Allowed

M/S.Kalasa Estate v. Bombay Burmah Trading Corporation Limited

Madras HC16 Dec 2024CRL RC/436/2022

Case brief

AI extract

What is this about?

In a criminal revision challenging conviction for cheque bounce under Section 138 of the Negotiable Instruments Act, the High Court allowed compounding of the offence despite prior appellate conviction, granting acquittal based on a post-conviction settlement where the full dues were paid.

What did the court decide?

The conviction and sentence were annulled; the petitioners were acquitted; the bank was directed to refund Rs. 86,925 wrongly deducted as TDS.

M/S.Kalasa Estate Vs Bombay Burmah Trading… — Contract and Commercial Disputes | Madras HC (2024)

¶1

Crl.R.C.No.436/2022

¶2

IN THE HIGH COURT OF JUDICATURE AT MADRAS

¶3

DATED : 16 .12.2024

¶4

CORAM

¶5

THE HONOURABLE MR.JUSTICE SHAMIM AHMED

¶6

Crl.R.C.No.436 of 2022

¶7

M/s. Kalasa Estate, A Partnership Firm represented by its Partners So.S. Sivasubramaniam, No.28, Thirunagar Colony, 4^th Main Road, Erode 638 003. 2. So.Sivasubramaniam, S/o. S.Sockalingam, No.28, Thirunagar Colony, 4^th Main Road, Erode 638 003. 3. So.S.Sockalingam, S/o.So.Sivasubramaniam, Partner Kalasa Estate, No.28, Thirunagar Colony, 4^th Main Road, Erode 638 003. ... Petitioners /vs/

¶8

Bombay Burmah Trading Corporation Limited, Mudis Valparai, represented by its Manager (Legal & HR) Ms.Menaka Chinnathambi 2. State of Tamil Nadu, rep: by Public Prosecutor, Coimbatore ... Respondents

¶9

Prayer : Criminal Revision Petition filed under section 397 and 401 of Cr.P.C. To set aside the judgment passed by the learned District Munsif cum

¶10

1/40 https://www.mhc.tn.gov.in/judis

¶11

Crl.R.C.No.436/2022

¶12

Judicial Magistrate, Valparai in STC.No.471 of 2015 dated 11.10.2019 as confirmed by the Judgment of the V Addl. District and Sessions Judge, Coimbatore in C.A.No.345 of 2019, dated 31.01.2022.

¶13

For Petitioners ... Mr. N.B.N.Swamy For Respondent .... Mr. A. Palaninathan for Mr.A.Sasidharan for R1 Mr.A.Gopinath, Govt. Advocate (crl.side) for R2

¶14

ORDER

¶15

Heard Mr.N.B.N. Swamy, the learned counsel appearing for the Revision Petitioner and Mr.A. Palaninathan, learned counsel appearing for the 1^st respondent and Mr.A.Gopinath, learned Govt. Advocate (crl.side) for the 2^nd respondent.

¶16

The instant Criminal Revision Case has been filed challenging the conviction and sentence passed in C.A.No.345 of 2019 dated 31.01.2022 by the learned V Additional District and Sessions Judge, Coimbatore, confirming the conviction and sentence made in STC.No.471 of 2015, dated 11.10.2019 passed by the learned District Munsif cum Judicial Magistrate, Valparai .

¶17

2/40 https://www.mhc.tn.gov.in/judis

¶18

Crl.R.C.No.436/2022

¶19

The learned trial Judge has convicted the Revision Petitioners/accused under section 138 of Negotiable Instruments Act and sentenced him to undergo SI for a period of one year and also directed the Revision Petitioners 2 and 3 jointly or severally to pay a compensation of the cheque amount being Rs.1,36,99,569/- to the complainant, in default, to undergo SI for six months. The conviction and sentence imposed by the trial court was also confirmed by the First Appellate Court.

¶20

The facts of the case are as follows;

¶21

4.1.A1 is a partnership firm engaged in the business of Coffee plantation. A2 and A3 are the partners of the A1 firm.

¶22

4.2.The complainant paid amount to the accused for procuring cofee

¶23

harvested from Kalasa Estate, Chikmangalur and from small growers, but as agreed, the Coffee was not supplied towards the said advance, nor they have procured Coffee from small growers.

¶24

4.3.In order to discharge their trade liability A2 and A3 being the partners of A1 company issued a cheque bearing No.033582, dated 01.03.2014 drawn on IDBI Bank, Erode 638 003 for a sum of Rs.1,36,99,569/- towards part payment.

¶25

4.4.When the said cheque was presented for encashment, through the

¶26

3/40 https://www.mhc.tn.gov.in/judis

¶27

Crl.R.C.No.436/2022

¶28

Bankers of the complainant viz., Union Bank of India, Valparai on 03.01.2014, the same was returned 'unpaid' vide Bank Memo dated 10.04.2014 for the reason “insufficient funds in the account” of A1.

¶29

4.5.The complainant thereafter, demanding the cheque amount, sent a

¶30

legal notice on 21.04.2014 to the accused to pay the cheque amount within 15 days of the receipt of notice and the same was received by the accused on 29.04.2014.

¶31

4.6.Since the accused had not made any payment within 15 days from

¶32

the date of receipt of legal notice, the complainant presented a complaint against A1 to A3 under section 138 of Negotiable Instruments Act before the District Munsiff cum Judicial Magistrate, Valparai.

¶33

After recording the sworn statement of the respondent and after

¶34

being satisfied that prima facie case has been made out to proceed further against the Revision Petitioners for the offence under section 138 of NI Act,

¶35

the trial Court has issued summon to the Revision Petitioners. On the appearance of the Revision Petitioners, copies have been furnished and the substance of allegation has been put to him. The Revision Petitioners have denied the allegation and has claimed to be tried.

