Conviction under Section 138 NI Act for a Rs.2 crore dishonoured cheque was compounded after the parties settled their entire financial liability through a One Time Settlement. The High Court accepted the compromise, set aside the trial and appellate court judgments and acquitted the petitioners.
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Crl.R.C.No.1367 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 14.10.2025
CORAM
THE HONOURABLE MR.JUSTICE M.NIRMAL KUMAR
Crl.R.C.No.1367 of 2019 and Crl.M.P.No.19209 of 2025
1.Sri Aravindar Educational Trust, Rep. by its authorized signatory S.Nithyanandam, Mailam Road, Sederapet, Sederapet, Pondicherry 605 111.
2.S.Nithyanandam ... Petitioners
Vs.
M/s.Kotak Mahindra Bank Limited, Rep. by its Chief Manager, Ponraj Thangadurai, No.39, Ceebros Centre, I Floor, Montieth Road, Egmore, Chennai. ... Respondent
PRAYER : Criminal Revision Petition filed under Sections 397 and 401 of Criminal Procedure Code, to set aside the order dated 26.09.2019 in Crl Appeal No.167/2019 on the file of XV Additional Sessions Court, Chennai confirming the order dated 21.03.2019 in C.C.No.2750/2016 on the file of Metropolitan Magistrate - Fast Track Court IV, George Town, Chennai.
For Petitioners : Mr.Rajarajan
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For Respondent : Ms.Jayaganga for Mrs.Ananda Gomathy
ORDER
The petitioners were convicted by judgment, dated 21.03.2019 in CC.No.2750 of 2016 by the learned Metropolitan Magistrate, Fast Track CourtIV, George Town, Chennai (trial Court) for offence under Sections 138 of Negotiable Instruments Act, 1881 and sentenced to undergo ten months Simple Imprisonment and to pay a compensation of Rs.2,00,00,000/- (Rupees two crores only) to the respondent/complainant jointly and severally with an interest rate of 9% per annum from the date of dishonour, within one month, in default, the 2nd petitioner to undergo two months Simple Imprisonment. Aggrieved over the judgment of the trial Court, an appeal was preferred by the petitioners before the learned XV Additional Sessions Judge, Chennai (lower appellate Court) in Crl.A.No.167 of 2019. The lower appellate Court, by judgment dated 26.09.2019 modified the findings of the trial Court setting aside the interest of 9% p.a for the cheque amount and confirming the remaining portion of the findings of the trial Court, against which the present criminal revision case is filed.
2.Gist of the case is that the respondent/complainant is a Public limited
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Company registered under the Indian Companies Act, 1956. The 1st petitioner approached the respondent and availed a financial facility to the tune of Rs.13,30,00,000/- (Rupees thirteen crores and thirty lakhs only) for his funding requirement and the same was sanctioned by the respondent vide sanction letter dated 21.01.2013. As per the directions of the Debt Recovery Tribunal-III, Chennai, the 1st petitioner represented by its Chairman agreed to pay a sum of Rs.2,00,00,000/- towards part payment of the dues payable under the above sanction letter and issued a cheque (Ex.P2) bearing No.000517 dated 23.08.2016 for a sum of Rs.2,00,00,000/- (Rupees two crores only) drawn on Kotak Mahindra Bank, Anna Nagar. When the cheque (Ex.P2) presented for encashment by the respondent through its bank viz., Kotak Mahindra Bank, Parrys, Chennai Branch, the same got dishonoured for the reason “Funds Insufficient” on 30.08.2016 vide return memo (Ex.P3). The respondent issued a statutory legal notice (Ex.P4) dated 08.09.2016 calling upon the petitioners to repay the dishonoured cheque amount and the same received by the petitioners on 12.09.2016. Despite the same, the petitioners neither came forward to repay the cheque amount nor made any reply for Ex.P4. Annoyed over the same, the respondent filed a private complaint under Section 138 of Negotiable Instruments Act, 1881 in C.C.No.2750 of 2016.
3.During trial, the respondent examined himself as PW1 and marked
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seven documents as Exs.P1 to P7. On the side of the defence, no witness examined and no document marked. On conclusion of trial, the trial Court convicted the petitioners as stated above.
4.The learned counsel for the petitioner submitted that now the issue between the petitioners and the respondent got resolved and that the respondent offered One Time Settlement (OTS) towards closure of the financial liabilities to the tune of Rs.12,00,00,000/- (Rupees twelve crores only) as full and final settlement of the entire outstanding amount. The repayment schedule for the OTS amount is that the payment for Rs.1,00,00,000/- (Rupees one crore only) already received through demand drafts dated 23.12.2024, 27.12.2024 and 31.12.2024 drawn on ICICI Bank and the payment of Rs.50,00,000/- (Rupees fifty lakhs only) on or before 31.03.2025 and payment of Rs.10,50,00,000/(Rupees ten crores and fifty lakhs only) on or before 30.06.2025. He further submitted that based on the settlement, a compounding petition in Crl.M.P.No.19209 of 2025 in Crl.R.C.No.1367 of 2019 filed under Section 147 of Negotiable Instruments Act, 1881 to compound the offence.
5.The learned counsel for the respondent confirms the settlement between
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the petitioners and the respondent and also confirms the receipt of One Time Settlement of Rs.12,00,00,000/- (Rupees twelve crores only) and also produced the letter of acceptance dated 07.02.2025 of Kotak Mahindra Bank.
6.Today, the petitioners and the respondent present before this Court and this Court had an enquiry with the respondent. The respondent reaffirmed the compromise entered with the petitioner, receipt of entire OTS and filing of compounding petition. The scanned reproduction of the compounding petition under Section 147 of Negotiable Instruments Act, 1881 is as follows:
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7.The respondent/complainant has filed a compounding petition in
Crl.M.P.No.19209 of 2025 in Crl.R.C.No.1367 of 2019 invoking Section 147 of
the Negotiable Instruments Act, 1881 to compound the offence and the same is ordered.
not to keep these proceedings pending since it will affect their future life, this Court accepts the compromise entered between them.
the revision is, accordingly, allowed. The petitioners are acquitted of all charges levelled against them.
14.10.2025
Speaking Order/Non Speaking Order Index : Yes/No Neutral Citation: Yes/No vv2
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M.NIRMAL KUMAR, J.
vv2
To
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14.10.2025
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1 issue framed by the court
Whether a Section 138 conviction should be set aside on compounding under Section 147 NI Act following an OTS between the parties.
3 provisions across 2 enactments
Sri Aravindar Educational Trust
S.Nithyanandam
M/s.Kotak Mahindra Bank Limited
M.Nirmal Kumar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
