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Vimal Plast India Pvt Ltd vs Ms Impex on 21 February, 2025

     IN THE COURT OF MS. SHEFALI BARNALA TANDON,
             ADDITIONAL SESSIONS JUDGE-05,
        WEST DISTRICT: TIS HAZARI COURTS: DELHI

                                                Criminal Revision No: 499/2024
                                                CNR No. DLWT01-009382/2024



In the matter of :

1.      Vimal Plast (India) Pvt. Ltd.
        Through its Director
        Having its Registered Office at
        Property No. E-21, First Floor,
        Nariana Vihar, New Delhi-110028.
        Also at
        Plot No. 3, Udyog Vihar, Greater Noida,
        Uttar Pradesh-201306.                                   .....Revisionist No. 1

2.      Harish Batra, Director
        Vimal Plast India Pvt. Ltd.
        Plot No. 3, Udyog Vihar, Greater Noida,
        Uttar Pradesh-201306.                                   .....Revisionist No. 2

3.      Saurabh Batra, Director,
        Vimal Plast India Pvt. Ltd.
        Plot No. 3, Udyog Vihar, Greater Noida,
        Uttar Pradesh-201306.                                   .....Revisionist No. 3

4.      Anju Batra, Director
        Vimal Plast India Pvt. Ltd.
        Plot No. 3, Udyog Vihar, Greater Noida,
        Uttar Pradesh-201306.                                   .....Revisionist No. 4

5.      Sahil Batra, Director
        Vimal Plast India Pvt. Ltd.
        Plot No. 3, Udyog Vihar, Greater Noida,
        Uttar Pradesh-201306.                                   .....Revisionist No. 5

                                       VERSUS


Criminal Revision No. 499/2024   Vimal Plast India Pvt. Ltd. Vs. M S Impex   Page 1 of 11
 M S Impex
Through its Proprietor
SC-1/22, 2nd Floor, Block-F,
Mansarovar Garden,
New Delhi - 110 015.
                                                                        ..... Respondent

Date of Institution                           : 28.10.2024
Date of reserving order                       : 10.01.2025
Date of pronouncement                         : 21.02.2025


                                      ORDER

1. The present appeal has been preferred by the appellant under 397 read with Section 399 of Code of Criminal Procedure (hereinafter referred to as 'Cr.PC') assailing the order dated 18.03.2024 (herein after referred to as the 'Impugned Order') passed by Ld. MM (NI Act), Digital Court-02, West District (herein after referred to as the 'Ld. Trial Court') in CC No. 1298/2021 titled as M S Impex Vs. Vimal Plast India Pvt. Ltd. whereby Ld. Trial Court vide Impugned Orders compounded the case and directed the accused/revisionist herein to pay Rs.16,00,000/- which includes additional interest of Rs.10,00,000/- to the complainant/respondent herein.

Arguments addressed on behalf of revisionist

2. Assailing the impugned order, Ld. Counsel for the revisionist submitted that the Ld. Trial Court failed to consider that Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 2 of 11 95% of the settlement amount has already been paid to the complainant/respondent and further amount has been refused by the complainant/respondent; that the present matter is a fit case for compounding [de-hors consent], however, Ld. Trial Court imposed punitive amount to the tune of Rs.10,00,00/- towards interests; that Ld. Trial Court failed to consider that conduct of the complainant/respondent after receiving maximum amounts of settlement, which clearly suggests the manner of misuse of process of law by him; that Ld. Trial Court failed to consider that the litigation is not meant to be used as a weapon or a tool to settle personal vendetta; that Ld. Trial Court failed to consider that since the matter has been compounded, the accused persons/revisionist should be acquitted without any compensation to the complainant/respondent; that Ld. Trial Court failed to consider that since the matter has been compounded, Ld. Trial Court has no power either under Cr. PC or N.I. Act to pass a money decree and/or pass order any compensation and/or interest of cheque value; that Ld. Trial Court failed to give any calculation while imposing interest of Rs.10,00,000/-.

