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AMAN CHAUDHARY, J. (ORAL) --

CRM-38335-2025

For the reasons mentioned in the application, the same stands allowed. Main case is preponed and taken on board today itself.

CRR-2337-2025

1. The challenge in the present criminal revision is to the order dated 11.09.2025 passed by learned Additional Sessions Judge, Panipat, dismissing the appeal preferred against the judgment of conviction and order of sentence dated 27.11.2019/28.11.2019 passed by learned Judicial Magistrate First Class, Panipat, vide which the petitioner was convicted and sentenced to undergo simple imprisonment for six months under Section 138 of the Negotiable Instrument Act, 1881 (for short, ‘the Act’) and to pay compensation to the tune of Rs.3,75,000/-.

2. The facts relevant as narrated in the complaint filed under Section 138 of the NI Act by the complainant-respondent No.2 are that the accused-petitioner in discharge of his liability had issued a cheque bearing No.014393 dated 06.10.2017. However, on presentation thereof, the same was dishonoured and returned with the remarks “Funds Insufficient” vide memo dated 22.11.2017. Despite issuance of legal notice, the petitioner failed to make the payment within the stipulated period. The proceedings against him were initiated under Section 138 of the NI Act, pursuant to which, he appeared and was released on bail. On finding prima facie case under Section 138 of the NI Act, notice of accusation was served upon him, to which he pleaded not guilty and claimed trial.

3. In order to prove his case, the complainant examined himself as CW 1 and also led documentary evidence. On closure of his evidence, statement of accused-petitioner under Section 313 Cr.P.C. was recorded, he denied all the allegations raised against him and pleaded innocence. In defence, he examined Raman Arora as DW 1.

4. After scrutinizing the evidence led by the parties, the trial Court came to the conclusion that the complainant has successfully proved his case against the petitioner-accused, and convicted and sentenced him, as mentioned in para no.1 above. Aggrieved convict-petitioner filed appeal, which was dismissed by learned Addl. Sessions Judge, Panipat, vide impugned judgment dated 11.09.2025.

5. Hence, the present revision petition.

6. Learned counsel for the petitioner submits that during the pendency of the petition, a settlement has been arrived at between the parties and matter between them was resolved. He, thus, prays the offence under Section 138 N.I.Act be compounded and fee with regard to the same be waived off, in view of the fact that the petitioner is a poor person and sole bread winner of the family. The petitioner has with great difficulty managed to collect the money and settled the dispute as he wanted to put an end to the same, seven years having gone by.

7. Learned counsel for the complainant-respondent No.2 admits the factum of compromise and states that as per the settlement, the complainant has received the agreed amount. Thus, he, on instructions, submits that there is no objection, if the prayer made by the petitioner is accepted.

8. It is apposite to refer to the judgment of Hon’ble The Supreme Court in B.V.Seshaiah vs. The State of Telangana and another 2023 Live Law (SC) 75, wherein it was held thus:

“10. In the case of M/S Meters and Instruments Private Limited & Anr. Vs Kanchan Mehta1,this court held that the nature of offence under section 138 of the N.I Act is primarily related to a civil wrong and has been specifically made a compoundable offence. The relevant paragraph of the judgment has been extracted herein:

“This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions’ cheques were issued merely as a device to defraud the creditors. Dishonor of cheque causes incalculable loss, injury and inconvenience to the Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 payee and credibility of business transactions suffers a setback. At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 amendment specifically made it compoundable.”

11. This is a very clear case of the parties entering into an agreement and compounding the offence to save themselves from the process of litigation. When such a step has been taken by the parties, and the law very clearly allows them to do the same, the High Court then cannot override such compounding and impose its will.

9. Hon'ble The Supreme Court in the case of K.Subramanian vs. R.Rajathi (2010) 15 SCC 352, has held as under:-

“6. Having regard to the salutary provisions of Section 147 of Negotiable Instruments Act read with Section 320 of the Code of Criminal Procedure, this Court is of the opinion that in view of the compromise arrived at between the parties, the petitioner should be permitted to compound the offence committed by him under Section 138 of the Code.

7. xx xx xx

8. The CRL.M.P. No.12804 of 2009 in which the prayer is made by petitioner to permit him to produce affidavits sworn by him on December 1, 2008 as well as affidavit sworn by P. Kaliappan power of attorney holder of R. Rajathi on December 1, 2008, as additional documents is allowed. CRL. M.P. No.12803 of 2009 in which the petitioner has prayed to permit him to compound the offence and acquit him by setting aside the conviction recorded in Criminal case No. 726/2003 under Section 138 of the Negotiable Instruments Act by Learned Judicial Magistrate, Karur is allowed. The petitioner is permitted to compound the offence. The Order of conviction and sentence recorded by all the Courts are hereby set aside and petitioner is acquitted of the charge leveled against him.”

10. The compounding of the offence at later stages of litigation in cases under Section 138 of NI Act has also been held to be permissible by Hon'ble The Supreme Court in a case of K.M. Ibrahim vs. K.P. Mohammed & Anr., 2009 (14) SCALE 262, wherein it was held as under:-

"11. 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.

12. 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."

11. Reiterating the aforesaid Hon’ble The Supreme Court in the case of Damodar S.Prabhu (supra) has held that in case of dishonour of cheque, accused convicted, there is no stage prescribed for compounding of offence under Section 147 of the Act and it was observed that “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.” It was further observed that, “Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance.”

12. In the peculiarity of facts and circumstances of the case and in light of the judgment in Damodar S.Prabhu (supra), the petitioner is permitted to compound the offence. However, this Court is not inclined to accept the prayer for waiving off the compounding fee, but considering the mitigating circumstances of the petitioner brought out by his learned counsel, as noticed above, the same is reduced in view of the afore-referred judgment and he is ordered to deposit an amount of Rs.5,000/- as costs, with the Haryana State Legal Services Authority on or before 31.10.2025. The judgment of conviction/order of sentence recorded by the trial Court and affirmed by the appellate Court are hereby set aside and the petitioner is acquitted of the charges framed against him. He be released forthwith in this case, if not required in any other case.

13. The revision petition stands disposed of accordingly.

14. Compliance report be forwarded by the Haryana State Legal Services Authority within a week after deposit of the aforesaid amount.

Order accordingly.

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