IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.2281  OF 2009

(Arising out of S.L.P.(Crl.)No…9263/09  CRL.M.P.15423/2009)     

K.M. IBRAHIM                   … APPELLANT Vs.

K.P. MOHAMMED & ANR. … RESPONDENTS

J U D G M E N T

ALTAMAS KABIR,  J.

1. Delay condoned.

2. Leave granted.  

3. The  appellant  issued  a  cheque  to  the  first  

respondent  for  an  amount  of  Rs.95,000/-  in  

discharge of a legally enforceable debt.  However,  

when  the  cheque  was  presented  by  the  first

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respondent to his bank, the same was dishonoured on  

account of insufficiency of funds in the account of  

the  appellant.   The  respondent  thereupon  issued  

statutory  notice  to  the  appellant  within  the  

prescribed time limit informing the appellant about  

the dishonor of the cheque and calling upon him to  

pay the amount due.  Since the appellant failed to  

pay  the  amount  in  time,  the  respondent  filed  a  

complaint  before  the  Chief  Judicial  Magistrate,  

Kasargode.  Considering the evidence on record, the  

Trial Court found the accused guilty of the offence  

with which he had been charged and sentenced him to  

undergo rigorous imprisonment for a period of one  

year  and  to  pay  a  fine  of  Rs.1,05,000/-.   In  

default of payment of fine, it was ordered that the  

appellant would undergo rigorous imprisonment for a  

further period of three months.   If, however, the  

fine was realized, directions were given that a sum  

of Rs.1,00,000/- should be given to the respondent  

by way of compensation.  

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4. Aggrieved by the said judgment, the appellant  

filed  Criminal  Appeal  No.74  of  2003.  While  

affirming  the  conviction,  the  Appellate  Court  

reduced the sentence to a period of one month and a  

fine of Rs.95,000/-.  In default of said payment,  

the appellant was directed to undergo imprisonment  

for a further period of two months.  

5. The said order was challenged before the High  

Court, which decided the matter in the light of  

Section 357(3) Cr.P.C.  The High Court dismissed  

the revision against which the present appeal has  

been filed.

6. At  the  very  initial  stage  of  hearing,  a  

question was raised on behalf of the appellant as  

to  whether  an  offence  under  Section  138  of  the  

Negotiable  Instruments  Act,  1881,  could  be  

compounded under Section 147 of the said Act read  

with Section 320 Cr.P.C.  

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7. Appearing for the appellant, Mr. Mukul Rohtagi,  

learned  Senior  Advocate,  contended  that  since  a  

specific power had been given to the parties to a  

proceeding  under  the  Negotiable  Instruments  Act  

under Section 147 to compound the offence, there  

could be no reason as to why the same cannot be  

permitted  even  after  conviction,  which  had  been  

affirmed upto the High Court.   It was urged that  

in order to facilitate settlement of disputes, the  

legislature thought it fit to insert Section 147 by  

Amending Act 55 of 2002.  Such amendment came into  

effect from 6th February, 2003, and provided that  

notwithstanding anything contained in the Code of  

Criminal Procedure, 1973, every offence punishable  

under the Act would be compoundable. Mr. Rohtagi  

urged that in view of the non-obstante clause, the  

provisions of Section 147 were given an overriding  

effect  over  the  Code  and  in  view  of  the  clear  

mandate given to the parties to compound an offence

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under the Act, reference to Section 320 Cr.P.C. can  

be made for purposes of comparison only in order to  

understand  the  scope  of  Section  147  of  the  

Negotiable Instruments Act.  Mr. Rohtagi submitted  

that the said position had been accepted by this  

Court in various decisions, such as in the case of  

O.P. Dholakia vs. State of Haryana & Anr. [(2000) 1  

SCC  762],  wherein  it  was  held  that  since  the  

petitioner had already entered into a compromise  

with  the  complainant  and  the  complainant  had  

appeared through counsel and stated that the entire  

money  had  been  received  by  him  and  he  had  no  

objection if the conviction already recorded under  

Section 138 of the Negotiable Instruments Act is  

set  aside,  the  Hon’ble  Judges  thought  it  

appropriate to grant permission, in the peculiar  

facts and circumstances of the case, to compound  

the  offence.   While  doing  so,  this  Court  also  

indicated  that  necessarily  the  conviction  and  

sentence  under  Section  138  of  the  Act  stood

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annulled.  

