HC Shimla (2024.04.25) in Krishan Chand Vs. Mahindra and Mahindra Financial Services Ltd. [(2024) ibclaw.in 344 HC, CrMP No. : 4301 of 2023 in Cr.R. No : 493 of 2022] held that;
The ‘compounding fee’ strictu sensu does not fall within the definition of ‘fine’, however, the same has been directed to be deposited with the Member Secretary, State Legal Services Authority to encourage the litigants to compound the offences, at the initial stage of litigation and not to wait up to the culmination of the litigation, before the Hon’ble Supreme Court.
Excerpts of the order;
Applicant-Krishan Chand has filed the present application, under Section 482 of the Code of Criminal Procedure (hereinafter referred to as ‘CrPC’), before this Court, on the ground, that he was convicted, by the Court of learned Judicial Magistrate First Class, Court No. 3, Shimla, District Shimla, H.P. (hereinafter referred to as ‘the trial Court’), vide judgment of conviction, dated 20th September, 2021, in case RBT No. 414-3 of 18/16, titled as Mahindra and Mahindra Financial Services Limited versus Krishan Chand.
# 2. Vide judgment of conviction and order of sentence, dated 20th September, 2021, the learned trial Court has convicted the applicant, for the offence, punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as ‘NI Act’) and sentenced him to undergo simple imprisonment for a period of one year and six months and to pay compensation to the tune of Rs. 8,69,786/-.
# 3. The said judgment of conviction and order of sentence had unsuccessfully been assailed, by the applicant, before the Court of learned Additional Sessions Judge (II), Shimla, District Shimla, H.P. (hereinafter referred to as ‘the First Appellate Court’), as, his appeal has been dismissed by the learned First Appellate Court, vide judgment, dated 12th August, 2022.
# 4. Aggrieved from the said judgment, the Revision Petition had been filed before this Court. During the pendency of the said Revision Petition, before this Court, an application, being CrMP No. 3251 of 2023, under Section 147 of the NI Act, was moved, wherein, a prayer has been made to allow the Revision Petition, by setting aside the judgment of conviction, as, the matter has been compromised between the parties.
# 5. Consequently, both the parties were directed to appear before this Court. On 13th September, 2023, both the parties put appearance before this Court and made statements, affirming the factum of compromise between the parties. Resultantly, the Revision Petition was allowed, vide judgment, dated 13th September, 2023, and the judgment of conviction and order of sentence were set aside, with a direction to the applicant to deposit 7% of the cheque amount, as compounding fee, with the Member Secretary, State Legal Services Authority, Shimla, within a period of eight weeks, from the date of the judgment, failing which, Revision Petition was ordered to be deemed to have been dismissed and the judgment of conviction and order of sentence, passed by the learned trial Court, were ordered to be revived automatically.
# 6. Since, the applicant could not comply with the said order, within the stipulated time frame, as such, by way of the present application, a prayer has been made to extend the time to deposit the compounding fee.
# 7. The admitted position of facts, in this case, is that the matter has been compromised, between the parties and in view of the compromise, the judgment of conviction and order of sentence have been set aside by acquitting the applicant, from the offence, punishable under Section 138 of the NI Act.
# 8. The Hon’ble Supreme Court, in a case, titled as Damodar S. Prabhu versus Sayed Babalal H., reported in (2010) 5 Supreme Court Cases 663, has passed certain guidelines to be followed, at the time of compounding the offence, under Section 138 of the NI Act. These guidelines have been issued by the Hon’ble Supreme Court, keeping in view the pendency of the cases, under Section 138 of the NI Act, in order to encourage the parties to compound the offence, at the initial stage of the litigation.
# 9. The relevant paras 21 to 25 of the judgment in Damodar S. Prabhu’s case (supra), are reproduced, as under:
“21. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:
THE GUIDELINES
(i) In the circumstances, it is proposed as follows:
(a) That directions can be given that the writ of summons be suitably modified making it clear to the accused that he could make an application for compounding of the offences at the first or second hearing of the case and that if such an application is made, compounding may be allowed by the court without imposing any costs on the accused.
(b) If the accused does not make an application for compounding as aforesaid, then if an application for compounding is made before the Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the accused will be required to pay 10% of the cheque amount to be deposited as a condition for compounding with the Legal Services Authority, or such authority as the court deems fit.
(c) Similarly, if the application for compounding is made before the Sessions Court or a High Court in revision or appeal, such compounding may be allowed on the condition that the accused pays 15% of the cheque amount by way of costs.
