2025 (11) TMI 1 - HC - Indian Laws

Inherent powers used to accept bona fide compromise under section 138 NI Act, revising conviction and sentence

Pandeeswari Versus B. Ramkumar, S/o. Balasubramanian, Virudhunagar

HC allowed revision under its inherent powers and disposed of the criminal revision by recording the out-of-court compromise between the parties, thereby ... Dishonour of Cheque - compounding of offences - order confirming the conviction of the trial court u/s 138 of Negotiable Instruments Act can be nullified by the High Court on the basis of compromise entered between the parties or not - HELD THAT:- It is well settled that inherent power of the Court can be exercised only when no other remedy is available to the litigants and nor a specific remedy as provided by the statute. It is also well settled that if an effective, alternative remedy is available, the High Court will not exercise its inherent power, especially when the Revision Petitioner may not have availed of that remedy. The power can be exercised by the High Court to secure the ends of justice, prevent abuse of the process of any court and to make such orders as may be necessary to give effect to any order under this Sanhita or Act, depending upon the facts of the given case. This Court can always take note of any miscarriage of justice and prevent the same by exercising its power. These powers are neither limited, nor curtailed by any other provision of the Sanhita or Act. However, such inherent powers are to be exercised sparingly and with caution. In the instant case, it is true that the appeal was dismissed and the conviction and sentence was upheld by the appellate court, but it cannot be lost sight of the fact that this Court has power to intervene in exercise of its power only with a view to do the substantial justice or to avoid a miscarriage and the spirit of compromise arrived at between the parties. This is perfectly justified and legal too. In the instant case, the Revision Petitioner is invoking the inherent power of this court after dismissal of the appeal confirming his conviction and sentence. In these circumstances, it is required to examine as to whether for entertaining the aforesaid case, any special circumstances are made out or not, so it can be legitimately argued and inferred and held that in all cases where the Revision Petitioner is able to satisfy this Court that there are special circumstances which can be clearly spelt out subsequent proceeding invoking inherent power of this court can be modified and cannot be thrown away on that technical argument as to its sustainability once the contesting parties entered into subsequent compromise. The present Criminal Revision Case is disposed of in terms of Memorandum of Compromise arrived at between the parties to this litigation out of Court. ISSUES PRESENTED AND CONSIDERED 1. Whether a High Court, in exercise of its revisionary or inherent powers, can permit compounding of an offence under Section 138 of the Negotiable Instruments Act after conviction by trial court and dismissal of the appeal by the appellate court. 2. Whether compounding under Section 147 of the Negotiable Instruments Act overrides or is constrained by Section 359 of the Bharatiya Nyaya Sanhita (B.N.S.S.), 2023, particularly where conviction and sentence have already been recorded and confirmed. 3. What legal principles, guidelines or conditions (if any) govern compounding at a belated stage (post-conviction and post-appeal) and the scope of High Court's inherent power to do substantial justice in such circumstances. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power of High Court to permit compounding after conviction and dismissal of appeal Legal framework: Section 147 of the Negotiable Instruments Act declares that every offence punishable under the Act shall be compoundable. Section 359 B.N.S.S. prescribes the scheme and limits of compounding under the new penal code, including requirement of court's permission when prosecution is pending and that no composition shall be allowed where accused is committed for trial or convicted and an appeal is pending without leave of the court to which committed or before which appeal is to be heard; also that composition has effect of acquittal. Precedent treatment: Decisions of the Apex Court recognizing compounding under Section 138 N.I. Act even at later stages (including after conviction) were cited (principles in Damodar S. Prabhu and Meters & Instruments - guidelines and recognition of compensatory object; Vinay Devanna Nayak - acquittal on compromise). Interpretation and reasoning: The Court held that Section 147 N.I. Act makes offences under the Act compoundable notwithstanding other procedural provisions. The High Court retains jurisdiction to intervene in the interest of substantial justice, and inherent powers may be exercised where special circumstances exist or to prevent miscarriage of justice. Even where conviction has been recorded and appeal dismissed, the High Court can permit compounding if the parties have genuinely settled and compensation has been paid, provided statutory limits (e.g., prohibition where prior conviction leads to enhanced punishment) are not attracted. Ratio vs. Obiter: Ratio - The