Document Fragment View

Matching Fragments

15 SEBI referred the compounding application for seeking the views of its High Powered Advisory Committee (“HPAC”) headed by a former Judge of the High Court of Bombay. The HPAC has been constituted for examining proposals for compounding offences. The HPAC recommended that the offences should not be compounded following which an intimation was furnished to the Trial Judge and recorded in an order dated 7 May 2016.

PART D 16 In the interregnum, the criminal complaint was listed for recording the evidence of the complainant, but after the evidence was adduced, the appellant declined to cross-examine the witness until the compounding application was decided. The appellant also filed an application on 6 November 2017 before the Trial Judge, praying that the compounding application be decided before further evidence of the complainant was recorded in the criminal complaint. 17 By an order dated 15 November 2018, the Trial Judge dismissed the compounding application and the criminal complaint was listed for the cross- examination of the complainant’s witness by the accused persons. The Trial Judge placed reliance on the decision of this Court in JIK Industries Limited vs Amarlal v. Jumani 2 (“JIK Industries”) for holding that no application for compounding an offence could be allowed without the consent of the complainant. A revision petition was filed by the appellant before the High Court of Delhi to challenge the order of the Trial Judge which, as stated earlier, has been dismissed by a Single Judge of the High Court of Delhi on 1 April 2019.

(iv) The decision in JIK Industries (supra), is an authority for the principle that a scheme under Section 391 of the Companies Act, 1956 does not amount to the compounding of an offence under Section 138 of the Negotiable Instruments Act, 1888 (“NI Act”). In the case of the NI Act, Section 147 merely states that offences under the Act shall be compoundable whereas Section 24A of the SEBI Act specifically provides for the power of SAT and the Court to compound offences. 

E.4      Compounding outside of CrPC


63       The provisions contained in Section 147 of the NI Act for compounding of

offences came up for consideration before a two judge Bench of this Court in JIK Industries (supra). Section 147 of the NI Act is in the following terms:

“147. Offences to be compoundable.- Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 [1995] SGHC 207 PART E of 1974), every offence punishable under this Act shall be compoundable.” 64 In that case, the High Court had rejected several writ petitions challenging the processes which were issued by the Trial Judge on a complaint filed by the respondent in proceedings under Section 138 read with Section 141. The High Court held that the sanctioning of a scheme under Section 391 of the Companies Act, 1956 did not automatically amount to the compounding of an offence under Section 138 read with Section 141 of the NI Act. In other words, the sanctioning of the scheme under Section 391 of the Act of 1956 was held not to have the effect of terminating the proceedings for an offence under Section 138 of the NI Act. Justice AK Ganguly, speaking for the two judge Bench, observed that in most of the cases the offence under the NI Act had been committed prior to the scheme:

Section 24A stipulates that an offence punishable under the Act may be compounded by SAT or a Court before which such proceedings are pending. The power to compound is recognized either before or after the institution of any proceeding.

PART E 72 Hence, it is evident that Section 24A specifies the authorities vested with the powers to compound offences under the SEBI Act, while Section 147 of the NI Act merely states that the offence under the Act shall be compoundable. In a complaint filed under the NI Act, the complainant is an aggrieved party, invariably being the payee in a dishonored instrument. The consideration which weighed with the two judge Bench while interpreting the provisions of Section 147 of the NI Act in JIK Industries (supra) will therefore not be ipso facto attracted while construing the provisions of Section 24A of the SEBI Act. Further, since the two statutory provisions are not in pari materia, it is not necessary for this Court to express any opinion on the issue as to whether the judgment in JIK Industries (supra), which is of a two judge Bench, is contrary to the earlier three judge Bench decision in Damodar S Prabhu (supra). We are concerned in the present case with interpreting the provisions of Section 24A of the SEBI Act, and hence it is not necessary for this Court to construe Section 147 of the NI Act.