Dinesh Kumar vs Neeraj Jain on 4 November, 2020

Madhya Pradesh High Court

Dinesh Kumar vs Neeraj Jain on 4 November, 2020
Author: Vishal Mishra
1
THE HIGH COURT OF MADHYA PRADESH
Cr.R. No.2113/2020
(Dinesh Kumar vs. Neeraj Jain)

Gwalior, Dated : 04.11.2020

Shri Rajnish Sharma, counsel for the petitioner.

Shri Neeraj Dhamanya, counsel for the respondent.

In the wake of unprecedented and uncertain situation due to outbreak of the Novel Corona Virus
(COVID-19) and considering the advisories issued by the government of India, this criminal revision
has been heard and decided through video conferencing to maintain social distancing. The parties
are being represented by the respective counsel through video conferencing, following the norms of
social distancing/physical distancing in letter and spirit.

Heard on I.A. No.19130/2020, an application for condonation of delay.

In the trial Court the applicant has engaged a counsel for contesting his case, but due to reasons best
known to him he did not appear there and regarding his non-appearance there was no information
to the applicant. Therefore, the applicant could not take suitable steps in that regard. Due to
non-appearance of the counsel and the applicant before the trial Court, the learned trial Court has
got a counsel engaged for the applicant from the Legal Aid who contested the case before the trial
Court but this fact was also not within the knowledge of the applicant till the judgment was rendered
by the trial Court. It was only when the police authority arrested the applicant it was came to the
knowledge of the applicant that he was arrested in the case under Section 138 of the N.I. Act and
immediately THE HIGH COURT OF MADHYA PRADESH Cr.R. No.2113/2020 (Dinesh Kumar vs.
Neeraj Jain) thereafter they applied for obtaining the copy of the judgment on 12.10.2020 and
thereafter on 14.10.2020 the revision petition was got drafted and filed before the court on
15.10.2020. The delay occurred in filing the criminal revision is based on bonafides and there was no
malafide on the part of the applicant as due to the fault on the part of the counsel he could not
appear before the trial Court and as the information in this regard was not available with the
applicant, therefore, he could not arrange for counsel there.

Considering the reasons assigned as aforesaid for the delay in the application, the same is allowed
and the delay of 27 months caused in filing the criminal revision is hereby condoned.

With the consent of the parties, the matter is finally heard through VC.

The present criminal revision under Section 397/401 of Cr.P.C. has been filed against the judgment
of conviction dated 16.04.2018 passed by Sixth Additional Sessions Judge Guna in Criminal Appeal
No.438/2015 whereby the judgment and sentence dated 23.11.2015 passed by the Judicial

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

Magistrate First Class Guna has been confirmed.

In the present case, the petitioner has been convicted under Section 138 of the Negotiable
Instruments Act and awarded a sentence to undergo rigorous imprisonment for a period of 4
months with fine of Rs.65,000/- under Section 357(3) of Cr.P.C. and in lieu of deposition of the fine
amount further three months SI. It is argued that the complainant THE HIGH COURT OF
MADHYA PRADESH Cr.R. No.2113/2020 (Dinesh Kumar vs. Neeraj Jain) (respondent herein) has
filed a private complaint under Section 138 of the N.I. Act against the petitioner with the pleading
that a loan of Rs.53,000/- was taken from the complainant on 2.5.2014 pointing out his personal
requirements with an assurance that the same will be returned as soon as possible and on the
demand being made the petitioner has issued cheque in favour of the respondent. The cheque was
dishonoured due to insufficient funds in the bank account. Thereafter, the proceedings were drawn
under Section 138 of the N.I. Act and was registered as Criminal Case No.1886/2014. After
recording of evidence the trial Court has convicted the petitioner vide its judgment of conviction
dated 23.11.2015 and awarded sentence of 4 months rigorous imprisonment with fine of
Rs.65,000/-. An appeal was preferred and vide the impugned order the appellate Court has also
confirmed the judgment dated 23.11.2015.

Counsel for the petitioner is not challenging the conviction rather it is pointed out that the parties
have already entered into a settlement and the entire amount as directed by the Court below has
already been handed over to the complainant and the complainant has also expressed his
willingness to compound the offence. An application under Section 147 of the N.I. Act has been filed
in this appeal by the complainant and it has been pointed out that the parties have entered into a
settlement outside the court and the entire amount of Rs.65,000/- has been paid to the complainant
and on the basis of the settlement entered into between the parties the complainant does not want
to continue with the criminal THE HIGH COURT OF MADHYA PRADESH Cr.R. No.2113/2020
(Dinesh Kumar vs. Neeraj Jain) revision and wants to compound the offence.

