M/S New Win Export & Anr. v. A. Subramaniam
Order
Leave granted.
2. This case arises from a complaint under Section 138 Negotiable
Instruments Act filed by the respondent/complainant. In the year
2006, appellant no.2 had borrowed a loan of Rs.5,25,000 from the
respondent but did not repay as promised. To discharge the said debt,
the appellant no.2 gave a cheque of Rs.5,25,000 which was issued
in the name of his partnership firm i.e., appellant no.1 (M/s New
Win Export). Since the cheque was dishonoured due to ‘insufficient
funds’, respondent filed a complaint under Section 138 NI Act against
the appellants where the Trial Court vide order dated 16.10.2012
convicted the appellants and imposed a sentence of 1 year of simple
imprisonment each. The appellants challenged their conviction before
the Appellate Court, which reversed the findings of the Trial Court
and acquitted the appellants. Finally, when the matter was taken to
the High Court at the instance of the respondent/complainant, the
High Court in its order dated 01.04.2019 set-aside the order of the
Appellate Court and restored the order of the Trial Court, convicting
the appellants. Now, the appellants are before this Court.
3. We have been apprised at the bar that before filing the present
appeal, appellants and respondent-complainant had entered into
a settlement agreement dated 27.01.2024. We have perused the
settlement document and from the terms of the agreement, it is
clear that the parties have settled the dispute among themselves.
As per the agreement, the appellants have paid Rs.5,25,000 to
the respondent-complainant, who has agreed to settle the present
matter for the said amount. Also, the complainant does not have any
objection if the conviction of the appellants is set aside. The relevant
portion of the said settlement agreement is reproduced below where
the expression ‘First Party’ is used for the respondent-complainant
and accused-appellant has been called as the ‘Second Party’:
“…..The First Party and the second Party had agreed to
settle their dispute between them at a final settlement of
Rs.5,25,000/ - (Five Lakhs and twenty five thousand only)
and the First party had. received a sum of Rs.5,25,000/
(Five Lakhs and. twenty five thousand only) by way of
Demand draft dated 08.12.2023 bearing No.135744 drawn
1228 [2024] 7 S.C.R.
Digital Supreme Court Reports
on Union Bank, Perunthozhuvu Branch received from the
second party.
5. The First Party agrees to accept the final settlement
amount of Rs.5,25, 000/ - (Five Lakhs and twenty five
thousand only) and the First Party had received the sum
of Rs.5,25,000/- (Five Lakhs and twenty five thousand
only) from the Second party as mentioned above.
6. After the execution of the present Settlement Agreement,
the Second Party is intending to file a Special Leave Petition
before the Honourable Supreme Court of India and the
First Party agrees to support the Special Leave Petition
filed by the Second Party, in order to enable the Hon’ble
Supreme Court of India to pass appropriate order as the
Hon’ble supreme Court may deem it fit and proper in the
facts and circumstances of the present.
7. The First Party will have no objection if the conviction
of the Second Party is set aside by the Hon’ble Supreme
Court of India.”
4. Section 147 of the Negotiable Instruments Act, 1881 makes all offences
under NI Act compoundable offences. In our opinion, this settlement
agreement can be treated to be compounding of the offence. All the
same, Section 320 (5) of CrPC provides that if compounding has to
be done after conviction, then it can only be done with the leave of
the Court where appeal against such conviction is pending.
5. In cases where the accused relies upon some document for
compounding the offence at the appellate stage, courts shall try
to check the veracity of such document, which can be done in
multiple ways. For the same, in the present matter, this Court vide
order dated 18.03.2024 had asked the respondent-complainant to
file an affidavit to bring on record whether or not any compromise
has been reached between the parties. In compliance with the said
order, the respondent-complainant has filed before us an affidavit
dated 27.03.2024 supporting the case of the appellants wherein it is
admitted that the accused have paid the amount to the satisfaction
of the complainant and further it is said that he has no objection if
conviction of the appellants is set aside. Now, when the accused
and complainant have reached a settlement permissible by law and
this Court has also satisfied itself regarding the genuineness of the
M/s New Win Export & Anr. v. A. Subramaniam
settlement, we think that the conviction of the appellants would not
serve any purpose and thus, it is required to be set aside.
6. At this juncture, we would also like to reiterate a few words regarding
the principles of compounding of offences in the context of NI Act. It is
to be remembered that dishonour of cheques is a regulatory offence
which was made an offence only in view of public interest so that
the reliability of these instruments can be ensured. A large number
of cases involving dishonour of cheques are pending before courts
which is a serious concern for our judicial system. Keeping in mind
that the ‘compensatory aspect’ of remedy shall have priority over the
‘punitive aspect’, courts should encourage compounding of offences
under the NI Act if parties are willing to do so. (See: Damodar S.
Prabhu v. Sayed Babalal H. (2010) 5 SCC 663, 1 Gimpex Private
Limited v. Manoj Goel (2022) 11 SCC 705,2 Meters And Instruments
Private Limited And Anr. v. Kanchan Mehta (2018) 1 SCC 560 3)
7. In Raj Reddy Kallem v. The State of Haryana & Anr. [2024] 5
SCR 203, this Court followed the same principles and quashed a
conviction under the NI Act, by invoking its powers under Article
142, even though the complainant therein declined to give consent
for compounding, observing that the accused has sufficiently
compensated the complainant.
8. Considering the totality of the circumstances and compromise
between the parties, we allow this appeal and acquit the appellants by
setting aside the impugned order dated 01.04.2019 as well the Trial
Court’s order dated 16.10.2012. Appellant no.2, who was exempted
from surrendering by this Court, need not surrender and his sureties
are hereby discharged.
Pending application(s), if any, are disposed of.
Result of the case: Appeal allowed
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