IMPORTANT POINT
Dishonour of cheque – Offence under Section 138 of NI Act can be compounded at any stage and overrides effect of Section 320(9) of Cr.P.C.

JUDGMENT (ORAL)

Meenakshi Madan Rai, J.—I.A. No. 08 of 2023 is a joint application filed by the Petitioners and Respondent herein under Section 147 of the Negotiable Instruments Act, 1881 (for short, the “NI Act”), seeking permission to compound the offence.

(i) The parties duly represented by their respective Learned Counsel submit that the matter was compromised between the parties on 31-03-2023, towards which Deed of Compromise has been submitted before this Court.

2. Learned Senior Counsel for the Petitioners submits that under Section 147 of the NI Act all offences therein are compoundable. That, the compounding of the offences, can be at any stage of the proceedings. To buttress his submissions, he has placed reliance on M. Rangaswamaiah vs. R. Shettappa, 2002 Cri.L.J. 4792. Accordingly, the Compromise Deed, dated 31-03-2023, be accepted and the Petitioners be acquitted of the offence under Section 138 of the NI Act that they have been convicted under.

3. Learned Counsel for the Respondent, in agreement with Learned Senior Counsel for the Petitioners, advanced the submission that the Supreme Court in Damodar S. Prabhu vs. Sayed Babalal H., (2010) 5 SCC 663 has propounded inter alia that an application for compounding of offences may be allowed even by the Sessions Court or the High Court, at any stage. That, the said ratio therefore permits the parties to compound the offence.

4. The genesis of the dispute is the Complaint filed by the Respondent/Complainant, under Section 138 read with Section 142 of the NI Act on 08-02-2016, before the Court of the Learned Chief Judicial Magistrate, East Sikkim, at Gangtok, being Private Complaint Case No.05 of 2016. According to the Respondent, he had loaned an amount of Rs.80,00,000/- (Rupees eighty lakhs) only, to the Petitioners/Accused persons No.1 and 2. A sum of Rs.20,00,000/- (Rupees twenty lakhs) only, was sought to be repaid, vide a cheque dated 19-10-2015, drawn on the Jankalyan Sahakari Bank Ltd., Sahar Branch Andheri (E) Mumbai. The cheque was dishonoured on 01-12-2015 on grounds of insufficient funds. The Petitioners thereafter failed to abide by the statutory provisions of the NI Act, pursuant to which the Respondent filed the Complaint mentioned hereinabove. The Learned Magisterial Court convicted the Petitioners under Section 138 of the NI Act and sentenced them to imprisonment of three months each and to pay a fine of Rs.20,00,000/- (Rupees twenty lakhs) only, each. It was also ordered that out of the fine so paid, Rs.20,00,000/- (Rupees twenty lakhs) only, each, i.e., Rs.40,00,000/- (Rupees forty lakhs) only, would be paid as compensation under Section 357 of the Code of Criminal Procedure, 1973 (for short, the “Cr.P.C.”) to the Respondent. Default clause of imprisonment was also imposed. (i) Aggrieved, by the Judgment and Order on Sentence, dated 29-03-2019, an Appeal was preferred before the Court of Learned Sessions Judge, East Sikkim, at Gangtok, on 23-04-2019, being Criminal Appeal No.04 of 2019. The Learned Appellate Court inter alia held that there was no need to interfere with the Judgment of the Learned Trial Court and dismissed the Appeal. Hence, the instant Revision Petition.

5. Having heard Learned Counsel for the parties, relevant reference is made to Damodar S. Prabhu (supra), wherein the Supreme Court held as follows;

“12. Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 CrPC which states that “No offence shall be compounded except as provided by this section”. A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect