Compounding of OFFENCE: SECTION 138 NEGOTIABLE
INSTRUMENTS ACT
The word compounding
owes its origin to Latin and is also called composition i.e "put
together". In criminal law, to compound means “to settle a matter by a money payment, in lieu of other liability.”
The power to compound the offence is at the discretion of the victim. As
regards prescription of law of compounding of offences , the same finds
elucidation in Section 320 of the Code of Criminal Procedure, 1973.
THE CONCEPT OF COMPOUNDING OF OFENCE
The concept of compounding offences may need further elucidation
with a view to elicit clarity. Under the Common law and most modern statutes, a compounding offence comprise of three (3) basic
components.:
(1) knowledge of the crime;
(2) the agreement not to prosecute or inform; and
(3) the receipt of consideration.
Section 147 of the Negotiable
Instruments Act, 1881, allows offences under the Act to be compoundable:
“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.”
It is
thus clear that the offence of bouncing of cheque, under Section 138 of the Negotiable
Instruments Act, is compoundable. This means that the parties can arrive at a
compromise, which will result into acquittal of the accused. Section 138 of the
Act was firstly brought in staute book in 1988, whereas Cr.P.C was finally
enacted in 1973, therefore, section 138 of Negotiable instruments could not
have been featured in it. In any case, section 320 of Cr.P.C relates to
offences under Indian Penal Code.
The
213th Report of the Law Commission of India has observed that more than 38 Lakh cheque bouncing cases
were pending before various courts in the country as on October 2008, thereby putting
huge and unprecedented strain on the judicial system. The report further
describes the issue of compounding of offence under Negotiable Instrument Act
at a belated stage. The concern was raised that if the compounding takes place
in early stage, The interests of justice could be better served. In a
protracted litigation in several forums, undue time and resources of system are
used causing strain on the judicial system. It may be noted that Section 147 of
Negotiable Instruments Act does not prescribe as to what stage, under the
stages u/s 138 NI Act case, is it appropriate
for compounding the offence and also the manner of compounding is also silent
i.e whether it can be done at the behest of complainant or prior leave of the court
shall be necessary is adding to the woes. Section 147 of the Negotiable
Instruments Act, 1881 if perused in its perspective, then. it may be found that
it is in the nature of an enabling provision entailing compounding of offences
prescribed under the said Act. Thus, the trap of Section 320 of the Cr.P.C may
not be applicable, and it may be construed as exception to the general rule
incorporated in sub-section (9) of Section 320 of the Cr.P.C which states that
‘No offence shall be compounded except as provided by this Section’. As Section
147 was added by way of an amendment to a special law i.e Negotiable
Instruments Act , the same should override the effect of Section 320(9) of the
Cr.P.C, more so, in view of the fact that Section 147 of NI Act contains a
non-obstante clause.
LAW
JIK Industries Limited and others Vs. Amarlal V. Jumani and
another, 2012 (1) RCR (Crl.) 822
The Hon'ble
Supreme Court has taken note of the historical perspective of compounding of
cases and held as under: -
"In our country also when the Code of
Criminal Procedure , 1861 was enacted, it was silent about the compounding of
offence. Subsequently, when the next Code of 1872 was introduced it mentioned
about compounding in Section 188 by providing the mode of
compounding. However, it did not contain any provision declaring what offences
were compoundable. The decision as to what offences were compoundable was
governed by reference to the exception to Section 214 of the Indian Penal Code. The subsequent Code of 1898
provided Section 345 indicating
the offences which were compoundable but the said Section was only made
applicable to compounding of offences defined and permissible under Indian
Penal code. The present Code, which repealed the 1898 Code, contains Section 320 containing
comprehensive provisions for compounding. A perusal of Section 320 makes it clear that the provisions contained in Section 320 and the various sub-sections is a Code by itself relating to
compounding of offence. It provides for the various parameters and procedures
and guidelines in the matter of compounding….”.
In a more recent
judgment reported as M/s Meters and
Instruments Private Limited and anr. Vs. Kanchan Mehta, 2017 (4) RCR (Crl.)
476, the Hon'ble Supreme Court has as under: -
i) Offence under Section 138 of the Act is primarily a civil
wrong. Burden of proof is on accused in view presumption under Section 139, but,
the standard of such proof is "preponderance of probabilities". The
same has to be normally tried summarily as per provisions of summary trial
under the Cr.P.C. but with such variation as may be
appropriate to proceedings under Chapter XVII of the Act.
