S.138 NI Act | Courts Can't Compel Complainant To Give Consent For Compounding, Mere Repayment Won't Absolve Accused : Supreme Court

Recently, the Supreme Court observed that the Courts cannot compel the complainant in a cheque dishonour case to give consent for the compounding of the complaint merely because the accused has compensated the complainant.The Court also observed that mere repayment of the amount cannot mean that the appellant is absolved from the criminal liabilities under Section 138 of the Negotiable Instruments Act.The bench comprising Justices AS Bopanna and Sudhanshu Dhulia observed :"...even though the complainant has been duly compensated by the accused yet the complainant does not agree for the compounding of the offence, the courts cannot compel the complainant to give 'consent' for compounding of the matter. It is also true that mere repayment of the amount cannot mean that the appellant is absolved from the criminal liabilities under Section 138 of the NI Act"The Court noted that it was held in the 2017 judgment in the case M/s Meters and Instruments Private Limited and Another vs. Kanchan Mehta that “even in the absence of 'consent' court can close criminal proceedings against an accused in cases of section 138 of NI Act if accused has compensated the complainant." However, this observation in M/s Meters and Instruments Private Limited and Another vs. Kanchan Mehta giving discretion to the Courts to close the proceedings and discharge the accused was held to be not a good law by the 5-judge bench in 2021 in In Re Expeditious Trial of Cases Under Section 138 of NI Act, 1881.At the same time, the Court said that it could quash the criminal proceedings by taking note of the peculiar facts of a case. In this regard, the Court distinguished the compounding of a complaint and the quashing of a complaint."In the present case, the appellant has already been in jail for more than 1 year before being released on bail and has also compensated the complainant. Further, in compliance of the order dated 08.08.2023, the appellant has deposited an additional amount of Rs.10 lacs. There is no purpose now to keep the proceedings pending in appeal before the lower appellate court," the Court noted."Here, we would like to point out that quashing of a case is different from compounding," the Court observed referring to JIK Industries Ltd v. Amarlal Jamuni (2012) 3 SCC 255Taking note of the special circumstances of the case, the Court quashed the criminal proceedings by exercising the powers under Article 142 of the Constitution.The Court also reiterated that in cases of section 138 of NI Act, the accused must try for compounding at the initial stages instead of the later stage; however, there is no bar to seek the compounding of the offence at later stages of criminal proceedings including after conviction, like the present caseAccordingly, the appeal was allowed.[The initial version of the report wrongly interpreted the judgment as holding that consent of the complainant was not mandatory. The report was amended to rectify the mistake. The error is deeply regretted]Case Title: RAJ REDDY KALLEM Versus THE STATE OF HARYANA & ANR.Citation : 2024 LiveLaw (SC) 336Click here to read/download the order

S.138 NI Act | Courts Can't Compel Complainant To Give Consent For Compounding, Mere Repayment Won't Absolve Accused : Supreme Court

Yash Mittal

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