Himachal Pradesh High Court
Unknown vs Sayed Babalal on 16 July, 2018
Author: Sandeep Sharma
Bench: Sandeep Sharma
Cr. Appeal No.592 of 2017 .
16.07.2018 Present: Mr. K.D.Sood, Senior Advocate, with Mr. Dhananjay Sharma, Advocate, for the appellant.
Mr. Sudhir Thakur, Advocate, for the respondent.
Pursuant to judgment dated 22nd June, 2018, whereby this Court while allowing the criminal appeal filed by the appellant, held respondentaccused guilty of having committed the offence punishable under Section 138 of the Negotiable Instruments Act, respondentaccused has come present in Court.
2. On the last date of hearing i.e. 10th July, 2018, learned counsel representing the parties, on instructions of their respective clients, stated before this Court that after recording of conviction vide judgment dated 22nd June, 2018 by this Court, parties have resolved their dispute amicably inter se them. By way of amicable settlement, both the parties have agreed that in case an amount of Rs. 10 lac in lump sum is paid to the complainant, complainant shall have no objection in getting the matter compounded under Section 147 of the Act ( for short 'Act'). But since on the last date, there was none to make definite statement with regard to compromise, matter was adjourned for today with direction to the complainant or his authorized representatives to remain present in Court.
::: Downloaded on - 18/07/2018 23:01:46 :::HCHP3. Today, during the proceedings of the case, a joint .
application under Section 147 of the Act, has been filed on behalf of the respondentaccused and the complainant/petitioner, placing therewith compromise arrived inter se the parties.
Application is ordered to be taken on record and it be registered.
It has been averred in the application that the parties have resolved to settle their matter amicably in terms of the compromise, wherein respondent/accused has agreed to pay a sum of Rs. 10 in lump sum to the complainant/petitioner towards his liability. As per agreement, respondent/accused shall pay Rs.
5,00,000/ to the complainant within a period of one month, whereas remaining amount of Rs. 5,00,000/ within two months from today i.e on or before 15th September, 2018. It has been also agreed inter se parties that after receipt of entire amount, matter shall be compromised. Though, there is specific averment in the application with regard to compromise/settlement arrived inter se parties, but this Court solely with a view to ascertain the correctness and genuineness of the compromise arrived inter se parties, also recorded the statement of Sh. Sudesh Kumar, authorized representative of complainant/petitioner, who otherwise had filed complaint on behalf of the appellant/complainant under Section 138 of the Act, in the ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP competent Court of law Sh. Sudesh Kumar, stated on oath that .
application under Section 147 of the Act, praying therein for compounding the offence has been filed jointly on behalf of the complainant as well as accused and it also bears his signatures.
He further stated on oath that as per the settlement/compromise, arrived inter se parties, respondent/accused has agreed to pay total sum of Rs. 10 lac to the complainant towards his liability and in case such amount is paid within two installments as agreed between the parties, complainant/petitioner shall have no objection in getting the matter compounded under Section 147 of the Act. Mr. Sudesh Kumar also stated that in case entire amount as per agreement is received within stipulated time, conviction awarded by this Court can also be quashed and set aside, but compounding, if any, under Section 147 of the Act, be ordered after receipt of the full payment.
4. There is no dispute that this Court vide judgment dated 22nd June, 2018 has held respondentaccused guilty of having committed the offence punishable under Section 138 of the Act and now adequate sentence and compensation was left to be awarded to the respondent/accused. But in view of the aforesaid developments, no final order till date has been passed as far as quantum is concerned. Now, question remains that ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP whether this Court after recording conviction has power to .
compound the case under Section 147 of the Act or not?.
