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2022 (9) TMI 423 - HC - Indian LawsDishonor of Cheque - petitioner submits that Section 138 N.I. Act proceedings are primarily a civil wrong - rebuttal of presumption - HELD THAT - The offence under Section 138 of N.I. Act, although a criminal offence, it can certainly be considered as a civil wrong for the purpose of invoking Section 258 of the Cr.P.C. - This Court further takes note of the fact that in the year 2011 itself there was a clear refusal on the part of the respondent to accept the amount for compounding the offence herein. Since the parties have settled the dispute and complainant respondent No.2 had accepted the sum towards full and final settlement of the cheque, on the satisfaction of the complainant and in the light of provisions of Section 147 of NI Act - in view of law laid down by the Hon'ble Apex Court in the case of DAMODAR S. PRABHU VERSUS SAYED BABALAL H. 2010 (5) TMI 380 - SUPREME COURT , the sentence awarded to the petitioner for offence under Section 138 NI Act is liable to be set aside. The petitioner is directed to deposit 15% of the cheque amount with the State Legal Services Authority, Jodhpur within a period of two weeks from today - Application disposed off.
Issues:
1. Challenge to order dated 25.01.2018 rejecting the application under Section 258 of the Cr.P.C. 2. Interpretation of Section 138 of the Negotiable Instruments Act, 1881 as a civil wrong. 3. Compounding of the offence under Section 138 of the NI Act without consent of both parties. 4. Settlement between parties after rejection of appeal and imposition of costs. Analysis: 1. The petitioner challenged the order dated 25.01.2018 rejecting their application under Section 258 of the Cr.P.C., seeking to quash the proceedings related to a complaint filed under Section 138 of the Negotiable Instrument Act, 1881 for a cheque amount. The petitioner had preferred an appeal and offered to pay the cheque amount, but the application was opposed by the respondent, leading to the rejection of the application by the trial court. 2. The petitioner contended that proceedings under Section 138 of the NI Act are primarily a civil wrong, relying on the judgment of the Hon'ble Apex Court in Meters and Instruments (P) Ltd. vs. Kanchan Mehta. The Court noted that even though compounding usually requires consent of both parties, the Court can close the proceedings and discharge the accused if satisfied that the complainant has been compensated, as established in the precedent law cited. 3. Despite the respondent's opposition to closing the proceedings on payment being made, the Court found that the petitioner's offer to pay an amount higher than the original cheque sum was in line with the principles outlined in the precedent law. The Court emphasized that the offence under Section 138 of the NI Act, though criminal in nature, can be treated as a civil wrong for invoking Section 258 of the Cr.P.C. 4. Following a settlement between the parties after the rejection of the appeal, where the respondent accepted the sum for full settlement, the Court referred to the decision in Damodar S. Prabhu vs. Sayed Babalal H. The Court set aside the sentence awarded to the petitioner under Section 138 of the NI Act, imposing a cost of 15% of the cheque amount on the petitioner. The petitioner was directed to deposit this amount with the State Legal Services Authority and release the demand draft in favor of the respondent. This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed understanding of the legal reasoning and implications of the Court's decision.
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