Madras High Court
K.M.Lakshmi Devi vs Itc Limited on 29 June, 2026
CRL RC No. 2047 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 06-07-2026
CORAM
THE HON'BLE MR.JUSTICE SHAMIM AHMED
CRL RC No. 2047 of 2024
K.M.Lakshmi Devi
Proprietor M/s.Sri Varun Enterprises,
No.1, P.V.Nayak Lane, Nagarthpet Cross,
Bengaluru - 560 002, Karnataka.
..Petitioner(s)
Vs
ITC Limited
Educational And Stationery Products Business,
Rep. By Its Authorized Signatory,
Mr.Hardik Patel
S/o.Mr.Yaswanth Patel,
ITC Centre, 5th Floor, Anna Salai,
Chennai - 600 002.
..Respondent(s)
PRAYER – This Criminal Revision Case is filed under Sections 438 read with
442 of B.N.S.S, 2023, to set aside the order of the appellate court in C.A.No.632
of 2023 dated 19.06.2024 on the file of Principal Sessions Judge, Chennai
confirming the order of the Trial Court in CC.No.3652 of 2019 dated
12.09.2023 on the file of Metropolitan Magistrate FTC-II Egmore at Allikulam,
Chennai.
For Petitioner(s): Mr.K.Bommuraj
For Respondent(s): Mr.Ravi Meenakshi Sundaram
ORDER
Heard Mr.K.Bommuraj, learned counsel appearing for the Revision
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Petitioner and Mr.Ravi Meenakshi Sundaram, learned counsel appearing for the
respondent.
2. The instant Criminal Revision Case has been filed challenging the
conviction order of the appellate court in C.A.No.632 of 2023 dated 19.06.2024
on the file of Principal Sessions Judge, Chennai, confirming the order of the
Trial Court in CC.No.3652 of 2019 dated 12.09.2023 on the file of Metropolitan
Magistrate FTC-II Egmore at Allikulam, Chennai.
3. The learned trial Judge has convicted the Revision Petitioner/accused
under section 138 of Negotiable Instruments Act and sentenced him to undergo
SI for a period of six months and also directed him to pay compensation of
Rs.25,75,765/-, within 30 days from the date of the judgment and in default, to
undergo two months Simple Imprisonment. The conviction and sentence
imposed by the trial court was also confirmed by the First Appellate Court.
4. The facts leading to filing of this Criminal Revision Case is as follows;
(i) The revision petitioner, borrowed a sum of Rs.25,75,765/- from the
respondent and to discharge his liability, the revision petitioner issued cheque
bearing No.056669, dated 07.11.2018. When the cheque was presented for
encashment, the same was returned with an endorsement ‘Exceeds
Arrangement’. Immediately, the respondent issued legal notice dated
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30.11.2018 to the petitioner demanding the cheque amount. Since the petitioner
neither returned the amount, nor gave any reply, the respondent filed a
complaint for the offence of section 138 of the Negotiable Instruments Act in
C.C.No.3652 of 2019 before the Metropolitan Magistrate, Fast Tract Court-II,
Egmore @ Allikulam.
5. After recording the sworn statement of the respondent and after being
satisfied that prima facie case has been made out to proceed further against the
Revision Petitioner for the offence under section 138 of NI Act, the trial Court
has issued summon to the Revision Petitioner. On the appearance of the
Revision Petitioner, copies have been furnished and the substance of allegation
has been put to him. The Revision Petitioner has denied the allegation and has
claimed to be tried.
6. After considering the arguments, the learned trial court has found the
Revision Petitioner guilty of the offence under section 138 of the Negotiable
Instruments Act and the Revision Petitioner has been convicted and sentenced
to undergo SI for a period of six months and also directed him to pay
compensation of Rs.25,75,765/-, within 30 days from the date of the judgment
and in default, to undergo two months Simple Imprisonment. The conviction
and sentence imposed by the trial court was also confirmed by the First
Appellate Court.
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7. Aggrieved by the judgment, the Revision Petitioner has preferred the
appeal in C.A.No.632 of 2023 before the Principal Sessions Judge, Chennai and
the first appellate court dismissed the appeal vide judgment and order dated
19.06.2024 by confirming the judgment of conviction and sentence imposed by
the trial court in C.C.No.3652 of 2019.
8. Challenging the conviction and sentence passed by the both courts
below, the Revision Petitioner has preferred the present Criminal Revision Case
before this Court.
