S.138 NI Act Offence Cannot Be Compounded Without Complainant's Consent, Even if Compensated: Himachal Pradesh High Court - 2025-07-05

Himachal Pradesh High Court: Consent of Complainant is Mandatory for Compounding Cheque Dishonour Offence

Shimla , HP – The High Court of Himachal Pradesh, in a significant ruling, has reaffirmed that an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) cannot be compounded without the express consent of the complainant. Justice RakeshKainthla , while upholding the conviction of a contractor in a cheque bounce case, dismissed the accused's plea to dispose of the matter as compromised based on a purported settlement.

The Court also clarified a crucial aspect of sentencing, holding that compensation cannot be awarded in addition to a fine under Section 357 of the Criminal Procedure Code (Cr.P.C.). The compensation must be ordered from the fine amount itself.

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Brief Overview of the Case

The case, Dalel Singh Patial vs. Sarwans Kaur Chopra , involved a criminal revision petition filed by Dalel Singh Patial against concurrent judgments of the Trial Court and the Appellate Court that convicted him for an offence under Section 138 of the NI Act.

The complainant, Sarwans Kaur Chopra, who runs a petrol pump, alleged that Patial, a contractor, had purchased diesel on credit and issued a cheque for ₹6,16,310/- to clear his outstanding dues. The cheque, dated January 28, 2007, was dishonoured due to "insufficient funds." Despite a legal notice, Patial failed to make the payment, leading to the criminal complaint.

Both the Trial Court and the first Appellate Court found Patial guilty, sentencing him to six months of simple imprisonment, a fine of ₹5,000/-, and compensation of ₹7,50,000/-.

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Key Arguments

Petitioner's (Accused) Arguments: - The matter had been compromised, as the accused had executed a gift deed in favour of the complainant's husband. - The cheque was not for a legally enforceable debt, as it was a blank signed cheque that had been misplaced. - The cheque, issued on 28.01.2007 for a liability calculated up to 31.01.2007, pertained to a future liability and was thus invalid under Section 138.

Respondent's (Complainant) Arguments: - No compromise was reached, and the complainant never consented to compound the offence. The gift deed was a separate matter executed out of "love and affection." - A subsequent settlement agreement for ₹4,50,000/- was breached by the accused. - The court cannot compel the complainant to give consent for compounding. - The conviction was based on sound legal principles, as the signature on the cheque was admitted, activating the presumption of liability under Sections 118 and 139 of the NI Act.

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Court's Analysis and Legal Principles

Justice Kainthla conducted a thorough review of the legal precedents and evidence, focusing on three primary issues: compounding of the offence, presumption of liability, and the legality of the sentence.

On Compounding without Consent: The Court heavily relied on recent Supreme Court judgments, including JIK Industries Ltd. v. Amarlal V. Jumani and A.S. Pharma (P) Ltd. v. Nayati Medical (P) Ltd. , to rule that compounding an offence under the NI Act is impermissible without the complainant's consent.

"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 the NI Act."

The Court rejected the petitioner's claim that a gift deed settled the matter, noting the deed itself cited "natural love and affection" as the reason and was unrelated to the litigation.

On Presumption of Liability: The Court observed that since the accused admitted his signature on the cheque, a statutory presumption under Sections 118 and 139 of the NI Act was triggered. The burden then shifted to the accused to rebut this presumption.

"Once the execution of the cheque is admitted, Section 139 of the Act mandates a presumption that the cheque was for the discharge of any debt or other liability."

The Court found the accused's story of losing a signed chequebook "not believable," questioning why a contractor would handle cheques so carelessly and why he did not take action against his bank for not honouring his 'stop payment' instruction.

On Sentencing and Compensation: The High Court identified a legal error in the sentence awarded by the Trial Court. Citing Dilip S. Dahanukar v. Kotak Mahindra Co. Ltd. , the Court explained that under Section 357 Cr.P.C., a court can order compensation to be paid out of the fine imposed, but cannot award compensation in addition to the fine.

"It was impermissible for the learned Trial Court to impose a fine as well as compensation. The learned Trial Court could have imposed a fine and ordered the compensation to be paid out of the fine amount. It was impermissible to separately award the compensation."

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Final Decision

The High Court partly allowed the revision petition. While upholding the conviction and the six-month imprisonment sentence, it modified the monetary penalty. The Court set aside the fine of ₹5,000/- but upheld the compensation of ₹7,50,000/-, deeming it just and reasonable considering the loss of interest and litigation costs incurred by the complainant over the years.

This judgment serves as a strong reminder of the mandatory nature of complainant's consent for compounding cheque bounce cases and clarifies the procedural correctness of awarding compensation under the Cr.P.C.