M/s New Win Export & Anr. vs A. Subramaniam

Court

Supreme Court of India

Date

11 July 2024

Case No.

Criminal Appeal No. 2948 of 2024

Result

Allowed

Bench

Sudhanshu Dhulia, Ahsanuddin Amanullah

Citation

[2024] 7 S.C.R. 1225 : 2024 INSC 535

Acts & Sections

Negotiable Instruments Act, 1881 CrPC

Issue for consideration

Whether in the instant case, conviction under Section 138 of the Negotiable Instruments Act, 1881 could be quashed by the Supreme Court as the parties had settled the dispute among themselves by entering into a settlement agreement.

Headnote

Negotiable Instruments Act, 1881 – s.138 – Offence under – Compounding of – Settlement treated to be compounding of the offence:

Held: Appellants and respondent-complainant had entered into a settlement agreement dated 27.01.2024 – It is clear that the parties have settled the dispute among themselves – As per the agreement, the appellants have paid Rs.5,25,000 to the respondentcomplainant, who has agreed to settle the present matter for the said amount – The complainant does not have any objection if the conviction of the appellants is set aside – This settlement agreement can be treated to be compounding of the offence – When the accused and complainant have reached a settlement permissible by law and this Court has also satisfied itself regarding the genuineness of the settlement, the conviction of the appellants would not serve any purpose and thus, it is required to be set aside. [Paras 3, 4, 5]

Negotiable Instruments Act, 1881 – s.147 – Compounding of offences in context of the Act – Dishonour of cheques is a regulatory offence – ‘compensatory aspect’ of remedy has priority over ‘punitive aspect’ – Code of Criminal Procedure, 1973 – s.320(5):

Held: Dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability of these instruments can be ensured – s.147 of Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences – All the same, s.320(5) CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending – Keeping in mind that the ‘compensatory aspect’ of remedy shall have priority over the ‘punitive aspect’, courts should encourage compounding of offences under the NI Act if parties are willing to do so. [Paras 4, 6]

Order Leave granted. 2. This case arises from a complaint under Section 138 Negotiable Instruments Act filed by the respondent/complainant. In the year 2006, appellant no.2 had borrowed a loan of Rs.5,25,000 from the respondent but did not repay as promised. To discharge the said debt, the appellant no.2 gave a cheque of Rs.5,25,000 which was issued in the name of his partnership firm i.e., appellant no.1 (M/s New Win Export). Since the cheque was dishonoured due to ‘insufficient funds’, respondent filed a complaint under Section 138 NI Act against the appellants where the Trial Court vide o

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