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SUPREME COURT OF INDIA
SUDHANSHU DHULIA, AHSANUDDIN AMANULLAH, JJ.
M/s. New Win Export & Anr. - Appellants
Versus
A. Subramaniam - Respondent
Criminal Appeal No. 2948 of 2024 (Arising out of SLP (Crl.) No. 9033 of 2024 @ Dy. No. 6463 of 2024)
Decided On : 11-07-2024
Negotiable Instruments Act, 1881 – Sections 138 and 147 – Criminal Procedure Code, 1973 – Section 320 [Bharatiya Nagarik Suraksha Sanhita, 2023 – Section 359] – Dishonour of cheque – Compounding of offence – Before filing present appeal, appellants and respondent-complainant had entered into settlement agreement – Appellants have paid some amount to respondent-complainant, who has agreed to settle present matter for said amount – Complainant does not have any objection if conviction of appellants is set aside – Such settlement agreement can be treated to be compounding of offence – When accused and complainant have reached a settlement permissible by law and this Court has also satisfied itself regarding genuineness of settlement, conviction of appellants would not serve any purpose and it is required to be set aside – Dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that reliability of these instruments can be ensured – Keeping in mind that ‘compensatory aspect’ of remedy shall have priority over ‘punitive aspect’, courts should encourage compounding of offences under NI Act if parties are willing to do so – Appellants acquitted. (Paras 3, 4, 5, 6 and 8)
Facts of the case:
This case arises from a complaint under Section 138 Negotiable Instruments Act filed by respondent/complainant. Appellants challenged their conviction before Appellate Court, which reversed findings of Trial Court and acquitted the appellants. Finally, when the matter was taken to High Court at instance of respondent/complainant, High Court in its order dated 01.04.2019 set-aside order of Appellate Court and restored order of Trial Court, convicting appellants.
Findings of Court:
Appellant no.2, who was exempted from surrendering by this Court, need not surrender and his sureties are hereby discharged.
Result : Appeal allowed.
ORDER :
Leave granted.
2. This case arises from a complaint under Section 138 Negotiable Instruments Act filed by the respondent/complainant. In the year 2006, appellant no.2 had borrowed a loan of Rs.5,25,000 from the respondent but did not repay as promised. To discharge the said debt, the appellant no.2 gave a cheque of Rs.5,25,000 which was issued in the name of his partnership firm i.e., appellant no.1 (M/s New Win Export). Since the cheque was dishonoured due to ‘insufficient funds’, respondent filed a complaint under Section 138 NI Act against the appellants where the Trial Court vide order dated 16.10.2012 convicted the appellants and imposed a sentence of 1 year of simple imprisonment each. The appellants challenged their conviction before the Appellate Court, which reversed the findings of the Trial Court and acquitted the appellants. Finally, when the matter was taken to the High Court at the instance of the respondent/complainant, the High Court in its order dated 01.04.2019 set-aside the order of the Appellate Court and restored the order of the Trial Court, convicting the appellants. Now, the appellants are before this Court.
3. We have been apprised at the bar that before filing the present appeal, appellants and respondent-complainant had entered into a settlement agreement dated 27.01.2024. We have perused the settlement document and from the terms of the agreement, it is clear that the parties have settled the dispute among themselves. As per the agreement, the appellants have paid Rs.5,25,000 to the respondent-complainant, who has agreed to settle the present matter for the said amount. Also, the complainant does not have any objection if the conviction of the appellants is set aside. The relevant portion of the said settlement agreement is reproduced below where the expression ‘First Party’ is used for the respondent-complainant and accused-appellant has been called as the ‘Second Party’:
5. The First Party agrees to accept the final settlement amount of Rs.5,25, 000/ -(Five Lakhs and twenty five thousand only) and the First Party had received the sum of Rs.5,25,000/-(Five Lakhs and twenty five thousand only) from the Second party as mentioned above.
6. After the execution of the present Settlement Agreement, the Second Party is intending to file a Special Leave Petition before the Honourable Supreme Court of India and the First Party agrees to support the Special Leave Petition filed by the Second Party, in order to enable the Hon'ble Supreme Court of India to pass appropriate order as the Hon'ble supreme Court may deem it fit and proper in the facts and circumstances of the present.
7. The First Party will have no objection if the conviction of the Second Party is set aside by the Hon'ble Supreme Court of India.”
4. Section 147 of the Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences. In our opinion, this settlement agreement can be treated to be compounding of the offence. All the same, Section 320 (5) of CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending.
5. In cases where the accused relies upon some document for compounding the offence at the appellate stage, courts shall try to check the veracity of such document, which can be done in multiple ways. For the same, in the present matter, this Court vide order dated 18.03.2024 had asked the respondent-complainant to file an affidavit to bring on record whether or not any compromise has been reached between the parti
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