2021 (5) TMI 807 - HC - Indian Laws

Dishonor of Cheque - petitioner facing a criminal prosecution for the commission of offence punishable under Section 138 of the Negotiable Instruments Act, 1881, has come up before this Court under Section 482 of the Code of Criminal Procedure - HELD THAT - A perusal of the petition reveals that the accused has met all the liability as detailed in the petition. The complainant had put in appearance and on 23.4.2021, made a statement on oath that he had received the full and final payment and prays for closure of the complaint/case. The said statement forms part of the record - The jurisprudence behind the N.I. Act is that the business transactions are honored. The legislative intention is not to send the people to suffer incarceration because their cheque was bounced. These proceedings are to execute the recovery of cheque amount by showing teeth of penalty loss. This Court has inherent powers under Section 482 of the Code of Criminal Procedure, further supported by Section 147 of the N.I. Act to interfere in this kind of matter where parties have paid the entire money and where the complainant does not object to clear all the proceedings. Given the entirety of the case and judicial precedents, the continuation of these proceedings will not suffice any fruitful purpose whatsoever. This is a fit case where the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure read with 147 of Negotiable Instruments Act, is invoked to compound the offence and consequently to quash the proceedings - given the compounding of offences, the proceedings are quashed. Accordingly, the petitioner is acquitted of the offence under Section 138 of the Act. Petition allowed.

Summary

Issues:
Petition for quashing criminal proceedings under Section 138 of the Negotiable Instruments Act due to compromise.

Analysis:
1. Compromise of Parties: The petitioner sought quashing of criminal proceedings under Section 138 of the Negotiable Instruments Act, citing a compromise between the parties. The complainant confirmed receiving full payment and requested closure of the case, leading to a plea for quashing the proceedings.

2. Jurisprudence and Legislative Intent: The court highlighted the legislative intent behind the Negotiable Instruments Act, emphasizing that the Act aims to ensure business transactions are honored and not to subject individuals to incarceration due to bounced cheques. The Act seeks to facilitate recovery of cheque amounts through penalty provisions.

3. Supreme Court Precedents: Referring to legal precedents, the court cited the Supreme Court's observations in various cases. It was noted that an offence under Section 138 of the Act is akin to a civil wrong with criminal implications. The court emphasized the compensatory nature of the provision and the importance of encouraging compounding at the initial stage.

4. Inherent Powers of the Court: The judgment highlighted the court's inherent powers under Section 482 of the Code of Criminal Procedure and Section 147 of the Negotiable Instruments Act to intervene in cases where parties reach a compromise and the complainant no longer objects to quashing the proceedings. The court emphasized the importance of judicial discretion in such matters.

5. Compensation and Quashing of Proceedings: The court ordered the accused to pay compensation at the rate of 5% of the cheque amount, emphasizing the importance of fulfilling this obligation. Based on the compromise between the parties, the court quashed the proceedings and acquitted the petitioner of the offence under Section 138 of the Act.

6. Closure of Proceedings: Considering the compromise and the petitioner's case for closure of proceedings, the court directed the closure of the case pending before the Additional Chief Judicial Magistrate. The petitioner was instructed to deposit the specified amount as compensation, failing which the order for quashing the proceedings would stand recalled.

In conclusion, the judgment underscores the significance of honoring compromises between parties in legal proceedings, the compensatory nature of offences under the Negotiable Instruments Act, and the court's authority to intervene in such matters to ensure justice and fairness.