Nand Lal vs H.P. State Co-Operative Agriculture & Rural Development Bank Ltd.

Sushil Kukreja, J

1.The instant petition has been filed by the petitioner-accused under Section 438 read with Section 442 of the Bharatiya Nagrik Suraksha Sanhita, 2023 (for short “BNSS”) against judgment, dated 10.09.2025, passed by learned Additional Sessions Judge, Kinnaur at Rampur Bushehar, District Shimla, H.P., in CIS Case Regd. No. 34 of 2025, whereby the judgment of conviction, dated 15.03.2025, and order of sentence, dated 1505.2025, passed by learned Judicial Magistrate First Class, Anni, District Kullu, H.P., in CIS Case No. 116 of 2018, was affirmed.

The brief facts, giving rise to the present petition, can succinctly be summarized as under:

The accused-Nand Lal approached the complainant-Bank for grant of loan of Rs.7,00,000/- for development of land, which was granted in his favour, as per the agreement executed by the accused. After availing the aforesaid loan, the accused did not adhere to the terms and conditions of the agreement and defaulted in depositing the monthly installments of the loan. The accused, in order to liquidate his financial liability towards the complainant-Bank on 04.10.2021 issued a cheque, bearing No. 886182, amounting to Rs.3,30,000/-, payable at Punjab National Bank in favour of the complainant-Bank. However, the aforesaid cheque, on being presented for encashment was dishonoured with remarks “funds insufficient”. Therefore, the complainant-Bank issued a legal notice to the accused, but he failed to pay the aforesaid amount to the complainant. Resultantly, the complainant-Bank filed a complaint under Section 138 of Negotiable Instruments Act (for short “the Act”) before the learned Trial Court.

The learned Trial Court after conclusion of the trial convicted the accused under Section 138 of the Act and sentenced him to undergo simple imprisonment for a period of two years and to pay compensation of Rs.6,60,000/- to the complainant-Bank and in default of payment of compensation amount the accused/convict was ordered to undergo further simple imprisonment for six months.

Being dissatisfied, the accused/petitioner/convict preferred an appeal before the learned Lower Appellate Court, which was dismissed, vide judgment dated 10.09.2025, and the judgment of conviction, dated 15.03.2025, and order of sentence, dated 15.05.2025, passed by the learned Trial Court, was affirmed. Hence, accused/petitioner/convict-Nand Lal preferred the instant petition under Section 438 of BNSS with a prayer that his petition be allowed and the impugned judgments and order of sentence passed by the learned Courts below be set- aside and he be acquitted.

During the pendency of the instant petition, an application (Cr.MP No. 5818 of 2025) under Section 147 of the Act has been filed by the petitioner-accused seeking permission of this Court to compound the offence on the basis of compromise by setting-aside the judgment of conviction, dated 15.03.2025, and order of sentence, dated 15.05.2025, passed by learned Judicial Magistrate 1st Class, Anni, District Kullu, H.P., which was affirmed by learned Additional Sessions Judge, Kinnaur at Rampur Bushahr, District Shimla, H.P., vide judgment, dated 10.09.2025, in CIS Case Regd. No. 34 of 2025.

Today, Mr. Narender Singh, Advocate, learned counsel for the complainant-Bank, who has been authorized by the complainant-Bank to make statement on its behalf before this Court, is present before this Court and his statement has been recorded and separately placed on the file.

Shri Narender Singh, Advocate, stated that during the pendency of the instant proceedings, the petitioner has paid the entire cheque amount alongwith all expenses and cost and no amount whatsoever remains to be paid by the petitioner in respect of cheque bearing number 886182, dated 04.10.2021, amounting to Rs.3,30,000/-. He further stated that the bank has also issued No Objection Certificate (NOC) in this respect, which is annexed as Annexure P-4. Therefore, the respondent/Bank has no objection in case the matter is compounded and judgment of conviction, dated 15.03.2025 and order of sentence, dated 15.05.2025, passed by learned Judicial Magistrate First Class, Anni, District Kullu, H.P., and upheld by learned Additional Sessions Judge, Kinnaur at Rampur Bushehar, District Shimla, H.P., vide judgment, dated 10.0-9.2025, is quashed and set-aside and the accused/petitioner is acquitted of the offence under Section 138 of the Act.

I have heard the learned counsel for the parties and have also gone through the material available on record.

Having taken note of the fact that the petitioner- accused has settled/paid the entire cheque amount alongwith all expenses and cost to the complainant-Bank and the complainant-Bank has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused- petitioner 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 SCC 663, wherein the Hon’ble Apex Court has held as under:-

“10. At present, we are of course concerned with Section 147 of the Act, which reads as follows:-

“147. Offences to be compoundable– Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable.”

