2022 (5) TMI 574 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - compromise has been entered into between the parties and the entire dispute has been finally resolved - compounding of offences - HELD THAT - From the facts, it is apparent that both the contesting parties are ad idem that the compromise has been effected between the parties without any pressure, threat or undue influence and the terms of the said compromise have been duly complied with. The compromise would go a long way in maintaining the peace and harmony between the parties and thus, a prayer has been made to the Court for compounding the offence in terms of Section 147 of the Act. Since the offence relating to dishonour of cheque has a compensatory profile and is required to have precedence over punitive mechanism, therefore, the present revision petition deserves to be allowed. In the present case, the petitioner was stated to be running a Tent house and on account of COVID-19 pandemic, his business had completely finished and it is the case of the petitioner that his family had to sell their tables and chairs so as to collect money to pay the complainant so as to compromise the matter with him. The fact that the complainant has agreed to finally settle the matter for an amount of Rs.2,60,000/- with respect to all the three cheques i.e. for Rs.1,25,000/-, Rs.70,000/-and for Rs.1,20,000/-, for a total amount of Rs.2,60,000/-, also shows that the financial position of the petitioner is not in a good State. It is settled law that this Court has the power to set aside the judgment of conviction against the petitioner on the basis of a valid compromise. The compromise in the present case is genuine and valid. The present criminal revision petition is allowed.

Summary

Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act, 1881.
2. Sentencing and fine imposed.
3. Compromise between the parties post-judgment.
4. Waiver of the 15% penalty amount due to financial hardship.
5. Setting aside of the conviction and sentence based on the compromise.

Detailed Analysis:

1. Conviction under Section 138 of the Negotiable Instruments Act, 1881:
The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, due to the dishonour of a cheque dated 23.7.2013 for Rs.70,000/- issued in favour of the complainant. The cheque was dishonoured with the remarks 'insufficient funds'. After giving the statutory notice and receiving no payment, the complainant filed a complaint under Section 138 of the Act.

2. Sentencing and Fine Imposed:
The trial court sentenced the petitioner to two years of rigorous imprisonment and imposed a fine of Rs.2000/-, with an additional one month of simple imprisonment in default of payment of the fine. The Additional Sessions Judge, Ludhiana, upheld this conviction and sentence on 17.3.2022.

3. Compromise Between the Parties Post-Judgment:
After the judgments, a compromise was reached on 30.4.2022, wherein the petitioner agreed to pay Rs.2,60,000/- to the complainant to settle the matter. The compromise was genuine and bona fide, entered into without coercion or undue influence. The complainant received Rs.60,000/- in cash and was to receive the remaining Rs.2,00,000/- via a bank draft.

4. Waiver of the 15% Penalty Amount Due to Financial Hardship:
The petitioner claimed inability to pay 15% of the cheque amount due to financial hardship exacerbated by the COVID-19 pandemic, which had severely impacted his tent business. The complainant acknowledged the petitioner's financial condition and agreed to settle for Rs.2,60,000/-. The court considered this financial hardship and waived the 15% penalty amount, citing similar precedents from the Supreme Court and a coordinate bench of the High Court.

5. Setting Aside of the Conviction and Sentence Based on the Compromise:
The court noted that the compromise would maintain peace and harmony between the parties. Given the compensatory nature of the offence under Section 138, the court allowed the criminal revision petition, setting aside the judgments of conviction and sentence dated 21.4.2017 and 17.3.2022. The court confirmed that the draft of Rs.2,00,000/- was handed over to the complainant in court, finalizing the settlement.

Conclusion:
The criminal revision petition was allowed based on the genuine compromise between the parties. The court set aside the conviction and sentence, acknowledging the petitioner's financial hardship and the mutual agreement to settle the matter for Rs.2,60,000/-. All pending miscellaneous applications were disposed of in light of this judgment.