2024 (12) TMI 592 - HC - Indian Laws

Dishonour of Cheque - compounding of offence - parties have entered into compromise with their free will - conviction for offence under Sections 138 of N.I. Act 1881 - HELD THAT - Since the parties have entered into compromise at the stage of revision therefore law laid down by the apex Court in the case of Damodar S. Prabhu Vs. Sayed Babalal H. 2010 (5) TMI 380 - SUPREME COURT will be applicable in this case where it was held that It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 of the CrPC cannot be followed in the strict sense. In view of the legislative vacuum we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act. . Considering the fact that the parties have amicably settled their dispute and have entered into compromise before this Court in the revision and decided to avoid further litigation hence the applicant is liable to pay 3% of the cheque amount of Rs.2, 00, 000/-i.e. Rs.6000/- by way of cost to be deposited with the State Legal Services Authority Indore - Subject to payment of cost at the rate of 3% of the cheque amount with the State Legal Services Authority Indore within a period of 10 days from today the applicant be released from the jail the applicant shall be acquitted from the charges under Section 138 of N.I. Act on the basis of compromise. The revision disposed off.

Summary

Issues:
Petitioner convicted under Section 138 of N.I. Act 1881 seeks reduction of sentence based on compromise application verified by Principal Registrar. Applicability of guidelines for graded scheme of imposing costs in cheque bouncing cases as per Damodar S. Prabhu Vs. Sayed Babalal H. case. Judicial endorsement of guidelines seen as discouragement for delaying composition of offence under Section 138. Application of graded scheme for costs to encourage early compounding. Power of the court to frame guidelines in legislative vacuum under Article 142 of the Constitution.

Analysis:
The judgment involves a revision petition filed against a conviction under Section 138 of the Negotiable Instruments Act, 1881. The petitioner sought a reduction in the sentence based on a compromise application, which was verified by the Principal Registrar. The compromise was found to be voluntary without any undue influence. The court referred to the case of Damodar S. Prabhu Vs. Sayed Babalal H. and applied the guidelines for a graded scheme of imposing costs in cheque bouncing cases to discourage delays in compounding offences. The court emphasized the need for early compounding to save valuable court time and encouraged parties to resolve disputes at an early stage.

The judgment highlighted the judicial endorsement of the guidelines as a means to discourage litigants from unduly delaying the composition of the offence under Section 138. The court acknowledged the absence of specific guidance in the legislation regarding compounding of offences under the Act and justified the endorsement of suggestions to fill the legislative vacuum. The graded scheme for imposing costs was seen as a tool to promote early compounding and reduce the burden on the court system.

Furthermore, the court emphasized the discretionary power of the competent court to impose costs based on the specific circumstances of each case. While the court suggested a scale of costs for uniformity, it recognized the need for flexibility in reducing costs based on individual cases. The judgment reiterated the importance of bona fide litigants pursuing cases to their logical end while also encouraging parties to settle disputes amicably to avoid prolonged litigation.

In conclusion, the court ordered the petitioner to pay 3% of the cheque amount as costs to be deposited with the State Legal Services Authority in Indore. Upon payment of the costs within a specified period, the petitioner would be released from jail and acquitted from the charges under Section 138 of the Negotiable Instruments Act based on the compromise. Failure to deposit the specified amount would result in the petitioner undergoing the original sentence and compensation as awarded by the trial court. The judgment disposed of the revision petition, subject to the payment of costs as directed.