Arguments addressed on behalf of respondent

3. Ld. Counsel for respondent also disputing the Impugned Order argued that there is infirmity and illegality done by the Ld. Trial Court and warrants interference by this Court. Ld. Counsel for the respondent further argued that appellants/accused committed defaults since beginning on agreed timeline and even failed to make payment as per the agreed terms of Memorandum of Settlement dated 24.12.2021. He further argued that it has been specifically mentioned Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 3 of 11 in the said Memorandum of Settlement that in case of default of payment as per agreed timeline, the complainant will be at liberty to continue the criminal trial on merits. He further argued that the complainant never gave consent for compounding the offence considering the past conduct of the accused. Hence the impugned order is bad in law, being compounded without the consent of the complainant.

Brief facts on perusal of the record

4. The Court heard the arguments as advanced by Ld. Counsels for both the parties and have gone through the material available on record including the Trial Court Record.

5. The brief facts necessary for disposal of the present case are that the appellants/accused persons and the respondent/complainant were having business relation. In discharge of its liability against the various credit-sales made by the complainant, appellant No.2, being the Director of Appellant No. 1/Company issued a cheque bearing No. 001850 dated 31.01.2021 in favour of complainant/M S Impex for an amount of Rs.52,41,099/-, however, when the said cheque was presented before the Bank for encashment, the same was returned with remarks 'STOP PAYMENT'. Despite numerous reminders, accused failed to make payment in discharge of their liability towards the complainant. Thereafter, a legal notice under Section 138 of NI Act was served upon the accused, however, they did not pay any heed to the said notice and failed to respond to the said notice.

Impugned order

6. During trial, both parties entered into Memorandum of Settlement wherein accused/revisionists agreed to pay Rs.56,07,419/- to the complainant/respondent in three installments. Pursuant to the said settlement, accused/revisionists paid Rs.50,00,000/- to the complainant/respondent, however, failed to pay balance amount. Thereafter, Ld. Trial Court vide Impugned Order compounded the matter and directed the accused/revisionists to pay balance amount of Rs.6,00,000/- along with interests of Rs.10,00,000/- to the complainant/respondent. Relevant part of the impugned order is as under:

" 37. It is not in dispute that Complainant has already received INR 50,07,419/- under the MOS. Therefore, INR 6,00,000/- is left to be paid under the settlement. Accused Persons undertook, by way of a statement recorded in Court, to pay the balance amount under the settlement and any additional amount as may be decided by this Court.

38. In the considered opinion of this Court, it is just and fair to direct the Accused Persons to pay the balance amount under the MOS i.e. INR 6,00,000/- to the Complainant and to pay an additional INR 10,00,000/- toward interest. This ought to duly compensate the Complainant and there is no need for litigation costs.

39. The amount to be paid by the Accused Persons to the Complainant is thus determined to be INR 16,00,000/-.

40. The application seeking composition of the offence is allowed. Accused Persons are directed to deposit in Court Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 5 of 11 the demand draft for an amount of INR 16,00,000/- (Rupees Sixteen Lakhs Only) in favour of the Complainant within 15 working days from today, which the Complainant shall be at liberty to withdraw, against acknowledgment, within seven working days thereafter.":

Court's Observation

7. It is not in dispute that the appellants owed Rs.52,41,099/- to complainant/respondent towards legal liability to discharge the debt and during trial, they settled the dispute out of the Court and entered into a Memorandum of Settlement dated 24.12.2021 as per which, appellants agreed to pay Rs.56,07,419/- (including interest) to complainant/respondent as per schedule mentioned therein. Pursuant to said Memorandum of Settlement, appellants paid Rs.50,00,000/- to complainant/respondent, which has been duly received by him, however, the appellants failed to pay balance amount of Rs.6,00,000/- to the complainant/respondent. Ld. Trial Court observed that despite opportunities given, the appellants failed to pay balance amount and vide impugned order compounded the matter and directed the appellants to pay Rs.16,00,000/- to the complainant/respondent which includes Rs.10,00,000/- towards interest.

