A Dispute In Nature Of Complaint U/S 138 NI Act Can Be Settled Via Compromise Irrespective Of Any Other Legislation: Allahabad HC
The Allahabad High Court observed that a dispute in the nature of complaint under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) can be settled via compromise irrespective of any other legislation including Criminal Procedure Code (CrPC).
The Lucknow Bench observed thus in an application filed under Section 482 of CrPC with a prayer to compound the offence committed under Section 138 NI Act.
A Single Bench of Justice Shamim Ahmed held, “Section 147 of NI Act begins with a non obstante clause and such clause is being used in a provision to communicate that the provision shall prevail despite anything to the contrary in any other or different legal provisions. So, in light of the compass provided, a dispute in the nature of complaint under section 138 of N.I. Act, can be settled by way of compromise irrespective of any other legislation including Cr.P.C. in general and section 320 (1)(2) or (6) of the Cr.P.C. in particular. The scheme of section 320 Cr.P.C. deals mainly with procedural aspects; but it simultaneously crystallizes certain enforceable rights and obligation.”
The Bench added that such provision has an element of substantive legislation and therefore, it can be said that the scheme of Section 320 CrPC does not lay down only procedure; but still, the status of the scheme remains under a general law of procedure and as per the accepted proposition of law, the special law would prevail over general law.
Advocate Veer Bahadur Lal Srivastava appeared for the applicant while AGA Ashok Srivastava appeared for the opposite parties.
Factual Background -
The applicant prayed to quash the judgment of the Additional Judge by which he was convicted under Section 138 NI Act i.e., for the offence of cheque dishonourment and was directed to undergo imprisonment for two years along with a fine of Rs. 45 lakhs. He had taken a sum of Rs. 30 lakhs as long from the opposite party and became defaulter in paying the installment.
The applicant agreed to pay the entire dues and issued a cheque of Rs. 27,60,000/- but when the same was presented by the opposite party, it got dishonoured with the reason “Funds Insufficient”. Therefore, a complaint case was filed under Section 138 NI Act and after completion of trial, the Trial Court convicted the applicant. Being aggrieved by such conviction, he approached the High Court.
The High Court in the above regard noted, “The expression 'special law' means a provision of law, which is not applicable generally but which applies to a particular or specific subject or class of subjects. Section 41 of Indian Penal Code stands on the same footing and defines the phrase special law. … In reference to offence under section 138 of N.I. Act read with section 147 of the said Act, the parties are at liberty to compound the matter at any stage even after the dismissal of the revision application. Even a convict undergoing imprisonment with the liability to pay the amount of fine imposed by the court and/or under an obligation to pay the amount of compensation if awarded, as per the scheme of N.I. Act, can compound the matter.”
The Court said that the complainant i.e. person or persons affected can pray to the court that the accused, on compounding of the offence may be released by invoking jurisdiction of the court under Section 482 CrPC and if the parties are asked to approach the Apex Court then, what will be situation, is a question which is required to be considered in the background of another accepted progressive and pragmatic principle accepted by courts that if possible, the parties should be provided justice at the door step.
“The phrase "justice at the door step" has taken the court to think and reach to a conclusion that it can be considered and looked into as one of such special circumstances for the purpose of compounding the offence under section 147 of the N. I. Act. … Merely because the litigation has reached to a revisional stage or that even beyond that stage, the nature and character of the offence would not change automatically and it would be wrong to hold that at revisional stage, the nature of offence punishable under Section 138 of the N.I. Act should be treated as if the same is falling under table-II of Section 320 IPC”, it further observed.
The Court emphasised that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect.
“So the intention of the legislature and object of enacting "Banking", Public Financial Institutions and the Negotiable Instrument Laws (Amended Act) 1988 and subsequent enactment, i.e., Negotiable Instruments (Amendment & Miscellaneous Provisions Act 2002 leads this Court to a conclusion that the offence made punishable under Section 138 of N.I. Act is not only an offence qua property but it is also of the nature of an economic offence, though not covered in the list of statutes enacted in reference to Section 468 of Cr.P.C. Thus, the parties, in reference to offence under Section 138 N.I. Act read with Section 147 of the said Act are at liberty to compound the matter at any stage even after the dismissal of the application”, it said.
The Court enunciated that the parties, in reference to offence under Section 138 N.I. Act read with Section 147 of the said Act are at liberty to compound the matter at any stage and the complainant i.e., the person or persons affected can pray to the court that the accused, on compounding of the offence may be released by invoking jurisdiction of the Court under Section 482 CrPC read with Article 226 of the Constitution.
“As discussed above, the court is inclined to hold accordingly only because there is no formal embargo in section 147 of the N.I. Act. This principle would not help any convict in any other law where other applicable independent provisions are existing as the offence punishable under section 138 of the N.I. Act is distinctly different from the normal offences made punishable under Chapter XVII of IPC (i.e. the offences qua property). … this Court is of the view that the compounding of the offence as required to be permitted”, it concluded.
Accordingly, the High Court allowed the application and modified the impugned judgment.
Cause Title- Ravindra Kumar Yadav v. State Of U.P. Thru. Addl. Chief Secy. Home, Civil Sectt. Lko. And Another (Neutral Citation: 2024:AHC-LKO:40076)
Appearance:
Applicant: Advocates Veer Bahadur Lal Srivastava, Alok Kumar Mishra, and Chandan Srivastava.
Opposite Parties: AGA Ashok Srivastava and Advocate Dharmendra Gupta.