It is argued that the law regarding compounding of offences under the N.I. Act is very clear and is no
more res integra and the offences under the N.I. Act can be compounded even at any stage of the
proceedings. He has relied upon the judgments passed in the cases of O.P. Dholakia vs. State of
Haryana & Anr. reported in (2000) 1 SCC 762, K.M.Ibrahim vs. K.P.Mohammad and Another,
reported in (2010) 1 SCC 798, and Damodar S. Prabhu Versus Sayed Babalal H., reported in (2010)
5 SCC 663 and submits that in terms of the aforesaid law laid down by the Hon'ble Supreme Court
the parties may be permitted to compound the offence and the conviction of the petitioner be set
aside.

Counsel appearing for the respondent has categorically made a statement before the Court that the
entire amount as directed by the learned trial Court as well as the appellate Court has been paid to
him and he does not want to continue with the proceedings. It is contended that the matter has
already been settled between the parties, therefore, he is having no objection if the conviction is set
aside.

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

Heard the learned counsel for the parties and perused the record. From the perusal of the pleadings
and the categorical statement made by the parties it is clear that the parties have already entered
into a settlement outside the court and the entire amount as directed by the learned trial Court duly
affirmed by the appellate Court has been paid to THE HIGH COURT OF MADHYA PRADESH Cr.R.
No.2113/2020 (Dinesh Kumar vs. Neeraj Jain) the complainant. The complainant has also made a
categorical statement before the Court and he has also filed an affidavit to the aforesaid effect in the
present revision. It is pointed out that the entire amount of Rs.65,000/- has already been paid in
cash to the complainant.

The Hon'ble Supreme Court in the case of K.M.Ibrahim (supra) has held as under:-

"7.Mr. Rohtagi submitted that the said position had been accepted by this Court in
various decisions, such as in O.P. Dholakia vs. State of Haryana, wherein it was held
that since the petitioner had already entered into a compromise with the complainant
and the complainant had appeared through counsel and stated that the entire money
had been received by him and he had no objection if the conviction already recorded
under Section 138 of the Negotiable Instruments Act is set aside, the Hon'ble Judges
thought it appropriate to grant permission, in the peculiar facts and circumstances of
the case, to compound the offence. While doing so, this Court also indicated that
necessarily the conviction and sentence under Section 138 of the Act stood annulled.

8. The said view has been consistently followed in the case of (1) Anil Kumar Haritwal
& Anr. vs. Alka Gupta (2) B.C. Seshadri v. B.N. Suryanarayana Rao decided by a three
Judge Bench;

(3) G. Sivarajan vs. Little Flower Kuries & Enterprises Ltd. (4) Kishore Kumar vs. J.K.
Corporation Ltd.

(5) Sailesh Shyam Parsekar vs. Baban (6) K. Gyansagar vs. Ganesh Gupta (7) K.J.B.L.
Rama Reddy vs. Annapurna Seeds (8) Sayeed Ishaque Menon vs. Ansari Naseer
Ahmed (9) Vinay Devanna Nayak vs. Ryot Sewa Sahakari Bank Ltd. wherein some of
the earlier decisions have been noticed; and (10) Sudheer Kumar vs. Manakkandi
M.K. Kunhiraman which was a decision of a Division Bench of the Kerala High Court,
wherein also the issue has been gone into in great detail.

9.The golden thread in all these decisions is that once a person is allowed to
compound a case as provided for under Section 147 of the Negotiable Instruments
Act, the conviction under Section 138 of the said Act should also be set aside. In
Vinay Devanna Nayak, the issue was raised and after taking note of the provisions of
Section 320 Cr.P.C., this Court held that since the matter had been compromised
between the parties and payments had been made in full and final settlement of the
dues of the bank, the appeal deserved to be allowed and the appellant was THE
HIGH COURT OF MADHYA PRADESH Cr.R. No.2113/2020 (Dinesh Kumar vs.
Neeraj Jain) entitled to acquittal. Consequently, the order of conviction and sentence

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

recorded by all the courts was set aside and the appellant was acquitted of the charge
leveled against him.

10.The object of Section 320 Cr.P.C., which would not in the strict sense of the term
apply to a proceeding under the Negotiable Instruments Act, 1881, gives the parties
to the proceedings an opportunity to compound offences mentioned in the table
contained in the said section, with or without the leave of the court, and also vests the
court with jurisdiction to allow such compromise. By virtue of Sub-Section (8), the
Legislature has taken one step further in vesting jurisdiction in the Court to also
acquit the accused/convict of the offence on the same being allowed to be
compounded.

