Himachal Pradesh High Court
Surjit Kumar Gupta vs . M/S Lakshmi Fruit on 26 August, 2025
Surjit Kumar Gupta vs. M/s Lakshmi Fruit .
Cr.Revision No. 274 of 2023 Reserved on:14.08.2025 26.08.2025 Present: Mr Panku Chaudhary, Advocate, for the petitioner.
Mr. Ashok Kumar Tyagi, Advocate, for the respondent.
r The to
Cr.MP No. 3402 of 2025
applicant has filed the present
application for compounding the offence. It has been asserted that the applicant was convicted and sentenced by the learned Judicial Magistrate First Class, Manali, Kullu, District Kullu, H.P. (learned Trial Court). An appeal filed by him was dismissed by the learned Sessions Judge, Kullu, District Kullu, H.P. (learned Appellate Court). The applicant has deposited the entire compensation through a demand draft. The complainant has settled the dispute with the applicant.
Hence, the present application seeking a composition of the offence.
2. Learned counsel for the respondent/complainant admitted that the matter has been reconciled between the parties.
3. Learned counsel for the petitioner/accused ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 2 submitted that 15 % of the cheque amount be reduced.
.
4. Heard.
5. The Hon'ble Supreme Court held in M.P. State Legal Services Authority vs. Prateek Jain, (2014) 10 SCC 690, that the purpose of laying down the guideline was to discourage people from contesting the complaints and then compounding the matter when they are driven to the wall. This leads to clogging the docket of the Court; therefore, the parties should be permitted to compound the offence at the earliest to save the time of the Court and the complainant. It was observed:-
"19. The purpose of laying down the Guidelines in Damodar S. Prabhu [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663: (2010) 2 SCC (Civ) 520: (2010) 2 SCC (Cri) 1328] is explained in the said judgment itself. The Court in that case was concerned with the stage of the case when compounding of the offence under Section 147 of the Act is to be permitted. To put it otherwise, the question was as to whether such a compounding can be only at the trial court stage or is permissible even at the appellate stage. It was noted that even before the insertion of Section 147 of the Act, by way of amendment in the year 2002, some High Courts had permitted the compounding of the offence contemplated by Section 138 of the Act during the later stages of litigation. This was so done by this Court also in O.P. Dholakia v. State of Haryana [(2000) 1 SCC 762: 2000 SCC (Cri) 310] and in some other cases which were noticed by the Bench. From these ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 3 judgments, the Court concluded that the .
compounding of offence at later stages of litigation in cheque-bouncing cases was held to be permissible.
20. While holding so, the Court also took note of the phenomena which was widely prevalent in the manner in which cases under Section 138 of the Act proceed in this country. It noticed that there was a tendency on the part of the accused persons to drag on these proceedings and resort to the settlement process only at a stage when the accused persons were driven to the wall. It is for this reason that most of the complaints filed result in compromise or settlement before the final judgment on the one side, and even in those cases where judgment is pronounced and conviction is recorded, such cases are settled at the appellate stage. This was so noted in paras 18-19 of the judgment [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663: (2010) 2 SCC (Civ) 520: (2010) 2 SCC (Cri) 1328], which read as under: (Damodar S. Prabhu case [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663 :
(2010) 2 SCC (Civ) 520 : (2010) 2 SCC (Cri) 1328], SCC pp. 670-71) "18. It is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. There is also some support for the apprehensions raised by the learned Attorney General that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute. Furthermore, the written submissions filed on behalf of the ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 4 learned Attorney General have stressed the .
fact that unlike Section 320 CrPC, Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court.
19. As mentioned earlier, the learned Attorney General's submission is that in the absence of statutory guidance, parties are choosing compounding as a method of last resort instead of opting for it as soon as the Magistrates take cognizance of the complaints. One explanation for such behaviour could be that the accused persons are willing to take the chance of progressing through the various stages of litigation and then choose the route of settlement only when no other route remains. While such behaviour may be viewed as rational from the viewpoint of litigants, the hard facts are that the undue delay in opting for compounding contributes to the arrears pending before the courts at various levels. If the accused is willing to settle or compromise by way of compounding the offence at a later stage of litigation, it is generally indicative of some merit in the complainant's case. In such cases, it would be desirable if parties choose compounding during the earlier stages of litigation. If, however, the accused has a valid defence such as a mistake, forgery or coercion, among other grounds, then the matter can be litigated through the specified forums."
