Important Point
Where in an offence u\s 138 of negotiable instrument Act, matter had been compromised between parties and amount of Rs.45,000/- had been paid by appellant accused towards full and final settlement to respondent-bank towards its dues, appellant was held entitled to acquittal.

Headnote:Negotiable Instruments Act, 1881 – Section 138 – Criminal Procedure Code,1973 – Section 401 r\w 397 – Complaint alleging dishonour of cheque – Appellant member of Ryot Seva Sahakari Bank ltd obtained a loan of Rs. 20,000 from complainant Bank for Business – Non payment of amount by appellant – Issuance of cheque of Rs. 24,000\- by appellant which was dishonored on presentation – Trial Court convicting appellant ordered him to pay sum of Rs. 48,000 as compensation – Appeal – First appellate Court while affirming conviction, reduced amount of compensation – Revision there against – Dismissed – Appeal – Amicable settlement between parties on appellant paying an amount of Rs. 45,000\- towards final settlement of claim of Respondent bank – Plea of appellant that since matter had been amicably settled between parties and amount of Rs. 45,000 had been paid to bank towards “Full and Final settlement” and no further claim having remained, compromises may be recorded - Since matter had been compromised between parties and amount of Rs.45,000/- had been paid by appellant towards full and final settlement to respondent-bank towards its dues, appellant held entitled to acquittal - Order of conviction and sentence recorded by all courts set aside. (Paras 10,17,18,19)
       Criminal Procedure Code, 1973 – Section 320 – Compounding of offence – Whether an offence punishable u\s 138 of Act which is a special law can be compounded? – Held (yes) – Relying upon decision in (1996) 2 SCC 739, held that object of bringing Section 138 in statute book was to inculcate faith in efficacy of banking operations and credibility in transacting business on negotiable instruments - Provision was intended to prevent dishonesty on part of the drawer of negotiable instruments in issuing cheques without sufficient funds or with a view to inducing payee or holder in due course to act upon it - Section 320 seeks to promote efficacy of bank operations and ensure credibility in transacting business through cheques - In such matters, therefore, normally compounding of offences should not be denied.(Para 17)
       Facts of the case :
       Appellant member of Ryot Seva Sahakari Bank ltd herein in the instant case obtained a loan of Rs. 20,000 from complainant Bank for Business. Appellant issued a cheque of Rs. 24,000\- for payment of amount which was dishonored on presentation. Trial Court convicting appellant ordered him to pay sum of Rs. 48,000 as compensation. On appeal thereagainst first appellate Court while affirming conviction, reduced amount of compensation. Revision there against was dismissed.
       Present Appeal has been filed against said order of High Court. Plea of appellant that since matter had been amicably settled between parties and amount of Rs. 45,000 had been paid to bank towards “Full and Final settlement” and no further claim having remained, compromises may be recorded.
       Findings of the Court:
       The Court held that since matter had been compromised between parties and amount of Rs.45,000/- had been paid by appellant towards full and final settlement to respondent-bank towards its dues, appellant was held entitled to acquittal. Order of conviction and sentence recorded by courts below were set aside.
       Result : Appeal allowed.

JUDGMENT

C.K. THAKKER, J.—

1.Delay Condoned. Leave granted.

2.The present appeal is filed against an order passed by the Court of Civil Judge (Jr. Dvn.) and Judicial Magistrate First Class, Ankola on April 12, 2004 in Criminal Case No.73 of 2001, confirmed by the Sessions Judge, Fast Track Court-I, Karwar on March 24, 2005 in Criminal Appeal No.50 of 2004 as also confirmed by the High Court of Karnataka, Bangalore on December 20, 2005 in Criminal Revision Petition No.1003 of 2005.

