Allowed

M/S Devgan Medical Agencies and Another v. State of Punjab and Another

Punjab & Haryana HC22 Dec 2025CRR/157/2025

Case brief

AI extract

What is this about?

The High Court allowed two criminal revisions against conviction and sentence under Section 138 of the NI Act. Citing Supreme Court precedent that Section 147 of the NI Act permits compounding even after appellate proceedings, the Court dismissed the original convictions as parties had settled. Petitioners were acquitted upon agreeing to deposit Rs.10,000 each.

What did the court decide?

Petitioners acquitted; conviction and sentence set aside; ordered to deposit Rs. 10,000 each as costs.

M/S Devgan Medical Agencies and Another Vs State… — Cheque Dishonour | Punjab & Haryana HC (2025)

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Both these criminal revisions are taken up and decided

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together by way of a common judgment.

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The challenge in these criminal revisions is to the order dated 13.12.2024 passed by learned Addl. Sessions Judge, Amritsar, dismissing the appeal preferred against the judgment of conviction and order of sentence dated 01.08.2024 passed by learned Judicial Magistrate Ist Class, Amritsar, vide which the petitioner was convicted and sentenced to undergo rigorous imprisonment for 1 year and to pay a compensation to the tune of Rs.5 lakh to the complainant under Section 357 (3) Cr.P.C.

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The facts relevant as narrated in the complaint filed under Section 138 of the NI Act are that the accused-petitioner(s) in discharge of their liability had issued a cheque bearing No.363690 dated 20.09.2018 for Rs.5 lakh. However, on presentation thereof, the same was dishonoured and returned with the remarks “Fund Insufficient”. Despite issuance of legal notice, the petitioners failed to make the payment within the stipulated period. The proceedings against them were initiated under Section 138 of the NI Act, pursuant to which, they appeared and were released on bail. On finding prima facie case under Section 138 of the NI Act, notice of accusation was served upon them, to which they pleaded not guilty and claimed trial.

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In order to prove its case, the complainant-Tarun Kapoor examined as CW 1 as well as Amarpal Singh, Relationship Manager from ICICI Bank, Branch Mall Road, Amritsar as CW2 and Ajay Kumar, Assistant Manager from Andhra Bank (now Union Bank of India) Branch Hall Gate, Amritsar as CW3 and also led documentary evidence. On closure of the evidence, statements of accused-petitioner(s) under Section

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313 Cr.P.C. were recorded, they denied all the allegations raised against

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them and pleaded innocence. In their defence, accused-petitioner(s) did not examine any witness despite availing ample opportunities and the defence evidence was closed by Court order.

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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(s)-accused, and convicted and sentenced them, as mentioned in para no.1 above. Aggrieved convictspetitioner(s) filed appeal, which was dismissed by learned Addl. Sessions Judge, Amritsar vide impugned judgment dated 13.12.2024.

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Hence, the present revision petitions.

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Learned counsel for the petitioner(s) submit that the matter has since been settled between the parties as the amount was paid to the complainant and no other amount is due with regard to the dishonour of the cheque. They7��"&�7�*#�<��"��&��#�'��;=�,�4�!��)� ��9*�&��>��"�#��#��"��9��)��>��7��>��"� ��"��the petitioner(s) have the responsibility of their families and due to this litigation, they have faced financial distress. The petitioner(s) have with great difficulty managed to collect the money and settled the dispute as they wanted to put an end to the same, seven years having gone by.

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Learned counsel for complainant-respondent No.2 affirms the factum of compromise arrived at between them.

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It is apposite to refer to the judgment of Hon’ble The Supreme Court in B.V.Seshaiah vs. The State of Telangana and

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another 2023 Live Law (SC) 75, wherein it was held thus:

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“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:

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“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.”

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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.”

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10. Hon'ble The Supreme Court in the case of K.Subramanian

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vs. R.Rajathi (2010) 15 SCC 352, has held as under:-

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“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.

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7. xx xx xx

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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

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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.”

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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

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under:-

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"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.

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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."

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Reiterating the aforesaid Hon’ble The Supreme Court in the

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case of Damodar S.Prabhu vs. Sayed Babalal H. 2010(5) SCC 663 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

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of the Negotiable Instruments Act was made by the parties after the

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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.”

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In the peculiarity of facts and circumstances of the case and in light of the judgment in Damodar S.Prabhu (supra ), the petitioner(s) are 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(s) brought out by their learned counsel, as noticed above, the same is reduced in view of the afore-referred judgment and they are ordered to deposit an amount of Rs.10,000/- each as costs, with the Punjab State Legal Services Authority on or before 05.01.2026. 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(s) are acquitted of the charges framed against them.

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