8. The main thrust of arguments advanced by Ld. Counsel for the Appellants is that the Ld. Trial Court erred in granting interest without any calculation and basis, which is bad in law.

9. Whereas the argument on behalf of respondent is that the matter cannot be compounded without consent of the complainant, and hence the impugned order is bad in law.

10. No doubt Section 147 of N. I. Act provides that every offence punishable under this Act shall be compoundable. However, the main issue before this Court is whether the same can be compounded 'Without Consent' of the complainant.

Relevant Law

11. On the point of compounded 'With' or 'Without Consent', this Court is guided by the decision rendered by Division Bench of Hon'ble Supreme Court of India in Criminal Appeal No(s). 3051 - 3052 of 2024 titled as A.S. Pharma Pvt. Ltd. Versus Nayati Medical Pvt. Ltd. & Ors., wherein Hon'ble Apex Court has dealt with similar issue and held that:

"12. Before delving into the question whether consent of the complainant, who is to compound the offence, is required to exercise the power under Section 147, N.I. Act, it is only appropriate to refer to paragraphs 12 and 13 of the impugned judgment of the High Court. They read thus: -

"12. Broadly speaking, in the considered opinion of this Court, the essence of all the aforesaid pronouncements by the Hon'ble Supreme Court coupled with Section 138 of the N.I. Act read together with the other provisions of the N.I. Act is that the consent of the complainant is not mandatory at the time of compounding of the offence under Section 138 of the N.I. Act, once the complainant has been equitably compensated. 13. In effect, whence the complainant has been reasonably compensated the accused can be discharged/ acquitted even without the consent of the complainant, in the interest of justice and to prevent the abuse of the process of law, since once an accused Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 7 of 11 accepts his liability to pay the cheque amount, there will be no fruitful purpose in keeping the complaint alive."

(Underline supplied)

13. Having gone through the factual matrix of the case on hand and the afore-extracted paragraph Nos. 12 and 13 of the impugned judgment, we are of the considered view that the understanding and exposition of law by the High Court on the question of invocation of the power under Section 482, Cr.P.C., and Section 147, N.I. Act to compound the offence under Section 138, N.I. Act, run contrary to the law enunciated by this Court on the said question. In the light of the decisions of this Court in Damodar S. Prabhu v. Sayed Babalal H. [(2010) 5 SCC 663], K.M. Ibrahim v. K.P. Mohammed & Anr. [(2010) 1 SCC 798] and O.P. Dholakia v. State of Haryana & Anr. [(2000) 1 SCC 762], there cannot be any doubt with regard to the position that offence under Section 138, N.I. Act could be compounded under Section 147, N.I. Act, at any stage of the proceedings.

14. As relates the requirement of 'consent' for compounding offence under Section 138, N.I. Act, by invoking the power under Section 147, N.I. Act, it is to be noted that the question is no longer res integra. This Court in the decision in JIK Industries Ltd. & Ors v. Amarlal V.Jumani & Anr. [(2012) 3 SCC 255] declined to accept the contention that in view of the non-obstante clause in Section 147, NI Act, which is a special statute, the requirement of consent of the person compounding the offence under Section 138, N.I. Act, is not required. After extracting provision under Section 147, N.I. Act, this Court in JIK Industries Ltd. case (supra) observed and held in paragraph 58 and 59 thereof thus: -

"58. Relying on the aforesaid non obstante clause in Section 147 of the NI Act, the learned counsel for the Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 8 of 11 appellant argued that a three-Judge Bench decision of this Court in Damodar [(2010) 5 SCC 663], held that in view of non obstante clause in Section 147 of the NI Act, which is a special statute, the requirement of consent of the person compounding in Section 320 of the Code is not required in the case of compounding of an offence under the NI Act.

