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Judgment
Prayer in this appeal is to set aside the judgment dated 08.05.2017
passed by the trial Court vide which the proceedings in a complaint filed by the
appellant-complainant under Section 138 of the Negotiable Instruments Act
('' N.I. Act '' for short) were compounded.
Brief facts of the case are that the appellant has filed a complaint
under Section 138 of N.I. Act with the allegations that the respondents-accused
issued a cheque of Rs.2 lacs, in discharge of their liabilities and when the
cheque was returned by the bank for the reasons "Account Blocked", the
appellant issued a legal notice and thereafter, filed the present complaint. After
the trial Court summoned the respondents-accused, they filed an application
(Annexure A-2) for compounding the offence as the accused have submitted a
demand draft for Rs.2 lacs in favour of the appellant-complainant. The said
application was contested by the appellant by filing reply (Annexure A-3). The
trial Court, vide impugned order dated 08.05.2017, passed the following order: -
"Perusal of case file also reveals that the present application for
compounding is moved before this Court at a subsequent stage.
The compounding of the offence at later stages of litigation in
cheque bouncing cases has also been held to be permissible in
case titled as KM. Ibrahim Vs. K.P. Mohsmmrf & St., 2009 (14)
SCALE 262, wherein it has been noted (at page 11): -
As far as the non-obstante clause included in Section
147 of the 1881 Act is concerned, the 1881 Act being a
special statute, the provisions of Section 147 will have an
overriding effect over the provision of the Code relating to
compounding of offences....
The proceedings u/s 138 of the Negotiable Instruments Act
are semi criminal in nature. For the interest of justice,
compensatory remedy should be given priority over the punitive
aspect. In case Damodar S. Prabhu Vs. Sayed Baba Lal H.,
Criminal Appeal Nos.964-966 of 2010, the following guidelines
have been issued: -
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 Court
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 present matter falls within the preview of 1(b) of
guidelines. However, learned counsel for the complainant
contended that the complainant is not agreed to compound the
offence. However, I am of the considered view that receiving the
Demand Draft against the cheque amount shows her concern with
the payment only. The complainant seems to be interested in
prosecuting the accused in vindictive mind. She can claim
damages by availing other legal remedies under Civil law, if the
complainant feels harass on account of litigation it is open for her
to claim damages and compensation in accordance with law.
Reliance is placed on case titled as Vijay Verma Vs. Bellow
Jewells Pvt. Ltd. and others, CRM-A-73-MA-2014 (O&M).
Hence, keeping in view the circumstances of the case as well as
maintaining the harmony between the complainant and the
accused, the present matter is hereby compounded subject to
condition that accused is required to pay 10% of cheque amount in
District Legal Services Authority. Receipt be placed on record on
the next date of hearing and thereafter, file will be consigned to
record room being compounded."
Counsel for the appellant submits that the trial Court was not
justified in compounding the offence under Section 138 of N.I. Act, as the same
was done without following the proper procedure. Counsel for the appellant has
relied upon JIK Industries Limited and others Vs. Amarlal V. Jumani and
another, 2012 (1) RCR (Crl.) 822, wherein the Hon''ble Supreme Court has
held as under: -
"In our country also when the Criminal Procedure Code, 1861
was enacted it was silent about the compounding of offence.
Subsequently, when the next Code of 1872 was introduced it
mentioned about compounding in Section 188 by providing the
mode of compounding. However, it did not contain any provision
declaring what offences were compoundable. The decision as to
what offences were compoundable was governed by reference to
the exception to Section 214 of the Indian Penal Code. The
subsequent Code of 1898 provided Section 345 indicating the
offences which were compoundable but the said Section was only
made applicable to compounding of offences defined and
permissible under Indian Penal code. The present Code, which
repealed the 1898 Code, contains Section 320 containing
comprehensive provisions for compounding. A perusal of Section
320 makes it clear that the provisions contained in Section
320 and the various sub-sections is a Code by itself relating to
compounding of offence. It provides for the various parameters
and procedures and guidelines in the matter of compounding. If
this Court upholds the contention of the appellant that as a result
of incorporation of Section 147 in the N.I. Act, the entire gamut of
procedure of Section 320 of the Code are made inapplicable to
compounding of an offence under the N.I. Act, in that case the
compounding of offence under N.I. Act will be left totally unguided
or uncontrolled. Such an interpretation apart from being an
absurd or unreasonable one will also be contrary to the provisions
of Section 4(2) of the Code, which has been discussed above.