Thus, principle of Section 258 Cr.P.C. will apply and the Court can close the
proceedings and discharge the accused on satisfaction that the cheque amount
with assessed costs and interest is paid and in case there is no good
reason to proceed with the punitive aspect.
ii) The object of the provision is primarily
compensatory in nature, , and punitive component is invoked with a view to enforce
the compensatory component. Moreover, compounding at the initial stage has to
be encouraged, but is not prohibited in advanced stage , given the object, subject
to appropriate compensation as may be found acceptable to the parties or the
Court in the line with Damodar S Prabhu (supra)
judgment.
iii) Though, compounding generally presupposes consent of
both parties, still, even in absence of consent, the Court, in the interests of
justice, or on being satisfied that the complainant has been duly compensated, may
opt in its discretion close the proceedings and discharge the accused.
iv) The procedure for trial of cases under Chapter XVII of
the Negotiable instruments Act has normally to be summary in nature. However,
if it is decided by Magistrate as per second proviso to Section 143, that
it was undesirable to try the case summarily as sentence of more than one year
may have to be passed, is to be exercised after considering the further fact
that apart from the sentence of imprisonment, the Court has jurisdiction under Section
357(3) Cr.P.C. to award suitable compensation with default sentence under Section
64 IPC and with further powers of recovery under Section 431 Cr.P.C.
Thus, it is open to the Magistrate to treat a complaint as summary or summon
case as per the facts and circumstances.
v) Evidence of the complaint is generally given on affidavit,
and later on the Court may summon the complainant for his examination, in case
of treating the case a ssummon case and if application u/s 145(2) of NI Act is
moved by the accused seeking cross examination of complainant The affidavit in evidence
can be read as evidence at all stages of trial or proceedings. The complainant could
be examined as per the trap of Section 264 Cr.P.C. Thus, the
basic object is to follow summary procedure, unless, exercise of power under
second proviso to Section 143 is
considered necessary i.e if it is likely that sentence of
one year may have to be passed and compensation under Section 357 (3)
Cr.P.C may not be found inadequate.
The Hon'ble Supreme Court in Meters and Instruments Private
Limited's case (supra) has held that though for the compounding, consent of
both the parties is required but in the absence of consent of one party, the
Court in the interest of justice on being satisfied that the complainant has
been duly compensated, in its discretion, can close the proceedings and
discharge the accused, despite the opposition from the complainant.
COMPOUNDING OF CHEQUE BOUNCING CASE AT APPELLATE STAGE
It is clear beyond doubt
that compounding of offence is permitted u/s 138 of Negotiable instruments Act.
However, still, there is another dimension to it i.e whether the offence u/s
138 of NI Act could be compounded even at the appellate stage after the accused
has already been convicted of the offence under Section 138?
The hon’ble Supreme Court
has answered this question in the affirmative in the case of K.M.
Ibrahim v. K.P. Mohammed, (2010) 1 SCC 798. It is held by the Supreme Court that cheque
bouncing case under Section 138 of the Act can be compounded at the appellate
stage as well and even after conviction. Not only that, it is further held that
the complaint can be compounded even at the stage of Special Leave Petition before
the Supreme Court.
It is held that Section
147 of the Negotiable Instruments Act does not bar the parties from compounding
an offence, under Section 138 of the Act, even at the appellate stage of the
proceedings and the compounding plea under Section 147 of the aforesaid Act,
even in a proceeding under Article 136 of the Constitution of India, before the
Supreme Court, cannot be rejected on the premise that it is belated.
What is of paramount
significance in this context is the fact that the “non obstante” clause included in Section 147 of the N.I. Act, being
a special statute, shall have an overriding effect over the provisions of the
Criminal Procedure Code relating to compounding of offences. The non obstante clause reads as “Notwithstanding
anything contained in the Code of Criminal Procedure, 1973”), the N.I. Act……..,
clearly implies that the provision shall override the existing law in Code of
Criminal Procedure. The obvious fall out of this shall be that once a person is
allowed to compound a case as provided for under Section 147 of the Negotiable
Instruments Act, the conviction under Section 138 of the said Act, shall in
effect tantamount to be set aside and should be set aside. The effect of
compounding shall be acquittal of charges against the notice framed.
A list of case shall be
worth-mentioning, where the hon’ble Supreme Court has permitted compounding of offence u/s 138 of Negotiable
Instruments Act even at the appellate / SLP stage:
|
S.N |
PARTICULARS |
REMARK |
|
1. |
O.P. Dholakia v. State
of Haryana, (2000) 1 SCC 762 |
The conviction was upheld in all the three forums including
High Court. However, the case was compounded by the apex court , pursuant to
compromise as compounding of offence could be permitted at any stage. |
|
2. |
Anil Kumar Haritwal v. Alka
Gupta, (2004) 4 SCC 366 |
Same as above |
|
3. |
B.C. Seshadri v. B.N.
Suryanarayana Rao, (2004) 11 SCC 510( Three Judge Bench) |
Same as above |
|
4. |
G.
Sivarajan v. Little Flower Kuries & Enterprises Ltd., (2004)
11 SCC 400. |
Same as above |
|
5. |
Kishore Kumar v. J.K.
Corpn. Ltd., (2004) 13 SCC 494. |
Same as above |
|
6. |
Sailesh Shyam Parsekar v. Baban, (2005)
4 SCC 162 |
Same as above |
|
7. |
K. Gyansagar v. Ganesh
Gupta, (2005) 7 SCC 54 |
Same as above |
|
8. |
K.J.B.L.