9. During the pendency of the present Criminal Revision, the parties were
referred to the Mediation and Conciliation Centre attached to this Court, as a
result of which, they have entered into a Settlement Agreement dated
06.04.2026, which is taken on record and the same is extracted hereunder:
“SETTLEMENT AGREEMENT
This settlement agreement entered into on 06th April 2026
between both the parties
1.Disputes and differences has arisen between the parties hereto
and Criminal Revision was filed on 24.10.2025 before Hon’ble
High Court.
2. The matter was referred to mediation vide an order dated
24.10.2025 before Hon’ble High Court, Madras.
3. The parties agreed that D.Palani would act as their
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4. Several meetings were held during the process of Mediation /
Conciliation from 05.11.2025 to 26.03.2026 and the parties have
with the assistance of the Mediator voluntarily arrived at an
amicable solution resolving the above mentioned disputes and
differences.
5. The parties hereto confirm and declare that they have
voluntarily and of their own free will arrived at his Settlement
Agreement in the presence of the Mediator / Conciliator.
6. The following settlement has been arrived at between the parties
hereto:
(a) The first party agreed to pay Rs.12,00,000/- (Rupees
Twelve Lakhs only) towards full and final settlement in the above
case. The 2nd party to received the amount in the following manner.
(b) The first party paid a sum of Rs.10,00,000/- (Ten Lakhs
Only) by way of RTGS through SBI JayaNagar Branch to the
account of second party vide transfer No.SBINR 341240 dated
03.01.2026 and
(c) The first party paid a sum of Rs.80,000/- (Rupees Eighty
thousand only) by IMPS through SBI Jainagar to second party
vide transaction No.607015533494 dated 11.03.2026.
(d) The first party paid a sum of Rs.60,000/- (Sixty thousand
only) by IMPS through SBI Jainagar to second party vide
transaction No.4698294162096 dated 27.03.2026.
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(e) The first party paid a sum of Rs.60,000/-(Rupees Sixty
Thousand only) by IMPS through SBI Jainagar to second party
vide transaction No.608617627277 dated 27.03.2026.
7. By signing this agreement the parties hereto state that they have
no further claims or demands against each other with respect to
Crl.R.C.No.2047 of 2024 connected with C.C.No.3652 of 2019
Fast Track Court, Allikulam (Case No) and all disputes and
differences in this regard have been amicably settled by the parties
hereto through the process of conciliation/mediation.”
10. Learned counsel for the Revision Petitioner further submits that this
court vide order dated 25.11.2024 allowed suspension and sentence and bail to
the petitioner on certain conditions to deposit Rs.7,72,730/-. The learned
counsel submitted that the petitioner deposited the said amount. Subsequently,
by order dated 06.10.2025, the respondent was permitted to withdraw the same.
Again, at the instance of both parties, the matter was referred to the Mediation
and Conciliation Centre attached to this Court. As a result of which, the
Mediation Centre has sent a report dated 09.04.2026, stating that the mediation
has been completed and enclosed a Settlement Agreement dated 06.04.2026.
11. As per the settlement entered into between the petitioner and the
respondent, though the total cheque amount to be paid to the respondent was
Rs.25,75,765/-, the respondent and petitioner have agreed for a settlement of
Rs.12,00,000/- and the respondent was ready to accept Rs.12,00,000/- and
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accordingly, the respondent has received Rs.12,00,000/-. Thus, it was argued by
the learned counsel for the petitioner that the respondent has no objection if this
Court while exercising power under section 147 of the Negotiable Instruments
Act, compound the offence and dispose of this Criminal Revision Case.
12. The learned counsel for the respondent submits that the petitioner and
the respondent have entered into a compromise and as per the terms of
Compromise, he has received Rs.12,00,000/- as full and final payment and no
amount is due. Thus, he submitted that recording the Settlement Agreement,
this Court may compound the offence and dispose of this Criminal Revision
Case.
13. Learned counsel for the Revision Petitioner further submits that the
present Revision has been filed on 21.11.2024 before this Court and on the basis
of change in circumstances, as the parties have entered into Settlement
Agreement filed by both parties, it was prayed to this Court to compound the
offence. It was further argued by the learned counsel for the Revision Petitioner
that this Court has inherent powers to compound the offence, so that, ends of
justice could be secured as the object of Negotiable Instruments Act is primarily
compensatory and not punitive and moreover Section 147 of NI Act would have
an overriding effect on section 320 Cr.P.C., irrespective of which stage, the
parties are compromising with the kind leave of this Hon’ble Court.
