The main legal point established in the judgment is the prospective application of the compounding fee in Negotiable Instruments cases and the Court's discretion to reduce the cost based on specific facts and circumstances.

Shri Suresh Agrawal, learned counsel with Ms. Vijaya Yadav, learned counsel for the petitioner. Shri D. K. Pathak, learned counsel for the respondent. Heard counsel for the parties. This reference arises pursuant to the order passed by the learned Single Judge dated 2-9-2015 in CRR No. 840/2011 (Gwalior Bench). Two questions have been formulated by the learned Single Judge for consideration by the Larger Bench, having found that the view taken by another learned Single Judge on the said issues was not correct. The same read thus :-

(i) Whether, the compounding fee as applicable in Negotiable Instruments cases pursuant to the judgment of Damodar S. Prabhu (supra) is applicable to cases which are compounded after 3-5-2010 retrospectively irrespective of the date on which the cheque is executed?

(ii) Whether cases of compounding of cases under Negotiable Instruments Act, if the cheque dated is prior to pronouncement of judgment in Damodar S. Prabhu (supra) i.e. 3-5-2010, the compounding fee is not leviable?

2. As regards the first question, the same is answered in paragraph 16 of the decision of the Supreme Court in the case of Damodar S. Prabhu vs. Sayed Babalal H., reported in 2010 (5) Mh.L.J. (S.C.) 172, 2010 (4) Mh.L.J. (Cri.) (S.C.) 142. From the last sentence of paragraph 16, it is amply clear that the directions given by the Supreme Court (as noted in paragraph 15), should be given effect prospectively.

3. As per the guidelines formulated by the Supreme Court, compounding of such cases can be allowed at different stages of the proceedings - pending before the Trial Court or Appellate Court or for that matter Revisional Court, as the case may be. Depending on the stage during which the compounding application is made, the amount towards compounding cost has been specified. That, however, can be and ought to be levied on case to case basis. Thus, the fact that the cheque is issued prior to 3rd May, 2010 - on which date the Supreme Court formulated the guidelines, will make no difference. Accordingly, the first question formulated by the learned Single Judge does not require any further elaboration and is answered accordingly.

4. Reverting to the second question, the same is another shade of the first question. As aforesaid, even if the date of cheque is prior to pronouncement of the judgment in Damodar S. Prabhu's case, that will make no difference. The relevant fact to be kept in mind is: when the compounding application is made and is being considered. Not the date on which cheque is issued.

5. Whether the Court has discretion to reduce the amount towards compounding cost has also been answered by the Supreme Court in its recent decision in the case of M.P. State Legal Services Authority vs. Prateek Jain and anr., reported in 2015 (1) SCC (Cri) 211. In paragraphs 25 and 26 of said decision, the Supreme Court observed thus :-

"25. What follows from the above is that normally costs as specified in the guidelines laid down in the said judgment has to be imposed on the accused persons while permitting compounding. There can be departure therefrom in a particular case, for good reasons to be recorded in writing by the concerned Court. It is for this reason that the Court mentioned three objectives which were sought to be achieved by framing those guidelines, as taken note of above. It is thus manifestly the framing of "Guidelines" in this judgment was also to achieve a particular public purpose. Here comes issue for consideration as to whether these guidelines are to be given a go-by when a case is decided/settled in the Lok Adalat? Our answer is that it may not be necessarily so and a proper balance can be struck taking care of both the situations.

26. Having regard thereto, we are of the opinion that even when a case is decided in Lok Adalat, the requirement of following the guidelines contained in Damodar S. Prabhu (supra) should normally not to be dispensed with. However, if there is a special/specific reason to deviate ther