¶36

4/40 https://www.mhc.tn.gov.in/judis

¶37

Crl.R.C.No.436/2022

¶38

After considering the arguments, the learned trial court has found the Revision Petitioners guilty of the offence under section 138 of the Negotiable Instruments Act and the Revision Petitioners have been convicted and sentenced to undergo Simple Imprisonment for a period of one month and also to pay a compensation of Rs.1,36,99,569/- to the complainant, in default, to undergo a sentence of Simple Imprisonment of six months.

¶39

Aggrieved by the judgment, the Revision Petitioners have preferred the appeal before the V Addl. District Judge, Coimbatore in C.A.No.345 of 2019 . Thereafter, the first appellate court dismissed the appeal vide judgment and order dated 31.01.2022 by confirming the judgment of conviction and sentence imposed by the trial court and it directed to secure the Revision Petitioners to undergo the sentence and to pay the compensation amount. Challenging the conviction and sentence passed by the both courts below, the Revision Petitioner has preferred the present Criminal Revision Case before this Court.

¶40

During the pendency of the present Criminal Revision, the parties

¶41

5/40 https://www.mhc.tn.gov.in/judis

¶42

Crl.R.C.No.436/2022

¶43

have entered into a Compromise/Settlement Memo, dated 19.09.2024, which

¶44

is taken on record and as per the terms of the Compromise, the following

¶45

conditions were laid down between the parties which are quoted as under:

¶46

COMPROMISE / SETTLEMENT MEMO

¶47

The petitioners and the Respondents respectfully submit that they have settled the matter between themselves on the terms and conditions as mentioned below:

¶48

1. That the petitioners and the Respondents mutually agree to settle all their disputes subject to Petitioners paying a sum of Rs.1,45,00,000/- (Rupees One Crore and Forty five lakhs) only to the Respondents in the following manner.

¶49

2. That the Petitioners have no objection for the Respondents to withdraw in all the sums and interest accrued thereon deposited by the Petitioners in STC.No.471/2014 before the Court of the District Munsiff and JMFC, Valparai.

¶50

3. That the Petitioners undertake to pay the difference sum falling short of Rs.1,00,00,000/- (Rupees one crore) on receipt of the sum received from Court of the District Munsiff and JMFC, Valparai being approximately a sum of Rs.18 Lakhs on the date of signing this memo of compromise.

¶51

4. That the Petitioners undertake to pay the balance sum

¶52

6/40 https://www.mhc.tn.gov.in/judis

¶53

Crl.R.C.No.436/2022

¶54

of Rs.45,00,000/- (Rupees Forty five lakhs) to the Respondents, subject to the condition the parties shall file the same memo of compromise in Commercial Appeal Nos.442/2022 and 443/2022 on the file of the High Court of Karnataka, Bangalore, on or before 15.10.2024 to the effect that any claims arising out of the decrees and judgment in Commercial suits OS No.7 and 8 of 2020 in the file of I Addl. District and Sessions and Commercial Judge, Kodagu, Madikeri against the Petitioners are settled and the commercial appeals are withdrawn or disposed off accordingly.

¶55

5. That in terms of the above compromise the above case my be disposed after recording compliance of the said memo accordingly in the interest of justice.”

¶56

Learned counsel for the Revision Petitioners submits that the

¶57

respondent/complainant filed a complaint in STC.No.471 of 2015 against the Revision Petitioners under section 138 of Negotiable Instruments Act in respect of return of cheque amount of Rs.1,36,99,569/-. The trial court after considering the entire evidence on record, found the revision petitioners guilty under section 138 of Negotiable Instruments Act and sentenced them

¶58

to undergo one year Simple Imprisonment and to pay the amount of Rs.1,36,99,569/- as compensation and in default, to undergo six months

¶59

7/40 https://www.mhc.tn.gov.in/judis

¶60

Crl.R.C.No.436/2022

¶61

Simple Imprisonment. He further submits that the Revision

¶62

Petitioners/accused filed an appeal against the order of the trial court in C.A.No.345 of 2022 before the V Addl. District Judge, Coimbatore. During the pendency of the aforesaid appeal, the learned first appellate court has ordered to deposit a sum of Rs.27,40,000/- and the revision petitioners/accused deposited the amount as per the order of the first appellate court and thereafter the said appeal was also dismissed vide order dated 31.01.2022.

¶63

Aggrieved by the order dated 31.01.2022, the Revision Petitioners have preferred the present Criminal Revision Case before this court along with an application for suspending the sentence imposed on them in Crl.M.P.No.4526 and 4529 of 2022, wherein, this Court, on 08.04.2022, suspended the sentence imposed on the petitioners subject to condition that the 2^nd and 3^rd petitioners shall deposit 30% of the cheque amount being Rs.41,10,000/- to the credit of STC.No.471 of 2015 before the trial court. Accordingly, the revision petitioners have also complied with the condition by depositing the amount.

¶64

It was also submitted by the learned counsel for the appellant that

¶65

8/40 https://www.mhc.tn.gov.in/judis

¶66

Crl.R.C.No.436/2022

¶67

during the pendency of the Criminal Revision Case, the respondent also filed a money recovery suit on the advice of the counsel in O.S.No.7 & 8 of 2020 before the I Addl. District and Sessions Judge and Commercial Judge, Kodagu, Madikkeri. The suit was decreed against the Revision Petitioners on 06.08.2022 for the payment of Rs.94,26,863/- and Rs.77,39,652/- with interest at the rate of 13% per annum to the respondent. Thereafter, aggrieved by the aforesaid judgment of the criminal Judge, the Revision Petitioners filed commercial Appeals bearing Nos.442 and 443 of 2022 on

¶68

the file of High Court of Karnataka, Bengaluru. During the pendency of the present criminal revision before this Court, the said commercial appeals were withdrawn. Learned counsels submitted that the said appeals were withdrawn by the Revision Petitioners and now, only the present case is pending in respect of the alleged amount between the parties.

