2022 (3) TMI 1212 - HC - Indian Laws

Dishonor of Cheque - amicable settlement of dispute between the parties - compounding of offences - section 138 and 147 of NI Act - HELD THAT - Having gone through the material placed on record, it has emerged that the petitioner has been convicted by the concerned Criminal Court for the offence punishable under Section 138 of the N.I. Act. However, now, the parties have amicably settled the dispute and, therefore, the parties have executed settlement agreement/ declaration as stated above stating that if the order of conviction passed against the petitioner is quashed and set aside, the respondent no.2 has no objection. When the parties have settled the dispute amicably, compounding of the offence is required to be permitted. However at this stage, it is required to be noted that as per the decision rendered by the Hon'ble Supreme Court, suitable amount is required to be deposited by the applicant with the Gujarat State Legal Services Authority, more particularly when the complainant has shown willingness to accept amount as ordered by the learned trial court by way of settlement. Application allowed.

Summary

Issues:
1. Petition under Articles 226 and 227 to quash a judgment convicting the applicant under Section 138 of the Negotiable Instruments Act.
2. Compounding of offence after conviction under Section 138 of the N.I. Act.
3. Settlement agreement between parties and its impact on quashing the conviction.

Analysis:
1. The judgment involves a petition seeking to quash a conviction under Section 138 of the Negotiable Instruments Act. The applicant prayed for setting aside the judgment of conviction passed by the Additional Chief Judicial Magistrate. The applicant argued for the quashing of the judgment based on legal provisions and relevant case laws.

2. The applicant relied on the Supreme Court's decision in Damodar S. Prabhu Vs. Sayed babalal H. to support the contention that compounding of the offence is permissible even after conviction under Section 138 of the N.I. Act under certain conditions. The applicant expressed readiness to deposit the required amount with the Gujarat State Legal Services Authority to settle the matter.

3. The respondent no.2, through their advocate, confirmed an amicable settlement with the petitioner and acknowledged receiving the outstanding amount. The authorized officer of the respondent no.2 bank filed an affidavit stating no objection if the conviction order is set aside. The court noted the settlement agreement between the parties and the willingness of the complainant to accept the settlement amount.

4. Referring to previous judgments, the court highlighted the importance of inculcating faith in banking operations and the compounding provision under Section 147 of the Negotiable Instruments Act. The court cited guidelines from Damodar S. Prabhu case regarding the process and conditions for compounding offences under Section 138 of the Act.

5. Considering the settlement between the parties and the willingness of the complainant to accept the settlement amount, the court allowed the application to quash the judgment of conviction. The court directed the applicant to deposit 15% of the cheque amount with the Gujarat State Legal Services Authority within four weeks. Upon compliance, the order to quash the conviction would take effect.

6. The court made the rule absolute to the extent of allowing the application for quashing the judgment and permitted direct service. The judgment emphasized the importance of amicable settlements in legal disputes and the role of statutory provisions in facilitating resolution between private parties.