2021 (12) TMI 1146 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - 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? - HELD THAT - The legal position in this behalf was fluid until the judgment rendered in Damodar S. Prabhu Vs. Sayed Babalal H. 2010 (5) TMI 380 - SUPREME COURT by the Supreme Court. In the said verdict, Supreme Court has examined the provisions of Section 138 and 147 of the Act threadbare and observed that compensatory aspect of the remedy should be given priority over the punitive aspect - While switching on to examine Section 147 of the Act, Supreme Court has observed that this being an enabling provision, it can serve as exception to the general rule incorporated in subsection ( 9) of Section 320 Cr.P.C. The Court, while laying emphasis on non-abstante clause under the aforesaid Section, further held that Section 147 inserted by way of amendment to special law will override the effect of Section 320(9) Cr.P.C. Applying the ratio decidendi of Damodar S.Prabhu and the guidelines framed therein, on the strength of compromise arrived at between petitioner and the complainant, It is felt persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist. Compounding of offence under Section 138 of the Act, obviously, entails acquittal of the petitioner - 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, Application of guidelines for imposing costs on parties delaying compounding

Analysis:
The accused-petitioner filed a revision petition challenging the judgment of the learned appellate Court confirming the conviction under Section 138 of the Negotiable Instruments Act, 1881. The trial Court had sentenced the petitioner to six months' simple imprisonment and ordered payment of compensation to the complainant. The petitioner sought annulment of judgments due to a compromise reached between the parties, which was supported by the counsel for the complainant as well. The Court considered the legal position regarding compounding of the offence under Section 138 after conviction, citing the Supreme Court's judgment in Damodar S. Prabhu vs. Sayed Babulal H., emphasizing the compensatory aspect over the punitive aspect of the remedy.

The Court analyzed the provisions of the Act related to penalties for dishonor of cheques and compounding of offences, highlighting the legislative intent to deter dishonour of cheques. Referring to earlier judgments, the Court affirmed the permissibility of compounding offences even at later stages of litigation in cheque bouncing cases. The Court also discussed the nature of the offence under Section 138, emphasizing the compensatory purpose of the fine imposed. The Court considered the seriousness of the offence and the nature of the remedy provided while allowing compounding based on the settlement between the parties.

Furthermore, the Court framed guidelines for a graded scheme of imposing costs on parties delaying compounding of offences to deter undue delays in settling cases. The guidelines set out conditions for compounding at different stages of the legal process, with varying percentages of the cheque amount to be deposited as costs. Applying the principles established in Damodar S. Prabhu and the guidelines framed therein, the Court exercised revisional jurisdiction to compound the offence under Section 138 based on the compromise between the parties. The accused-petitioner was ordered to deposit 15% of the cheque amount with the District Legal Services Authority within a specified period, failing which appropriate orders would be passed.

In conclusion, the revision petition was allowed, setting aside the previous judgments and compounding the offence under Section 138 of the Act. The petitioner was ordered to deposit the specified amount within a month, failing which further orders would be issued. The Court's decision was based on the principles laid down in Damodar S. Prabhu and aimed at achieving real and substantial justice in light of the settlement between the parties.