¶69

Learned counsel for the Revision petitioners submits that during

¶70

the pendency of the present Revision Petition, the Revision Petitioners as well as the respondents have entered into a compromise outside the Court. Accordingly, a compromise deed was signed between the parties on 19.09.2024 which is taken on record. In the said compromise deed, terms

¶71

and conditions were also laid down and it was stated that the Revision

¶72

9/40 https://www.mhc.tn.gov.in/judis

¶73

Crl.R.C.No.436/2022

¶74

Petitioners will pay the entire amount of Rs.1,45,00,000/- to the respondent /complainant including the amount which was deposited by the trial court by the order of this court at the time of admission.

¶75

Learned counsel for the Revision petitioners have filed an application today before this Court signed by the Revision Petitioners and 1^st respondent/complainant as well as counsel for both the parties with the prayer to compound the offence under section 147 of the Negotiable Instruments Act as the entire amount has been paid to the respondent/complainant and the parties have entered into a compromise and this court is empowered to compound the offence under section 147 of the Negotiable Instruments Act.

¶76

The said application is also taken on record today.

¶77

In paragraph 6 of the said application, it has been clearly stated by

¶78

the parties that the petitioners/accused are willing to compound the offence and the respondent/complainant is also agreeing to compound the offence by receiving a sum of Rs.1,45,00,000/- as full and final settlement of the cheque amount and other disputes between the petitioner and respondent/complainant and the mode of payments has also been given in

¶79

10/40 https://www.mhc.tn.gov.in/judis

¶80

Crl.R.C.No.436/2022

¶81

para 6 of the application.

¶82

Mr.A.Palaninathan, the learned counsel for the 1st respondent

¶83

submits that before this court, on the basis of the compromise deed dated 19.09.2024, as per the condition laid down in paragraph 6 of the present application dated 16.12.2024, his client has received the entire amount of Rs.1,45,00,000/- from the Revision petitioners towards the disputed cheque amount and no amount is due pending against the Revision Petitioners and he submitted that he has no objection if this court exercising his power under section 147 of Negotiable Instruments Act to compound the offence and acquit the revision petitioners from the charges and discharge them.

¶84

Learned counsel for the Respondent further submits that as the amount was deposited before the trial court in compliance of the order passed by this Court dated 08.04.2022 in Crl.M.P.No.4526 and 4529 of 2022, the Union Bank of India, Valparai Branch, Coimbatore District, without any authority of law has deducted TDS to the tune of Rs.86,925/- which is totally illegal and without jurisdiction. This fact has also been mentioned in paragraph 7 of the application on 16.12.2024 and it was prayed that the Bank be directed to refund the said amount of Rs.86,925/- which was taken

¶85

11/40 https://www.mhc.tn.gov.in/judis

¶86

Crl.R.C.No.436/2022

¶87

towards TDS without any authority as the said amount was deposited before the Court by order of this Court and there is no provision in any law to deduct the TDS amount if the amount is deposited by order of this Court.

¶88

Learned counsel for the Revision Petitioners further submits that the present Revision has been filed on 10.03.2022 before this Court and on the basis of change in circumstances, as the parties have entered into Memorandum of Compromise, it was prayed to this Court to compound the offence. It was further argued by the learned counsel for the Revision Petitioners that this Court has inherent powers to compound the offence, so that, ends of justice could be secured as the object of Negotiable Instruments Act is primarily compensatory and not punitive and moreover Section 147 of NI Act would have an overriding effect on section 320 Cr.P.C. Irrespective of which stage, the parties are compromising with the kind leave of this Hon'ble Court.

¶89

In support of his arguments, learned counsel for the Revision Petitioners has submitted that in the case of Damodar S. Prabhu vs. Sayed Babalal H reported at 2010 (2) SCC (Cri) 1328 , the Hon'ble Apex Court had formulatedthe guidelines for compounding the offence under section 138 N.I.

¶90

12/40 https://www.mhc.tn.gov.in/judis

¶91

Crl.R.C.No.436/2022

¶92

Act wherein in para 21, it was pleased to observe as under :

¶93

"With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:THE GUIDELINES

¶94

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

¶95

(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.

¶96

(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 a 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.

¶97

(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.

¶98

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

¶99

13/40 https://www.mhc.tn.gov.in/judis

¶100

Crl.R.C.No.436/2022

¶101

of the cheque amount."

¶102

Learned counsel for the Revision petitioners also submitted that in

¶103

the case of M/s Meters and Instruments Private Limited and another vs.

¶104

Kanchan Mehta reported at 2017 (7) Supreme 558, the Hon'ble the Apex Court in para 18, was pleased to observe as under :

¶105

i) Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on accused in view presumption under Section 139 but the standard of such proof is "preponderance of probabilities". The same has to be normally tried summarily as per provisions of summary trial under the Cr.P.C. but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of Section 258 Cr.P.C. will apply and the Court can close the proceedings and discharge the accused on satisfaction that the cheque amount with assessed costs and interest is paid and if there is no reason to proceed with the punitive aspect.

¶106

(ii)The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.

¶107

(iii)Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the

¶108

14/40 https://www.mhc.tn.gov.in/judis

¶109

Crl.R.C.No.436/2022

¶110

proceedings and discharge the accused.

¶111

(iv)Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the Court has jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C. With this approach, prison sentence of more than one year may not be required in all cases.

