2023 (11) TMI 142 - HC - Indian Laws

Section 138 compounding under Section 147 requires property attachment only, non-bailable warrants lack jurisdiction

Sanjeev Srivastava And Another Versus State Of NCT of Delhi & Ors.

Delhi HC held that once an offence under Section 138 of the Negotiable Instruments Act is compounded under Section 147, recovery must proceed through ... Dishonour of Cheque - noncompliance of certain terms of the settlement agreement, has been settled - compounding of offences - HELD THAT:- As per the judgment delivered by a learned Division Bench of this Court in Dayawati v. Yogesh Kumar Gosain, [2017 (10) TMI 1063 - DELHI HIGH COURT] once the offence under Section 138 of the NI Act is compounded in terms of Section 147 of the said Act, the recovery of the agreed upon amount, has to be realized in terms of Section 431 read with Section 421 of the CrPC. It is pertinent to note that the only thing which the Court in terms of the aforesaid provisions can do is attach the properties of the accused persons. Powers to issue non-bailable warrants with the learned Metropolitan Magistrate at the stage when the proceedings in the complaint case are over has not been provided for. A bare reading of the said provisions reflects that the mandatory presence of accused persons has not been provided for. The warrant will only be issued for attachment and not for arrest. In view of the scheme of the CrPC and the observations made in Dayawati (supra), this Court is of the considered opinion that once a compromise has been arrived at and an offence under Section 138 of the NI Act is compounded, the concerned Court, after passing an order compounding the offence can only proceed for attachment in terms of Sections 421 and 431 of the CrPC. Thus, the non-bailable warrants issued were without jurisdiction and therefore, the consequent proceedings under Section 82 of the CrPC were also invalid. This Court is of the opinion that in the present case, no useful purpose will be served by continuing with the proceedings in the subject FIR and it is an appropriate case for quashing the same in order to secure the ends of justice - Petition allowed. Issues Involved:1. Quashing of FIR No. 147/2022 under Section 174A of IPC.2. Non-compliance with settlement terms under Section 138 of the NI Act.3. Validity of non-bailable warrants and subsequent proceedings under Section 82 of CrPC.4. Impact of subsequent settlement on the ongoing proceedings.Summary:Issue 1: Quashing of FIR No. 147/2022 under Section 174A of IPCThe petitioners sought quashing of FIR No. 147/2022 under Section 174A of IPC registered at PS Defence Colony. The FIR was a result of the petitioners being declared absconders after failing to comply with the terms of a settlement agreement under Section 138 of the NI Act.Issue 2: Non-compliance with settlement terms under Section 138 of the NI ActIn 2016, a complaint under Section 138 of the NI Act was filed. The dispute was settled in 2018, and terms were recorded by the Metropolitan Magistrate. However, the petitioners did not comply with the settlement, leading to the issuance of warrants of attachment under Sections 421/431 of CrPC.Issue 3: Validity of non-bailable warrants and subsequent proceedings under Section 82 of CrPCThe Metropolitan Magistrate issued non-bailable warrants and later declared the petitioners absconders under Section 82 of CrPC. The court noted that the issuance of non-bailable warrants was beyond jurisdiction as the court could only proceed for attachment under Sections 421 and 431 of CrPC once the offence under Section 138 of the NI Act was compounded.Issue 4: Impact of subsequent settlement on the ongoing proceedingsA subsequent settlement was reached on 21.12.2022, and the offence under Section 138 of the NI Act was compounded again, leading to the acquittal of the accused. Respondent no. 2 had no objection to quashing the present FIR, as stated in his affidavit.Judgment:The court held that the non-bailable warrants issued were without jurisdiction, making the consequent proceedings under Section 82 of CrPC invalid. Given the subsequent settlement and acquittal, continuing the FIR proceedings would serve no useful purpose. Therefore, FIR No. 147/2022 under Section 174A of IPC was quashed to secure the ends of justice.Conclusion:The petition was allowed, and FIR No. 147/2022 was quashed. The judgment emphasized that once an offence under Section 138 of the NI Act is compounded, the court can only proceed for attachment and not issue non-bailable warrants.