(d) Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount.
22. Let it also be clarified that any costs imposed in accordance with these Guidelines should be deposited with the Legal Services Authority operating at the level of the court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate’s Court or a Court of Session, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority.
23. We are also in agreement with the learned Attorney General’s suggestions for controlling the filing of multiple complaints that are relatable to the same transaction. It was submitted that complaints are being increasingly filed in multiple jurisdictions in a vexatious manner which causes tremendous harassment and prejudice to the drawers of the cheque. For instance, in the same transaction pertaining to a loan taken on an instalment basis to be repaid in equated monthly instalments, several cheques are taken which are dated for each monthly instalment and upon the dishonour of each of such cheques, different complaints are being filed in different courts which may also have jurisdiction in relation to the complaint. In light of this submission, we direct that it should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed under Section 200 CrPC. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively.
24. We are also conscious of the view that the judicial endorsement of the abovequoted Guidelines could be seen as an act of judicial law-making and therefore an intrusion into the legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act.
25. The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo, valuable time of the court is spent on the trial of these cases and the parties are not liable to pay any court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end.”
# 10. In order to comply with the directions of the Hon’ble Supreme Court, passed in Damodar S. Prabhu’s case (supra), this Court has imposed the compounding fee on the applicant, as, the compounding of the offence has been done, by the parties, after contesting the litigation before two Courts, i.e. the learned trial Court and the learned First Appellate Court.
# 11. By way of the present application, a prayer has been made to extend the time to deposit the compounding fee. Admittedly, the judgment has been pronounced and signed by this Court, on the day, when the case has been decided. In such situation, the material question, which arises for determination, before this Court, is to see as to whether the time, granted to the applicant, to deposit the compounding fee, can be extended, in view of the bar, as contained in Section 362 CrPC.
# 12. The provisions of Section 362 CrPC, are reproduced, as under:
“362. Court not to alter judgment. – Save as otherwise provided by this Code or by any other law for the time being in force, no Court, when it has signed its judgment or final order disposing of a case, shall alter or review the same except to correct a clerical or arithmetical error.”
# 13. Bare reading of Section 362 CrPC shows that there is a clear cut prohibition on the power of the Court to alter or review the judgment passed. It is no longer res integra that the powers, under Section 482 CrPC, cannot be used in violation to the other mandatory provisions, such as, Section 362 CrPC.
# 14. By way of the present application, neither a prayer has been made to alter the judgment nor to review the same, which has been passed, on the basis of the compromise, between the parties. The ‘compounding fee’ strictu sensu does not fall within the definition of ‘fine’, however, the same has been directed to be deposited with the Member Secretary, State Legal Services Authority to encourage the litigants to compound the offences, at the initial stage of litigation and not to wait up to the culmination of the litigation, before the Hon’ble Supreme Court.
# 15. In para 21 of the judgment in Damodar S. Prabhu’s case (supra), it has been held by the Hon’ble Supreme Court that the requirement of deposit of the costs will act as deterrent for delayed composition, since, at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. It has further been held that an application for compounding, made after several years, not only results in the system being burdened, but, the complainant is also deprived of effective justice.
# 16. As such, in the considered opinion of this Court, the compounding fee is nothing, but, an additional burden on the accused, who has not compounded the offence, at the initial stage, i.e. before the learned trial Court, where the compounding can be done, without imposition of any compounding fee, on the accused.
# 17. Now, reverting back to the controversy involved, in the present case, as to whether, the time for depositing the compounding fee, by the applicant, can be extended, especially, in view of the bar, as created by Section 362 CrPC.
# 18. The compounding fee has no relevance in the adjudication of the controversy involved, in such type of cases. None of the parties is entitled to get the compounding fee, as, the Hon’ble Supreme Court has directed that the same to be deposited with the State Legal Services Authority.
# 19. In such situation, the compounding fee, to the considered opinion of this Court, does not have any connection with the merits of the case. Even otherwise, the requirement of Section 147 of NI Act is compounding between the parties and the imposition, as well as, the depositing of the compounding fee, is a sort of message to the similarly situated litigants, to compound the offences, at the initial stage of the litigation, in order to avoid payment of the compounding fee.
# 20. The payment of compounding fee is a sort of atonement in those cases, where, the compounding has been done at a later stage, i.e., when the lis is pending before the higher Court, as, the Hon’ble Supreme Court has exempted the person, who compounds the offence, at the initial stage.