At this point, it would be apt to clarify that in view of the non- obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure (hereinafter “CrPC”) will not be applicable in the strict sense since the latter is meant for the specified offences under the Indian Penal Code, 1860.

So far as the CrPC is concerned, Section 320 deals with offences which are compoundable, either by the parties without the leave of the court or by the parties but only with the leave of the Court. Sub-section (1) of Section 320 enumerates the offences which 9 are compoundable without the leave of the Court, while subsection (2) of the said section specifies the offences which are compoundable with the leave of the Court.

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 which states that ‘No offence shall be compounded except as provided by this Section’. 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; (2010) 15 Supreme Court Cases 352, 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. The relevant portion of the judgment is reproduced as under:-

“6. Thereafter a compromise was entered into and the petitioner claims that he has paid Rs. 4,52,289 to the respondent. In support of this claim, the petitioner has produced an affidavit sworn by him on 1.12.2008. The petitioner has also produced an affidavit sworn by P. Kaliappan, Power of attorney holder of R. Rajathi on 1.12.2008 mentioning that he has received a sum of Rs. 4,52,289 due under the dishonoured cheques in full discharge of the value of cheques and he is not willing to prosecute the petitioner.

The learned counsel for the petitioner states at the Bar that the petitioner was arrested on 30.7.2008 and has undergone the sentence imposed on him by the trial Court and confirmed by the Sessions Court, the High Court as well as by this Court. The two affidavits sought to be produced by the petitioner as additional documents would indicate that indeed a compromise has taken place between the petitioner and the respondent and the respondent has accepted the compromise offered by the petitioner pursuant to which he has received a sum of Rs.4,52,289. In the affidavit filed by the respondent a prayer is made to permit the petitioner to compound the offence and close the proceedings.

Having regard to the salutary provisions of Section 147 of the Negotiable Instruments Act read with Section 320 of the Code of Criminal Procedure, this Court is of the opinion that in view of the compromise arrived at between the parties, the petitioner should be permitted to compound the offence committed by him under Section 138 of the Code.”

Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant-Bank, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon’ble Apex Court.

Therefore, in view of the detailed discussion made hereinabove as well as law laid down by the Hon’ble Apex Court, the application is allowed and matter is ordered to be compounded.

Accordingly, the present matter is ordered to be compounded and the impugned judgment of conviction, dated 15.03.2025, and order of sentence, dated 15.05.2025, passed by learned Judicial Magistrate First Class, Anni, District Kullu, H.P. in CIS Case No. 116 of 2018 and affirmed by Additional Sessions Judge, Kinnaur at Rampur Bushahr, District Shimla, CIS Case Regd. No. 34 of 2025, are quashed and set-aside and the petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Bail bonds, if any, stand discharged.

Undisputedly, the total amount of the cheque is Rs.3,30,000/- however, the learned counsel for the petitioner submitted that the petitioner is a poor person and the imposition of compounding fee may be reduced.

In case K. Subramanian vs. R. Rajathi (supra), the Hon’ble Apex Court had issued the guidelines with respect to the imposition of compounding fee, which read as under:-

“THE GUIDELINES

(i) In the circumstances, it is proposed as follows:

(a) That directions can be given that the writ of summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the Court without imposing any costs on the accused.

(b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the Curt deems fit.

(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.

(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.

... ... ... ... ... ... ...

The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo, valuable time of the court is spent on the trial of these cases and the parties are not liable to pay any court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end.”

Therefore, taking into consideration the law laid down by the Hon’ble Apex Court (supra) and the financial condition of the petitioner, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.15,000/- (rupees fifteen thousand) only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today.

The learned counsel for the petitioner-accused submitted that the petitioner is undergoing sentence in the instant case and is presently lodged in Model Central Jail Kanda, Shimla, H.P.. Since the instant petition filed by the petitioner is allowed and the judgment of conviction, dated 15.03.2025, and order of sentence, dated 15.05.2025, passed by learned Judicial Magistrate First Class, Anni, District Kullu, H.P., in CIS Case No. 116 of 2018, and affirmed by learned Additional Sessions Judge, Kinnaur at Rampur Bushehar, District Shimla, H.P., in CIS Case Regd. No. 34 of 2025, have been quashed and set-aside and the petitioner-accused has been acquitted, the Superintendent, Model Central Jail Kanda, Shimla, H.P., is directed to release him forthwith, if not required in any other case.

The petition stands disposed of accordingly, so also the pending miscellaneous application(s), if any.