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2023 (12) TMI 1055 - HC - Indian LawsDishonour of Cheque - compounding of offence - CIRP proceedings have been initiated against the Accused company and its directors - whether the present case is an appropriate case where the consent of non-applicant no.2 for compounding the offence, could be ignored? - HELD THAT - In the present case, the complaint has been filed on 29.03.2018, the summons is said to have been issued in April, 2018. Advocates appeared through counsel. On 11.12.2018 the applicants have filed an application seeking compounding of offence. Demand draft of the entire amount of cheque was also annexed. Strictly speaking, the applicants have not filed the application on 1st or 2nd hearing of the case but have filed the same on third hearing of the case which can be said to be an initial stage. This application has been filed in response to the summons issued by the Court making it clear that if the applicants would make an application for compounding of offence at the first or second hearing of the case, the compounding may be allowed. The non-applicant no.2, thus, appears to have raised his claim for recovery of the amount on 03.01.2018 before the IRP. Admissible recovery, whether of Rs.3 crores or otherwise, will be considered before the IRP and in terms of the provisions of the IBC Code, 2016. In the circumstances, to not offer consent on the ground that the applicants owe dues to the non-applicant no.2 to the tune of Rs. 3 crores is, in my considered opinion, an abuse of process of law and, therefore, by invoking the jurisdiction u/s 482 of the Code, this attempt will have to be and stands nipped down. Whether it will be permissible for six accused (the present applicants) out of twelve, to seek compounding of offence? - HELD THAT - The applicants have referred to the judgment of the Allahabad High Court, in the case of GAGAN PAL SINGH AHUJA AND ORS VERSUS STATE OF U.P. AND ORS. 2023 (5) TMI 1280 - ALLAHABAD HIGH COURT , which was required to consider whether piecemeal compromise and compounding thereof is permissible and it was held that the scope and ambit of Section 482 Cr.P.C. is in much wider than that of Section 320 of Cr.P.C. The non-applicant is getting adequate compensation. In the circumstances, having given my thoughtful consideration to the attending circumstances, the request to compound the offence will have to be allowed. The present case appears to be a fit case where powers under Section 482 of the Code must be exercised, considering the peculiar facts and circumstances of the case - criminal application allowed.
Issues Involved:
1. Validity of the rejection of the application for compounding the offence under Section 138 of the Negotiable Instruments Act, 1881. 2. Interpretation and application of the guidelines laid down by the Supreme Court in Damodar S. Prabhu vs. Sayed Babalal and Meters and Instruments Private Limited vs. Kanchan Mehta. 3. The impact of insolvency proceedings on the compounding of offences under the NI Act. 4. The permissibility of piecemeal compounding of offences. Summary: Issue 1: Validity of the rejection of the application for compounding the offence under Section 138 of the NI Act The applicants were aggrieved by the order dated 03.11.2022, passed by the Magistrate, which rejected their application for compounding the offence upon full payment of the cheque amount. The Magistrate's decision was based on the non-applicant no.2's refusal to compound the offence, relying on the judgment in JIK Industries Limited vs. Amarlal V. Jumani. Issue 2: Interpretation and application of the guidelines laid down by the Supreme Court The applicants contended that the Magistrate's order did not consider the Supreme Court's guidelines in Damodar S. Prabhu vs. Sayed Babalal, which allow compounding at any stage without the complainant's consent if the accused compensates the complainant adequately. The Supreme Court's guidelines in Damodar's case were intended to reduce the pendency of Section 138 cases by encouraging early compounding. The Court noted that the guidelines should be followed to encourage settlement, especially at the initial stages of litigation. Issue 3: Impact of insolvency proceedings on the compounding of offences under the NI Act The applicants argued that the non-applicant no.2 had already filed its claim before the Interim Resolution Professional (IRP) under the Insolvency and Bankruptcy Code (IBC), and the Resolution Plan had been accepted. Therefore, the liability under the cheque had been satisfied through the Corporate Insolvency Resolution Process (CIRP). The Court found that the non-applicant no.2's refusal to consent to the compounding on the grounds of pending dues was an abuse of the process of law. Issue 4: Permissibility of piecemeal compounding of offences The Court referred to various judgments, including the Allahabad High Court's decision in Gaganpal Singh Ahuja vs. State of U.P., which recognized piecemeal compounding in appropriate cases. The Court concluded that in the present case, the non-applicant no.2 was adequately compensated by the applicants' offer to pay the cheque amount along with interest and litigation costs. Therefore, the compounding of the offence was permissible even without the complainant's consent. Order: The Court allowed the Criminal Application No.566/2023, set aside the impugned order dated 03.11.2022, and compounded the offence under Section 138 of the NI Act, subject to the applicants depositing the cheque amount with interest and litigation costs within fifteen working days. The applicants would be discharged upon depositing the demand draft in the trial Court. The request for a stay of the judgment's effect was granted for six weeks to allow the respondent no.2 to challenge the order before the Supreme Court.
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