Offence under S. 138 of NI Act compounded in light of settlement between the parties

Himachal Pradesh High Court: A Single Judge Bench comprising of Sandeep Sharma, J., decided a criminal revision petition filed under Section 397 read with Section 401 CrPC, wherein it was held that the matter under Section 138 of Negotiable Instruments Act which has been amicably settled between the parties, could be compounded by the Court.

The petitioner filed instant petition against the judgment of the trial Judge whereby he convicted and sentenced the petitioner for the offence punishable under Section 138 NI Act. The petitioner defaulted in paying back a certain amount of debt to the respondent; for the discharge of which, the petitioner had given a cheque in favour of the respondent. However, the cheque, when presented in the bank was returned for insufficiency of funds. Accordingly, the petitioner was prosecuted and convicted. Learned counsel for the petitioner filed an application under Section 147 of the NI Act for compounding of the offence. He submitted that in wake of the amicable settlement reached to by the parties, the debt amount have been paid in full and final settlement to the respondent. Hence, the matter should be compounded and the proceedings pending against the petitioner should be quashed.

The High Court perused the documents and the application filed by the petitioner, and found that indeed a settlement was reached to between the parties. The Court also relied on the Supreme Court judgment in Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663 to reach to a conclusion that the present matter being amicably settled by the parties, could be compounded.

Accordingly, the offence under Section 138 NI Act was compounded and the proceedings pending against the petitioner were quashed. [Bhago Devi v. Dashmesh General Cycle Store, 2018 SCC OnLine HP 108, order dated 18.01.2018]

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