S.B. Criminal Revision No.533 of 2017

16th April, 2018.

Petitioner Counsel: Mr. PANKAJ GUPTA
Respondent Counsel: Mr. MAHESH SAINI

Cases Cited:
Damodar S. Prabhu Vs. Sayed Babalal H., 2010 ALL MR (Cri) 1967 (S.C.)=(2010) 5 SCC 663 [Para 5,10,12]
M/s. Meters and Instruments Pvt. Ltd. & Anr. Vs. Kanchan Mehta, 2017 ALL SCR (Cri) 1875=(2018) 1 SCC 560 [Para 9,10]

JUDGMENT

JUDGMENT :- Accused-petitioner has preferred this revision petition under Section 397/401 Cr.P.C. to challenge judgment dated 20.04.2017, passed by Additional Sessions Judge, Suratgarh, District Sriganganagar (for short, 'learned appellate Court'), whereby learned appellate Court has confirmed judgment dated 17.12.2015, rendered by Additional Chief Judicial Magistrate, Suratgarh, Sriganganagar (for short, 'learned trial Court'). The learned trial Court, by its verdict dated 17.12.2015, indicted accused-petitioner for offence under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'Act') and handed down sentence of one year's simple imprisonment. Besides imprisonment, the learned trial Court has also ordered that accused-petitioner should pay compensation to the complainant to the tune to Rs.5,65,000/-. Being aggrieved by the same, petitioner approached learned appellate Court but that effort did not fructify to her advantage as the learned appellate Court dismissed her appeal. This sort of situation has necessitated filing of this revision petition.

2. Learned counsel for the petitioner submits that now rival parties have sorted out their dispute and compromise has been arrived at. With this positive assertion, learned counsel has urged that both the impugned judgments be annulled and sentence handed down by learned trial Court and confirmed by learned appellate Court be set aside.

3. Learned counsel for the complainant, while acknowledging the compromise arrived at between the parties, would urge that looking to the nature of offence and in the wake of settlement of dispute between rival parties, the conviction recorded by learned trial Court and upheld by the learned appellate Court merits annulment.

4. I have heard learned counsel for the accused-petitioner and learned counsel for the complainant and perused the materials available on record.

5. Chapter XVII of the Act deals with penalties in case of dishonor of cheques for insufficiency of funds in the accounts. A complete procedure in this behalf is provided under Section 138 to 147 of the Act. Section 142 deals with cognizance of offence and Section 143 empowers a Court to try cases under Section 138 of the Act summarily. As per Section 147 of the Act, every offence punishable under the Act is compoundable notwithstanding anything contained in the Cr.P.C. While it is true that the offence is compoundable but a pivotal question, which has emerged for consideration, is whether revisional powers can be exercised by this Court to compound the offence under Section 138 of the Act after conviction of the petitioner by appellate Court. The legal position in this behalf was fluid until the judgment rendered in Damodar S. Prabhu Vs. Sayed Babalal H. [(2010) 5 SCC 663] : [2010 ALL MR (Cri) 1967 (S.C.)] by the Supreme Court. In the said verdict, Supreme Court has examined the provisions of Section 138 and 147 of the Act threadbare and observed that compensatory aspect of the remedy should be given priority over the punitive aspect. While discussing object of Section 138 of the Act, the Court held:

"However, there are some larger issues which can be appropriately addressed in the context of the present case. It may be recalled that Chapter XVII comprising Section 138 to 142 was inserted into the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988). The object of bringing Section 138 into the statute was to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. It was to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficient arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers. If the cheque is dishonoured for insufficiency of funds in the drawer's account or if it exceeds the amount arranged to be paid from that account, the drawer is to be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both.

It may be noted that when the offence was inserted in the statute in 1988, it carried the provision for imprisonment up to one year, which was revised to two years following the amendment to the Act in 2002. It is quite evident that the legislative intent was to provide a strong criminal remedy in order to deter the worryingly high incidence of dishonour of cheques. While the possibility of imprisonment up to two years provides a remedy of a punitive nature, the provision for imposing a 'fine which may extent to twice the amount of the cheque' serves a compensatory purpose. What must be remembered is that the dishonour of a cheque can be best described as a regulatory offence that has been created to serve the public interest in ensuring the reliability of these instruments. The impact of this offence is usually confined to the private parties involved in commercial transactions."

6. While switching on to examine Section 147 of the Act, Supreme Court has observed that this being an enabling provision, it can serve as exception to the general rule incorporated in sub-sec.(9) of Section 320 Cr.P.C. The Court, while laying emphasis on non-abstante clause under the aforesaid Section, further held that Section 147 inserted by way of amendment to special law will override the effect of Section 320(9) Cr.P.C. Placing reliance on some earlier judgments, the Court, has approved compounding of offences at later stage of litigation in cheque bouncing cases, and held:

"The compounding of the offence at later stages of litigation in cheque bouncing cases has also been held to be permissible in a recent decision of this Court, reported as K.M. Ibrahim v. K.P. Mohammed & Anr., wherein Kabir, J. has noted (at SCC p. 802, paras 13- 14):

"13. 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 provisions of the Code relating to compounding of offences....

14. It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. Accordingly, we find no reason to reject the application under Section 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution."

It is evident that the permissibility of the compounding of an offence is linked to the perceived seriousness of the offence and the nature of the remedy provided. On this point we can refer to the following extracts from an academic commentary [Cited from: K.N.C. Pillai, R.V. Kelkar's Criminal Procedure, Fifth Edn. (Lucknow: Eastern Book Company, 2008) at p. 444]:

"17.2 Compounding of offences,- A crime is essentially a wrong against the society and the State. Therefore, any compromise between the accused person and the individual victim of the crime should not absolve the accused from criminal responsibility. However, where the offences are essentially of a private nature and relatively not quite serious, the Code considers it expedient to recognize some of them as compoundable offences and some others as compoundable only with the permission of the court. ..."

