2021 (12) TMI 841 - HC - Indian Laws

Dishonor of cheques - insufficiency of funds - settlement of dispute between rival parties - annulment of conviction recorded by learned trial Court - HELD THAT - Chapter XVII of the Act deals with penalties in case of dishonor of cheques for insufficiency of funds in the accounts. A complete procedure in this behalf is provided under Section 138 to 147 of the Act. Section 142 deals with cognizance of offence and Section 143 empowers a Court to try cases under Section 138 of the Act summarily. As per Section 147 of the Act, every offence punishable under the Act is compoundable notwithstanding anything contained in the Cr.P.C. While it is true that the offence is compoundable but a pivotal question, which has emerged for consideration, is whether revisional powers can be exercised by this Court to compound the offence under Section 138 of the Act after conviction of the petitioner by appellate Court. The instant revision petition is allowed.

Summary

Issues:
Challenge to judgment under Section 397/401 Cr.P.C., Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881, Delay in compounding of offence, Guidelines for imposing costs on parties delaying compounding.

Analysis:
The accused-petitioner filed a revision petition challenging the judgment passed by the learned trial Court under Section 138 of the Negotiable Instruments Act, 1881. The trial Court had indicted the accused-petitioner for the offence and sentenced him to one year's simple imprisonment along with a fine of ?6,80,000. The accused-petitioner, after approaching the appellate Court, sought to annul the judgments based on a compromise reached with the complainant, where all dues were settled. The legal issue that arose was whether revisional powers could be exercised to compound the offence under Section 138 after conviction by the appellate Court.

The Court examined the provisions of Section 138 and 147 of the Act in light of the Supreme Court judgment in Damodar S. Prabhu Vs. Sayed Babulal H. The Supreme Court emphasized the compensatory aspect of the remedy over the punitive aspect in cases of cheque bouncing. It was noted that the legislative intent behind Section 138 was to enhance the acceptability of cheques in commercial transactions and to provide a strong criminal remedy against dishonour of cheques. The Court also discussed the permissibility of compounding offences at later stages of litigation in cheque bouncing cases.

Furthermore, the Court framed guidelines for a graded scheme of imposing costs on parties causing undue delays in compounding offences. These guidelines aimed to deter delayed composition of offences and ensure effective justice for the complainants. The Court directed that costs be deposited based on the stage of the proceedings, with higher costs imposed at later stages. The Court, applying the principles from Damodar S. Prabhu, compounded the offence under Section 138 due to the settlement between the parties, leading to the acquittal of the petitioner. However, the petitioner was ordered to deposit 15% of the cheque amount as costs within a specified period to avoid further legal action.

In conclusion, the revision petition was allowed based on the principles established in Damodar S. Prabhu, emphasizing the compensatory aspect of the remedy and the need for timely resolution of cheque bouncing cases through compounding. The Court's decision aimed to provide real and substantial justice in the matter and acknowledged the settlement between the parties while ensuring compliance with the guidelines for imposing costs on parties causing delays in compounding offences.