IMPORTANT POINTS
1. Compounding can only be possible at the instance of the person who is either a complainant or who has been injured or is aggrieved.
2. It is well settled that a judgment is always an authority for what it decides. It is equally well settled that a judgment cannot be read as a statute. It has to be read in the context of the facts discussed in it.
3. Basic mode and manner of effecting the compounding of an offence under Section 320 of Criminal Procedure Code cannot be said to be not attracted in case of compounding of an offence under N.I. Act in view of Section 147 of the same.

Headnote:Negotiable Instruments Act, 1881-Section 138 read with Section 141 - Appeals filed against order passed by High Court holding that sanction of a scheme under Section 391 of the Companies Act, 1956 does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act- High Court also held that sanction of a scheme under Section 391 of the Companies Act will not have the effect of termination or dismissal of complaint proceedings under N.I. Act-Held a scheme under Section 391 of the Companies Act does not have the effect of creating new debt- The scheme simply makes the original debt payable in a manner and to the extent provided for in the scheme- In the instant appeal in most of the cases the offence under N.I. Act had been committed prior to the scheme-Hence offence which had already been committed prior to the scheme does not get automatically compounded only as a result of said scheme-Hence appellant’s contention that scheme under Section 391 of the Companies Act would have effect of automatically compounding the offence under the N.I. Act held unacceptable (Para 13)
        Negotiable Instruments Act, 1881-Section 138 read with Section 141 - Criminal Procedure Code ,1973-Section 320- Appeals filed against order passed by High Court holding that sanction of a scheme under Section 391 of the Companies Act, 1956 does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act- Contention of appellant that once a scheme under Section 391 of the Companies Act is sanctioned by the Court the same operates as compounding of offence under Section 138 read with Section 141 of the N.I. Act held unacceptable- Rather a scheme under Section 391 of Companies Act cannot be contrary to any law- A scheme under Section 391 of the Companies Act cannot have the effect of overriding the requirement of any law- The compounding of an offence is always controlled by statutory provision- There are various features in the compounding of an offence and those features must be satisfied before it can be claimed by offender that the offence has been compounded- Thus, compounding of an offence cannot be achieved indirectly by the sanctioning of a scheme by the Company Court (Para 18)
        Negotiable Instruments Act, 1881-Section 138 read with Section 141 - Appeals filed against order passed by High Court holding that sanction of a scheme under Section 391 of the Companies Act, 1956 does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act- A perusal of Section 320 makes it clear that provisions contained in Section 320 and the various sub-sections is a Code by itself relating to compounding of offence- It provides for the various parameters and procedures and guidelines in the matter of compounding- If contention of appellant is accepted that as a result of incorporation of Section 147 in the N.I. Act, the entire gamut of procedure of Section 320 of the Code are made inapplicable to compounding of an offence under the N.I. Act, in that case the compounding of offence under N.I. Act would be left totally unguided or uncontrolled-Such an interpretation apart from being an absurd or unreasonable one would also be contrary to the provisions of Section 4(2) of the Code-There is no other statutory procedure for compounding of offence under N.I. Act- Therefore, Section 147 of the N.I. Act must be reasonably construed to mean that as a result of said Section the offences under N.I. Act are made compoundable, but the main principle of such compounding, namely, the consent of the person aggrieved or the person injured or the complainant cannot be wished away nor can the same be substituted by virtue of Section 147 of N.I. Act-Hence contentions of appellants that as a result of sanction of a scheme under Section 391 of the Companies Act there is an automatic compounding of offences under Section 138 of the N.I. Act even without the consent of the complainant held unacceptable-Appeals dismissed (Paras 73 to 75)
       Facts of the Case :
        Present Appeals have been filed against order passed by High Court holding that sanction of a scheme under Section 391 of the Companies Act, 1956 does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act.
       Findings of the Court :
        A. A scheme under Section 391 of the Companies Act does not have the effect of creating new debt. The scheme simply makes the original debt payable in a manner and to the extent provided for in the scheme. In the instant appeal in most of the cases the offence under N.I. Act had been committed prior to the scheme. Hence offence which had already been committed prior to the scheme does not get automatically compounded only as a result of said scheme. Hence appellant’s contention that scheme under Section 391 of the Companies Act would have effect of automatically compounding the offence under the N.I. Act was held unacceptable.
        B. Contention of appellant that once a scheme under Section 391 of the Companies Act is sanctioned by the Court the same operates as compounding of offence under Section 138 read with Section 141 of the N.I. Act was held unacceptable. Rather a scheme under Section 391 of Companies Act cannot be contrary to any law. A scheme under Section 391 of the Companies Act cannot have the effect of overriding the requirement of any law. The compounding of an offence is always controlled by statutory provision. There are various features in the compounding of an offence and those features must be satisfied before it can be claimed by offender that the offence has been compounded. Thus, compounding of an offence cannot be achieved indirectly by the sanctioning of a scheme by the Company Court.