In a recently published commentary, the following observations have been made with regard to the offence punishable under Section 138 of the Act [Cited from: Arun Mohan, Some Thoughts Towards Law Reforms on the topic of Section 138, Negotiable Instruments Act -Tackling an avalanche of cases (New Delhi: Universal Law Publishing Co. Pvt. Ltd., 2009) at p. 5]

"... Unlike that for other forms of crime, the punishment here (in so far as the complainant is concerned) is not a means of seeking retribution, but is more a means to ensure payment of money. The complainant's interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused who is willing to undergo a jail term, there is little available as remedy for the holder of the cheque.

If we were to examine the number of complaints filed which were 'compromised' or 'settled' before the final judgment on one side and the cases which proceeded to judgment and conviction on the other, we will find that the bulk was settled and only a miniscule number continued."

7. Finally, the Court has framed certain guidelines for a graded scheme of imposing costs on parties, who unduly delay compounding of the offences. Framing the guidelines, the Court held:

"With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:-

(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. "

8. At this stage, it would be just and appropriate to refer that the petitioner has surrendered before the learned trial Court. It is also relevant that both the parties have entered into compromise and same has been verified, by the counsels appearing on behalf of rival parties before the Deputy Registrar (Judl.), in pursuance of direction issued by this Court on 04.04.2018. The complete text of compromise, in vernacular, reads as under:

"euds T;ksfr izdk'k Bkdjk.kh iq= Jh HkS:nku Bkdjk.kh tkfr czkgE.k fuoklh okMZ ua0 16u;k 11iqjkuk xks'kkyk ds ikl lwjrx<+ rglhy lwjrx<+ ftyk Jhxaxkuxj jktLFkku dk gwWa tks fuEu gYQu c;ku djrk gwW fd %&

1- ;g fd fedj }kjk ,d eqdnek u0 382@2014 lh0vkbZ0,l0 u0 828@2015 vUrxZr /kkjk 138 N.I. Act dk vfr0 eq[; U;kf;d eftLVªsV] lwjrx<+ ds le{k fd;k x;k Fkk ftlesa vfr0 eq[; U;kf;d eftLVªsV] lwjrx<+ }kjk fu.kZ; fnukad 17@12@2015 dks vfHk;qDr v'kksd dokrMk iq= jkenhRrk ey fuoklh 'kkjnk cky fudsru Ldwy lwjrx<+ rglhy lwjrx<+ ftyk Jhxaxkuxj dks ,d o"kAZ dk lk/kkj.k dkjkokl o 5]65]000@& :0 crkSj {kfriwfrZ dk fu.kZ; fn;k Fkk ftls vfr0 ls'ku U;k;k/kh'k lwjrx<+ }kjk vihy la0 02@2016 lh0vkbZ0,l0 u0 02@2016 esa Hkh mDr fu.kZ; dks ;Fkkor j[kk FkkA

2- ;g fd mijksDr eqdnesa esa fedj ,oa vfHk;qDr dk vkilh iapk;r }kjk jkthukek dks pqdk gS o fedj us viuh reke jkf'k crkSj xokgku uxn izkIr dj yh gS A

3- ;g fd vc fedj o vfHk;qDr ds chp fdlh Hkh izdkj dk dksbZ ysu nsu 'ks"k ugha jgk gS uk gh dksbZ fookn ckdh gS A

4- ;g fd 'kiFk i= dh en la[;k 1 rk 3 fedj }kjk lgh lgh o lR; fy[kokbZ gS dksbZ rF; fNik;k ugha x;k gS A bZ'oj esjh enn djs A"

9. Supreme Court in a recent judgment M/s. Meters and Instruments Pvt. Ltd. & Anr. V/s. Kanchan Mehta [(2018) 1 SCC 560] : [2017 ALL SCR (Cri) 1875] has reiterated the compensatory aspect of remedy to be given priority over the punitive aspect vis-a-vis offence under Section 138 of the N.I. Act. The Court held:-

"18. 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."

10. Applying the ratio decidendi of Damodar S.Prabhu [2010 ALL MR (Cri) 1967 (S.C.)] & M/s. Meters and Instruments Pvt. Ltd. [2017 ALL SCR (Cri) 1875] (supra) and the guidelines framed therein, on the strength of compromise being arrived at between petitioner and the complainant, I feel persuaded to exercise revisional jurisdiction for doing real and substantial justice in the matter for the administration of which alone the Courts exist.

11. Accordingly, I prefer to give priority to the compensatory aspect of remedy over the punitive aspect in the matter in the wake of settlement of dispute and compromise being arrived at between the rival parties.

12. In view of foregoing discussion, the instant revision petition is allowed, impugned judgment dated 20.04.2017 passed by learned appellate Court as well as judgment dated 17.12.2015 passed by the learned trial Court are set at naught as a consequence of compromise having been arrived at between +6the rival parties and while acknowledging their compromise offence under Sec. 138 of the Act is hereby compounded by resorting to Section 147 of the Act. Compounding of offence under Section 138 of the Act, obviously, entails acquittal of the petitioner.

However, taking into account the fact that petitioner has caused undue delay in making endeavour for compounding of offence, in terms of guidelines framed by the Supreme Court in Damodar S. Prabhu [2010 ALL MR (Cri) 1967 (S.C.)] (supra), accused-petitioner is ordered to be released, if not required in any other case, subject to the condition that he deposits 10% of the cheque amount, i.e., Rs.49,000/- with the District Legal Services Authority, Sriganganagar.

Petition allowed.