High Court Cannot Invoke Power U/S 482 CrPC To Compound Cheque Bounce Cases Without Complainant's Consent: Supreme Court
The Supreme Court has reiterated that an offence under Section 138 of the Negotiable Instruments Act can be compounded under Section 147 of the NI Act only with the consent of the complainant concerned.
In order to grant relief to the parties, the Court invoked its inherent powers under Article 142 of the Constitution to quash a cheque bounce case by invoking its inherent powers despite the lack of consent from the complainant. Earlier, the Delhi High Court exercised its inherent power under Section 482 of the Cr.P.C. and Section 147 of the Negotiable Instruments Act, 1881 (N.I. Act) to compound an offence under Section 138. However, the Supreme Court set aside the judgment of the High Court concerning the compounding of an offence under Section 138 of the N.I. Act without the complainant’s consent.
A Bench of Justice C.T. Ravikumar and Justice Sanjay Karol observed, “We are of the considered view that there is no point in restoring the proceedings and to permit their continuance before the trial Court, though we have set aside the impugned judgment to the extent it compounded the offence under Section 138, of the N.I. Act, invoking the power under Section 482, Cr.P.C., and Section 147, N.I. Act. Hence, despite the lack of consent from the appellant complainant, we found that it is a befitting case to invoke the power of this Court under Article 142 of the Constitution of India to do complete justice between the parties and to quash Complaint.”
Advocate Vimit Trehan represented the appellant, while Advocate Giriraj Subramanium appeared for the respondents.
The appellant, A.S. Pharma Pvt. Ltd., had filed a complaint under Section 138 of the N.I. Act after cheques issued by Nayati Medical Pvt. Ltd. (respondent) were dishonored. Following the issuance of summons, the respondents expressed their readiness to settle the matter. An application to permit compounding of the offence was filed under Section 320 of the Cr.P.C.
The trial court dismissed the application, after which the respondents challenged the same before the High Court seeking compounding of the offence and quashing of proceedings. The High Court under Section 482 of the Cr.P.C. and Section 147 of the N.I. Act allowed the compounding of the offence and held that “the consent of the complainant is not mandatory at the time of compounding of the offence under Section 138 of the N.I. Act, once the complainant has been equitably compensated.”
The Supreme Court had to determine whether the consent of the complainant, who is to compound the offence, is required to exercise the power under Section 147 of the N.I. Act.
"In short, the position is ‘that an offence under Section 138, N.I. Act could be compounded under Section 147 thereof, only with the consent of the complainant concerned’. In that view of the matter, the impugned judgment of the High Court wherein despite the absence of the consent of the appellant-complainant compounded the offence under Section 138, N.I. Act, on the ground that the appellant was equitably compensated, could not be sustained," the Bench remarked.
The Court observed that the High Court invoking its power under Section 482 of the Cr.P.C. and Section 147 of the N.I. Act to compound the offence under Section 138 of the N.I. Act was contrary to the law enunciated by the Apex Court.
The Court referred to its decision in JIK Industries Ltd. v. Amarlal V. Jumani (2012), where the Court distinguished the quashing of a case from compounding of case, “Quashing of a case is different from compounding. In quashing, the Court applies it but in compounding it is primarily based on consent of the injured party. Therefore, the two cannot be equated.”
Therefore, the Bench observed, “In that view of the matter, the impugned judgment of the High Court wherein despite the absence of the consent of the appellant-complainant compounded the offence under Section 138, N.I. Act, on the ground that the appellant was equitably compensated, could not be sustained.”
The Bench further observed, “We have no doubt in holding that merely because taking into account such aspects and circumstances this Court ‘quashed’ the proceedings by invocation of the power under Article 142 of the Constitution of India, cannot be a reason for ‘compounding’ an offence under Section 138, N.I. Act, invoking the power under Section 482, Cr.P.C. and the power under Section 147, N.I. Act, in the absence of consent of the complainant concerned in view of the decision referred hereinbefore.”
However, recognising that the respondents had already deposited an amount with 12% interest, the Court held that it would serve no purpose to restore the criminal proceedings. Instead, the Supreme Court invoked its extraordinary powers under Article 142 of the Constitution to quash the complaint.
Consequently, the Court held, “ The High Court had clearly fallen in error in invoking the power under Section 482, Cr.P.C., as also the power under Section 147, N.I. Act, to compound the offence under Section 138 of the N.I. Act qua the respondent accused. Hence, the impugned judgment to the extent it compounded the offence under Section 138, N.I. Act invoking the inherent power under Section 482, Cr.P.C. and the power under Section 147, N.I. Act stands quashed and set aside.”
Accordingly, the Supreme Court disposed of the appeal.
Cause Title: A.S. Pharma Pvt. Ltd. v. Nayati Medical Pvt. Ltd. & Ors. (Neutral Citation: 2024 INSC 690)
Appearance:
Appellant: Advocates Vimit Trehan and Dhruv Dwivedi; AOR Ravi Bharuka
Respondents: Advocates Giriraj Subramanium, Simarpal Singh Sawhney, Siddhant Juyal, Veda Singh, Ravi Pathak, Simar Singh Sawhney, Akhilesh Talluri, Joy Banarjee and Urvarshi Singh; AOR Aditya Singh