There is no other statutory procedure for compounding of offence
under N.I. Act . Therefore, Section 147 of the N.I. Act must be
reasonably construed to mean that as a result of the said Section
the offences under N.I. Act are made compoundable, but the main
principle of such compounding, namely, the consent of the person
aggrieved or the person injured or the complainant cannot be
wished away nor can the same be substituted by virtue of Section
147 of N.I. Act.
For the reasons aforesaid, this Court is unable to
accept the contentions of the learned counsel for the appellant(s)
that as a result of sanction of a scheme under Section 391 of the
Companies Act there is an automatic compounding of offences
under Section 138 of the N.I. Act even without the consent of the
complainant."
Counsel for the appellant has thus submitted that the compounding,
without consent of the complainant, cannot be ordered by the trial Court. He has
also relied upon M/s Meters and Instruments Private Limited and anr. Vs.
Kanchan Mehta, 2017 (4) RCR (Crl.) 476, wherein the Hon''ble Supreme
Court has as under: -
"From the above discussion following aspects emerge:
i) Offence under Section 138 of the Act is primarily a civil
wrong. Burden of proof is on accused in view presumption
under Section 139 but the standard of such proof is
"preponderance of probabilities". The same has to be
normally tried summarily as per provisions of summary trial
under the Cr.P.C . but with such variation as may be
appropriate to proceedings under Chapter XVII of the Act.
Thus read, principle of Section 258 Cr.P.C. will apply and the
Court can close the proceedings and discharge the accused on
satisfaction that the cheque amount with assessed costs and
interest is paid and if there is no reason to proceed with the
punitive aspect.
ii) The object of the provision being primarily compensatory,
punitive element being mainly with the object of enforcing the
compensatory element, compounding at the initial stage has to
be encouraged but is not debarred at later stage subject to
appropriate compensation as may be found acceptable to the
parties or the Court.
iii) Though compounding requires consent of both parties,
even in absence of such consent, the Court, in the interests of
justice, on being satisfied that the complainant has been duly
compensated, can in its discretion close the proceedings and
discharge the accused.
iv) Procedure for trial of cases under Chapter XVII of the Act
has normally to be summary. The discretion of the Magistrate
under second proviso to Section 143, to hold that it was
undesirable to try the case summarily as sentence of more than
one year may have to be passed, is to be exercised after
considering the further fact that apart from the sentence of
imprisonment, the Court has jurisdiction under Section
357(3) Cr.P.C. to award suitable compensation with default
sentence under Section 64 IPC and with further powers of
recovery under Section 431 Cr.P.C. With this approach, prison sentence of more than one year may not be required in
all cases. v) Since evidence of the complaint can be given on affidavit,
subject to the Court summoning the person giving affidavit
and examining him and the bank''s slip being prima facie
evidence of the dishonor of cheque, it is unnecessary for the
Magistrate to record any further preliminary evidence. Such
affidavit evidence can be read as evidence at all stages of trial
or other proceedings. The manner of examination of the
person giving affidavit can be as per Section 264 Cr.P.C. The
scheme is to follow summary procedure except where exercise
of power under second proviso to Section
143 becomes necessary, where sentence of one year may have
to be awarded and compensation under Section 357(3) is
considered inadequate, having regard to the amount of the
cheque, the financial capacity and the conduct of the accused
or any other circumstances."
After hearing learned counsel for the appellant, I find no merit in
the present appeal. Admittedly, the appellant accepted the demand draft of Rs.2
lacs against the cheque amount and the accused persons have been further
directed to deposit 10% of the cheque amount in District Legal Services
Authority, therefore, the implied consent of the appellant is apparent on record.
Even otherwise, the Hon''ble Supreme Court in M/s Meters and Instruments
Private Limited''s case (supra) has held that though for the compounding,
consent of both the parties is required but in the absence of consent of one
party, the Court in the interest of justice on being satisfied that the complainant
has been duly compensated, in its discretion, can close the proceedings and
discharge the accused.
A perusal of the impugned order passed by the trial Court shows
that the same has been passed in the light of the judgment passed by the
Hon''ble Supreme Court in Damodar S. Prabhu Vs. Sayed Babalal H., 2010
(2) RCR (Crl.) 851. The only argument raised by counsel for the appellant that
the appellant has not given consent for compounding the offence, was duly
noticed by the trial Court, as the appellant-complainant has accepted the
demand draft of Rs.2 lacs as against the cheque amount of Rs.2 lacs, which
proves the consent of the appellant.
For the reasons stated above, I find no illegality in the impugned
order passed by the trial Court.
Accordingly, the application under Section 378 (4) of Cr.P.C . as
well as the present appeal are dismissed.