This particular tendency prompted the Court to accept the submission of the Attorney General to frame guidelines for a graded scheme of imposing costs on parties who unduly delay ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 5 compounding of the offence inasmuch as such a .
requirement of deposit of the costs will act as a deterrent for delayed composition since free and easy compounding of the offences at any stage, however belated, was given incentive to the drawer of the cheque to delay settling of cases for years. For this reason, the Court framed the guidelines permitting compounding with the imposition of varying costs depending upon the stage at which the settlement took place in a particular case.
21. After formulating "The Guidelines", which are already extracted above, the Court made very pertinent observations in paras 24-26 of the said judgment [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663: (2010) 2 SCC (Civ) 520: (2010) 2 SCC (Cri) 1328] which would have a bearing in the present case. Thus, we reproduce the same below: (Damodar S. Prabhu case [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663:
(2010) 2 SCC (Civ) 520: (2010) 2 SCC (Cri) 1328], SCC p. 673) "24. We are also conscious of the view that the judicial endorsement of the above-
quoted Guidelines could be seen as an act of judicial law-making and therefore an intrusion into the legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 CrPC cannot be followed in a strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act.
::: Downloaded on - 26/08/2025 21:34:48 :::CIS 625. 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 r 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.
26. Even in the past, this Court has used its power to do complete justice under Article 142 of the Constitution to frame guidelines in relation to subjectmatter where there was a legislative vacuum."
It is clear from the reading of the aforesaid paragraphs that the Court made it clear that framing of the said Guidelines did not amount to judicial legislation. In the opinion of the Court, since Section 147 of the Act did not carry any guidance on how to proceed with compounding the offences under the Act and Section 320 of the Code of Criminal Procedure, 1973 could not be followed in a strict sense in respect of the offences pertaining to Section 138 of the Act, there was a legislative vacuum which prompted the Court to frame those guidelines to achieve the following objectives:
(i) to discourage litigants from unduly delaying the composition of the offences in ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 7 cases involving Section 138 of the Act;
.
(ii) it would result in encouraging compounding at an early stage of litigation, saving valuable time of the court, which is spent on the trial of such cases; and
(iii) even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested to attain uniformity.
At the same time, the Court also made it abundantly clear that the court concerned would be at liberty to reduce the costs with regard to specific facts and circumstances of a case while recording reasons in writing for such variance.
22. What follows from the above is that normally costs as specified in the Guidelines laid down in the said judgment [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663: (2010) 2 SCC (Civ) 520: (2010) 2 SCC (Cri) 1328] have to be imposed on the accused persons while permitting compounding. There can be a departure therefrom in a particular case, for good reasons to be recorded in writing by the court concerned. It is for this reason that the Court mentioned three objectives which were sought to be achieved by framing those Guidelines, as taken note of above. It is thus manifestly the framing of "Guidelines" in that judgment [Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663: (2010) 2 SCC (Civ) 520:
(2010) 2 SCC (Cri) 1328] was also to achieve a particular public purpose. Here comes the issue for consideration as to whether these Guidelines are to be given a go-by when a case is decided/settled in the Lok Adalat? Our answer is that it may not be necessarily so, and a proper balance can be struck, taking care of both situations.
5. Thus, the normal rule is the money ordered to ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 8 be paid by the Hon'ble Supreme Court has to be .
deposited after the settlement to discourage the people from contesting the complaints, which ultimately end in the settlement. If the matter is to be settled, the same should be settled in the Court of First Instance at the first opportunity. Any exception can be created as per the circumstances of the case.
6. In the present case, no reason has been assigned as to why the amount of 15 % of the cheque amount should be reduced. The learned Trial Court awarded the compensation on 26.08.2022. The complaint was filed before the learned Trial Court on 21.10.2016. Thus, the complainant successfully stalled the payment of the amount for nine years, and when he was convicted by the learned Trial Court and his appeal was dismissed, he tried to get away by depositing the amount, which he was supposed to deposit in the year 2022. This was precisely the conduct which was sought to be discouraged by the Hon'ble Supreme Court by providing the condition of deposit of 15% of the cheque amount. A person cannot issue a cheque with impunity and thereafter drag the other side to the litigation up to ::: Downloaded on - 26/08/2025 21:34:48 :::CIS 9 this Court and get away with the payment of 15% of the .
cheque amount. Allowing the reduction of 15% of the cheque amount would encourage people like the applicant to adopt such dilatory tactics, which cannot be encouraged.
7. Consequently, the prayer for the reduction of the amount is ordered to be rejected.
8. Let 15% of the cheque amount be deposited within two weeks. List thereafter.
(Rakesh Kainthla) Judge 26 August 2025 th (ravinder) ::: Downloaded on - 26/08/2025 21:34:48 :::CIS