Offences U/S 138 NI Act Can Be Compounded At Any Stage, Irrespective Of Bar U/S 320(9) CrPC: Sikkim High Court

The Sikkim High Court has ruled that offences under Section 138 of the Negotiable Instruments Act can be compounded at any stage, irrespective of the provisions of Section 320(9) of the Criminal Procedure Code.

Section 320(9) CrPC provides that no offence shall be compounded except as provided in the section. In other words, it restricts the power of compounding offences to the offences that are listed under Section 320 of the CrPC and cannot be compounded otherwise.

The bench of Justice Meenakshi Madan Rai noted that Section 147 of NI Act (Offences To Be Compoundable) was inserted by way of an amendment to the special law and the Section commences with a non obstante clause.

The Court was hearing a joint application filed by the Petitioners and Respondent under Section 147, seeking permission to compound the offence.

As per the factual matrix of the case, a loan of ₹80 lakhs was given by the Respondent to the Petitioners, who failed to repay ₹20 lakhs via a cheque that bounced due to insufficient funds. The Respondent filed a complaint under Section 138 of the NI Act, and the Magisterial Court convicted the Petitioners, sentencing them to imprisonment and a fine of ₹20 lakhs each. The Court also ordered that ₹40 lakhs would be paid as compensation to the Respondent. The Appeal Court upheld the Judgment, leading to the Revision Petition.

Counsels for the opposite parties submitted that the matter was compromised between them on March 31st 2023, towards which Deed of Compromise had been submitted before the Court. Counsel for the Petitioners further submitted that under Section 147 of the NI Act all offences therein are compoundable and the compounding of the offences, can be at any stage of the proceedings.

Referring to Apex Court judgment in Damodar S. Prabhu vs. Sayed Babalal H 2010, the bench observed that the offence under Section 138 of the NI Act can be compounded at any stage and overrides the effect of Section 320(9) CrPC (which otherwise provides that no offence shall be compounded except as provided by the Section), in view of the fact that Section 147 of the NI Act was inserted by way of an amendment to a special law and the Section commences with a non obstante clause.

"Consequently, in light of the compromise Petition filed before this Court, enumerating the terms of consent and the submissions of the Learned Counsel for the parties that the settlement was arrived at between the parties without duress on either party from any quarter, the compromise Petition is accepted and taken on record. The compounding of the offence is allowed", the bench said while allowing the petition and setting aside the conviction of the petitioners.

Case Title: Alpesh Narendra Shah and Another Vs Manoj Agarwal

Citation: 2023 LiveLaw (Ski) 3

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