High Court orders reconsideration of cheque payment dispute, emphasizing settlement terms for justice

The High Court quashed the order rejecting the application for payment of the dishonoured cheque amount, directing the Magistrate to reconsider the case in light of the settlement between the parties. The proceedings under Section 138 of the Negotiable Instruments Act were to be reviewed to ensure justice and adherence to the settlement terms. The revision petition was disposed of without costs, and all related applications were also resolved.

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Issues Involved:
1. Quashing of the proceeding under Section 138 of the Negotiable Instruments Act.
2. Rejection of the application for payment of the dishonoured cheque amount.
3. Vicarious liability under Section 141 of the Negotiable Instruments Act.
4. Compounding of the offence under Section 138 of the Negotiable Instruments Act.
5. Settlement between parties and its impact on the proceedings.

Detailed Analysis:

1. Quashing of the proceeding under Section 138 of the Negotiable Instruments Act:
The petitioners sought to quash the proceeding of Case No. C-5223 of 2018 under Section 138 of the Negotiable Instruments Act, pending before the Additional Chief Judicial Magistrate, Bidhannagar. The petitioners argued that the complaint was filed before the expiration of the statutory period of 15 days from the date of service of the demand notice, rendering the complaint premature and not maintainable in law.

2. Rejection of the application for payment of the dishonoured cheque amount:
The petitioners filed an application on 25.02.2019, expressing their readiness to pay the amount of the dishonoured cheque and prayed for the closure of the proceedings. The opposite party, however, refused to accept the payment, arguing that accepting the amount would affect the proceedings under the Insolvency and Bankruptcy Code, 2016, pending before the National Company Law Tribunal (NCLT), Kolkata Bench. The Magistrate found the opposite party's reasoning convincing and rejected the petitioners' application on 18.06.2019.

3. Vicarious liability under Section 141 of the Negotiable Instruments Act:
The petitioners contended that the complaint did not aver that the directors (petitioners nos. 2, 3, 4, and 5) were in charge of and responsible for the conduct of the company's business. They argued that mere designation as directors does not satisfy the requirement of Section 141, which must be strictly construed as it creates vicarious liability. The complainant failed to specify the roles of the directors in the dishonour of the cheque.

4. Compounding of the offence under Section 138 of the Negotiable Instruments Act:
The petitioners cited the Supreme Court's judgment in Meters and Instruments Private Limited v. Kanchan Mehta, which allows for the compounding of offences even without the complainant's consent if the cheque amount is paid. The petitioners argued that the Magistrate erred by not considering this precedent and failing to quash the proceedings despite their willingness to pay the cheque amount.

5. Settlement between parties and its impact on the proceedings:
The petitioners presented a supplementary affidavit showing a Deed of Settlement executed on 27.01.2022, indicating that the parties had settled their disputes. The NCLT, in its order dated 28.02.2022, recorded the settlement agreements and dismissed the insolvency petition with liberty to revive in case of default. The High Court noted that the opposite party did not appear despite due service and set aside the Magistrate's order dated 18.06.2019. The case was remitted to the Magistrate to dispose of in light of the settlement, ensuring the presence of both parties within one month.

Conclusion:
The High Court quashed the order dated 18.06.2019, directing the Magistrate to dispose of the case considering the settlement between the parties. The proceedings under Section 138 of the Negotiable Instruments Act were to be revisited, ensuring justice and compliance with the settlement terms. The revision petition was disposed of without any order as to costs, and all connected applications were also disposed of.

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