutes the criminal. And inasmuch as the law permits not merely the person injured by a crime, but also all other members of the community, to prosecute, it is criminal for anyone to make such a composition; even though he suffered no injury and indeed has no concern with the crime. 79. Russell on Crime (12th Edn.) also describes: Agreements not to prosecute or to stifle a prosecution for a criminal offence are in certain cases criminal. (Ch. 22 Compounding Offences, p. 339.) 80. Later on compounding was permitted in certain categories of cases where the rights of the public in general are not affected but in all cases such compounding is permissible with the consent of the injured party. 81. In our country a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code, 1860 or other criminal offences. An offence under Section 138 of the Negotiable Instruments Act, 1881, is almost in the nature of a civil wrong which has been given criminal overtones. 60. In R. Vijayan v. Baby, (2012) 1 SCC 260, this Court referred to the provisions of Chapter XVII of the Negotiable Instruments Act, observing that Chapter XVII is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. The Court held: 16. We propose to address an aspect of the cases under Section 138 of the Act, which is not dealt with in Damodar S. Prabhu. It is sometimes said that cases arising under Section 138 of the Act are really civil cases masquerading as criminal cases. The avowed object of Chapter XVII of the Act is to encourage the culture of use of cheques and enhance the credibility of the instrument . In effect, its object appears to be both punitive as also compensatory and restitutive, in regard to cheque dishonour cases. Chapter XVII of the Act is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. It provides a single forum and single proceeding, for enforcement of criminal liability (for dishonouring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary. (emphasis supplied) 61. In Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129, a three-Judge Bench of this Court answered the question as to whether the territorial jurisdiction for filing of cheque dishonour complaints is restricted to the court within whose territorial jurisdiction the offence is committed, which is the location where the cheque is dishonoured, i.e., returned unpaid by the bank on which it is drawn. This judgment has been legislatively overruled by Section 142(2) of the Negotiable Instruments Act set out hereinabove. However, Shri Mehta relied upon paragraphs 15.2 and 17 of the judgment of Vikramjit Sen, J., which states as follows: 15.2. We have undertaken this succinct study mindful of the fact that Parliamentary debates have a limited part to play in inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the drawee bank returns the cheque unpaid. The focus in this case was on the court within whose jurisdiction the offence under Section 138 can be said to have taken place. This case, therefore, has no direct relevance to the point that has been urged before us. 62. In Lafarge Aggregates Concrete India (P) Ltd. v. Sukarsh Azad, (2014) 13 SCC 779, this Court, continuing the trend of the earlier judgments in describing the hybrid nature of these provisions, held: 6. The respondents have agreed to pay the said amount but the appellant has refused to accept the payment and insisted that the appeal against rejection of the recall application should be allowed by this Court. The counsel for the appellant submitted that merely because the accused has offered to make the payment at a later stage, the same cannot compel the complainant appellant to accept it and the complainant appellant would be justified in pursuing the complaint which was lodged under the Negotiable Instruments Act, 1881. In support of his submission, the counsel for the appellant also relied on Rajneesh Aggarwal v. Amit J. Bhalla. 7. However, we do not feel persuaded to accept this submission as the appellant has to appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, of the facts of the instant case and the statutory provisions and the mandate of the Hon ble Supreme Court, in cases of Kanchan Mehta, Madan Tiwari and P. Mohanraj [supra], once the proceedings under Section 138 have been held to be proceedings in the form of a civil sheep in a criminal wolf s clothing, therefore, once the petitioner-accused has amicably decided to settle/liquidate/discharge his liability, though, the transaction-proceedings have a tinge of criminal liability, then, on settling the entire liability in view of Section 147 of the Negotiable Instruments Act, the compounding of offences, on discharge of liability, appears to be genuine, which is certainly is a step towards securing the ends of justice. It is relevant to observe that once the Respondent-Complainant who had initiated the proceedings under Section 138 of the Negotiable Instruments Act, 1881, has received his cake then, no useful purpose will be achieved in continuing the criminal proceedings, against the accused-petitioner who has discharged/liquidated his liability. 14. It is not in dispute that the cheque dated 01.02.2016, was issued by petitioner [Sunil Kumar], which was presented to the Bank and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Once, no dispute remains between the parties to the lis, then obviously the law cannot be so harsh so as to stand as a wall between the parties notwithstanding the amicable settlement inter se the parties. Continuation of criminal proceedings in such circumstances, would only cause an irreparable harassment and hardship and may even tarnish and spoil the reputation of the petitioner-accused. The Court proceedings cannot be permitted to de-generate into a weapon of harassment and persecution. The power to do complete justice is the very essence of every judicial justice dispensation system. It cannot be diluted by distorted perceptions and is not a slave to anything, except to the caution and circumspection, the standards of which the Court sets before it, in exercise of such plenary and unfettered power inherently vested in it while donning the cloak of compassion to achieve the ends of justice. 19. The compromise, in a modern society, is the sine qua non of harmony and orderly behavior. It is the soul of justice and if the power under Section 482 of the Cr.P.C or power under other statutes, including Section 147 of the Negotiable Instruments Act, 1881, is used to enhance such a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us M/s Anand Automobile, NH20 Bodh, Teshil Nurpur (Kangra) (HP) on 08.07.2022 [Annexure P-2], convicting and sentencing the petitioneraccused [Sunil Kumar] herein, are quashed-set aside and rendered inoperative, for all intents and purposes, so far it relates to the cheque in dispute, in the instant case. Resultantly, the petitioner-accused shall stand acquitted of alleged offence under Section 138 of the Negotiable Instruments Act, 1881. 23. Since, the petitioner-accused [Sunil Kumar] is suffering custody in Sub Jail, Nurpur, District Kangra, [H.P.]; therefore, the Respondents-State Authorities are directed to release the petitioner-accused [Sunil Kumar], if not required in any other case. Release warrants be prepared and consequential action be taken expeditiously in accordance with law. 24. Petitioner is permitted to produce/use copy of this order, downloaded from the web-page of the High Court of Himachal Pradesh, before the authorities concerned, and the said authorities shall not insist for production of a certified copy, but if required, may verify passing of order from Website of the High Court. In the aforesaid terms, the petition stands disposed of accordingly. Pending mi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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