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2024 (6) TMI 700 - HC - Indian LawsDishonour of Cheque - compounding of the matter - HELD THAT - The Hon ble Apex Court while dealing with the object of the scope of Section 138 and the provision of compounding in Section 147 of the Negotiable Instruments Act, has held in P. Mohanraj and Others versus Shah Brothers Ispat Private Limited 2021 (3) TMI 94 - SUPREME COURT . The Hon ble Apex Court has discussed the scope of Section 138 of the Negotiable Instruments Act Section 147, regarding compounding of offence, under the aforesaid Act, holding that ' even after issuance of notice if the payee or holder does not make the payment within the stipulated period, the statutory presumption would be of dishonest intention exposing to criminal liability.' Once the proceedings under Section 138 have been held to be proceedings in the form of a civil sheep in a criminal wolf s clothing, therefore, once the petitioner - accused has amicably decided to settle/liquidate/ discharge his liability, though, the transactionproceedings have a tinge of criminal liability, then, on settling the entire liability in view of Section 147 of the Negotiable Instruments Act, the compounding of offences, on discharge of liability, appears to be genuine, is certainly is a step towards securing the ends of justice. It is relevant to observe that once the Respondent- Complainant who had initiated the proceedings under Section 138 of the Negotiable Instruments Act, 1881, has received his cake then, no useful purpose will be achieved in continuing the criminal proceedings against the accused-petitioner despite having discharged/ liquidated his liability. This Court on the basis of the material placed on record is satisfied that the petitioner-accused Budhi Singh and Respondent No.2-Complainant have settled the dispute and Respondent No.2-Complainant has no grudges against the petitioner-accused, who has liquidated/ discharged/remitted his liability in favour of the complainant in the proceedings under Section 138 of the Act. Petition disposed off.
Issues Involved:
1. Quashing of judgment of conviction and sentence u/s 138 of the Negotiable Instruments Act. 2. Compounding of the offence based on settlement between parties. 3. Application of inherent powers u/s 482 Cr.P.C. Summary: Issue 1: Quashing of Judgment of Conviction and Sentence u/s 138 of the Negotiable Instruments Act The petitioner-accused filed a petition u/s 482 Cr.P.C. to quash the judgment of conviction and sentence dated 29.10.2021/24.11.2021 passed by the Trial Court, which imposed six months of simple imprisonment and compensation of Rs 2,00,000/- for the offence u/s 138 of the Negotiable Instruments Act. This judgment was affirmed by the Appellate Court on 07.10.2023. Issue 2: Compounding of the Offence Based on Settlement Between Parties During the petition, the petitioner-accused filed Cr.MP No.1477 of 2024, stating that the matter had been resolved and requested for compounding of the offence. This was confirmed by the counsel for the respondents, who acknowledged the settlement and agreed to the quashing of the impugned judgments. The Court noted the statutory provisions of Sections 138 and 147 of the Negotiable Instruments Act, emphasizing that offences under this Act are compoundable. Issue 3: Application of Inherent Powers u/s 482 Cr.P.C. The Court referred to Section 482 Cr.P.C., which preserves the inherent powers of the High Court to make necessary orders to prevent abuse of the process of any Court or to secure the ends of justice. The Court also cited various judgments of the Hon'ble Supreme Court, including Meters and Instruments Private Limited v. Kanchan Mehta, Madan Tiwari v. Yashwant Kumar Sahu, and P. Mohanraj v. Shah Brothers Ispat Private Limited, which support the compounding of offences under Section 138 of the Negotiable Instruments Act, even at later stages, if the parties have settled the matter. Conclusion: The Court concluded that since the petitioner-accused had settled the matter and discharged his liability towards the complainant, continuing the criminal proceedings would serve no purpose. The Court emphasized that the object of Section 147 of the Negotiable Instruments Act is to allow compounding of offences to enhance social amity and reduce friction. Consequently, the impugned judgments of conviction and sentence were quashed, and the petitioner-accused was acquitted of the offence u/s 138 of the Negotiable Instruments Act. The Court ordered the release of the petitioner-accused from custody, provided he was not required in any other case. The petition was disposed of accordingly.
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