7A. The said view has been consistently followed in  

the case of (1) Anil Kumar Haritwal & Anr. vs. Alka  

Gupta & Anr. [(2004) 4 SCC 366]; (2) B.C. Seshadri  

vs.  B.N.  Suryanarayana  Rao [2004  (11)  SCC  510]  

decided by a three Judge Bench; (3)  G. Sivarajan  

vs. Little Flower Kuries & Enterprises Ltd. & Anr.  

[(2004  11  SCC  400];  (4)  Kishore  Kumar vs.  J.K.  

Corporation Ltd. [(2004 13 SCC 494]; (5)  Sailesh  

Shyam Parsekar vs.  Baban [(2005 (4) SCC 162]; (6)  

K. Gyansagar vs. Ganesh Gupta & Anr. [(2005) 7 SCC  

54]; (7) K.J.B.L. Rama Reddy vs. Annapurna Seeds &  

Anr. [(2005) 10 SCC 632]; (8) Sayeed Ishaque Menon  

vs.  Ansari Naseer Ahmed [(2005) 12 SCC 140]; (9)  

Vinay  Devanna  Nayak vs.  Ryot  Sewa  Sahakari  Bank  

Ltd. [(2008)  2  SCC  305],  wherein  some  of  the  

earlier  decisions  have  been  noticed;  and  (10)  

Sudheer Kumar vs. Manakkandi M.K. Kunhiraman & Anr.  

[2008  (1)  KLJ  203],  which  was  a  decision  of  a

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Division Bench of the Kerala High Court, wherein  

also the issue has been gone into in great detail.

8. The golden thread in all these decisions is  

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  

case of Vinay Devanna Nayak (supra), the issue was  

raised and after taking note of the provisions of  

Section 320 Cr.P.C., this Court held that since the  

matter had been compromised between the parties and  

payments had been made in full and final settlement  

of the dues of the Bank, the appeal deserved to be  

allowed  and  the  appellant  was  entitled  to  

acquittal.  Consequently, the order of conviction  

and sentence recorded by all the courts were set  

aside and the appellant was acquitted of the charge  

leveled against him.

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9. The object of Section 320 Cr.P.C., which would  

not in the strict sense of the term apply to a  

proceeding  under  the  Negotiable  Instruments  Act,  

1881,  gives  the  parties  to  the  proceedings  an  

opportunity to compound offences mentioned in the  

table  contained  in  the  said  section,  with  or  

without the leave of the court, and also vests the  

court with jurisdiction to allow such compromise.  

By virtue of Sub-Section (8), the Legislature has  

taken one step further in vesting jurisdiction in  

the Court to also acquit the accused/convict of the  

offence on the same being allowed to be compounded.  

Inasmuch as, it is with a similar object in mind  

that  Section  147  has  been  inserted  into  the  

Negotiable Instruments Act, 1881, by amendment, an  

analogy may be drawn as to the intention of the  

Legislature as expressed in Section 320(8) Cr.P.C.,  

although, the same has not been expressly mentioned  

in  the  amended  section  to  a  proceeding  under  

Section 147 of the aforesaid Act.  

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10. Apart from the above, this Court is further  

empowered under Article 142 of the Constitution to  

pass appropriate orders in line with Sub-Section  

(8) of Section 320 Cr.P.C. in an application under  

Section 147 of the aforesaid Act, in order to do  

justice to the parties.

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.   The  various  decisions  cited  by  Mr.  

Rohtagi on this issue does not add to the above  

position.

12. 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,

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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.   

13. Since the parties have settled their disputes,  

in keeping with the spirit of Section 147 of the  

Act, we allow the parties to compound the offence,  

set  aside  the  judgment  of  the  courts  below  and  

acquit the appellant of the charges against him.   

14. The  appeal  is,  accordingly,  allowed  in  the  

aforesaid terms.                 

………………………………………J. (ALTAMAS KABIR)

…………………………………………J. (CYRIAC JOSEPH)

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New Delhi Dated: December 2, 2009