NEW DELHI: A person can avoid a jail term after being convicted in a cheque bounce case if they reach a compromise with the complainant, Supreme Court said on Tuesday, holding that once a compromise deed is signed between the parties, conviction under Section 138 of Negotiable Instruments Act cannot be sustained.
A bench of justices Aravind Kumar and Sandeep Mehta said the offence of dishonour of cheque was mainly a civil wrong and had been made specifically compoundable. "This court referred the offence under Section 138 NI Act as a Civil Sheep in Criminal Wolf's Clothing which meant issues agitated by the parties under the said provision are of private nature whXich are brought within the sweep of criminality jurisdiction in order to strengthen the credibility of the negotiable instruments," the bench said while referring to an earlier verdict of the SC.
The court set aside a Punjab and Haryana HC ruling that had refused to quash conviction in a cheque dishonour case after settlement between the parties.
SC said when parties enter into an agreement and compound the offence, they do so to save themselves from the process of litigation, allows them to do so. Hence, courts cannot override such compounding and impose its will, it said.
"Once the complainant has signed the compromise deed accepting the amount in full and final settlement of the default sum the proceedings under Section 138 of the NI Act cannot hold water; therefore, the concurrent conviction rendered by the Courts below has to be set aside," the bench said.
"Therefore, it is very clear that although dishonour of cheque entails criminal consequence, the legislature by virtue of section 147 of the NI Act has made it compoundable notwithstanding the provisions of the Code of Criminal Procedure, 1973 and the same can be compounded at any stage of the proceedings especially when the parties have themselves arrived at a voluntary compromise," it said.
A bench of justices Aravind Kumar and Sandeep Mehta said the offence of dishonour of cheque was mainly a civil wrong and had been made specifically compoundable. "This court referred the offence under Section 138 NI Act as a Civil Sheep in Criminal Wolf's Clothing which meant issues agitated by the parties under the said provision are of private nature whXich are brought within the sweep of criminality jurisdiction in order to strengthen the credibility of the negotiable instruments," the bench said while referring to an earlier verdict of the SC.
The court set aside a Punjab and Haryana HC ruling that had refused to quash conviction in a cheque dishonour case after settlement between the parties.
SC said when parties enter into an agreement and compound the offence, they do so to save themselves from the process of litigation, allows them to do so. Hence, courts cannot override such compounding and impose its will, it said.
"Once the complainant has signed the compromise deed accepting the amount in full and final settlement of the default sum the proceedings under Section 138 of the NI Act cannot hold water; therefore, the concurrent conviction rendered by the Courts below has to be set aside," the bench said.
"Therefore, it is very clear that although dishonour of cheque entails criminal consequence, the legislature by virtue of section 147 of the NI Act has made it compoundable notwithstanding the provisions of the Code of Criminal Procedure, 1973 and the same can be compounded at any stage of the proceedings especially when the parties have themselves arrived at a voluntary compromise," it said.
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