2020 (2) TMI 677 - HC - Indian Laws

Court quashes charge under Section 138 NI Act, acquits applicant. Settlement crucial for dispute resolution.

SARJAN HIRALAL SONI Versus STATE OF GUJARAT

The court allowed the revision application, quashed the impugned judgments, and acquitted the applicant of the charge under Section 138 of the Negotiable ... Dishonor of Cheque - insufficiency of funds - settlement of dispute between the parties - section 138 of NI Act - HELD THAT:- It appears that the dispute is settled amicably between the parties and respondent no.2-original complainant has received amount of ₹ 2,00,000/- from the accused-applicant as full and final settlement and no other amount remains due from the applicant. Reliance placed in the case of VINAY DEVANNA NAYAK VERSUS RYOT SEVA SAHAKARI BANK LTD [2007 (12) TMI 444 - SUPREME COURT] where it was held that taking into consideration even the provision of Section 147 and the primary object underlying Section 138, in our judgment, there is no reason to refuse compromise between the parties. Applying the ratio of the aforesaid decision of the Apex Court to the facts of the present case as well as considering the settlement arrived at between the parties, the revision application is required to be allowed and the parties be permitted to compound the offence - revision application allowed. Issues:Challenge to impugned judgments dated 09.01.2018 and 06.08.2019, Settlement between parties, Compounding of offense under Section 138 of Negotiable Instruments Act.Analysis:1. Challenge to Impugned Judgments:The applicant challenged the judgments dated 09.01.2018 and 06.08.2019 passed by the Additional Chief Metropolitan Magistrate and Additional City Sessions Judge, respectively. The case involved a dispute between the original complainant, engaged in the business of making golden ornaments, and the accused, who issued a cheque that was dishonored due to insufficient funds. The complainant initiated legal action, leading to the judgments under challenge. The applicant sought relief against the confirmed sentence imposed by the Sessions Judge.2. Settlement Between Parties:During the hearing, both parties informed the court about an amicable settlement. The complainant accepted a cash amount of Rs. 2,00,000 as full and final settlement of the dispute. The complainant submitted an affidavit confirming the settlement and expressed no objection to quashing the previous court orders. The court considered this settlement, supported by the complainant's affidavit and other relevant documents, indicating the resolution of the dispute between the parties.3. Compounding of Offense under Section 138:Referring to the decision of the Apex Court in Vinay Devanna Nayak v/s Ryot Seva Sahakari Bank Ltd., the court emphasized the importance of promoting credibility in banking transactions and the efficacy of negotiable instruments. The court noted that the primary object underlying Section 138 of the Negotiable Instruments Act is to prevent dishonest practices related to issuing cheques without sufficient funds. Applying the principles laid down by the Apex Court, the court allowed the revision application, permitted the parties to compound the offense, and acquitted the applicant of the charge under Section 138.In conclusion, the court allowed the revision application, quashed the impugned judgments, and acquitted the applicant of the charge under Section 138 of the Negotiable Instruments Act. The settlement between the parties played a crucial role in resolving the dispute, leading to the disposal of the application. The court's decision was based on legal principles aimed at promoting credibility in banking transactions and facilitating amicable settlements between parties involved in such cases.