( 1 ) EMPLOYEES State Insurance Corporation represented by its Inspector, Hill Fort Road, adarshnagar, Hyderabad had preferred the present appeal as against the order of acquittal recorded in C. C. No. 66 of 1998 on the file of the XXIII Metropolitan Magistrate hyderabad, which had been transferred to the said Court by the Metropolitan Sessions judge, Hyderabad vide orders in Dis. No. 2282 of 1998, dated 4-7-1998 for disposal according to law.

( 2 ) IT is averred in the complaint that the managing Directorof A-1 company shown as a-2 issued a cheque for Rs. 1,00,000. 00 in favour of appellant-complainant Recovery officer towards contribution for the period from 10/92 to 9/94 payable by the accused, drawn on the State Bankof India Vijayawada and the said cheque was returned dishonoured for the reason "exceeds arrangements" and that the appellant- complainant got issued the statutory notice as required underthe Negotiable Instruments act, 1881 (for brevity of "the Act") which was received by the accused but no payment was made.

( 3 ) P. W. 1 who is the Inspector of E. S. I. Corporation was examined and Ex. P-1, the cheque issued by the accused Ex. P-2, the cheque return memo, Ex. P-3 the office copy of the legal notice, Exs. P-4 and P-5 post acknowledgments of A-1 and A-2, Ex. P-6, resolution dated 3-1-1999 authorising inspectors to file and prosecute the cases in various Courts, Exs. P-7 and 8, the authorizations also were marked and P. W. 1 had deposed about all the aspects in detail. P. W. 1 also deposed that Ex. P-1 was issued in discharge of the liability towards ESI contribution and the cheque was dishonoured for the reason "exceeds arrangements". P. W. 1 also deposed that the accused paid the amount on 3-3-1998 by way of demand draft and the same was accepted by the appellant-complainant.

( 4 ) SRI B. G. Ravindra Reddy the learned counsel representing appellant-complainant made the following submissions:- the learned counsel submitted that the employees State Insurance Corporation is governed by the provisions of the Employees state Insurance Corporation Act, 1948 and in view of the Sections 39, 40, 85 and 86 of the said Act this is a statutory obligation and liability, and hence the same is legally enforceable debt within the meaning of the section 138 of the Act. The learned counsel also submitted that prior to the introduction of section 147 of the Act by Amending Act 55 of 2002, there was cleavage of opinion relating to the compoundability of the offence and in view of the fact that this is a matter which was filed priorto the said Amending Act, recording of acquittal is not in accordance with law at the best it may be a mitigating circumstance to be taken into consideration and hence the said findings recorded by the learned Judge cannot be sustained.

( 5 ) THE learned Additional public prosecutor also had taken this Court through the provisions of Section 138 of the Act and also the other Sections 143 to 147 of the Act, which had been introduced by Act 55 of 2002 and would submit that in view of the fact that ESI contribution had been deposited by the accused by way of demand draft on 3-3-1998, there may not be any justification in further proceeding with the matter as against respondents No. 1 and 2 accused.

( 6 ) SRI B. Sree Rama Krishna the learned counsel appointed from the Legal Aid Panel to assist the Court had submitted that C. C. was filed in the year of 1998 and the Amending act 55 of 2002 came into force subsequent thereto. However, the learned counsel submitted that even prior to the introduction of Section 147 of the Act, the Courts had taken the view that taking into consideration the object of introducing these provisions, if payment had been made and settlement had been arrived at, normally the same may have to be given effect to. The learned counsel no doubt submitted that there was cleavage of opinion relating to the compoundability of this offence prior to the introduction of section 147 of the Act.

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