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SUPREME COURT OF INDIA
A.S. BOPANNA, SUDHANSHU DHULIA, JJ.
Raj Reddy Kallem – Appellant
Versus
The State of Haryana and Another – Respondents
Criminal Appeal No. 2210 of 2024 (Arising Out of SLP (Crl.) No. 629 of 2023)
Decided On : 08-04-2024
Negotiable Instruments Act, 1881 – Sections 138 and 147 – Indian Penal Code, 1860 – Sections 406, 420 read with 120B – Criminal Procedure Code, 1973 – Section 320 – Dishonour of cheque – Compounding of offence – Settlement between parties – As per Section 147 of NI Act, all offences punishable under Negotiable Instruments Act are compoundable – However, unlike Section 320 of Cr.P.C. NI Act does not elaborate upon manner in which offences should be compounded – In cases of Section 138 of NI Act, accused must try for compounding at initial stages instead of later stage, however, there is no bar to seek compounding of offence at later stages of criminal proceedings including after conviction – In case at hand, initially, both sides agreed to compound offence at appellate stage but appellant could not pay amount within time stipulated in agreement and complainant now has shown her unwillingness towards compounding of offence, despite receiving entire amount – Consent is not mandatory in compounding of offences under Section 138 of NI Act – As far as FIR case under Sections 406, 420, 120B of IPC against appellant is concerned, no merit in allegations that appellant from very beginning had intention of cheating complainant – Transaction between parties was purely civil in nature which does not attract criminal law in any way – Even though complainant is unwilling to compound case but, considering totality of facts and circumstances of present case, these proceedings must come to an end – All criminal proceedings qua appellant quashed – In order to do complete justice, in exercise of powers under Article 142 of Constitution of India, all pending criminal appeals against appellant quashed and conviction and sentence awarded to appellant by trial court set aside. (Paras 11, 12, 13, 14 and 15)
Facts of the case:
In NI Act case, trial court convicted appellant under Section 138 of NI Act and sentenced him to 2 years of rigorous imprisonment along with direction to pay amount of cheques. In the appeal filed by appellant before Additional Sessions Judge, both sides made an effort to settle dispute and consequently matter was placed before Lok Adalat, where after negotiations, parties reached a settlement. Consequently, Additional Session Judge, Pre-Lok Adalat, Ambala passed settlement order dated 05.12.2015 where appellant agreed to pay back the entire amount of Rs. 1.55 Crore, which was to be paid within a period of about 16 months. Once entire amount was paid, entire proceedings under Section 138 of NI Act as well as offences under Sections 406, 420 read with 120B of IPC arising out of the FIR had to be compounded.
Findings of Court:
Trial court directed to hand over Demand Drafts totaling amount of Rs. 30 lacs to complainant which were deposited in trial court in pursuance of this Court's orders, if not handed-over till now.
Result : Appeal allowed.
ORDER :
1. Leave granted.
2. The brief facts leading to this appeal are that in the year 2012 Respondent No. 2-complainant placed a purchase order for the supply of “Promotec Fiber Laser Cutting Machine” to the company (M/s Farmax) of the appellant. For the said purchase, an advance amount of Rs. 1,55,00,000 was paid to the company of the appellant. All the same, for some reasons, M/s Farmax failed to procure and supply this machine to respondent No. 2-complainant. Thereafter, the appellant issued 5 cheques to the complainant towards return of the advance money. Admittedly, some of these cheques were dishonoured and in Nov-Dec 2013 the complainant initiated proceedings under section 138 of the Negotiable Instruments Act (hereinafter referred to as “NI Act”). Additionally, in January 2014 complainant filed a complaint under Section 156(3) of Criminal Procedure Code (hereinafter referred to as ‘Cr.P.C.’) which led to an FIR No. 35 of 2014 at Police Station Mahesh Nagar (Ambala) under Sections 406, 420 and 120B of Indian Penal Code (hereinafter referred to as ‘IPC’) against the appellant, wherein it was said that the appellant had wrongfully retained the hard-earned money of the complainant and had cheated her. The charge sheet dated 21.07.2014 under Sections 406, 420 r/w 120B of IPC was filed against the appellant and trial commenced in the said FIR case.
3. In NI Act case, the trial court vide order dated 25.05.2015/29.05.2015 convicted the appellant under Section 138 of the NI Act and sentenced him to 2 years of rigorous imprisonment along with direction to pay the amount of cheques. In the appeal filed by appellant before the Additional Sessions Judge, both sides made an effort to settle the dispute and consequently the matter was placed before the Lok Adalat, where after negotiations, parties reached a settlement. Consequently, the Additional Session Judge, Pre-Lok Adalat, Amabala passed the settlement order dated 05.12.2015 where the appellant agreed to pay back the entire amount of Rs. 1.55 crore, which was to be paid within a period of about 16 months. Once the entire amount was paid, the entire proceedings under Section 138 of NI Act as well as offences under Section 406, 420 read with 120B of IPC arising out of the FIR had to be compounded. This was also mentioned in the settlement order dated 05.12.2015, the relevant portion of the said order is reproduced below:
However, the appellant could not discharge his liability in terms of the settlement and the Additional Sessions Judge passed an order dated 11.07.2016 holding that the settlement dated 05.12.2015 stood frustrated.
4. During 2016-2020, appellant approached various courts including this Court seeking an extension of time to pay back the amount and meanwhile a substantial amount has been paid to the complainant. Finally, this matter came before this Court in SLP (Crl) No. 10560 of 2019 filed by the appellant’s wife and this court vide order dated 29.11.2019 passed an order directing the appellant’s wife to deposit Rs. 20 lacs before the trial court within three weeks as only Rs. 20 lacs was the outstanding amount out of the total amount of Rs. 1.55 crore at that relevant time. Appellant’s wife failed to comply with this Court’s order dated 29.11.2019 and that SLP was dismissed vide order dated 14.02.2020.
5. Thereafter, the appellant approached the trial court and presented a Demand Draft dated 12.02.2020 of Rs. 20 lacs in favour of the complainant as repayment towards the remaining amount of Rs. 20 lacs. In this application, the appellant prayed that criminal proceedings pending against the appellant, initiated on the instance of the complainant, should either be compounded or quashed. However,
Dishonour of cheque – Compounding of offence – Consent is not mandatory in compounding of offences under Section 138 of NI Act.
The court held that a settlement payment can constitute compounding of an offence under Section 138 of the N.I. Act, allowing for the quashing of the complaint even without the complainant's consent.
The main legal point established in the judgment is that in cases of dishonour of cheques, the compensatory aspect of the remedy should be given priority over the punitive aspect. The court also emph....
(1) Offence of dishonour of cheque is fully compoundable.(2) Generally, powers available under Section 482 of Cr.P.C. would not be exercised when a statutory remedy under law is available.
Compounding of offences under the Negotiable Instruments Act requires the complainant's consent; unilateral agreements are insufficient to quash criminal proceedings.
The compounding of the offence under Section 138 N.I. Act is permissible without the consent of the complainant if the accused has been duly compensated, and the Court can use its inherent powers und....
Generally the powers available under Section 482 of the Code would not have been exercised when a statutory remedy under the law is available, however considering the peculiar set of facts and circum....
The main legal point established in the judgment is the importance of promoting compromise and securing the ends of justice, especially in cases where the accused has remitted the entire liability an....
The voluntary settlement between parties allows for quashing of convictions under Section 138 of the Negotiable Instruments Act, emphasizing a shift from punitive to compensatory justice.
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