2007 (12) TMI 444 - SC - Indian Laws

Whether an offence punishable under Section 138 of the Act which is a special law can be compounded? Held that - Taking into consideration even the provision of Section 147 and the primary object underlying Section 138 in our judgment there is no reason to refuse compromise between the parties. We therefore dispose of the appeal on the basis of the settlement arrived at between the appellant and the respondent. For the foregoing reasons the appeal deserves to be allowed and is accordingly allowed by holding that since the matter has been compromised between the parties and the amount of 45, 000/- has been paid by the appellant towards full and final settlement to the respondent-bank towards its dues the appellant is entitled to acquittal.

Summary

Issues:
- Delay Condonation
- Appeal against conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881
- Compounding of offence under Section 138 of the Act
- Settlement between parties
- Applicability of Section 320 of the Code of Criminal Procedure
- Interpretation of Section 138 of the Act
- Consideration of settlement in criminal cases

Analysis:
1. Delay Condonation: The Supreme Court granted leave in an appeal against an order passed by lower courts in a criminal case under Section 138 of the Negotiable Instruments Act, 1881.

2. Appeal against Conviction and Sentence: The appellant failed to repay a loan obtained from a bank, resulting in a dishonored cheque and subsequent legal proceedings. The Trial Court convicted the accused, sentencing him to imprisonment and compensation. The Appellate Court upheld the conviction but reduced the compensation amount.

3. Compounding of Offence: The accused sought revision in the High Court, which dismissed the petition due to non-compliance with an interim order. However, a settlement was reached between the parties, with the appellant paying the bank Rs.45,000 towards full settlement.

4. Settlement Between Parties: The appellant requested acquittal based on the settlement, which was confirmed by the bank. Both parties agreed that no further dues existed, leading to a request for acquittal.

5. Applicability of Section 320 of CrPC: The Court discussed the compounding of offences under Section 320, emphasizing that certain offences are compoundable, allowing parties to settle disputes. The Court highlighted the relevance of compromise in criminal cases, even for non-IPC offences like those under Section 138 of the Act.

6. Interpretation of Section 138 of the Act: Section 138 was introduced to regulate financial transactions and ensure accountability in cheque payments. The Court noted that compounding of such offences should not be denied to promote banking credibility and financial vigilance.

7. Consideration of Settlement in Criminal Cases: Referring to past judgments, the Court recognized the importance of compromise in cases involving dishonored cheques. The Court cited Section 147, which mandates compoundability of offences under the Act, further supporting the allowance of settlements.

In conclusion, the Supreme Court allowed the appeal, acquitting the appellant based on the settlement reached with the bank, thereby setting aside the previous convictions and sentences. The judgment emphasized the significance of compromise in resolving cases under Section 138 of the Negotiable Instruments Act, promoting financial integrity and banking credibility.