2025 (1) TMI 130 - HC - Indian Laws

Dishonour of Cheque - conviction of the petitioner-accused under Section 138 of the Negotiable Instruments Act, 1881 - compounding of offences - compromise arrived between the parties - HELD THAT - Having taken note of the fact that the petitioneraccused and the complainant-respondent have settled the matter and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accusedpetitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H. 2010 (5) TMI 380 - SUPREME COURT , wherein the Hon ble Apex Court has held ' A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Indian Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause.' In K. Subramanian Vs. R. Rajathi 2009 (11) TMI 1013 - SUPREME COURT , it has been held by the Hon ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Conclusion - Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant, prayer for compounding the offence can be accepted. Petition disposed off.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions presented and considered in this judgment are:

Whether the conviction of the petitioner-accused under Section 138 of the Negotiable Instruments Act, 1881, should be upheld or set aside.
Whether the offence under Section 138 of the Negotiable Instruments Act can be compounded after a conviction has been recorded.
Whether the petitioner-accused should be acquitted based on the compromise reached between the parties.
What is the appropriate compounding fee, if any, given the financial circumstances of the petitioner?

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Conviction under Section 138 of the Negotiable Instruments Act

Relevant legal framework and precedents: Section 138 of the Negotiable Instruments Act, 1881, deals with the dishonor of cheques due to insufficient funds. The legal framework allows for punishment of imprisonment and/or fine.
Court's interpretation and reasoning: The court initially affirmed the conviction based on evidence that the cheque issued by the petitioner was dishonored and the legal notice was not complied with.
Key evidence and findings: The cheque issued by the petitioner was dishonored due to insufficient funds, and the petitioner failed to pay the amount after receiving a legal notice.
Application of law to facts: The facts supported the conviction under Section 138, as the elements of the offence were satisfied.
Treatment of competing arguments: The petitioner argued for acquittal based on a subsequent compromise, which the court considered under Section 147 of the Act.
Conclusions: The initial conviction was upheld until a compromise was reached, allowing for the compounding of the offence.

Issue 2: Compounding of Offence under Section 138

Relevant legal framework and precedents: Section 147 of the Negotiable Instruments Act allows for the compounding of offences, overriding Section 320 of the CrPC. The Supreme Court's guidelines in Damodar S. Prabhu v. Sayed Babalal H. and K. Subramanian v. R. Rajathi were considered.
Court's interpretation and reasoning: The court recognized the non-obstante clause in Section 147, allowing compounding even after conviction.
Key evidence and findings: A compromise deed was executed, and the complainant received the full compensation amount.
Application of law to facts: The court applied Section 147 to allow compounding, considering the compromise and the complainant's lack of objection.
Treatment of competing arguments: The court balanced the petitioner's financial constraints with the legal requirement for a compounding fee.
Conclusions: The offence was compounded, and the conviction was set aside based on the compromise.

Issue 3: Appropriate Compounding Fee

Relevant legal framework and precedents: The Supreme Court's guidelines suggest a graded scheme for compounding fees based on the stage of litigation.
Court's interpretation and reasoning: The court considered the petitioner's financial condition and the guidelines to determine a reduced compounding fee.
Key evidence and findings: The petitioner's financial hardship was noted.
Application of law to facts: A token compounding fee of Rs. 5,000 was deemed appropriate.
Treatment of competing arguments: The court exercised discretion to reduce the fee while ensuring compliance with legal standards.
Conclusions: The petitioner was directed to pay a reduced compounding fee, considering his financial situation.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 of the CrPC."
Core principles established: Offences under Section 138 can be compounded post-conviction, and courts have discretion in determining compounding fees.
Final determinations on each issue: The conviction under Section 138 was set aside; the offence was compounded; and a reduced compounding fee was imposed.

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