Section 147 of the Negotiable Instruments Act, 1881, allows offences under the Act to be compoundable:
“147. Offences to be compoundable.—Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable.”
So, the offence of cheque dishonour, under Section 138 of the Act, is also compoundable. This means that the parties can arrive at a compromise, which will result into acquittal of the accused.
However, the question is – can this offence be compounded even at the appellate stage after the accused has already been convicted of the offence under Section 138?
Supreme Court answered this question in the affirmative in the case of K.M. Ibrahim v. K.P. Mohammed, (2010) 1 SCC 798, and held that the cheque bounce case under Section 138 can be compounded at the appellate stage even after conviction, and also that it can be compounded even at the stage of SLP before the Supreme Court.
It was held that while it was true that the application under Section 147 of the Negotiable Instruments Act for compounding of the offence was made by the parties after the proceedings had been concluded before the appellate court. It was held that, 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, the Supreme Court did not find any reason to reject the application under Section 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution.
It was held that due to the non obstante clause included in Section 147 of the N.I. Act (i.e., “Notwithstanding anything contained in the Code of Criminal Procedure, 1973”), the N.I. Act being a special statute, the provisions of Section 147 will have an overriding effect over the provisions of the Criminal Procedure Code relating to compounding of offences.
Referring to certain earlier decided cases, it was observed that once a person is allowed to compound a case as provided for under Section 147 of the Negotiable Instruments Act, the conviction under Section 138 of the said Act should also be set aside.
In the above case, since the parties had settled their disputes, in keeping with the spirit of Section 147 of the Act, the Supreme Court allowed the parties to compound the offence; it set aside the judgment of the courts below and acquitted the accused of the charges against him.
Here is a list of some previous judgments of the Supreme Court in which compounding of the offence under Section 138 of the Act was allowed at the appellate / SLP stage:
- O.P. Dholakia v. State of Haryana, (2000) 1 SCC 762.
- Anil Kumar Haritwal v. Alka Gupta, (2004) 4 SCC 366.
- B.C. Seshadri v. B.N. Suryanarayana Rao, (2004) 11 SCC 510.
- G. Sivarajan v. Little Flower Kuries & Enterprises Ltd., (2004) 11 SCC 400.
- Kishore Kumar v. J.K. Corpn. Ltd., (2004) 13 SCC 494.
- Sailesh Shyam Parsekar v. Baban, (2005) 4 SCC 162.
- K. Gyansagar v. Ganesh Gupta, (2005) 7 SCC 54.
- K.J.B.L. Rama Reddy v. Annapurna Seeds, (2005) 10 SCC 632.
- Sayeed Ishaque Memon v. Ansari Naseer Ahmed, (2005) 12 SCC 140.
- Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305.