59. This Court is unable to accept the aforesaid contention for various reasons which are discussed below."

15. In the contextual situation it is relevant to refer to a recent decision of this Court in Raj Reddy Kallem v. The State of Haryana & Anr. [2024 INSC 347]. The said decision would reveal that this Court took note of earlier decisions of this Court in JIK Industries Ltd. case (supra) as also in the decision in Meters and Instruments Private Ltd. & Anr. V. Kanchan Mehta [(2018) 1 SCC 560] and in un-ambiguous terms held that for compounding the offence under Section 138, N.I. Act, 'consent' of the complainant is required. In Kanchan Mehta's case (supra) even after referring to the decision in JIK Industries ltd. case (supra) this Court held that even in the absence of 'consent' Court could close criminal proceedings against an accused in a case under Section 138, N.I. Act, if the accused had compensated the complainant. It was held therein thus:

-

"18.3. 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.

16. But then, it is to be noted that later a five-Judge Constitution Bench in Expeditious Trial of Cases Under Section 138, N.I. Act, 1881, In re, (2021) 16 SCC 116 held that observation Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 9 of 11 in Kanchan Mehta's decision giving discretion to the trial Court "to close the proceedings and discharge the accused", by reading Section 258, Cr.P.C., which confers the power to stop proceeding in certain cases, 'not a good law'. In Raj Reddy Kallem's case (supra), after referring to the above positions this Court further observed that even in Kanchan Mehta's case (supra) nowhere it was contemplated that 'compounding' could be done without the 'consent' of the parties. It is worthwhile to note at this juncture that in Raj Reddy Kallem's case this Court drew nice distinction between 'quashing of a case' and 'compounding an offence'. To drive that point home, this Court referred to the decision in JIK Industries Ltd. case (supra), where this Court distinguished the quashing of a case from compounding as hereunder: -

"Quashing of a case is different from compounding. In quashing, the Court applies it but in compounding it is primarily based on consent of the injured party. Therefore, the two cannot be equated."

17. It is in the aforesaid circumstances that we held that the question whether the offence under Section 138, N.I. Act could be compounded invoking the power under Section 147, N.I. Act, without consent of the complainant concerned, is no longer res integra. In short, the position is 'that an offence under Section 138, N.I. Act could be compounded under Section 147 thereof, only with the consent of the complainant concerned'. In that view of the matter, the impugned judgment of the High Court wherein despite the absence of the consent of the appellant-complainant compounded the offence under Section 138, N.I. Act, on the ground that the appellant was equitably compensated, could not be sustained."

Conclusion

12. Applying the aforesaid ratio laid down by the Hon'ble Supreme Court of India, this Courts finds that in the absence of the consent by the complainant/respondent, the matter could not be compounded. This Court further finds that Ld. Trial Court erred in reaching to calculate the interest i.e. Rs.10,00,000/- without specifying period and the rate of interest.

13. In view of aforesaid law and observations made by this Court, impugned order dated 18.03.2024 is hereby set aside and the present matter is remanded back to the Ld. Trial Court to pass order, as per law laid down by the Superior Courts. Both parties are directed to appear before the Court concerned on 17.03.2025.

14. The file of this revision be consigned to record room after due compliance.

                                                     SHEFALI          BARNALA
                                                     BARNALA          TANDON
                                                                      Date:
                                                     TANDON
Pronounced in the open                                                2025.02.21
                                                                      16:49:14 +0530

Court on 21.02.2025                               (Shefali Barnala Tandon)
                                                Additional Sessions Judge -05,
                                               (West) Tis Hazari Courts Delhi

It is to certify that this order contains 11 pages and each page bears the signatures of the under signed. Digitally signed SHEFALI by SHEFALI BARNALA BARNALA TANDON TANDON Date:

2025.02.21 16:49:20 +0530 (Shefali Barnala Tandon) Additional Sessions Judge -05 (West) Tis Hazari Courts Delhi Criminal Revision No. 499/2024 Vimal Plast India Pvt. Ltd. Vs. M S Impex Page 11 of 11