¶112

(v) Since evidence of the complaint can be given on affidavit, subject to the Court summoning the person giving affidavit and examining him and the bank's slip being prima facie evidence of the dishonor of cheque, it is unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit evidence can be read as evidence at all stages of trial or other proceedings. The manner of examination of the person giving affidavit can be as per Section 264 Cr.P.C. The scheme is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of one year may have to be awarded and compensation under Section 357(3) is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other circumstances'.

¶113

Learned counsel for the Revision Petitioners further has relied

¶114

upon the judgment of Gujarat High Court in the case of Kripal Singh Pratap

¶115

Singh Ori vs. Salvinder Kaur Hardip Singh reported at 2004 Crl. L. J. 3786

¶116

15/40 https://www.mhc.tn.gov.in/judis

¶117

Crl.R.C.No.436/2022

¶118

wherein, the Gujarat High Court was pleased to observe as under:-

¶119

31. In the circumstances, it is hereby declared that the compromise arrived between the parties to this litigation out of court is accepted as genuine and the order of conviction and sentence passed by the learned JMFC, Vadodara and confirmed in appeal by the learned Sessions Judge, Fast Track Court, Vadodara, therefore, on the given set of facts are hereby quashed and set aside as this court intends, otherwise to secure the ends of justice as provided under section 482 Cr.P.C. Obviously the order disposing Revision Application would not have any enforceable effect."

¶120

Learned counsel for the Revision Petitioners has also relied upon

¶121

the judgment of Hon'ble the Apex Court in the case of Vinay Devanna

¶122

Nayak vs. Ryot Seva Sahkari Bank Limited reported at AIR 2008 SC 716 wherein the Hon'ble Apex Court was pleased to observe as under :

¶123

"18. Taking into consideration even the said provision (Section 147) and the primary object underlying Section 138, in our judgment, there is no reason to refuse compromise between the parties. We, therefore, dispose of the appeal on the basis of the settlement arrived at between the appellant and the respondent.

¶124

19. For the foregoing reasons the appeal deserves to be allowed and is accordingly allowed by holding that since the matter has been compromised between the parties and the amount of Rs.45,000/- has been paid by the appellant towards full and final settlement to the respondent-bank towards its dues, the appellant is entitled to acquittal. The order of conviction and sentence recorded by all courts is set aside and he is acquitted of the charge

¶125

16/40 https://www.mhc.tn.gov.in/judis

¶126

Crl.R.C.No.436/2022

¶127

levelled against him."

¶128

Learned counsel for the Revision Petitioners has argued that the law regarding compounding of offences under the N.I. Act is very clear and is no more resintegra and the offences under the N.I. Act can be compounded even at anystage of the proceedings. He 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 petitioners be set aside.

¶129

Per contra, Mr.A.Gopinath, the learned Govt. Advocate (crl.side) appearing for the 2^nd respondent / State submits that as the Revision Petitioners have beenconvicted by both the Courts below, there is no justification to compound the offence at this stage under section 147 of the Negotiable Instruments Act on the basis of the compromise Deed. In these circumstances, it is admitted by both parties that the entire cheque amount of Rs.1,45,00,000/- has been paid. He also submits that the power to compound he offence under section 147 of the Negotiable Instruments Act be exercised by the court, if there is no alternative remedy is available.

¶130

The learned Govt. Advocate (crl.side) also further submitted that the amount of Rs.86,925 which was deducted by the Bank... towards TDS

¶131

17/40 https://www.mhc.tn.gov.in/judis

¶132

Crl.R.C.No.436/2022

¶133

does not appears to be justify as the Bank has no jurisdiction to deduct the TDS amount on the court deposit amount. Thus, he supports the arguments advanced by the learned counsel for the respondent/complainant to refund the said amount.

¶134

I have heard the learned counsel for the Revision Petitioners, learned counsel for the 1^st respondent and learned Govt. Advocate (crl.side) appearing for the 2^nd respondent / State and perused the application filed today for compounding of the offence under section 147 of Negotiable Instruments Act and also the materials placed on record.

¶135

Considering the facts as narrated above, the following question arose for consideration.

¶136

'Whether the order passed by the Appellate Court confirming the conviction of the trial court under section 138 of Negotiable Instruments Act can be nullified by the High Court on the basis of compromise entered between the parties'

¶137

Before answering the aforesaid question as framed, I shall

¶138

examine the relevant provision of the Cr.P.C., as well as the Negotiable

¶139

18/40 https://www.mhc.tn.gov.in/judis

¶140

Crl.R.C.No.436/2022

¶141

Instrument Act. I may extract Section 320 of Cr.P.C., and section 147 of

¶142

Negotiable Instruments Act.

¶143

Section 320 Cr.P.C. - Compounding of Offences -

¶144

1) The offences punishable under the sections of the Indian Penal Code (45 of 1860), specified in the first two columns of the Table next following may be compounded by the persons mentioned in the third column of that Table -

¶145

2) The offences punishable under the Sections of the Indian Penal Code (45 of 1860), specified in the first two columns of the Table next following may, with the permission of the Court before which any prosecution for such offence is pending be compounded by the persons mentioned in the third column of that Table -

¶146

3) When any offence is compoundable under this section, the abetment of such offence or an attempt to commit such offence (when such attempt is itself an offence) may be compounded in like manner.

¶147

4) (a) When the person who would otherwise be competent to compound an offence under this section is under the age of eighteen years or is an idiot or a lunatic, any person competent to contract on his behalf may, with the permission of the Court, compound such offence.

¶148

(b) When the person who would otherwise be competent to compound an offence under this section is dead, the legal representative, as defined in the Code of Civil Procedure, 1908 (5 of 1908) of such person may, with the consent of the Court, compound such offence.

¶149

5) When the accused has been committed for trial or when he has been convicted and an appeal is pending, no composition for the offence shall be allowed without the leave of the Court to which he is committed, or as the case

¶150

19/40 https://www.mhc.tn.gov.in/judis

¶151

Crl.R.C.No.436/2022

¶152

may be, before which the appeal is to be heard.

