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2014 (1) TMI 788 - HC - Companies LawDishonour of Cheque - Failure for repayment of friendly loan - Metropolitan Magistrate acquitted the respondent - Compounding of interest - Settlement outside the Court - Held that - in view of the non obstante clause contained in the Section, the restrictions and limitations prescribed under the Code of Criminal Procedure with respect to compounding of offences would not be applicable as far as compounding of an offence punishable under the provisions of the aforesaid Act is concerned. Consequently, such an offence can be compounded at any stage before the sentence, if any awarded to an accused under the provisions of the aforesaid Act is fully executed. Hence, there is no legal bar to the compounding of such an offence, either during or even after disposal of an appeal filed either by the accused or by the complainant. Since Section 147 of the N.I. Act does not require permission of the Court for compounding such an offence , no such permission is necessary and the parties therefore can enter into a compromise outside the Court and then get the same recorded in the Court at any point of time before the sentence is fully executed - considering the settlement between the parties, the respondent before this court is acquitted of the charge under Section 138 of the N.I. Act, subject to her depositing 15% of the cheque amount by way of costs with Delhi Legal Services Authority within one month - Appeal disposed of.
Issues:
- Compounding of offense under Section 138 of the Negotiable Instruments Act - Legal implications of compounding after conviction by the Court - Guidelines for compounding offenses under the Act Analysis: 1. The appellant filed a complaint under Section 138 of the Negotiable Instruments Act against the respondent for dishonoring cheques issued towards repayment of a friendly loan. The Metropolitan Magistrate acquitted the respondent, leading to the appeal. 2. The Court, in an earlier order, found the respondent guilty under Section 138 of the Act. The issue arose whether the respondent could compound the offense post-conviction and if such compounding would lead to acquittal. 3. An Amicus Curiae was appointed to assist the Court, and written synopses were filed by both parties. 4. Section 147 of the N.I. Act states that all offenses under the Act are compoundable, overriding the Code of Criminal Procedure's limitations on compounding offenses. Compounding can occur at any stage before the sentence is executed, without needing the Court's permission. 5. Compounding under Section 147 does not require Court permission, allowing parties to reach a compromise outside the Court and record it before the sentence execution. 6. Referring to the case of Damodar S. Prabhu v. Sayed Babalal H., the Supreme Court allowed compounding of offenses under the Act and set aside the conviction based on a settlement between parties. The Court clarified that Section 147 controls the compounding of offenses under the Act, not the Code of Criminal Procedure. 7. To manage the heavy burden on the Justice Delivery System due to such cases, the Apex Court issued guidelines for compounding offenses under the Act. These guidelines include conditions for compounding at different stages and the requirement to deposit a percentage of the cheque amount with the Legal Services Authority. 8. Following the guidelines, the respondent was acquitted of the charge under Section 138 of the Act upon depositing 15% of the cheque amount with the Delhi Legal Services Authority within a month. In conclusion, the judgment allowed for the compounding of the offense under Section 138 of the Negotiable Instruments Act post-conviction, following specific guidelines set by the Apex Court to streamline the process and reduce the burden on the Justice Delivery System.
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