IMPORTANT POINT
Once a person is allowed to compound a case as provided for under Section 147 of the NI Act, the conviction under Section 138 of the said Act should also be set aside.

JUDGMENT

Altamas Kabir, J.—

1. Delay condoned.

2. Leave granted.

3. The appellant issued a cheque to the first respondent for an amount of Rs.95,000/- in discharge of a legally enforceable debt. However, when the cheque was presented by the first respondent to his bank, the same was dishonoured on account of insufficiency of funds in the account of the appellant. The respondent thereupon issued statutory notice to the appellant within the prescribed time limit informing the appellant about the dishonor of the cheque and calling upon him to pay the amount due. Since the appellant failed to pay the amount in time, the respondent filed a complaint before the Chief Judicial Magistrate, Kasargode. Considering the evidence on record, the Trial Court found the accused guilty of the offence with which he had been charged and sentenced him to undergo rigorous imprisonment for a period of one year and to pay a fine of Rs.1,05,000/-. In default of payment of fine, it was ordered that the appellant would undergo rigorous imprisonment for a further period of three months. If, however, the fine was realized, directions were given that a sum of Rs.1,00,000/- should be given to the respondent by way of compensation.

4. Aggrieved by the said judgment, the appellant filed Criminal Appeal No.74 of 2003. While affirming the conviction, the Appellate Court reduced the sentence to a period of one month and a fine of Rs.95,000/-. In default of said payment, the appellant was directed to undergo imprisonment for a further period of two months.

5. The said order was challenged before the High Court, which decided the matter in the light of Section 357(3) Cr.P.C. The High Court dismissed the revision against which the present appeal has been filed.

6. At the very initial stage of hearing, a question was raised on behalf of the appellant as to whether an offence under Section 138 of the Negotiable Instruments Act, 1881, could be compounded under Section 147 of the said Act read with Section 320 Cr.P.C.

7. Appearing for the appellant, Mr. Mukul Rohtagi, learned Senior Advocate, contended that since a specific power had been given to the parties to a proceeding under the Negotiable Instruments Act under Section 147 to compound the offence, there could be no reason as to why the same cannot be permitted even after conviction, which had been affirmed upto the High Court. It was urged that in order to facilitate settlement of disputes, the legislature thought it fit to insert Section 147 by Amending Act 55 of 2002. Such amendment came into effect from 6th February, 2003, and provided that notwithstanding anything contained in the Code of Criminal Procedure, 1973, every offence punishable under the Act would be compoundable. Mr. Rohtagi urged that in view of the non-obstante clause, the provisions of Section 147 were given an overriding effect over the Code and in view of the clear mandate given to the parties to compound an offence under the Act, reference to Section 320 Cr.P.C. can be made for purposes of comparison only in order to understand the scope of Section 147 of the Negotiable Instruments Act. Mr. Rohtagi submitted that the said position had been accepted by this Court in various decisions, such as in the case of O.P. Dholakia vs. State of Haryana & Anr.1 [(2000) 1 SCC 762], wherein it was held that since the petitioner had already entered into a compromise with the complainant and the complainant had appeared through counsel and stated that the entire money had been received by him and he had no objection if the conviction already recorded under Section 138 of the Negotiable Instruments Act is set aside, the Hon’ble Judges thought it appropriate to grant permission, in the peculiar facts and circumstances of the case, to compound the offence. While doing so, this Court also indicated that necessarily the conviction and sentence under Section 138 of the Act stood annulled.

7A. The said view has been consistently followed in the case of (1) Anil Kum