Cheque dishonour offences are not automatically compounded by a company scheme; complainant consent remains necessary.

A scheme sanctioned under Section 391 of the Companies Act, 1956 binds the parties and restructures the civil debt, but it does not extinguish or automatically compound an already incurred offence under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. Compounding under the Negotiable Instruments Act remains a bilateral act requiring the complainant's consent; Section 147 makes the offence compoundable but does not permit deemed or unilateral compounding. In the absence of a special procedure, the basic framework under Section 320 of the Code of Criminal Procedure, 1973 continues to apply. The criminal complaints therefore survive notwithstanding the company scheme.

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Issues: (i) Whether sanction of a scheme under Section 391 of the Companies Act, 1956 automatically compounds offences under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881. (ii) Whether compounding of an offence under the Negotiable Instruments Act, 1881 can occur without the consent of the complainant and without following the basic procedure under Section 320 of the Code of Criminal Procedure, 1973.

Issue (i): Whether sanction of a scheme under Section 391 of the Companies Act, 1956 automatically compounds offences under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.

Analysis: A scheme sanctioned under Section 391 binds the dissenting minority and has statutory force, but it only restructures the company's original debt and does not create a new debt or erase criminal liability already incurred. The scheme cannot override statutory requirements governing criminal prosecution or compounding. The offence under Section 138, if completed before the scheme, does not stand compounded merely because the civil debt has been reworked under the scheme.

Conclusion: The sanction of a scheme under Section 391 of the Companies Act, 1956 does not automatically compound offences under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881.

Issue (ii): Whether compounding of an offence under the Negotiable Instruments Act, 1881 can occur without the consent of the complainant and without following the basic procedure under Section 320 of the Code of Criminal Procedure, 1973.

Analysis: Section 147 of the Negotiable Instruments Act, 1881 makes the offence compoundable, but it does not abolish the foundational principle that compounding is bilateral and requires the consent of the person aggrieved or complainant. Section 147 overrides only the inconsistency with Section 320(9) of the Code, and in the absence of a special procedure under the Act, the general framework of Section 320 and Section 4(2) of the Code of Criminal Procedure, 1973 continues to apply. The non-obstante clause does not permit deemed or unilateral compounding.

Conclusion: Compounding under the Negotiable Instruments Act, 1881 cannot be effected without the complainant's consent, and the basic compounding framework under Section 320 of the Code of Criminal Procedure, 1973 remains relevant.

Final Conclusion: The criminal complaints were held to survive notwithstanding the company scheme, and the High Court's refusal to treat the scheme as an automatic compounding device was upheld.

Ratio Decidendi: A scheme sanctioned under Section 391 of the Companies Act, 1956 does not by itself compound a cheque dishonour offence, and compounding of an offence under the Negotiable Instruments Act, 1881 remains dependent on the complainant's consent and the statutory compounding framework.

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