¶153

6) A High Court or Court of Session acting in the exercise of its powers of revision under Section 401 may allow any person to compound any offence which such person is competent to compound under this section.

¶154

7) No offence shall be compounded if the accused is, by reason of a previous conviction, liable either to enhanced punishment or to a punishment of a different kind for such offence.

¶155

8) The composition of an offence under this section shall have the effect of an acquittal of the accused with whom the offence has been compounded.

¶156

9) No offence shall be compounded except as provided by this section.

¶157

Section 147 of the Negotiable Instrument Act :’

¶158

"Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable."

¶159

I have to refer the Compromise/Settlement Memo dated 19.09.2024

¶160

which is taken on the record for proper adjudication. The terms of the Compromise /Settlement Memo is extracted hereunder.

¶161

COMPROMISE / SETTLEMENT MEMO

¶162

The petitioners and the Respondents respectfully submit that they have settled the matter between themselves on the terms and conditions as mentioned

¶163

20/40 https://www.mhc.tn.gov.in/judis

Crl.R.C.No.436/2022

below:

4. That the Petitioners undertake to pay the balance sum of Rs.45,00,000/- (Rupees Forty five lakhs) to the Respondents, subject to the condition the parties shall file the same memo of compromise in Commercial Appeal Nos.442/2022 and 443/2022 on the file of the High Court of Karnataka, Bangalore, on or before 15.10.2024 to the effect that any claims arising out of the decrees and judgment in Commercial suits OS No.7 and 8 of 2020 in the file of I Addl. District and Sessions and Commercial

¶170

21/40 https://www.mhc.tn.gov.in/judis

¶171

Crl.R.C.No.436/2022

¶172

Judge, Kodagu, Madikeri against the Petitioners are settled and the commercial appeals are withdrawn or disposed off accordingly.

¶173

5. That in terms of the above compromise the above case my be disposed after recording compliance of the said memo accordingly in the interest of justice.”

¶174

In pursuance of entering the Compromise Memo dated 19.09.2024, a petition for compounding the offence under section 147 of Negotiable Instruments Act, signed by both parties and their respective counsel was filed on 16.12.2024, wherein, the mode of payments made in pursuance of the Compromise Memo dated 19.09.2024 was mentioned as follows:

¶175

I. The petitioner has handed over a sum of Rs.18,00,000/- to the respondent/complainant on 19.09.2024 through Demand Draft bearing No.021092 dated 31.08.2024 drawn on IDBI Bank in favour of the respondent/complainant.

¶176

II. The petitioner has paid a sum of Rs.45,00,000/- through Demand Draft bering No.005657 dated 09.10.2024 drawn on IDBI Bank, Chickmangalur Branch, karnataka received by the respondent on 15.10.2024 by settling the Commercial Appeal No.442/2022 and 443/2022 on the file of High Court of Karnataka, Bangalore.

¶177

III. The petitioner / accused submits that a sum

¶178

22/40 https://www.mhc.tn.gov.in/judis

¶179

Crl.R.C.No.436/2022

¶180

of Rs.79,29,649/- was transferred from the deposited amount held in the account of the District Munsif cum Judicial Magistrate, Valparaion 24.10.2024 to the account of the Respondent/Complainant.

¶181

IV. The Petitioner/Accused has paid and amount of Rs.1,83,426/- through demand Draft bearing No.021152 dated 07.11.2024 drawn on IDBI Bank, Chickmangalur Branch, Karnataka, received by the respondent on 10.12.2024.

¶182

V. The petitioner/accused submits that a sum of Rs.86,925/- was deducted as TDS from one of the deposits deposited before the learned district Munsif cum Judicial Magistrate, Valparai in STC.No.471 of 2015 is yet to be released by the Union Bank of India, Valparai Branch.

¶183

It is well settled that inherent power of the Court can be exercised only when no other remedy is available to the litigants and nor a specific remedy as provided by the statute. It is also well settled that if an effective, alternative remedy is available, the High Court will not exercise its inherent power, especially when the Revision Petitioners may not have availed of that remedy. The power can be exercised by the High Court to secure the ends of justice, prevent abuse of the process of any court and to make such orders as

¶184

23/40 https://www.mhc.tn.gov.in/judis

¶185

Crl.R.C.No.436/2022

¶186

may be necessary to give effect to any order under this Code or Act, depending upon the facts of the given case. This Court can always take note of any miscarriage of justice and prevent the same by exercising its power. These powers are neither limited, nor curtailed by any other provision of the Code or Act. However, such inherent powers are to be exercised sparingly and with caution

¶187

In the instant case, it is true that the appeal was dismissed and the conviction and sentence was upheld by the appellate court, but it cannot be lost sight of the fact that this Court has power to intervene in exercise of its power only with a view to do the substantial justice or to avoid a miscarriage and the spirit of compromise arrived at between the parties. This is perfectly justified and legal too.

¶188

I have considered the judgments cited by the learned counsel for the Revision Petitioners as well as by the learned Counsel for the State and other decisions of the Hon'ble Apex Court and I do not think it necessary to enlist those decisions which are taken into consideration for the purpose of the present proceedings.

¶189

24/40 https://www.mhc.tn.gov.in/judis

¶190

Crl.R.C.No.436/2022

¶191

In the instant case, the Revision Petitioners are invoking the inherent power of this court after dismissal of the appeal confirming his conviction and sentence. In these circumstances, I have to examine as to whether for entertaining the aforesaid case, any special circumstances are made out or not, so it can be legitimately argued and inferred and held that in all cases where the Revision Petitioners are able to satsify this Court that there are special circumstances which can be clearly spelt out subsequent proceeding invoking inherent power of this court can be modified and cannot be thrown away on that technical argument as to its sustainability once the contesting parties entered into subsequent compromise.