11. Inasmuch as, it is with a similar object in mind that Section 147 has been inserted
into the Negotiable Instruments Act, 1881, by amendment, an analogy may be drawn
as to the intention of the Legislature as expressed in Section 320(8) Cr.P.C.,
although, the same has not been expressly mentioned in the amended section to a
proceeding under Section 147 of the aforesaid Act.

12.Apart from the above, this Court is further empowered under Article 142 of the
Constitution to pass appropriate orders in line with Sub- Section (8) of Section 320
Cr.P.C. in an application under Section 147 of the aforesaid Act, in order to do justice
to the parties.

13. As far as the non-obstante clause included in Section 147 of the 1881 Act is
concerned, the 1881 Act being a special statute, the provisions of Section 147 will have
an overriding effect over the provisions of the Code relating to compounding of
offences. The various decisions cited by Mr. Rohtagi on this issue does not add to the
above position.

14.It is true that the application under Section 147 of the Negotiable Instruments Act
was made by the parties after the proceedings had been concluded before the
Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties
from compounding an offence under Section 138 even at the appellate stage of the
proceedings. Accordingly, we find no reason to reject the application under Section
147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution.

15. Since the parties have settled their disputes, in keeping with the spirit of Section
147 of the Act, we allow the parties to compound the offence, set aside the judgment
of the courts below and acquit the appellant of the charges against him.

16. The appeal is, accordingly, allowed in the aforesaid terms."

The Hon'ble Supreme Court in the case of Damodar S. Prabhu (supra) has held as under:-

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

"6. Mr. Goolam E. Vahanvati, Solicitor General (now Attorney- General for India) had appeared as
amicus curiae in the present matter and referred to the facts herein as an illustration of how parties
involved in cheque bounce cases usually seek the compounding of the offence at a very late stage.
The interests of justice would indeed be better served THE HIGH COURT OF MADHYA PRADESH
Cr.R. No.2113/2020 (Dinesh Kumar vs. Neeraj Jain) if parties resorted to compounding as a method
to resolve their disputes at an early stage instead of engaging in protracted litigation before several
forums, thereby causing undue delay, expenditure and strain on part of the judicial system. This is
clearly a situation that is causing some concern, since Section 147 of the Act does not prescribe as to
what stage is appropriate for compounding the offence and whether the same can be done at the
instance of the complainant or with the leave of the court.

7.The learned Attorney General stressed on the importance of using compounding as an expedient
method to hasten the disposal of cases. In this regard, the learned Attorney General has proposed
that this Court should frame some guidelines to disincentivise litigants from seeking the
compounding of the offence at an unduly late stage of litigation. In other words, judicial directions
have been sought to nudge litigants in cheque bounce cases to opt for compounding during the early
stages of litigation, thereby bringing down the arrears.

8. Before examining the guidelines proposed by the learned Attorney General, it would be useful to
clarify the position relating to the compounding of offences under the Negotiable Instruments Act,
1881. Even before the insertion of Section 147 in the Act (by way of an amendment in 2002) some
High Courts had permitted the compounding of the offence contemplated by Section 138 during the
later stages of litigation. In fact in O.P. Dholakia v. State of Haryana, a division bench of this Court
had permitted the compounding of the offence even though the petitioner's conviction had been
upheld by all the three designated forums. After noting that the petitioner had already entered into a
compromise with the complainant, the bench had rejected the State's argument that this Court need
not interfere with the conviction and sentence since it was open to the parties to enter into a
compromise at an earlier stage and that they had not done so. The bench had observed:

"3.... Taking into consideration the nature of the offence in question and the fact that
the complainant and the accused have already entered into a compromise, we think it
appropriate to grant permission in the peculiar facts and circumstances of the
present case, to compound."

Similar reliefs were granted in orders reported as Sivasankaran v. State of Kerala, Kishore Kumar v.
J.K. Corpn. Ltd. and Sailesh Shyam Parsekar v. Baban among other cases.

