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Synopsis

The Supreme Court has said that the provision for compounding every offence punishable under the Negotiable Instruments Act under Section 147 is not a power available to a court to exercise without the consent of the complainant. 

A bench of Justices C T Ravikumar and Sanjay Karol, in a recent order, set aside and quashed a Delhi High Court's order to the extent that it compounded the offence under Section 138, NI Act invoking the inherent power under Section 482, CrPC and the power under Section 147, NI Act.

The bench said a bare perusal of Section 482, CrPC, and Section 147, NI Act would reveal they are different and distinct. 

"The former being the inherent power of High Court exercisable even suo motu to give effect to any order under CrPC, or to prevent abuse of the process of any court or otherwise to secure the ends of justice. However, the provision for compounding every offence punishable under the NI Act, under Section 147 of the Act, is not a power available to a court to exercise without the consent of the complainant," the bench said.

Dealing with an appeal filed by A S Pharma Pvt Ltd, the court noted though the high court entertained the challenge against the order rejecting an application for compounding the offence under Section 138, NI Act filed under Section 320 CrPC, the high court actually compounded the offence invoking its inherent power under Section 482 CrPC, coupled with the power under Section 147 of the NI Act. 

Referring to Monica Kumar (Dr) Vs State of Uttar Pradesh (2008) and Arvind Barsaul (Dr) Vs State of MP (2008), the bench emphasised when the parties are ad idem for discontinuance of criminal proceedings which are not of grave nature, power under Section 482, CrPC is exercisable. 

By the combined exercise of powers under Section 482, CrPC, and Section 147, NI Act, the high court, has actually compounded the offence, under Section 138, NI Act, despite the non-consent of the complainant/ appellant herein therefore, the court pointed out.

"It is thus well-neigh settled position that the inherent powers under Section 482, CrPC, are invocable when no other efficacious remedy is available to the party concerned and not where a specific remedy is provided by the statute concerned. We may further add here that certainly the power under Section 482, CrPC is not invocable, ignoring the factor which is sine qua non for the exercise of power to compound the offence(s) under NI Act viz, the consent of the complainant," the bench said.

Court also categorically opined that the understanding and exposition of law by the high court on the question of invocation of the power under Section 482, CrPC, and Section 147, NI Act to compound the offence under Section 138, NI Act, ran contrary to the law enunciated by the top court on the said question. 

The bench also pointed out that the requirement of ‘consent’ for compounding offence under Section 138, NI Act, by invoking the power under Section 147, NI Act, it is to be noted that the question is no longer res integra. 

In Raj Reddy Kallem Vs The State of Haryana & Anr (2024) and in Meters and Instruments Private Ltd & Anr V Kanchan Mehta (2018), the bench pointed out, the top court in un-ambiguous terms held that for compounding the offence under Section 138, NI Act, ‘consent’ of the complainant is required. 

It also referred to a five-judge Constitution bench judgment in Expeditious Trial of Cases Under Section 138, NI Act, 1881, In re, (2021) which held that observation in Kanchan Mehta’s decision giving discretion to the trial court “to close the proceedings and discharge the accused”, by reading Section 258, CrPC which confers the power to stop proceeding in certain cases, ‘not a good law’. 

"It is in the circumstances that we held that the question whether the offence under Section 138, NI Act could be compounded invoking the power under Section 147, NI Act, without consent of the complainant concerned, is no longer res integra. In short, the position is ‘that an offence under Section 138, NI Act could be compounded under Section 147 thereof, only with the consent of the complainant concerned’," the bench said.

The court thus declared that impugned judgment of the high court wherein despite the absence of the consent of the appellant-complainant compounded the offence under Section 138, NI Act, on the ground that the appellant was equitably compensated, could not be sustained.

The bench also pointed out that merely because taking into account such aspects and circumstances the top court in Raj Reddy Kallem case ‘quashed’ the proceedings by invocation of the power under Article 142 of the Constitution of India, could not be a reason for ‘compounding’ an offence under Section 138, NI Act, invoking the power under Section 482, CrPC and the power under Section 147, NI Act, in the absence of consent of the complainant concerned. 

"In this context, this is to be noted that the fact that this court quashed the proceedings under Section 138, NI Act, invoking the power under Article 142 of the Constitution of India can be no reason at all for High Courts to pass an order quashing proceeding under Section 138, NI Act, on the similar lines as the power under Article 142 of the Constitution of India is available only to the Supreme Court of India," the bench said.

The apex court said that the high court had clearly fallen in error in invoking the power under Section 482 CrPC as also the power under Section 147, NI Act, to compound the offence under Section 138 of the NI Act qua the respondent accused, Nayati Medical Pvt Ltd & Ors.

However, the court noted that the position was that the respondents had deposited an amount of Rs 6,50,000 along with 12% simple interest per annum from the date of cheque till the date of actual payment besides a sum of Rs one lakh payable additionally, as ordered under the impugned judgment before the trial court.

Therefore, the amount is available to be withdrawn by the appellant-complainant, it noted.

In the case, the bench felt despite the lack of consent from the appellant complainant that it was a befitting case to invoke the power of the top court under Article 142 of the Constitution to do complete justice between the parties to quash the complaint with regard to dishonoured cheques issued in 2020 to the sums of Rs 3,00,000 and Rs 3,50,000.

Case Title: M/s A S Pharma Pvt Ltd Vs Nayati Medical Pvt Ltd & Ors