¶192

In the case of Krishan Vs. Krishnaveni , reported in (1997) 4 SCC 241 , Hon'ble the Apex Court has held that though the inherent power of the High Court is very wide, yet the same must be exercised sparingly and cautiously particularly in a case where the applicant is shown to have already invoked the revisional jurisdiction under section 397 of the Code. Only in cases where the High Court finds that there has been failure of justice or misuse of judicial mechanism or procedure, sentence or order was not correct, the High Court may in its discretion prevent the abuse of process or miscarriage of justice by exercising its power.

¶193

25/40 https://www.mhc.tn.gov.in/judis

¶194

Crl.R.C.No.436/2022

¶195

In the case of S.W. Palankattkar & others Vs. State of Bihar, 2002 (44) ACC 168 , it has been held by the Hon'ble Apex Court that quashing of the criminal proceedings is an exception than a rule. The inherent powers of the High Court itself envisages three circumstances under which the inherent jurisdiction may be exercised:-(i) to give effect an order under the Code, (ii) to prevent abuse of the process of the court ; (iii) to otherwise secure the ends of justice. The power of High Court is very wide but should be exercised very cautiously to do real and substantial justice for which the court alone exists.

¶196

For adjudicating the instant case, the facts as stated hereinabove are very relevant. Here, the Revision Petitioners has attempted to invoke the jurisdiction of this court.

¶197

I am not in agreement that when the adjudication of a criminal

¶198

offence has reached to the state of revisional level, there cannot be any compromise without permission of the court in all case including the offence punishable under 'N.I. Act' or the offence mentioned in Table-1 (one) can be compounded only if High Court or Court of Sessions grants permission for

¶199

26/40 https://www.mhc.tn.gov.in/judis

¶200

Crl.R.C.No.436/2022

¶201

such purpose. The Court presently, concerned with an offence punishable under 'N.I. Act'.

¶202

It is evident that the permissibility of the compounding of an offence is linked to the perceived seriousness of the offence and the nature of the remedy provided. On this point I can refer to the following extracts from an academic commentary [Cited from : K.N.C. Pillai, R.V. Kelkar's Criminal Procedure, 5th Edition :

¶203

"17.2 - compounding of offences – A crime is essentially a wrong against the society and the State. Therefore, any compromise between the accused person and the individual victim of the crime should not absolve the accused from criminal responsibility. However, where the offences are essentially of a private nature and relatively not quite serious, the Code considers it expedient to recognize some of them as compoundable offences and some others as compoundable only with the permission of the court…"

¶204

35. Section 147 of NI Act begins with a non obstante clause and such clause is being used in a provision to communicate that the provision shall prevail despite anything to the contrary in any other or

¶205

27/40 https://www.mhc.tn.gov.in/judis

¶206

Crl.R.C.No.436/2022

¶207

different legal provisions. So, in light of the compass provided, a dispute

¶208

in the nature of complaint under section 138 of N.I. Act, can be settled by

¶209

way of compromise irrespective of any other legislation including Cr.P.C. In general and section 320 (1)(2) or (6) of the Cr.P.C. in particular. The scheme of section 320 Cr.P.C. deals mainly with procedural aspects; but it simultaneously crystallizes certain enforceable rights and obligation. Hence, this provision has an element of substantive legislation and therefore, it can be said that the scheme of section 320 does not lay down only procedure; but still, the status of the scheme remains under a general law of procedure and as per the accepted proposition of law, the special law would prevail over general law. For the sake of convenience, I would like to quote the observations of Hon'ble the Apex Court in the case of Municipal Corporation, Indore vs.

¶210

Ratnaprabha reported in (AIR 1977 SC 308) which reads as under :

¶211

"As has been stated, clause (b) of section 138 of the Act provides that the annual value of any building shall "notwithstanding anything contained in any other law for the time being in force" be deemed to be the gross annual rent for which the building might "reasonably at the time of the assessment be expected to be let from year to year" While therefore, the requirement of the law is that the reasonable letting value should determine the annual value of the building, it has also been specifically provided that this would be so "notwithstanding anything contained in

¶212

28/40 https://www.mhc.tn.gov.in/judis

¶213

Crl.R.C.No.436/2022

¶214

any other law for the time being in force". It appears to us that it would be a proper interpretation of the provisions of clause (b) of Section 138 of the Act to hold that in a case where the standard rent of a building has been fixed under Section 7 of the Madhya Pradesh Accommodation Control Act, and there is nothing to show that there has been fraud or collusion, that would be its reasonable letting value, but, where this is not so, and the building has never been let out and is being used in a manner where the question of fixing its standard rent does not arise, it would be permissible to fix its reasonable rent without regard to the provisions of the Madhya Pradesh Accommodation Control Act, 1961. This view will, in our opinion, give proper effect to the nonobstante clause in clause (b) with due regard to its other provision that the letting value should be "reasonable"

¶215

The expression 'special law' means a provision of law, which is not applicable generally but which applies to a particular or specific subject or class of subjects. Section 41 of Indian Penal Code stands on the same footing and defines the phrase special law. In this connection I would like to quote the well accepted proposition of law emerging from various observations made by the Hon'ble Apex Court in different decisions as a gist of the principle and it can be summarised as under:

¶216

"When a special law or a statute is applicable to a particular subject, then the same would prevail over a general law with regard to the very subject, is the accepted principle in the field of interpretation of statute."

