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Compounding of offence u/s 138 of Negotiable Instruments Act, 1881 not permissible except with the complainant’s consent: Punjab and Haryana High Court

It appeared that the petitioners are not legally sustainable. Under Section 147 of the NI Act, the offence under Section 138 of the Negotiable Instruments Act can be compounded at any stage. However, the Hon’ble Supreme Court laid down a graded scale of costs to be paid by the party applying for compounding concerning the stage of proceedings at which the compounding has sought the compounding. Beyond that, this judgment has no significance; so far as the question of consent of the complainant for compounding is concerned held by Hon’ble Justice Rajbir Sehrawat in M/s Anant Tools (Unit No. II) Pvt. Ltd. and others versus M/s Anant Tools Pvt. Ltd., Jalandhar [CRM-M-17300 of 2017 (O&M)].

The facts leading to this case relate to the respondent – M/s Anant Tools Pvt. Limited filed complaint against the present petitioners, M/s Anant Tools Pvt. Limited, and its Directors. The allegations in the complaint are that earlier, the complainant and the accused had common business and were initially running a joint business. After that, the business was separated by the two. As a result, the assets, rights and liabilities were divided between the parties. An amount of Rs.18,52,253/- was required to be paid by the accused No.1 to the complainant due to the above-said settlement, as involved in one complaint. There are other amounts also, which are involved in two other complaints. For discharge of the above-said liability, the petitioners had issued a cheque dated 08.01.2009 for the above-said amount of Rs.18, 52,253/-. For the amounts involved in other complaints, two other cheques were also issued. However, on being presented, the cheques were dishonoured by the Bank. Then notices were issued to the accused of dishonour of all the three cheques, as involved in three complaints. Despite the notices, the amounts were not paid by the petitioners. This resulted in complaints being filed against the petitioners under Section 138 of the Negotiable Instruments Act. The summoning orders were issued against the present petitioners in all three complaints. During the pendency of the above-said complaints against the petitioners, they filed applications for the compounding of the offences in all three complaints. However, since the complainant had not agreed. Compounding the offences, the trial Court dismissed the applications moved by the petitioners in all three complaints.

The petitioner’s counsel stated that after the summons was issued against the petitioner, they had also lodged an FIR against the complainant. As an attempt for compromising the entire matter, the complainant had agreed to the quashing of the complaints at the stage when the complaints had applied to seeking anticipatory bail; in the FIR case lodged by the petitioner. However, after that, the complainant got dishonest, and the complainant tried to get out of the agreement between the parties. Hence, the petitioners moved the above-said applications for compounding by attaching the drafts for the amounts of cheque involved in the complaint, with the further undertaking to pay any more reasonable amount deemed appropriate by the Court. But these applications have been dismissed by the trial Court.

The Hon’ble High Court at Punjab and Haryana stated that the arguments raised by the learned counsel for the petitioners are not legally sustainable. So far as the compromise between the parties, under which the petitioner can take recourse, is concerned, the same has already been held to be finally revoked by this Court, with other liberty to their respective parties; to prosecute their criminal cases against each other. Therefore, by any means, it would not have been possible for the trial court to give effect to any agreement/ compromise or consent; on the part of the complainant on its own. Hence, the only question; which the trial court could have considered is whether the application filed by the petitioner for compounding the offence under Section 138 of the Negotiable Instruments Act would have been allowed even without the complainant’s consent. The trial Court has rightly rejected the application for compounding moved by the petitioners; for the lack of necessary consent from the complainant. This Court does not find any illegality or infirmity in the order passed by the trial Court. It has been held that the essential ingredient of compounding, i.e., the consent of the other side, the complainant in the present case, cannot be dispensed with while considering any application for compounding. This proposition qua compounding has been contrasted by the Hon’ble Supreme Court, in this judgment, as against the proceedings where the quashing of a complaint is sought by the accused. The Supreme Court has held that quashing of a complaint stands on a different footing, and it can be ordered even without the complainant’s consent. Compounding is altogether a different concept, and the same cannot be resorted to or applied by the Court, except with the complainant’s consent.

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