5. Learned counsel representing the parties, while inviting attention of this Court to the judgment rendered by Hon'ble Apex Court in Damodar S. Prabhu Vs. Sayed Babalal H (2010)5 SCC 663, fairly submitted that even after recording conviction under Section 138 of the Act, this Court has power to compound the offence while exercising power under Section 147 of the Act. In the aforesaid judgment, Hon'ble Apex Court while laying certain guidelines has held that in case accused intends to compromise the matter under Section 147 of the Act, which is otherwise a special Act after recording of conviction, prayer made in that regard can be accepted with the leave of the Court.
Hon'ble Apex Court further held that as far as nonobstante clause included in Section 147 of the 1881 Act is concerned, the 1881 Act being a special statute, shall have overriding effect over the provisions of Section 320 of Cr.P.C, relating to compounding of offence and as such, prayer for compounding of offence can be considered by the Court without being influenced by provision contained under Section 320 of Cr.P.C. It would be profitable to reproduce following paras NO. 6 to 15 of the judgment herein:
6. Before examining the guidelines proposed by the ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP learned Attorney General, it would be useful to clarify the .
position relating to the compounding of offences under the Negotiable Instruments Act, 1881. Even before the insertion of Section 147in the Act (by way of an amendment in 2002) some6. Before examining the guidelines proposed by the learned Attorney General, it would be useful to clarify the position relating to the compounding of offences under the Negotiable Instruments Act, 1881. Even before the insertion of Section 147in the Act (by way of an amendment in 2002) some High Courts had permitted the compounding of the offence contemplated by Section 138 during the later stages of litigation. In fact in O.P. Dholakia v. State of Haryana, (2000) 1 SCC 672, a division bench of this Court had permitted the compounding of the offence even though the petitioner's conviction had been upheld by all the three designated forums. After noting that the petitioner had already entered into a compromise with the complainant, the bench had rejected the State's argument that this Court need not interfere with the conviction and sentence since it was open to the parties to enter into a compromise at an earlier stage and that they had not done so. The bench had observed: "... Taking into consideration the nature of the offence in question and the fact that the complainant and the accused have already entered into a compromise, we think it appropriate to grant permission in the peculiar facts and circumstances of the present case, to compound."
7. Similar reliefs were granted in orders reported as Sivasankaran v. State of Kerala & Anr., (2002) 8 SCC 164, Kishore Kumar v. J.K. Corporation Ltd., (2004) 12 SCC 494 and Sailesh Shyam Parsekar v. Baban, (2005) 4 SCC 162, among other cases. As mentioned above, the Negotiable Instruments Act, 1881 was amended by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 which inserted a specific provision, i.e. Section 147`to make the offences under the Act compoundable'. We can refer to the following extract from ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP the Statement of Objects and Reasons attached to the 2002 amendment which is self explanatory: .
"Prefatory Note Statement of Objects and Reasons. The Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. These provisions were incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. The existing provisions in the Negotiable Instruments Act, 1881, namely, Sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the courts to deal with such matters has been found to be cumbersome. The courts are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure contained in the Act. ..."
(emphasis supplied) In order to address the deficiencies referred to above,Section 10 of the 2002 amendment inserted Sections 143, 144, 145, 146 and 147 into the Act, which deal with aspects such as the power of the Court to try cases summarily (Section 143), Mode of service of summons (Section 144), Evidence on affidavit (Section 145), Bank's slip to be considered as prima facie evidence of certain facts (Section 146) and Offences under the Act to be compoundable (Section 147). 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 ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable.
.
8. At this point, it would be apt to clarify that in view of the nonobstante 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. 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. Subsection (1) of Section 320 enumerates the offences which are compoundable without the leave of the Court, while sub section (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 subsection (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 thanthe 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
9.In Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305, this Court had examined `whether an offence punishable under Section 138 of the Act which is a special law can be compounded'. After taking note of a divergence of views in past decisions, this ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP Court took the following position (C.K. Thakker, J. at Para. 17): .
