LexM/S NEW WIN EXPORT & ANR. versus A. SUBRAMANIAM
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[2024] 7 S.C.R. 1225 : 2024 INSC 535 M/s New Win Export & Anr. v. A. Subramaniam (Criminal Appeal No. 2948 of 2024) 11 July 2024 [Sudhanshu Dhulia and Ahsanuddin Amanullah, JJ.] Issue for Consideration Whether in the instant case, conviction under Section 138 of the Negotiable Instruments Act, 1881 could be quashed by the Supreme Court as the parties had settled the dispute among themselves by entering into a settlement agreement. Headnotes† Negotiable Instruments Act, 1881 – s.138 – Offence under – Compounding of – Settlement treated to be compounding of the offence: Held: Appellants and respondent-complainant had entered into a settlement agreement dated 27.01.2024 – It is clear that the parties have settled the dispute among themselves – As per the agreement, the appellants have paid Rs.5,25,000 to the respondent- complainant, who has agreed to settle the present matter for the said amount – The complainant does not have any objection if the conviction of the appellants is set aside – This settlement agreement can be treated to be compounding of the offence – When the accused and complainant have reached a settlement permissible by law and this Court has also satisfied itself regarding the genuineness of the settlement, the conviction of the appellants would not serve any purpose and thus, it is required to be set aside. [Paras 3, 4, 5] Negotiable Instruments Act, 1881 – s.147 – Compounding of offences in context of the Act – Dishonour of cheques is a regulatory offence – ‘compensatory aspect’ of remedy has priority over ‘punitive aspect’ – Code of Criminal Procedure, 1973 – s.320(5): Held: Dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability 1226 [2024] 7 S.C.R. Digital Supreme Court Reports of these instruments can be ensured – s.147 of Negotiable Instruments Act, 1881 makes all offences under NI Act compoundable offences – All the same, s.320(5) CrPC provides that if compounding has to be done after conviction, then it can only be done with the leave of the Court where appeal against such conviction is pending – Keeping in mind that the ‘compensatory aspect’ of remedy shall have priority over the ‘punitive aspect’, courts should encourage compounding of offences under the NI Act if parties are willing to do so. [Paras 4, 6] Case Law Cited Raj Reddy Kallem v. The State of Haryana & Anr. [2024] 5 SCR 203; Damodar S. Prabhu v. Sayed Babalal H. [2010] 5 SCR 678 : (2010) 5 SCC 663; Gimpex Private Limited v. Manoj Goel [2021] 11 SCR 432 : (2022) 11 SCC 705; Meters and Instruments Private Limited and Anr. v. Kanchan Mehta [2017] 10 SCR 66 : (2018) 1 SCC 560 – referred to. List of Acts Negotiable Instruments Act, 1881; Code of Criminal Procedure, 1973. List of Keywords Section 138 Negotiable Instruments Act, 1881; Insufficient funds; Settlement agreement; Compoundable offences; Compounding of the offence; Compounding after conviction; Compensatory aspect of remedy. Case Arising From CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 2948 of 2024 From the Judgment and Order dated 01.04.2019 of the High Court of Judicature at Madras in CRLA No. 45 of 2014 Appearances for Parties M Yogesh Kanna, K. Paari Vendhan, Manoj Kumar A, Advs. for the Appellants. Sudhakar Rajendran, Vairawan A.S, Advs. for the Respondent. [2024] 7 S.C.R. 1227 M/s New Win Export & Anr. v. A. Subramaniam Judgment / Order of the Supreme Court Order Leave granted. 2. This case arises from a complaint under Section 138 Negotiable Instruments Act filed by the respondent/complainant. In the year 2006, appellant no.2 had borrowed a loan of Rs.5,25,000 from the respondent but did not repay as promised. To discharge the said debt, the appellant no.2 gave a cheque of Rs.5,25,000 which was issued in the name of his partnership firm i.e., appellant no.1 (M/s New Win Export). Since the cheque was dishonoured due to ‘insufficient funds’, respondent filed a complaint under Section 138 NI Act against the appellants where the Trial Court vide order dated 16.10.2012 convicted the appellants and imposed a sentence of 1 year of simple imprisonment each. The appellants challenged their conviction before the Appellate Court, which reversed the findings of the Trial Court and acquitted the appellants. Finally, when the matter was taken to the High Court at the instance of the respondent/complainant, the High Court in its order
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