High Court can nullify confirmed convictions under Section 138 N.I. Act by permitting compounding where compounding is statutorily permissible (Section 147) and where parties have effected full settlement; such compounding results in acquittal. Obiter - General remarks on frequency or policy considerations of discouraging delay and misuse of compounding when convictions are final (though connected to reasoning). Conclusion: The Court concluded it could permit compounding of the offence post-conviction and post-dismissal of appeal, on satisfaction of genuineness of settlement and absence of statutory bar, and proceeded to annul conviction and sentence treating the accused as acquitted on compounding. Issue 2 - Interaction between Section 147 N.I. Act and Section 359 B.N.S.S.; requirement of leave and limits Legal framework: Section 147 N.I. Act (every offence under the Act compoundable) and Section 359 B.N.S.S. (compounding provisions, court's permission where prosecution pending, leave required where accused committed or convicted and appeal pending, effect of composition is acquittal, and bars where previous conviction attracts enhanced/different punishment). Precedent treatment: Authorities cited recognize compounding under N.I. Act and allow courts to condition compounding (including costs) depending on stage of proceedings (as per Damodar S. Prabhu guidelines). Interpretation and reasoning: The Court analyzed both provisions and held that Section 147 N.I. Act operates notwithstanding the general criminal procedural code; but Section 359 B.N.S.S. still prescribes procedural safeguards - e.g., requirement of court's leave where conviction or appeal status exists. The High Court, acting under its revisionary or inherent jurisdiction, can grant leave contemplated by Section 359(5)/(6) to allow compounding, subject to absence of statutory disqualification (e.g., enhanced punishment by reason of prior conviction). The Court emphasized exercising such powers sparingly and only where ends of justice and prevention of miscarriage require intervention. Ratio vs. Obiter: Ratio - Section 147 makes N.I. offences compoundable; Section 359 B.N.S.S. governs procedure and leave; High Court can grant leave to compound even after conviction and appeal dismissal where statutory bars are absent and parties genuinely settle. Obiter - Remarks on interplay being 'notwithstanding' and on policy considerations of compounding frequency. Conclusion: Section 147 empowers compounding; Section 359 imposes procedural constraints but permits High Court to allow compounding; on the facts (full payment, genuine compromise, no statutory bar), compounding was permissible and effectual to acquit. Issue 3 - Guiding principles and limitations on late-stage compounding, and scope of inherent powers Legal framework: Principles of inherent jurisdiction and revisionary powers of High Court (exercise sparingly, to secure substantial justice, prevent abuse/miscarriage), statutory compounding provisions (Section 147 N.I. Act and Section 359 B.N.S.S.), and established judicial guidelines (graded costs and stage-based conditions per Apex Court jurisprudence). Precedent treatment: The Court relied on Supreme Court guidance (formulated percentages/costs in Damodar S. Prabhu), and decisions permitting acquittal on compromise where compensation paid (Meters & Instruments; Vinay Devanna Nayak). The Court also referenced a recent analogous High Court decision it followed. Interpretation and reasoning: The Court acknowledged policy concerns (delay, misuse). It observed that guidelines exist to discourage belated composition (costs/percentages), but stressed flexibility: compounding should be encouraged early but not foreclosed thereafter if compensation is made and there is no abuse. The inherent power is a residual remedy where statutorily permissible compounding and leave requirements are met; it cannot be used where a statutory bar (e.g., prior conviction attracting enhanced/different punishment) exists. The Court emphasized that exercise of inherent power is justified where special circumstances are shown - here, full payment, petitioner in custody, complainant's unconditional consent, and absence of coercion. Ratio vs. Obiter: Ratio - Late-stage compounding is permissible subject to safeguards: genuine settlement, absence of statutory disqualification, court's satisfaction that compounding is not an abuse, and exercise of inherent/revisionary power with caution. Obiter - Discussion of alternative remedies and broader policy on imposing graded costs for delay. Conclusion: The Court applied the principles and precedents, found special circumstances (complete restitution, voluntary compromise, complainant's consent, no coercion), and exercised its power to permit compounding, treat the accused as acquitted, and order unconditional release. Relief and Consequences On the established findings (genuine compromise, full payment of cheque amount, complainant's consent, absence of statutory bar), the Court modified the appellate and trial judgments, annulled conviction and sentence under Section 138 N.I. Act, treated the accused as acquitted on account of compounding, and directed immediate release without conditions; no costs were ordered.