Cheque dishonour case quashed after accused pays Rs 1.55 crore despite complainant refusing to compound under Section 138

The SC allowed the appeal in a dishonour of cheque case under Section 138 NI Act. Despite the complainant's unwillingness to compound the offence, the court quashed the proceedings after the appellant paid the entire amount of Rs.1.55 crore plus Rs.10 lacs interest and an additional Rs.10 lacs as ordered. The appellant had been in jail for over one year before bail. The court found the transaction was civil in nature without criminal intent, distinguishing between compounding and quashing. The impugned order was set aside and proceedings terminated.

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Issues Involved:
1. Conviction under Section 138 of the Negotiable Instruments Act (NI Act).
2. Criminal proceedings under Sections 406, 420, and 120B of the Indian Penal Code (IPC).
3. Settlement and compounding of offences.
4. Quashing of criminal proceedings and appeals.

Summary:

Issue 1: Conviction under Section 138 of the NI Act
- The appellant was convicted by the trial court u/s 138 of the NI Act and sentenced to 2 years of rigorous imprisonment along with a direction to pay the cheque amount.
- An appeal led to a settlement in Lok Adalat, where the appellant agreed to repay Rs.1.55 crore within 16 months, failing which the settlement would be frustrated.
- The appellant failed to comply with the settlement terms, and the Additional Sessions Judge declared the settlement frustrated.
- Despite subsequent payments, the trial court refused to accept a Demand Draft for the remaining Rs.20 lacs due to non-compliance with the Supreme Court's order.

Issue 2: Criminal Proceedings under Sections 406, 420, and 120B of IPC
- The appellant faced charges u/s 406, 420, and 120B of IPC for allegedly cheating the complainant by not supplying a machine after taking an advance payment.
- The Supreme Court found no merit in the allegations, stating the transaction was civil in nature and did not attract criminal law.

Issue 3: Settlement and Compounding of Offences
- The appellant paid the entire amount of Rs.1.55 crore and an additional Rs.10 lacs towards interest.
- The complainant refused to consent to the compounding of the offence despite receiving the entire amount.
- The Supreme Court noted that u/s 147 of the NI Act, offences are compoundable but require the complainant's consent, which was not given in this case.
- The Court cited Damodar S. Prabhu v. Sayed Babalal H. and Kanchan Mehta cases, emphasizing the compensatory aspect over the punitive aspect in cheque dishonour cases.

Issue 4: Quashing of Criminal Proceedings and Appeals
- The Supreme Court exercised its powers u/s Article 142 of the Constitution to quash all pending criminal appeals and proceedings against the appellant.
- The Court highlighted that continuing the appeals would defeat the purpose of ensuring the complainant gets her money back.
- The Court directed the trial court to hand over the Demand Drafts totaling Rs.30 lacs to the complainant.

Conclusion:
- The Supreme Court allowed the appeal, set aside the High Court's impugned order, quashed all criminal proceedings arising out of FIR No.35 of 2014, and quashed the pending criminal appeals against the appellant's conviction u/s 138 of the NI Act.
- The Court directed the trial court to hand over the Demand Drafts to the complainant. Pending applications were disposed of.

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