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of <h1>SC Acquits Appellants; Recognizes Offence Compounding, Emphasizes Compensation Over Punishment in NI Act Case.</h1> The SC allowed the appeal, acquitted the appellants, and set aside previous conviction orders under Section 138 of the NI Act, following a settlement ... Dishonour of Cheque - insufficient funds - compounding of the offence - settlement of dispute - Section 147 of the Negotiable Instruments Act - HELD THAT:- Section 147 of the Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences. This settlement agreement can be treated to be compounding of the offence. All the same, Section 320 (5) of CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending. In cases where the accused relies upon some document for compounding the offence at the appellate stage, courts shall try to check the veracity of such document, which can be done in multiple ways. For the same, in the present matter, this Court vide order dated 18.03.2024 had asked the respondent-complainant to file an affidavit to bring on record whether or not any compromise has been reached between the parties. In Raj Reddy Kallem v. The State of Haryana & Anr. [2024 (5) TMI 322 - SUPREME COURT], this Court followed the same principles and quashed a conviction under the NI Act, by invoking its powers under Article 142, even though the complainant therein declined to give consent for compounding, observing that the accused has sufficiently compensated the complainant. The appellants are acquitted by setting aside the impugned order dated 01.04.2019 as well the Trial Court’s order dated 16.10.2012 - appeal allowed. Issues:1. Conviction under Section 138 Negotiable Instruments Act2. Settlement agreement between the parties3. Compounding of the offence at the appellate stage4. Principles of compounding of offences under NI ActAnalysis:Conviction under Section 138 Negotiable Instruments Act:The case involved a complaint under Section 138 of the Negotiable Instruments Act filed by the respondent/complainant against the appellants for dishonoring a cheque issued to discharge a debt. The Trial Court convicted the appellants, but the Appellate Court later acquitted them. Subsequently, the High Court set aside the Appellate Court's order and restored the Trial Court's conviction, leading the matter to the Supreme Court.Settlement agreement between the parties:Before filing the appeal, the parties entered into a settlement agreement where the appellants agreed to pay Rs.5,25,000 to the respondent-complainant, who in turn agreed to settle the matter for the said amount. The settlement agreement was presented to the Court, and the respondent expressed no objection to setting aside the conviction of the appellants.Compounding of the offence at the appellate stage:The settlement agreement was considered a compounding of the offence under Section 147 of the Negotiable Instruments Act. As per Section 320(5) of the CrPC, compounding after conviction requires leave of the Court where the appeal is pending. The Court verified the settlement's genuineness by directing the respondent to file an affidavit confirming the compromise, which was done to the satisfaction of the Court.Principles of compounding of offences under NI Act:The Court emphasized the importance of encouraging the compounding of offences under the NI Act, especially in cases where parties are willing to settle. Quoting previous judgments, the Court highlighted the compensatory aspect of the remedy over the punitive aspect and stressed the need to prioritize the compensatory nature of settlements in such cases. Referring to a previous case, the Court invoked its powers under Article 142 to quash the conviction under the NI Act, considering the compensation provided by the accused.In conclusion, considering the settlement between the parties and the principles of compounding offences under the NI Act, the Supreme Court allowed the appeal, acquitted the appellants, and set aside the previous orders of conviction. Appellant no.2 was exempted from surrendering, and the sureties were discharged.
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