¶217

29/40 https://www.mhc.tn.gov.in/judis

¶218

Crl.R.C.No.436/2022

¶219

In reference to offence under section 138 of N.I. Act read with

¶220

section 147 of the said Act, the parties are at liberty to compound the matter at any stage even after the dismissal of the revision/appeal. Even a convict undergoing imprisonment with the liability to pay the amount of fine imposed by the court and/or under an obligation to pay the amount of compensation if awarded, as per the scheme of N.I. Act, can compound the matter. The complainant i.e. person or persons affected can pray to the court that the accused, on compounding of the offence may be released by invoking jurisdiction of this court. If the parties are asked to approach the Apex Court then, what will be situation, is a question which is required to be considered in the background of another accepted progressive and pragmatic principle accepted by our courts that if possible, the parties should be provided justice at the door

¶221

step. The phrase "justice at the door step" has taken the court to think and reach to a conclusion that it can be considered and looked into as one of such special circumstances for the purpose of compounding the offence under section 147 of the N. I. Act.

¶222

38 . It is also well settled that the operation or effect of a general Act

¶223

30/40 https://www.mhc.tn.gov.in/judis

¶224

Crl.R.C.No.436/2022

¶225

may be curtailed by special Act even if a general Act contains a non obstante clause. But here is not a case where the language of section 320 Cr.P.C. would come in the way in recording the compromise or in compounding the offence punishable under section 138 of the N.I. Act. On the contrary provisions of section 147 of N.I. Act though starts with a non obstante clause, is an affirmative enactment and this is possible to infer from the scheme that has overriding effect on the intention of legislature reflected in section 320 Cr.P.C.

¶226

Merely because the litigation has reached to a revisional stage or that even beyond that stage, the nature and character of the offence would not change automatically and it would be wrong to hold that at revisional stage,the nature of offence punishable under Section 138 of the N.I. Act should be treated as if the same is falling under table-II of Section 320 IPC. I would like to reproduce some part of the statement of objects and reasons of the Negotiable Instruments (Amendment & Miscellaneous Provisions) Act, 2002

¶227

"The Negotiable Instrument Act 1881 was amended by the Banking,Public Financial Institutions and Negotiable Instrument Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of

¶228

31/40 https://www.mhc.tn.gov.in/judis

¶229

Crl.R.C.No.436/2022

¶230

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 Instrument Act, 1981, namely Section 138 to 142 in ChapterXVII have been found deficient in dealing with dishonour of cheques. Notonly the punishment provided in the Act has proved to be inadequate, theprocedure prescribed for the courts to deal with such matters has beenfound to be cumbersome. The Courts are unable to dispose of such casesexpeditiously in a time bound manner in view of the procedure contained in the Act.

¶231

2. A large number of cases are reported to be pending under Sections 138 and 142 of the Negotiable Instruments Act in various courts in the country. Keeping in view the large number of complaints under the saidAct, pending in various courts, a Working Group was constituted to review Section 138 of the Negotiable Instruments Act, 181 and make recommendations as to what changes were needed to effectively achieve the purpose of that Section.

¶232

3. ..........…

¶233

4. Keeping in view the recommendations of the Standing Committee on finance and other R/SCR.A/2491/2018 ORDER representations, it has been decided to bring out, inter alia the following amendments in the Negotiable Instrument Act 1881, namely.

¶234

(i) xxxxxx (ii) xxxxxx (iii) xxxxxx (iv) to prescribe procedure for dispensing with preliminary evidence of the complainant. (v) xxxxxx

¶235

32/40 https://www.mhc.tn.gov.in/judis

¶236

Crl.R.C.No.436/2022

¶237

(vi) xxxxx

¶238

(vii) to make the offences under the Act compoundable. .....…

¶239

5. xxxxxx

¶240

6. The Bill seeks to achieve the above objects."

¶241

In a commentary the following observations have been made with

¶242

regard to offence punishable under section 138 of the N.I. Act. [ Cited from : Arun Mohan, Some thoughts towards law reforms on the topic of Section 138

¶243

Negotiable Instrument Act -Tackling an avalanche of cases] :

¶244

"... ... Unlike that for other forms of crime, the punishment here (in so far as the complainant is concerned) is not a means of seeking retribution,but is more a means to ensure payment of money. The complainant's interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail. The threat of jail is only a mode to ensure recovery. As against the accused who is willing to undergo a jail term, there is little available as remedy for the holder of the cheque. If we were to examine the number of complaints filed which were 'compromised' or 'settled' before the final judgment on one side and the cases which proceeded to judgment and conviction on the other, we will find that the bulk was settled and only a miniscule number continued."

¶245

It is quite obvious that with respect to the offence of dishonour of

¶246

cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect.

¶247

So the intention of the legislature and object of enacting

¶248

33/40 https://www.mhc.tn.gov.in/judis

¶249

Crl.R.C.No.436/2022

¶250

"Banking", Public Financial Institutions and the Negotiable Instrument Laws (Amended Act) 1988 and subsequent enactment, i.e., Negotiable Instruments (Amendment & Miscellaneous Provisions Act 2002 leads this Court to a conclusion that the offence made punishable under Section 138 of N.I. Act is

¶251

not only an offence qua property but it is also of the nature of an economic offence, though not covered in the list of statutes enacted in reference to Section 468 of Cr.P.C. Thus, the parties, in reference to offence under Section 138 N.I. Act read with Section 147 of the said Act are at liberty to compound the matter at any stage even after the dismissal of the proceedings.

¶252

In the instant case, the problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, furthermore, the arguments on behalf of the Govt. Advocate (crl.side) on the fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments Act provides no explicit guidance as to what stage compounding can or cannot be done and whether compounding can be done at the instance of the complainant or with the leave of the court.

¶253

I am also conscious of the view that judicial endorsement of the above quoted guidelines as given in the case of Damodar S. Prabhu (supra)

¶254

34/40 https://www.mhc.tn.gov.in/judis

¶255

Crl.R.C.No.436/2022

¶256

could be seen as an act of judicial law making and therefore an intrusion into the legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. I have already explained that the scheme contemplated under Section 320 of the Cr.P.C. cannot be followed in the strict sense.

