"A large number of cases involving dishonour of cheques are pending before courts which is a serious concern for our judicial system. 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," the bench said in its July 11 order.
The Negotiable Instruments Act governs all negotiable instruments like promissory notes, bills of exchange, and cheques.
Compoundable offences are those where a compromise can be reached by the rival parties.
The bench said it has to be remembered that dishonour of cheques is a
"Considering the totality of the circumstances and compromise between the parties, we allow this appeal and acquit the appellants by setting aside the impugned order dated April 1, 2019 as well the trial court's order dated October 16, 2012. Appellant no.2 (P Kumarasamy), who was exempted from surrendering by this Court, need not surrender and his sureties are hereby discharged," the bench ordered.
The bench noted that in 2006, P Kumarasamy alias Ganesh had borrowed Rs 5,25,000 from respondent A Subramaniam but did not repay the loan.
To discharge the debt, the bench said, Kumarasamy gave a cheque for Rs 5.25 lakh in the name of his partnership firm 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 order dated October 16, 2012 convicted the appellants and imposed a sentence of one year of simple imprisonment each," it said.
It noted Kumarasamy challenged the conviction before the appellate court, which reversed the findings of the trial court and acquitted him and the firm.
"Finally, when the matter was taken to the high court at the instance of the respondent/complainant, the high court in its order dated April 1, 2019 set aside the order of the appellate court and restored the order of the trial court, convicting the appellants," the bench noted.
It noted the firm and Kumarsamy challenged the high court order before the apex court.
The bench added that Section 147 of the Negotiable Instruments Act, 1881 makes all offences under it compoundable.
"In our opinion, this settlement agreement can be treated to be compounding of the offence. All the same, Section 320 (5) of 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," it said.
The bench said in cases where the accused relies upon some document for compounding the offence at the appellate stage, courts shall try to check the veracity of such documents.
"For the same, in the present matter, this court vide order dated March 18, 2024 had asked the respondent-complainant to file an affidavit to bring on record whether or not any compromise has been reached between the parties," it said.
The bench said an affidavit was filed by the complainant in compliance with the order where it was said that the accused have paid the amount to the satisfaction of the complainant, and that he has no objection if conviction of the appellants is set aside.
"Now, 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, we think that the conviction of the appellants would not serve any purpose and thus, it is required to be set aside," it said.