2022 (1) TMI 384 - HC - Indian Laws

Dishonor of Cheque - compounding of offences - Acquittal of the accused - whether at this stage of the proceedings i.e. when the petitioner has already been convicted by the trial Magistrate and his conviction has been upheld by the Appellate Court, the offence under Section 138 of NI Act can be compounded? - HELD THAT - The issue is no longer res integra. In DAMODAR S. PRABHU VERSUS SAYED BABALAL H. 2010 (5) TMI 380 - SUPREME COURT , the Supreme Court while laying down guidelines as to the levy of costs depending upon stage of the compromise arrived at between the parties, held that conviction of an accused in proceedings under Section 138 of NI Act can be set aside even at appellate stage and the accused can be acquitted on the basis of a compromise with the complainant. Even though the parties have arrived at a settlement after the Appellate Court had upheld the conviction of the petitioner, yet keeping in view the spirit of Section 147 of the NI Act, the offence under Section 138 of the Act can be compounded, as the respondent has clearly agreed that on account of precarious financial condition of the petitioner, he is ready to accept the amount of ₹ 25000/- which he has already received from the petitioner and the amount which is deposited with the Registry of this Court as full and final settlement of his claim. Therefore, this is a fit case where costs are required to be waived while compounding the offence. The settlement arrived at between the parties is accepted and the parties are permitted to compound the offence. The judgments of both the courts below are set aside and the petitioner is acquitted of the charges - Petition allowed.

Summary

Issues:
Conviction under Section 138 of the Negotiable Instruments Act, Compounding of offence at appellate stage, Waiver of costs in appropriate cases

Analysis:
1. The revision petition challenged a judgment convicting the petitioner under Section 138 of the NI Act, sentencing him to imprisonment and compensation. The Revisional Court modified the judgment, setting aside the compensation direction while upholding the conviction.

2. The complaint stemmed from two cheques issued by the petitioner to the respondent for jewelry items. During the revision, the parties reached a settlement, with the respondent receiving additional funds and agreeing not to pursue the case further.

3. The key issue was whether an offence under Section 138 of the NI Act could be compounded post-conviction. Referring to legal precedents, the court noted that the Supreme Court allowed for setting aside convictions and acquitting the accused based on a compromise with the complainant, even at the appellate stage.

4. Citing relevant cases like Damodar S. Prabhu vs. Sayed Babalal H., the court emphasized that the spirit of Section 147 of the NI Act permits compounding of the offence, especially when parties agree to a settlement due to the petitioner's financial condition.

5. Drawing from Rajendra vs. Nand Lal, the court highlighted that costs could be waived in appropriate cases. Additionally, in K.M. Ibrahim vs. K.P. Mohammed, it was clarified that compounding was permissible even at the appellate stage of proceedings under Section 138.

6. Ultimately, considering the settlement between the parties and the respondent's willingness to accept the agreed amount as full settlement, the court accepted the compromise. Both lower court judgments were set aside, and the petitioner was acquitted. The deposited amount was directed to be released to the respondent after verification.