Rama Reddy v. Annapurna Seeds, (2005) 10 SCC 632. |
Same as above |
|
9 |
Sayeed
Ishaque Memon v. Ansari Naseer Ahmed, (2005) 12 SCC
140. |
Same as above |
|
10. |
Vinay
Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008)
2 SCC 305. |
Same as above |
|
11. |
Sudheer
Kumar vs. Manakkandi M.K. Kunhiraman & Anr. [2008 (1) KLJ 203(Kerala High
Court) |
Same as above |
The
hon’ble Supreme Court has held in K.M. Ibrahim
( Supra ) as under:-
“The
golden thread in all these decisions is that once a person is allowed to
compound a case as provided for under Section 147 of the Negotiable Instruments
Act, the conviction under Section 138 of the said Act should also be set aside.
In the case of Vinay Devanna Nayak (supra), the issue was raised and after
taking note of the provisions of Section 320 Cr.P.C., this Court held that
since the matter had been compromised between the parties and payments had been
made in full and final settlement of the dues of the Bank, the appeal deserved
to be allowed and the appellant was entitled to acquittal. Consequently, the
order of conviction and sentence recorded by all the courts were set aside and
the appellant was acquitted of the charge leveled against him”.
GUIDELINES LAID DOWN BY SUPREME COURTRuchika Sawhney Vs M/s Landmark Apartment Private Limited and others ( Punjab & Haryana High Court) CRM-A-1852-MA-2017(O&M)on 01.12.2017 while permitting compounding of offence u/s 138 of Negotiable instruments Act had the occasion to deal with the guidelines as laid down in case reported as Damodar S. Prabhu Vs. Sayed Babalal , 2010 (2) RCR (Crl.) 851
(a) That directions
can be issued to the effect 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 preferred, compounding may be allowed by the court and
that too, without imposing any costs on the accused at that stage;
(b) Even 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 Court
deems fit;
(c) If the application
for compounding is preferred 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) lastly, if the
application for seeking compounding of offence is made before the Supreme
Court, the accused shall have to pay 20% of the cheque amount.
The
Punjab & Haryana High Court had negated the contention of the complainant
that the intends to prosecute the complaint, even after receiving demand draft
against the cheque amount and therefore complainant cannot be allowed to be
vindictive Of course, complainant can seek damages by availing other legal
remedies under Civil law, if the complainant feels harass on account of
litigation it is open for her to claim damages and compensation in accordance
with law. The reliance was also placed in a matter captioned as Vijay Verma Vs. Bellow Jewells Pvt. Ltd.
and others, CRM-A-73-MA-2014 (O&M). The offence was compounded, subject
to condition that accused was directed to pay 10% of cheque amount in District
Legal Services Authority.
CONCLUSION
The aforesaid discussion clearly
shall entail that the provision of compounding is specifically contained in
Negotiable instruments Act, as per Section 147 of the Negotiable instruments Act,
but that has become part of the Act only in 2003. The section, clearly
stipulates that, the offence under the Act could be compounded and the provision
of the Act shall follow, notwithstanding, any corresponding law for the time
being in force. The Criminal Procedure Code is an earlier enactment and Section
320 of Cr.P.C stipulates and contains the list of the offences under Indian Penal
Code, as compoundable or non-compoundable. Even the compoundable offence has
two criteria i.e (i) the compounding could be done at the behest of complainant
or with his consent or (ii) with leave of the court. The Section 138 of the
Negotiable Instruments Act is a later enactment and the provision of Section
138 was itself made part of the Act in 1988 and the amendment was carried out
in the Act and section 147 prescribing compounding is made part of the Act much
later The law that has further evolved in the meanwhile, is that, not only the
compounding of offence u/s 138 of Negotiable Instruments Act can be permitted at the very first
hearing, but subsequently, subject to certain addition of costs, the order of
compounding of offence could also be passed. In fact, even till the stage of
the matter reaches Supreme Court, the offence under Section 138 of the Negotiable
Instruments Act could be compounded, pursuant to compromise with the
complainant and that aspect has adequately been dealt with by hon’ble Supreme
Court. There are another dimension, though, i.e what, if the complainant opts
to continue with the proceedings, even after receipt of the amount, while
contending that the complaint is for the offence and the complainant does not wish
to withdraw? The Courts has held that after receipt of cheque amount with costs
etc, it is not available to the complainant to pursue the complaint and prosecute
the case in vindictive pursuits and in such a case, the complaint could be closed
and the accused may still be discharged. This is in sync with the objective of
the Act i.e to infuse confidence in cheque transaction as a Negotiable Instrument and though, the element of criminal
law is in built in the Act, still, the offence is quasi criminal in nature and
punitive measures is held to be imposed only , if the settlement does not take
place and/or the amount as per the cheques with costs as per the guidelines of
hon’ble Supreme Court is not paid by the accused. Seeking to continue with the proceedings,
despite the payment with costs shall lead to tyranny of accused and that is not
the object of the Act.
Anil K Khaware
Founder & Senior Associate
Society lawandjustice.com
No comments:
Post a Comment