2025 (8) TMI 324 - HC - Indian Laws

Offence under Section 138 NI Act can be compounded post-conviction under Section 147 with token fee payment

The HC allowed the petitioner's application for compounding the offence under Section 138 of the Negotiable Instruments Act after the parties settled the ... Dishonor of Cheque - insufficient funds - petitioner failed to liquidate his financial liability towards the respondent within the stipulated time - settlement entered into between parties - compounding of offences - HELD THAT:- Having taken note of the fact that the petitioneraccused and the complainant-respondent have settled the matter and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accusedpetitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon’ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H. [2010 (5) TMI 380 - SUPREME COURT], wherein the Hon’ble Apex Court has held that 'A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Indian Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause.' In K. Subramanian Vs. R. Rajathi [2009 (11) TMI 1013 - SUPREME COURT], it has been held by the Hon’ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon’ble Apex Court - in view of the detailed discussion made hereinabove as well as law laid down by the Hon’ble Apex Court, the application is allowed and matter is ordered to be compounded. Therefore, taking into consideration the law laid down by the Hon’ble Apex Court and the financial condition of the petitioner, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee of Rs.10,000/-, only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today. Petition disposed off. ISSUES: Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 ('the Act') can be compounded after conviction and confirmation of sentence.Whether the Court has jurisdiction to allow compounding of offence under Section 147 of the Act read with Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 ('BNSS').The applicability and effect of the non-obstante clause in Section 147 of the Act overriding Section 320 of the Code of Criminal Procedure, 1973 ('CrPC') regarding compounding of offences.The extent and discretion of the Court in imposing compounding fees, particularly considering the financial status of the accused. RULINGS / HOLDINGS: The Court held that the offence under Section 138 of the Act is compoundable even after conviction and confirmation of sentence, relying on the enabling provision of Section 147 of the Act and relevant Apex Court precedents.It was held that Section 147 of the Act, containing a non-obstante clause, overrides Section 320 of the CrPC, thereby allowing compounding of offences under the Act notwithstanding the general provisions of the CrPC.The Court accepted the prayer for compounding the offence on the basis of an amicable settlement between the parties and the complainant's consent, ordering quashing and setting aside of the conviction and sentence.Regarding compounding fees, the Court applied the guidelines from the Apex Court in K. Subramanian vs. R. Rajathi, directing the accused to pay a token compounding fee of Rs.10,000/- considering his poor financial condition, exercising discretion to reduce the fee. RATIONALE: The Court applied Section 147 of the Negotiable Instruments Act, 1881, which explicitly provides that 'every offence punishable under this Act shall be compoundable' and contains a non-obstante clause overriding conflicting provisions such as Section 320 of the CrPC.The Court relied on the Apex Court's ruling in Damodar S. Prabhu v. Sayed Babalal H. and K. Subramanian v. R. Rajathi, which clarify that compromise and compounding are permissible even post-conviction and that the compounding scheme under the Act is distinct and supersedes the general compounding provisions of the CrPC.The Court recognized that Section 147 is an enabling provision and an exception to the general rule under Section 320(9) CrPC, emphasizing the legislative intent to facilitate compounding of cheque bounce offences to reduce litigation and promote settlement.The Court followed the graded scheme for compounding fees as laid down by the Apex Court, which aims to encourage early compounding, but retained discretion to reduce fees based on the accused's financial circumstances, requiring reasons to be recorded for such variance.