" ... This provision is intended to prevent dishonesty on the part of the drawer of negotiable instruments in issuing cheques without sufficient funds or with a view to inducing the payee or holder in due course to act upon it. It thus seeks to promote the efficacy of bank operations and ensures credibility in transacting business through cheques. In such matters, therefore, normally compounding of offences should not be denied. Presumably, Parliament also realised this aspect and inserted Section 147 by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (Act 55 of 2002). ..."
In the same decision, the court had also noted (Para. 11): "... Certain offences are very serious in which compromise or settlement is not permissible. Some other offences, on the other hand, are not so serious and the law may allow the parties to settle them by entering into a compromise. The compounding of an offence signifies that the person against whom an offence has been committed has received some gratification to an act as an inducement for his abstaining from proceeding further with the case."
10. It would also be pertinent to refer to this Court's decision in R. Rajeshwari v. H.N. Jagadish, (2008) 4 SCC 82, wherein the following observations were made (S.B. Sinha, J. at Para. 12): "Negotiable Instruments Act is a special Act. Section 147 provides for a non obstante clause, stating:
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.
Indisputably, the provisions of the Code of Criminal Procedure, 1973 would be applicable to the proceedings pending before the courts for ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP trial of offences under the said Act. Stricto sensu, however, the table appended to Section 320 of the Code of Criminal Procedure is not attracted as .
the provisions mentioned therein refer only to provisions of the Penal Codeand none other."
11. 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., 2009 (14) SCALE 262, wherein Kabir, J. has noted (at Paras. 11,
12): r to "11. As far as the nonobstante 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. ...
12. 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 underSection 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution."
12. 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, 5th edn. (Lucknow: Eastern Book Company, 2008) at p. 444]: ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP "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."
13. 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 ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP 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 learned Attorney General have stressed on the fact that unlike Section 320 of the 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. 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 of 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.
14. It may be noted here that Section 143 of the Act makes an offence under Section 138 triable by a Judicial ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP Magistrate First Class (JMFC). After trial, the progression of further legal proceedings would depend on whether there has been a conviction or an acquittal.
.
In the case of conviction, an appeal would lie to the Court of Sessions under Section 374(3)(a) of the CrPC;
thereafter a Revision to the High Court under Section 397/401 of the CrPC and finally a petition before the Supreme Court, seeking special leave to appeal under 136 of the Constitution of India. Thus, in case of conviction there will be four levels of litigation. 7 In the case of acquittal by the JMFC, the complainant could appeal to the High Court under Section 378(4) of the CrPC, and thereafter for special leave to appeal to the Supreme Court under Article 136. In such an instance, therefore, there will be three levels of proceedings.
15. 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: THE GUIDELINES
(i) In the circumstances, it is proposed as follows:
::: Downloaded on - 18/07/2018 23:01:46 :::HCHP(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 rCourt 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.
Let it also be clarified that any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate's Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP connection with composition before the Supreme Court should be deposited with the National Legal Services Authority.
.
6. Consequently, in view of the aforesaid law laid down by the Hon'ble Apex Court coupled with the facts that this Court enjoys power under Section 147 of the Act, to compound the offence, joint prayer made on behalf of the r to parties for compounding the offence deserves to be considered.
Since final order, if any, in term of the joint prayer made in the application is to be passed after receipt of full payment agreed to be made by the accused, this Court deems it fit to adjourn this Case till 17th August, 2018, on which date, respondentaccused shall pay an amount of Rs. 5,00,000/ as per compromise.
7. However, it is made clear that prayer for compounding the offence shall be considered and decided by this Court after receipt of full payment i.e. Rs. 10 lac on or before 15th September, 2018.
8. Needless to say, in case first installment as agreed ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP by the respondentaccused is not paid on or before 17 th August, 2018, he shall surrender before this Court on the next date of .
hearing in terms of the judgment passed by this Court.
List on 17th August, 2018.
(Sandeep Sharma) Judge 16 July, 2018 th ( shankar) ::: Downloaded on - 18/07/2018 23:01:46 :::HCHP