9.As mentioned above, the Negotiable Instruments Act, 1881 was amended by the Negotiable
Instruments (Amendment and Miscellaneous Provisions) Act, 2002 which inserted a specific
provision, i.e. Section 147 to make the offences under the Act compoundable'. We can refer to the
following extract from the Statement of Objects and Reasons attached to the 2002 amendment
which is self- explanatory:-

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

"Prefatory Note - Statement of Objects and Reasons. - The Negotiable Instruments Act, 1881 was
amended by the Banking, Public THE HIGH COURT OF MADHYA PRADESH Cr.R. No.2113/2020
(Dinesh Kumar vs. Neeraj Jain) Financial Institutions and Negotiable Instruments Laws
(Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of
dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. These
provisions were incorporated with a view to encourage the culture of use of cheques and enhancing
the credibility of the instrument. The existing provisions in the Negotiable Instruments Act, 1881,
namely, Sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of
cheques. Not only the punishment provided in the Act has proved to be inadequate, the procedure
prescribed for the courts to deal with such matters has been found to be cumbersome. The courts
are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure
contained in the Act."(emphasis supplied) In order to address the deficiencies referred to above,
Section 10 of the 2002 amendment inserted Sections 143, 144, 145, 146 and 147 into the Act, which
deal with aspects such as the power of the Court to try cases summarily (Section 143), Mode of
service of summons (Section 144), Evidence on affidavit (Section 145), Bank's slip to be considered
as prima facie evidence of certain facts (Section 146) and Offences under the Act to be
compoundable (Section 147)."

The Hon'ble Supreme Court in the case of Damodar S. Prabhu (supra) has framed guidelines with
respect to granting permission for compounding of offences at various stages. "The Guidelines" in
the form of directions given in the aforesaid judgment read as under:

"THE GUIDELINES

(i) In the circumstances, it is proposed as follows:

(a) That directions can be given that the Writ of Summons be suitably modified making it clear to
the accused that he could make an application for compounding of the offences at the first or second
hearing of the case and that if such an application is made, compounding may be allowed by the
court without imposing any costs on the accused.

(b) If the accused does not make an application for compounding as aforesaid, then if an application
for compounding is made before the Magistrate at the subsequent stage, compounding can be
allowed subject to the condition that the accused will be required to pay 10% of the cheque amount
to be deposited as a condition for compounding with the Legal Services Authority, or such authority
as the Court deems fit.

(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court
in revision or appeal, such compounding THE HIGH COURT OF MADHYA PRADESH Cr.R.
No.2113/2020 (Dinesh Kumar vs. Neeraj Jain) may be allowed on the condition that the accused
pays 15% of the cheque amount by way of costs.

(d) Finally, if the application for compounding is made before the Supreme Court, the figure would
increase to 20% of the cheque amount."

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 Dinesh Kumar vs Neeraj Jain on 4 November, 2020

Thus, from the perusal of the aforesaid dictum of the Hon'ble Supreme Court in the aforesaid cases
it is apparently clear that cases under the Negotiable Instruments Act can be compounded at any
stage.

Considering the aforesaid preposition of law and also the Guidelines issued by the Hon'ble Supreme
Court in the aforesaid case, this Court deems it appropriate to permit the parties to compound the
offence on the basis of the compromise entered into between the parties. However, in terms of the
Guidelines framed by the Hon'ble Supreme Court as the accused/revisionist has not appeared before
the Court and has not taken effective steps to compound the offence at initial stage, thus following
the Guidelines, this Court deems it appropriate to permit the compounding of offence subject to
payment of cost at the rate of 15% of the cheque amount to be paid to the complainant. Thus, in the
aforesaid terms it is directed that if the accused/revisionst pays a cost of 15% of the cheque amount
to the complainant within a period of 15 days from the date of passing of this order, this Court
permits the compounding of offence to the parties. If such an amount towards the cost is being paid
to the complainant then the judgment and conviction dated 16.04.2018 passed by the trial Court
duly affirmed by the appellate court is set aside. The revisionist is acquitted from all the charges. He
is in custody, he be released forthwith and set free, if not requires in any other case.

THE HIGH COURT OF MADHYA PRADESH Cr.R. No.2113/2020 (Dinesh Kumar vs. Neeraj Jain)
Revision stands disposed of with the aforesaid observations. Also heard on I.A. No.19129/2020, an
application for suspension of sentence.

In view of the aforesaid order passed by this Court today, the application for suspension of sentence
of the revisionist has rendered infructuous. The same is disposed of accordingly.

E- copy of this order be provided to the applicant and E-copy of this order be sent to the trial Court
concerned for compliance. It is made clear that E-copy of this order shall be treated as certified copy
for practical purposes in respect of this order.

(VISHAL MISHRA) JUDGE van SMT VANDANA VERMA 2020.11.11 11:18:15 -08'00'

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