2009 (12) TMI 903 - SC - Companies Law

Post-Conviction Compounding: Section 147 Prevails

The Court allowed the compounding of the offence under Section 138 of the Negotiable Instruments Act, even after conviction, emphasizing the legislative ... Whether an offence under Section 138 of the Negotiable Instruments Act, 1881, could be compounded under Section 147 of the said Act read with Section 320 Cr.P.C.? Held that:- It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. Accordingly, we find no reason to reject the application under Section 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution. Since the parties have settled their disputes, in keeping with the spirit of Section 147 of the Act, we allow the parties to compound the offence, set aside the judgment of the courts below and acquit the appellant of the charges against him. Appeal allowed. Issues:1. Compounding of an offence under Section 138 of the Negotiable Instruments Act.2. Interpretation of Section 147 of the Negotiable Instruments Act.3. Applicability of Section 320 Cr.P.C. in compounding offences under the Negotiable Instruments Act.4. Jurisdiction of the Court to acquit the accused/convict upon compounding of the offence.5. Effect of non-obstante clause in Section 147 of the Negotiable Instruments Act.Issue 1: Compounding of an offence under Section 138 of the Negotiable Instruments ActThe appellant issued a cheque that bounced due to insufficient funds, leading to a complaint being filed. The appellant sought to compound the offence under Section 147 of the Act, even after conviction. The appellant's argument was based on the power granted by Section 147 for parties to compound the offence, emphasizing the legislative intent to facilitate settlements. Previous cases, such as O.P. Dholakia vs. State of Haryana, supported the view that compounding could be allowed post-conviction, leading to annulment of conviction and sentence under Section 138.Issue 2: Interpretation of Section 147 of the Negotiable Instruments ActSection 147, inserted by an amendment, made all offences under the Act compoundable, with an overriding effect over the Code of Criminal Procedure. The Court cited various cases, including Anil Kumar Haritwal vs. Alka Gupta, to establish the consistent stance that compounding under Section 147 should result in setting aside the conviction under Section 138. The Court highlighted the legislative intent behind Section 147 and its similarity to Section 320(8) Cr.P.C., even though not explicitly mentioned.Issue 3: Applicability of Section 320 Cr.P.C. in compounding offences under the Negotiable Instruments ActWhile Section 320 Cr.P.C. does not strictly apply to proceedings under the Negotiable Instruments Act, the Court drew an analogy between the provisions to emphasize the intent to allow compounding and subsequent acquittal. The Court noted that Section 147 of the Act, akin to Section 320(8) Cr.P.C., vested jurisdiction in the Court to acquit the accused upon compounding, aligning with the objective of facilitating settlements.Issue 4: Jurisdiction of the Court to acquit the accused/convict upon compounding of the offenceThe Court invoked Article 142 of the Constitution to pass appropriate orders in line with Section 320(8) Cr.P.C. in applications under Section 147 of the Act to ensure justice for the parties involved. The Court highlighted the power vested in the Court to acquit the accused upon compounding, reflecting the legislative intent to promote settlements and provide a legal mechanism for acquittal post-compounding.Issue 5: Effect of non-obstante clause in Section 147 of the Negotiable Instruments ActGiven that the 1881 Act is a special statute, the non-obstante clause in Section 147 was deemed to have an overriding effect over provisions of the Code related to compounding offences. The Court clarified that the various decisions cited did not alter this position, emphasizing the primacy of Section 147 in matters of compounding offences under the Negotiable Instruments Act.In conclusion, the Court allowed the parties to compound the offence under Section 138 of the Negotiable Instruments Act, setting aside the judgments of the lower courts and acquitting the appellant in line with the spirit and provisions of Section 147 of the Act.