2014 (4) TMI 1195 - HC - Companies Law

Quashment of criminal complaints filed under section 138 NI Act - compounding of offences - Held that - Offence under section 138 NI Act has been made compoundable according to section 147 of NI Act, it could have been the best way of resolution of matter with or without intervention of the State Legal Services Authority. Serious matter of concern is only that huge amount of public money is at stake. As against ₹ 1475 lacs become due in 1998 to 2000, after 12 to 14 years to give an offer equivalent to that amount alone and that too in installments and in piece meal hardly can be said to be a valid offer. At the top of that Corporation is bound by laws and policies. In aforesaid petitions, Company failed to show that their offer ever accepted by the Corporation. In view of the pendency of more than 10 years of NI Act cases, State Legal Services Authority and trial court extended full opportunities and latitude to both the parties to reach at amicable solution in terms of reasonable amount against each cheque, but gap between offered amount and due amount is very high, prima facie appears to be beyond the scope of negotiation also. In present criminal cases offence under NI Act has been committed years before prior to the introduction of OTS Scheme. For offence already committed years before cannot be automatically compounded as a matter of resolution of the Scheme as a matter of right. Compliance of Scheme is sincere and utmost duty of officer of Corporation, offer of petitioner can be accepted only if that tallies with the provisions of Scheme and should be in consonance with the amount due in each and every case on the basis of amount and date of cheque and date of bounce vis-a-vis date of offer. Continuation of criminal proceedings will not be miscarriage of justice. Corporation cannot be forced to accept the offer of amount, which, according to them, is not as per the OTS Scheme of 2007. Interest of justice would be served if amount of each and every bounced cheque should be paid back to the Corporation as per agreement/as per policy observing on the line as has been given in JIK. Industries case (2012 (2) TMI 269 - SUPREME COURT OF INDIA). Relief of quashment of criminal complaints filed under section 138 NI Act cannot be granted under inherent powers of this Court, rather it is expected of the trial court that all such pending criminal cases should be disposed of expeditiously without any further delay as per law.

Summary

Issues:
1. Quashment of criminal proceedings under section 138 of Negotiable Instruments Act (NI Act) based on a One Time Settlement Scheme (OTS) offer.
2. Interpretation of guidelines for compounding cheque bouncing cases.
3. Application of OTS policy to financially sound companies.
4. Consideration of proposals for settlement in accordance with prevailing policies.
5. Determination of liability based on outstanding dues and interest calculations.
6. Compounding of offences under section 138 NI Act against the wishes of the complainant.
7. Validity of settlement offers in light of OTS Scheme and policies.

Analysis:
1. The judgment addressed the issue of quashing criminal proceedings under section 138 of the NI Act based on a proposed One Time Settlement Scheme (OTS). The petitioner, a public limited company, sought to settle outstanding loan amounts with the respondent, a statutory body, through an OTS offer. However, the Corporation declined the proposal despite the petitioner's willingness to repay the cheque amounts. The court emphasized the need for offers to align with OTS policies and the actual dues in each case, ultimately dismissing the petitions and stressing the expeditious disposal of criminal cases.

2. The judgment delved into the interpretation of guidelines for compounding cheque bouncing cases, citing the Damodar S Prabhu case. The court highlighted the importance of the complainant's consent in compounding offences under the NI Act, emphasizing the need for alignment with legal provisions and policies. The application of these guidelines was crucial in assessing the validity of settlement offers and ensuring compliance with statutory requirements.

3. The court examined the application of the OTS policy to financially sound companies, emphasizing that the policy may not be applicable to profit-making entities like the petitioner. It considered the Corporation's perspective on proposals and the need for offers to adhere to prevailing policies, as demonstrated by the rejection of the petitioner's proposals due to non-compliance with the OTS policy.

4. Detailed analysis of the proposals submitted by the petitioner, including options for settlement and the Corporation's responses, was provided. The court scrutinized the Board of Directors' decisions on the proposals and highlighted the importance of offers being in line with OTS policies to ensure a fair and lawful resolution of financial disputes.

5. The judgment meticulously examined the determination of liability based on outstanding dues and interest calculations, showcasing the Corporation's assessment of the petitioner's liabilities. The court emphasized the need for offers to reflect the actual amounts due, as evidenced by the detailed calculations provided by the Corporation.

6. The issue of compounding offences under section 138 NI Act against the wishes of the complainant, particularly when involving a statutory body, was thoroughly discussed. The court underscored the importance of consent in compounding cases and the need for offers to align with legal provisions and policies, ultimately guiding the resolution of disputes in a lawful and just manner.

7. The judgment scrutinized the validity of settlement offers in light of the OTS Scheme and prevailing policies, emphasizing the need for offers to be in accordance with legal requirements and actual dues. The court highlighted the Corporation's obligation to adhere to laws and policies, ultimately guiding the resolution of financial disputes in a fair and just manner.