In CRM-M-13193-2018 (O&M)-PUNJ HC- Compounding of offence u/s 147 of Negotiable Instruments Act requires consent: P&H HC Justice Jasjit Singh Bedi [05-05-2022]

Read Order: M/s Nidhi Knitwears (P) Ltd. and Another v. Honey Hosiery Mills

Monika Rahar 

Chandigarh, May 06, 2022:  Referring to the judgments of the Top Court in Anant Tools (Unit No.II) Pvt. Ltd. And others v. M/s Anant Tools Pvt. Ltd., Jalandhar and JIK Industries Limited and others v. Amarlal V. Jumnai and Another, the Punjab and Haryana High Court has reiterated that the basic mode and manner of effecting the compounding of an offence under Section 320 Cr.P.C. could not be said to be not attracted in case of compounding of offence under Section 147 of the NI Act. 

Further, while considering the decision in JIK Industries (Supra) as also the case of  M/s Meters and Instruments Private Limited And Another versus Kanchan Mehta 2017(4) RCR (Criminal) 476, the Bench of Justice Jasjit Singh Bedi held, “This effectively means that compounding requires consent but quashing does not.”

The Court was dealing with a petition under Section 482 of the Code of Criminal Procedure seeking the quashing of the order of the Additional Sessions Judge, Ludhiana by which the petitioner’s application for permission to compound the offence alleged against him, was dismissed. 

Essentially, in this case, the complainant/respondent (M/s Honey Hosiery Mills) filed a complaint through its sole proprietor (Anju Jain) against Chhote Lal Pandit (Director, M/s Nidhi Knitwears) under Section 138 of the Negotiable Instruments Act (‘the Act’) alleging that the cheques issued by the second petitioner to discharge a pre-existing liability in favour of the complainant. 

The accused-petitioners were convicted by the Trial Court. Aggrieved, the convicts filed an appeal, during the pendency of which, the petitioner filed an application for permission to compound the offence in view of the judgement rendered in Damodar S. Prabhu versus Syad Babalal, as the petitioners were ready to deposit the cheque amount as well as the relevant charges according to the said judgment. 

This application was opposed by the respondent-complainant. Based on the respective pleadings of the parties, the application of the petitioners seeking permission to compound the offence was dismissed. 

When the matter came before the High Court, the parties sought adjournment for settlement but the same could not be arrived at. 

The petitioner’s counsel contended that in view of the judgment in Damodar S. Prabhu’s case (supra), the petitioners were ready and willing to deposit the requisite amount so as to finally settle the matter. It was further contended that in terms of Meters and Instruments (Supra) the consent of the complainant is not relevant and if the Court comes to the conclusion that the settlement is valid, then the Court on being satisfied that the complainant was duly compensated, can in its discretion, close the proceedings.  

Reliance was also placed on the judgments of this Court in Hem Lata v. Balwant Singh (CRR-1221 of 2012 decided on 01.03.2019), and Suba Singh v. Nirmal Singh and Another, 2020(2) PLR 155. Reference was also made to the judgment passed by the Himachal Pradesh High Court in the case of Vikas Jishtu v. Puran Chand Sharma and another.

On the other hand, the counsel for the complainant, relied upon a judgment in JIK Industries (Supra) and Anant Tools (Supra) to contend that the consent of the complainant is essential to effect a settlement and that the judgment in Damodar S. Prabhu’s case (supra) did not adjudicate upon the issue of requirement of consent for compounding an offence under the Act.

After considering the rival submissions, the Court perused the decisions cited by the parties. The Court opined at the very outset that in Damodar S. Prabhu (supra), the Top Court proceeded primarily on the assumption that there was consent between the parties and that the dispute therein was only the stage at which the parties can appropriately be allowed to compound the offence.

Further, the Court observed that in case of JIK Industries (supra), the precise issue was as to whether the consent of the parties was necessary to compound the offence and it was held that the basic mode and manner of effecting the compounding of an offence under Section 320 Cr.P.C. could not be said to be not attracted in case compounding of offence under Section 147 of the Negotiable Instruments Act. Also, it was observed that even in Meters and Instruments (supra), the Court stated that though compounding requires the consent of both the parties, even in the absence of such consent, the Court in the interest of justice can, in its discretion, close the proceedings.

Thus drawing from the above, the Court held that the compounding of an offence under the NI Act requires consent but quashing does not. 

“Therefore, even as per M/s Meters andInstruments (supra), the accused cannot as a matter of right claim that a settlement should be effected because he is unilaterally willing to make the good the payment. Of course, the Court in its discretion, may quash such proceedings if it feels that the claim of the complainant is satisfied and he has been adequately compensated”, opined the Bench. 

Significantly, the Court observed that the High Court in Anant Tools’s case (supra), comprehensively dealt with the judgments in JIK Industries’ case (supra) and Meters and Instruments’ case (supra) and came to the conclusion that if a subsequent Bench of the Supreme Court differs with the view taken by an earlier Bench of equal strength, then the only course open for the subsequent Bench is to refer the matter to a larger Bench. 

On this issue alone, the Court opined that in Hem Lata’s case (supra), the decision in JIK Industries (supra) was referred but there was no discussion as to why the Court opted to follow the law laid down in M/s Meters and Instruments (supra) and not JIK Industries (supra), while in the cases of Suba Singh (supra) and Vikas Jishtu (supra), the reliance was placed on M/s Meters and Instruments (supra) alone and JIK Industries (supra) was not referred to at all.

Further, the Court placed reliance on the “M/s Indo Swiss Time Limited versus Umrao and others, 1981 AIR (Punjab and Haryana) 213”, wherein the High Court held that when judgments of the Superior Court of co-equal Benches and therefore, of matching authority then their weight inevitably must be considered by the rationale and the logic thereof and not by the mere fortuitous circumstances of the time and date on which they were rendered. 

Thus, the Court in the present case, opined that when two directly conflicting judgments of the Superior Court and of equal authority are extent then both of them cannot be binding on the Courts below, rather in such a situation, it is the plain duty of the High Court in the interest of justice to respectfully follow that which appears to it to state the law accurately or, in any case, more accurately than the other conflicting judgments. 

Applying the said principle to the present case, the Court held that the judgment in Anant Tools (supra) lays down the law more accurately than the judgments in the cases of Hem Lata (supra), Suba Singh (supra) and Vikas Jishtu (supra).

Coming back to the facts of the present case, the Court held that the cheques pertained to the year 2011 totalling a sum of Rs. 2,24,996/-, while the petitioners were willing to make a payment of Rs. 4,00,000/-. This payment, after ten years of the issuance of the cheques, in the opinion of the Court, was grossly inadequate and was not sufficient to compensate the complainant so as to enable the Court to exercise its discretion to close the proceedings, particularly, in the circumstances, when the complainant was not willing to consent to compound the offence.