Piecemeal Compromise And Compounding Permissible In Cheque Bounce Cases: Bombay HC
The Bombay High Court held that a piecemeal compromise and compounding of offence is permissible in cheque bounce cases.
The Court was dealing with a petition challenging an order of Additional Chief Judicial Magistrate, Nagpur dismissing an application filed by some of the accused in a cheque bounce case seeking compounding of offence upon full payment of cheque amount.
A Single Bench of Justice Anil L. Pansare observed, “To my mind, the ratio decidendi in the above cases is that in appropriate cases, a piecemeal compromise and compounding is permissible. The non-applicant is getting adequate compensation. In the circumstances, having given my thoughtful consideration to the attending circumstances, the request to compound the offence will have to be allowed."
Advocate D.P. Singh represented the applicants while APP Shamsi Haider and Senior Advocate Anand Jaiswal represented the respondents.
In this case, as per the applicants, the impugned order suffered from non-consideration of the law laid down by the Supreme Court, in the case of Damodar S. Prabhu v. Sayed Babalal (2010) Vol.5 SCC 663 and Meters and Instruments Private Limited v. Kanchan Mehta (2018) Vol.1 SCC 560. The non-applicant no. 2 i.e., a company filed a complaint under Section 138 of the NI Act, accusing as many as 12 entities or individuals to be responsible for dishonour of cheque amounting to Rs. 15 lakhs. The accused nos. 1 and 2 were a Company, named and styled as Castex Technologies Limited having offices at Haryana and Rajasthan. The accused no.3- John Earnest Flintham was the Managing Director of the Company, accused nos. 4 to 12 were the Directors of the accused nos.1 and 2 companies.
These applicants were arrayed as accused in the capacity as Directors of the Company with an allegation that they all were involved in the day-to-day affairs of the Company. The allegations against the accused were that they had placed different purchase orders with the non-applicant no. 2-Company/ complainant for supply of Lustron, Inoculant and Nodulant, which were foundry consumables. The non-applicant no.2 had supplied the material for an amount of Rs. 3.16 crores approximately and to discharge the part liability, a cheque was issued by the accused-Company. The cheque was for Rs.15 lakhs and was presented for encashment, but returned back unpaid with the remarks “insufficient funds”. After complying with other necessary formalities like issuance of notices etc., a complaint was filed, under Section 138 read with Section 142 of the NI Act as well as Section 420 of the Indian Penal Code (IPC).
The High Court in view of the facts and circumstances of the case noted, “The non-applicant no.2, thus, appears to have raised his claim for recovery of the amount on 03.01.2018 before the IRP. Admissible recovery, whether of Rs.3 crores or otherwise, will be considered before the IRP and in terms of the provisions of the IBC Code, 2016. In the circumstances, to not offer consent on the ground that the applicants owe dues to the non-applicant no.2 to the tune of Rs. 3 crores is, in my considered opinion, an abuse of process of law and, therefore, by invoking the jurisdiction u/s 482 of the Code, this attempt will have to be and stands nipped down.”
Another question that arose before the Court was whether it will be permissible for six accused (applicants) out of twelve, to seek compounding of offence. In this regard, the applicants referred to the judgment of the Allahabad High Court in the case of Gaganpal Singh Ahuja & others v. State of U.P. & others, reported in 2023(6) ADJ 223, which was required to consider whether piecemeal compromise and compounding thereof is permissible.
“To my mind, the ratio decidendi in the above cases is that in appropriate cases, a piecemeal compromise and compounding is permissible. The non-applicant is getting adequate compensation. In the circumstances, having given my thoughtful consideration to the attending circumstances, the request to compound the offence will have to be allowed”, said the Court.
Accordingly, the High Court allowed the criminal application and set aside the order of the ACMM.
Cause Title- Anuradha Kapoor & Ors. v. State of Maharashtra & Anr. (Neutral Citation: 2023:BHC-NAG:16559)