3.Brief facts of the case are that the appellant herein was a member of Ryot Sewa Sahakari Bank Ltd., Basgod, Taluka Ankola (‘Complainant Bank’ for short). He had obtained a loan of Rs.20,000/- from the Complainant-Bank on April 3, 1998 for business. The amount was not paid by the appellant. The appellant issued a cheque of Rs.24,000/- on October 13, 2000 in favour of the Complainant-Bank and assured the Bank that it would be honoured. But when the cheque was submitted for clearance, it was dishonored and returned to the drawer on December 22, 2000 with endorsement; “Loan account due date is over and account is not in operation”. The complainant, therefore, issued a registered legal notice on December 26, 2000 which was duly served upon the accused-loanee on December 30, 2000. In spite of the notice, no payment was made by the accused and hence a criminal case was filed by the Bank against him under the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the Act’). A summons was issued to the accused for an offence punishable under Section 138 of the Act. He pleaded not guilty to the charge and claimed to be tried.

4.The Trial Court on the basis of evidence adduced by the complainant Bank, held that the accused had issued a cheque of Rs. 24,000/- which was dishonored and even after receipt of legal notice, he failed to pay the amount and thereby he had committed an offence punishable under 138 of Act. The Court, hence, convicted the accused and ordered him to undergo imprisonment for a period of six months. The accused was also ordered to pay a sum of Rs.48,000/- as compensation within one month from the date of the order. The Court ordered that out of the said amount of compensation, Rs.43,000/- should be paid to the complainant towards the compensation and Rs.5,000/- to be appropriated to the State. In default of payment of compensation, the accused was ordered to undergo imprisonment for a period of six months.

5.Being aggrieved by the order of conviction and sentence, the appellant preferred an appeal. The Appellate Court confirmed the order of conviction and sentence recorded by the Trial Court. It, however, reduced the amount of compensation from Rs. 43,000/- to Rs. 30,000/- and fine from Rs. 5,000/- to Rs. 3,000/-. Order of default-sentence was maintained.

6.The aggrieved accused invoked Revisional Jurisdiction of the High Court under Section 401 read with Section 397 of the Code of Criminal Procedure, 1973. The High Court on July 13, 2005, passed an interim order directing the accused to deposit the compensation-amount in the Court. But the accused failed to comply with the said order. When the matter came up for hearing, the High Court, by the impugned order dated December 20, 2005 dismissed the Revision Petition observing that there was no ground to interfere with the order passed by the Trial Court and confirmed by the First Appellate Court. It also observed that the petitioner-accused had not complied with the interim order passed on July 13, 2005. Thus, there was no reason to admit the revision petition and accordingly it was dismissed. The accused has challenged that order in this Court.

7.On November 12, 2007, the matter was placed for admission-hearing. It was stated by the Learned Counsel for the appellant that the appellant intended to pay the amount. Accordingly, notice was issued to the other side. Pursuant to the notice, the respondent-Bank appeared and affidavit is filed by General Manager, Ryot Sewa Sahakari Bank Limited, Bas

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2007 Supreme(SC) 1566

2007(8) Supreme 245Supreme Court of indiaC.K. Thakker & Markandey Katju, JJ.Vinay Devanna Nayak — PetitionerversusRyot Seva Sahakari Bank Ltd. — RespondentAppeal (crl.) 1679 of 2007[Arising out of SLP (Cr.) No. 6908 of 2007]Decided on : 07-12-2007

Important PointWhere in an offence u\s 138 of negotiable instrument Act, matter had been compromised between parties and amount of Rs.45,000/- had been paid by appellant accused towards full and final settlement to respondent-bank towards its dues, appellant was held entitled to acquittal.

Cases Referred (7)

2007(8) Supreme 245
Supreme Court of india
C.K. Thakker & Markandey Katju, JJ.
Vinay Devanna Nayak — Petitioner
versus
Ryot Seva Sahakari Bank Ltd. — Respondent
Appeal (crl.) 1679 of 2007
[Arising out of SLP (Cr.) No. 6908 of 2007]
Decided on : 07-12-2007

Important Point
Where in an offence u\s 138 of negotiable instrument Act, matter had been compromised between parties and amount of Rs.45,000/- had been paid by appellant accused towards full and final settlement to respondent-bank towards its dues, appellant was held entitled to acquittal.