# 21. Even otherwise, the offences, under Section 138 of the NI Act, are based upon civil wrong. The nature of offences, under Section 138 of the NI Act, has elaborately been discussed by the Hon’ble Supreme Court, in Meters & Instruments (P) Ltd. versus Kanchan Mehta, reported in (2018) 1 Supreme Court Cases 560. Relevant paras-6 and 7 of the judgment, are reproduced, as under:
“6. The object of introducing Section 138 and other provisions of Chapter XVII in the Act in the year 1988 vide the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 was to enhance the acceptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonour of cheque with safeguards to prevent harassment of honest drawers. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to amend the Act was brought in, inter alia, to simplify the procedure to deal with such matters. The amendment includes provision for service of summons by speed post/courier, summary trial and making the offence compoundable.
7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. Dishonour of cheque causes incalculable loss, injury and inconvenience to the payee and credibility of business transactions suffers a setback. [Goa Plast (P) Ltd. v. Chico Ursula D’Souza, (2004) 2 SCC 235, p. 248, para 26 : 2004 SCC (Cri) 499] At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 Amendment specifically made it compoundable. [Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC 305 : (2008) 1 SCC (Civ) 542 : (2008) 1 SCC (Cri) 351] The offence was also described as “regulatory offence”. The burden of proof was on the accused in view of presumption under Section 139 and the standard of proof was of “preponderance of probabilities”. [Rangappa v. Sri Mohan, (2010) 11 SCC 441, p. 454, para 28 : (2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] The object of the provision was described as both punitive as well as compensatory. The intention of the provision was to ensure that the complainant received the amount of cheque by way of compensation. Though proceedings under Section 138 could not be treated as civil suits for recovery, the scheme of the provision, providing for punishment with imprisonment or with fine which could extend to twice the amount of the cheque or to both, made the intention of law clear. The complainant could be given not only the cheque amount but double the amount so as to cover interest and costs. Section 357(1)(b) CrPC provides for payment of compensation for the loss caused by the offence out of the fine. [R. Vijayan v. Baby, (2012) 1 SCC 260, p. 264, para 9 : (2012) 1 SCC (Civ) 79 : (2012) 1 SCC (Cri) 520] Where fine is not imposed, compensation can be awarded under Section 357(3) CrPC to the person who suffered loss. Sentence in default can also be imposed. The object of the provision is not merely penal but to make the accused honour the negotiable instruments. [Lafarge Aggregates & Concrete India (P) Ltd. v. Sukarsh Azad, (2014) 13 SCC 779, p. 781, para 7 : (2014) 5 SCC (Cri) 818]”
(Self Emphasis supplied)
# 22. This view has again been re-iterated by the Hon’ble Supreme Court in a case, titled as P. Mohanraj and others versus Shah Brothers Ispat Private Limited, reported in (2021) 6 Supreme Court Cases 258.
# 23. The Legislature, in its wisdom, has used the terms ‘alter’, as well as ‘review’, in Section 362 CrPC. The word ‘alter’, as per the Judicial Dictionary, Third Edition, by Justice L.P. Singh and P.K. Majumdar means ‘only change or modify or revise but not abolish’.
# 24. In case, the time, in the present case, is extended, it will neither change nor modify or revise the order, passed by this Court, on the basis of the compromise, which had taken place, between the parties. Neither the terms and conditions of the compromise will be affected by the extension of time, to deposit the compounding fee, nor, it will affect the complainant, with whose consent, the compounding has been done.
# 25. As per the Webster’s Third New International Dictionary, the word ‘alter’ means ‘to cause to become different in some particular characteristic (as measure, dimension, course, arrangement or inclination) without changing into something else’.
# 26. In the application, the applicant is not seeking to recall the order, by virtue of which, the compounding fee has been imposed. He is simply seeking the extension of time to deposit the compounding fee, as, he could not deposit the same within the prescribed time frame, due to the reasons, as mentioned in the application. Moreover, no doubt has been raised by the complainant about the reasons assigned in the application, for not depositing the compounding fee.
# 27. Consequently, the application under consideration is allowed and the compounding fee, as ordered, be now deposited within a period of ten days from today, failing which, the consequences, as ordered, vide the judgment, dated 13th September, 2023, shall ensue.
# 28. With these observations, the application is disposed of.
-----------------------------
No comments:
Post a Comment