¶257

In view of the aforesaid discussion, the parties, in reference to offence under Section 138 N.I. Act read with Section 147 of the said Act are at liberty to compound the matter at any stage. The complainant i.e. the person or persons affected can pray to the court that the accused, on compounding of the offence may be released by invoking inherent jurisdiction of this Court.

¶258

Generally, the powers available would not have been exercised when a statutory remedy under the law is available, however, considering the peculiar set of facts and circumstances it would not be in the interest of justice to relegate the parties to the court. Additionally when both the parties have invoked the jurisdiction of this Court and there is no bar on exercise of

¶259

35/40 https://www.mhc.tn.gov.in/judis

¶260

Crl.R.C.No.436/2022

¶261

powers and the inherent powers of this court can always be invoked for

¶262

imparting justice and bringing a quietus to the issue between the parties.

¶263

As discussed above, the court is inclined to hold accordingly only

¶264

because there is no formal embargo in section 147 of the N.I. Act. This principle would not help any convict in any other law where other applicable

¶265

independent provisions are existing as the offence punishable under section 138 of the N.I. Act is distinctly different from the normal offences made punishable under Chapter XVII of IPC (i.e. the offences qua property).

¶266

In view of the observations and in view of the guidelines as laid down in the case of Damodar S. Prabhu (Supra) and also in view of the observations made in the judgment referred above and taking into account the fact that the parties have settled the dispute amicably by way of compromise, this Court is of the view that the compounding of the offence as required to be permitted.

¶267

Accordingly, the present Criminal Revision Case is disposed of in

¶268

terms of Compromise/Settlement Memo arrived at between the parties to this litigation out of Court. The impugned conviction and sentence passed in

¶269

36/40 https://www.mhc.tn.gov.in/judis

¶270

Crl.R.C.No.436/2022

¶271

C.A.No.345 of 2019, dated 31.01.2022 by the learned V Addl. District and Sessions Judge, Coimbatore confirming the conviction and sentence made in STC.No.471 of 2015, dated 11.10.2019 by the learned District Munsif cum Judicial Magistrate, Valparai are hereby modified . The conviction and sentence under section 138 of the Negotiable Instruments Act in STC.No.471 of 2015 stands anulled as this Court intends, otherwise to secure the ends of justice. The Revision Petitioners shall be treated as acquitted on account of compounding of the offence with the complainant/person affected.

¶272

While disposing of this Criminal Revision Case by recording the Joint Compromise/Settlement Memo entered into between the parties, the learned counsel for the 1^st respondent/complainant submitted that a sum of Rs.86,925/- was deducted as TDS from one of the deposits deposited before the learned District Munsif cum Judicial Magistrate, Valparai in STC.No.471 of 2015 is to be released by the Union Bank of India, Valparai, Branch as the said amount which was directed to be deposited as per the order of the court shall not carry TDS under the provision of any law, he prays for a direction to the Union Bank of India, Valparai Branch to release of the abovesaid amount deducted towards TDS.

¶273

37/40 https://www.mhc.tn.gov.in/judis

¶274

Crl.R.C.No.436/2022

¶275

In view of the above, the Union Bank of India, Valparai Branch is directed to release the amount of Rs. Rs.86,925/- which was already deducted towards TDS to the 1^st respondent/complainant within a period of three weeks from the date of receipt of certified copy of this order on appropriate application

¶276

Office is directed to communicate this order to the learned trial

¶277

court concerned immediately.

¶278

In the result,

¶279

The Criminal Revision Case is disposed of in terms of Joint Compromise/Settlement Memo dated 19.09.2024.

¶280

The impugned conviction and sentence passed in C.A.No.345 of 2019 dated 31.01.2022 by the learned V Addl. District and Sessions Judge, Coimbatore confirming the conviction and sentence made in STC.No.471 of 2015, dated 11.10.2019 by the learned District Munsif cum Judicial Magistrate, Valparai are hereby modified.

¶281

The conviction and sentence imposed on the Revision

¶282

38/40 https://www.mhc.tn.gov.in/judis

¶283

Crl.R.C.No.436/2022

¶284

●

¶285

Petitioners by both the courts below stands anulled .

¶286

● The Revision Petitioners shall be treated as acquitted on account of compounding of the offence with the complainant/1^st respondent.

¶287

The Union Bank of India, Valparai Branch is directed to release the amount of Rs.86,925/- deducted towards TDS on the court deposit amount to the 1^st respondent/complainant within a period of three weeks from the date of receipt of

¶288

certified copy of this order on making appropriate application

¶289

16.12.2024

¶290

msr

¶291

Index:yes/no Internet: yes/no

¶292

¶293

The District Munsif cum Judicial Magistrate, Valparai 2. The V Addl. District and Sessions Judge, Coimbatore

¶294

The Public Prosecutor, High Court Madras.

¶295

39/40 https://www.mhc.tn.gov.in/judis

Crl.R.C.No.436/2022

SHAMIM AHMED, J.

msr

Crl.R.C.No.436 of 2022

¶300

16.12.2024

¶301

40/40 https://www.mhc.tn.gov.in/judis

M/S.Kalasa Estate v. Bombay Burmah Trading Corporation Limited

Case brief

What is this about?

What did the court decide?

M/S.Kalasa Estate v. Bombay Burmah Trading Corporation Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

A.Govindaraj Vs M.Nandakumar

Kvr Karnan Vs Jaisankar

Sakthikumar Vs Jaisankar

S.Samuel Vs Muniappan @ Vetri

Udhayakumar @ Udhaya Vs State Represented by

Sagayaraj Vs State Rep by