JUDGMENT

Ganguly, J.

1. Leave granted.

2. This group of appeals were heard together as they involve common questions of law. There are some factual differences but the main argument by the appellant(s) in this matter was advanced by Mr. Chander Uday Singh, Senior Advocate on behalf of the Sharp Industries Limited in SLP (Crl.) No.6643-6651 of 2010 and the facts are taken mostly from the said case.

3. The learned counsel assailed the judgment of the High Court wherein by a detailed judgment High Court dismissed several criminal writ petitions which were filed challenging the processes which were issued by the learned Trial Judge on the complaint filed by the respondents in proceedings under Section 138 read with Section 141 of Negotiable Instruments Act, 1881 (hereinafter ‘N.I. Act’). By way of a detailed judgment, the High Court after dismissing the writ petitions held that sanction of a scheme under Section 391 of the Companies Act, 1956 (hereinafter ‘Companies Act’) does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act. The High Court also held that sanction of a scheme under Section 391 of the Companies Act will not have the effect of termination or dismissal of complaint proceedings under N.I. Act. However, the learned Judge made it clear that the judgment of the High Court will not prevent the petitioners from filing separate application invoking the provisions of Section 482 Criminal Procedure Code, if they are so advised. Assailing the said judgment the learned counsel submitted that an unsecured creditor who does not oppose the scheme of compromise or arrangement under Section 391 of the Companies Act must be taken to have supported the scheme in its entirety once such a scheme is sanctioned by the High Court, even a dissenting creditor cannot file a criminal complaint under Section 138 of the N.I. Act for enforcement of a pre-compromise debt. Nor can such a creditor oppose the compounding of criminal complaint which was filed under Section 138 of the N.I. Act in respect of pre-compromise debt.

4. The material facts of the case are that the appellant company on or about 12th May, 2005 came out with a scheme by which it was agreed that the appellant company should be revived and thereafter payments will be made to the creditors. Pursuant to such scheme the appellant company filed a petition under Section 391 of the Companies Act to the High Court. The whole scheme was placed before the High Court and according to the appellant(s), first order of the scheme came to be passed by the Hon’ble High Court by its order dated 5th May, 2005 in Company Petition No.92 of 2005. At the time the said company petition was pending, a meeting was convened by the appellant company on 1.6.05 and the same was attended by several creditors including representative of the first respondents and they opposed the scheme. Despite the said opposition, the appellant(s) succeeded in getting the scheme approved by statutory majority as required under the law. Thereafter, on 17.11.2005 another company petition with a fresh scheme (Company petition No. 460 of 2005) was filed. After the said company petition was filed all proceedings which were initiated by different companies against the appellant(s) came to be stayed by the High Court. In view of the aforesaid scheme the appellant company filed application for compounding under Section 147 of the N.I. Act read with Section 320 of the Criminal Procedure Code (hereinafter, ‘the Code’) and Section 391 of the Companies Act. However, the respondents opposed the said prayer of the petitioner and by an order dated 19th January, 2007, the learned Chief Judicial Magistrate, Ahmednagar rejected the application filed by the appellant for termination of the proceedings inter alia on the ground that the learned Magistrate has no power to quash or terminate the proceedings.

5. Being aggrieved by the said order of the Magistrate, the appellants filed writ petitions b

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2012 Supreme(SC) 86

Cases Referred (19)