Dismissed

Jatin Ashok Khandwala v. the State of Maharashtra and Anr.

Bombay HC18 Sept 2008WP/1030/2008

Case brief

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What is this about?

The High Court of Bombay held that mere subsequent payment of decretal amount toward an unsatisfied civil decree, without express agreement to forgo prosecution, does not amount to compounding under Section 138 NI Act. Ou tlined that Section 482 CrPC was not applicable to quash proceedings here.

What did the court decide?

Complaint set to not proceed for six weeks; leave to appeal rejected; prayer for stay denied after interim stay granted.

2.The petitioner has been arraigned as an accused in a complaint filed by the 2nd respondent under section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the said Act). Process was issued on the said complaint. It appears that a summary suit was filed by the 2nd respondent in this Court for recovery of the amount covered by the cheque which is subject matter of the complaint under section 138 of the said Act of 1881. In the said summary suit filed by the 2nd respondent, a summons for judgment was taken out. By

judgment and order dated 31st July 2006, this Court granted the summons for judgment and passed a decree in favour of the 2nd respondent. It appears that insolvency proceedings were taken out by the 2nd respondent under the Presidency Towns Insolvency Act, 1909 in the form of an insolvency notice. According to the case of the petitioner, the decretal amount was paid during the pendency of insolvency notice. The petitioner has filed a chamber summons in the summary suit with a prayer for recording satisfaction of the decree. The said chamber summons is pending. In the meanwhile, an application was moved by the petitioner under section 147 of the said Act of 1881 praying for declaration that the offence stands compounded as the applicant had paid the cheque amount with interest. The said application has been rejected by the learned trial Judge. The prayer in this writ petition is for setting aside the said order. By an amendment, a prayer has been also incorporated for quashing of the pending complaint.

3.The learned counsel appearing for the petitioner has invited my attention to the correspondence exchanged between the advocates for the parties. He pointed out that a summary suit was filed claiming the cheque amount and entire cheque amount with interest as decreed by this Court has been paid by the petitioner to the 2nd

respondent and the 2nd respondent has accepted the said amount. His submission is that after having paid an amount which is much more than the amount covered by the cheque, the petitioner cannot be compelled to face the prosecution under section 138 of the said Act of 1881. He submitted that apart from the fact that offence stands compounded, this is a fit case for exercising power under section 482 of the Code of Criminal Procedure, 1973 for quashing the proceedings of the criminal case.

4.The learned counsel for the 2nd respondent placed reliance on a decision of the Apex Court in the case of Rajneesh Aggarwal Vs. Amit J. Bhalla (AIR 2001 S.C. 518) as well as a decision of the learned single Judge of this Court in the case of Shri William Rosario Fernandes Vs. M/s.Cabral & Co & Anr (2007 ALL MR (Cri.) 222). He submitted that by a subsequent payment made in terms of a decree, it cannot be said that the offence has been compounded. He submitted that no case was made out for exercising the power under section 482 of the said Code.

5.I have considered the submissions.The complaint was filed in October 2002 and the summary suit was filed in the year 2005. The summons for judgment taken out in the summary suit was granted by this Court

on 31st July 2006. Accordingly, a decree was passed on 31st July 2006. Infact, while disposing of the summons for judgment, this Court observed that frivolous defences were raised and false statements were made on oath by the petitioner and therefore this Court directed the petitioner to pay exemplary costs of Rs.50,000/- to the plaintiff i.e the complainant. An insolvency notice was taken out by the 2nd respondent on ground of non compliance with the decree and during the pendency of said insolvency notice, certain amounts have been paid by the petitioner to the 2nd respondent and now a chamber summons is taken out by the petitioner praying for for marking the decree in the summary suit as satisfied. The chamber summons is still pending. Even according to the case of petitioner, the alleged decretal amount was paid by him in November 2006.

6.It must be noted here that the decree in the suit is not a consent decree. Infact, the summons for judgment was contested by the petitioner and that is the reason why the petitioner was ordered to pay costs of Rs.50,000/- on the ground that he raised frivolous defence. Insolvency proceedings were required to be taken out by the 2nd respondent as the decree remained unsatisfied. Assuming that the entire decretal amount was paid by the petitioner and the decree was satisfied by the petitioner, this by itself will not amount to

compounding of the offence under section 138 of the said Act of 1881. An element of mutuality is an essential ingredient of compounding and there has to be an express agreement not to prosecute the accused. Merely because there is a compliance with the money decree passed in favour of the 2nd respondent, the compounding cannot be inferred and in the facts of the case the 2nd respondent has repeatedly replied to the letters sent by the petitioner that she was not interested in compounding the offences. Therefore, in absence of any agreement showing compounding, the learned Judge was justified in rejecting the application of the petitioner. The subsequent deposit of the cheque amount with interest thereon may be a mitigating circumstance while deciding the question of punishment or penalty.

7.The second prayer of the learned counsel appearing for the petitioner is for exercising power under section 482 of the said Code. There is nothing wrong if a complainant in a complaint under section 138 of the Negotiable Instruments Act, 1881 files a civil suit for recovery of the amount covered by the cheque. Infact that is the proper remedy under the law for recovery of the amount. It is not as if that the suit was not contested. The suit was a summary suit under Order XXXVII of the Code of Civil Procedure, 1908. The summons for judgment taken out by the 2nd respondent was

granted by this Court by making an observation that not only that the defence raised by the petitioner was frivolous but false statements on oath were made by him. This Court observed that the petitioner wasted the time of this Court. Therefore, the petitioner was directed to pay costs of Rs.50,000/-. Thereafter the 2nd respondent was forced to take out insolvency proceedings as the decree was not complied with. The deposit of the amount covered by the cheque with interest after filing of the complaint under section 138 of the said Act of 1881 is by itself no ground for quashing the complaint. Even assuming that subsequently the entire decretal amount was paid by the petitioner, considering the conduct of the petitioner, this is not a case for exercising the power under section 482 of the said Code of 1973. The power under section 482 of the said Code of 1973 has to be used sparingly and in very rare cases.

same is rejected. It is however clarified that subsequent payment of various amounts by the petitioner is bound to be considered by the trial Court at the time of trial. The learned counsel appearing for the petitioner seeks leave of this Court to prefer an appeal. Prayer is rejected. He prays for stay of the complaint. The said prayer is opposed by the learned counsel appearing for the 2nd respondent. Considering

Jatin Ashok Khandwala v. the State of Maharashtra and Anr.

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Jatin Ashok Khandwala v. the State of Maharashtra and Anr.

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