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2021 (3) TMI 1137 - HC - Indian LawsDishonor of cheque - insufficiency of funds - compounding of offences or not - Section 138 of NI Act - HELD THAT - The Hon'ble Supreme Court in the case of KM. IBRAHIM VERSUS KP. MOHAMMED ANR. 2009 (12) TMI 903 - SUPREME COURT has held as under It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. The parties have agreed to end the proceedings by way of compromise and the opposite party no.2 has already received the entire amount of cheque as well as cost/ interest of ₹ 10,000/- , this Court deems it appropriate to compound the offence on the basis of compromise deed dated 19.2.2021 entered into between the parties. However, in terms of the guidelines framed by the Hon'ble Supreme Court as the revisionist has not appeared before the Court and has not taken effective steps to compound the offence at initial stages, in terms of guidelines framed by the Hon'ble Supreme Court in DAMODAR S. PRABHU VERSUS SAYED BABALAL H. 2010 (5) TMI 380 - SUPREME COURT , the revisionist is directed to pay a cost of 15% of the cheque amount to the High Court Legal Services Committee, High Court, Allahabad within a period of four weeks from today. Revision allowed.
Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act. 2. Compounding of the offence under Section 147 of the Negotiable Instruments Act. 3. Guidelines for compounding at various stages of litigation. Issue-wise Detailed Analysis: 1. Conviction under Section 138 of the Negotiable Instruments Act: The revisionist was convicted under Section 138 of the Negotiable Instruments Act and sentenced to rigorous imprisonment for one year and a fine of ?7,05,000/-, with a further six months imprisonment in default of payment. The conviction stemmed from the dishonor of a cheque (no. 154599 dated 12.4.2012 for ?4,15,000/-) due to insufficient funds. The complaint was filed by the opposite party, leading to the conviction by the Special Chief Judicial Magistrate, Varanasi, which was upheld by the appellate court. 2. Compounding of the offence under Section 147 of the Negotiable Instruments Act: The revisionist and the opposite party reached a compromise, with the revisionist paying ?7,00,000/- via RTGS and ?10,000/- in cash as interest/cost. A written compromise deed dated 19.2.2021 was submitted. The opposite party confirmed the receipt of the amount and expressed no desire to continue criminal proceedings, requesting the matter be resolved per the compromise deed. 3. Guidelines for compounding at various stages of litigation: The Supreme Court has consistently held that offences under the Negotiable Instruments Act can be compounded at any stage of proceedings. Notable cases include K. M. Ibrahim vs. K.P. Mohammad and another, where it was established that once a case is compounded, the conviction should be set aside. The Court also referenced the Damodar S. Prabhu vs. Sayed Babalal H. case, which provided guidelines for compounding at different stages: - No costs for compounding at the initial stages. - 10% of the cheque amount as costs if compounded before the Magistrate at a later stage. - 15% of the cheque amount as costs if compounded before the Sessions Court or High Court. - 20% of the cheque amount as costs if compounded before the Supreme Court. In the current case, the revisionist did not seek compounding at the initial stages but at the appellate stage. Therefore, per the guidelines, the revisionist was directed to pay 15% of the cheque amount to the High Court Legal Services Committee, High Court, Allahabad within four weeks. Conclusion: The Court allowed the revision, setting aside the judgment and sentence dated 10.5.2018, contingent upon the revisionist depositing 15% of the cheque amount to the High Court Legal Services Committee within the stipulated period. This decision aligns with the principles established by the Supreme Court regarding the compounding of offences under the Negotiable Instruments Act.
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