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14. In support of his arguments, learned counsel for the Revision
Petitioner has submitted that in the case of Damodar S. Prabhu vs. Sayed
Babalal H reported at 2010 (2) SCC (Cri) 1328, the Hon’ble Apex Court had
formulated the guidelines for compounding the offence under section 138 N.I.
Act wherein in para 21, it was pleased to observe as under :
“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.
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(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.”
15. Learned counsel for the Revision petitioner also submitted that in the
case of M/s Meters and Instruments Private Limited and another vs. Kanchan
Mehta reported at 2017 (7) Supreme 558, the Hon’ble the Apex Court in para
18, was pleased to observe as under :
i) Offence under Section 138 of the Act is primarily a civil
wrong. Burden of proof is on accused in view presumption
under Section 139 but the standard of such proof is
“preponderance of probabilities”. The same has to be
normally tried summarily as per provisions of summary trial
under the Cr.P.C. but with such variation as may be
appropriate to proceedings under Chapter XVII of the Act.
Thus read, principle of Section 258 Cr.P.C. will apply and the
Court can close the proceedings and discharge the accused
on satisfaction that the cheque amount with assessed costs
and interest is paid and if there is no reason to proceed with
the punitive aspect.
(ii)The object of the provision being primarily compensatory,
punitive element being mainly with the object of enforcing the
compensatory element, compounding at the initial stage has
to be encouraged but is not debarred at later stage subject to
appropriate compensation as may be found acceptable to the
parties or the Court.
(iii)Though compounding requires consent of both parties,
even in absence of such consent, the Court, in the interests of
justice, on being satisfied that the complainant has been duly
compensated, can in its discretion close the proceedings and
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discharge the accused.
(iv)Procedure for trial of cases under Chapter XVII of the Act
has normally to be summary. The discretion of the Magistrate
under second proviso to Section 143, to hold that it was
undesirable to try the case summarily as sentence of more
than one year may have to be passed, is to be exercised after
considering the further fact that apart from the sentence of
imprisonment, the Court has jurisdiction under Section
357(3) Cr.P.C. to award suitable compensation with default
sentence under Section 64 IPC and with further powers of
recovery under Section 431 Cr.P.C. With this approach,
prison sentence of more than one year may not be required in
all cases.
(v) Since evidence of the complaint can be given on affidavit,
subject to the Court summoning the person giving affidavit
and examining him and the bank’s slip being prima facie
evidence of the dishonor of cheque, it is unnecessary for the
Magistrate to record any further preliminary evidence. Such
affidavit evidence can be read as evidence at all stages of
trial or other proceedings. The manner of examination of the
person giving affidavit can be as per Section 264 Cr.P.C. The
scheme is to follow summary procedure except where
exercise of power under second proviso to Section 143
becomes necessary, where sentence of one year may have to
be awarded and compensation under Section 357(3) is
considered inadequate, having regard to the amount of the
cheque, the financial capacity and the conduct of the accused
or any other circumstances’.
16. Learned counsel for the Revision Petitioner further has relied upon
the judgment of Gujarat High Court in the case of Kripal Singh Pratap Singh
Ori vs. Salvinder Kaur Hardip Singh reported at 2004 Crl. L. J. 3786 wherein,
the Gujarat High Court was pleased to observe as under:-
31. In the circumstances, it is hereby declared that the
compromise arrived between the parties to this litigation out of
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CRL RC No. 2047 of 2024court is accepted as genuine and the order of conviction and
sentence passed by the learned JMFC, Vadodara and confirmed
in appeal by the learned Sessions Judge, Fast Track Court,
Vadodara, therefore, on the given set of facts are hereby
quashed and set aside as this court intends, otherwise to secure
the ends of justice as provided under section 482 Cr.P.C.
Obviously the order disposing Revision Application would not
have any enforceable effect.”
17. Learned counsel for the Revision Petitioner has also relied upon the
judgment of Hon’ble the Apex Court in the case of Vinay Devanna Nayak vs.
Ryot Seva Sahkari Bank Limited reported at AIR 2008 SC 716 wherein the
Hon’ble Apex Court was pleased to observe as under :
“18. Taking into consideration even the said provision
(Section 147) and the primary object underlying Section
138, in our judgment, there is no reason to refuse
compromise between the parties. We, therefore, dispose of
the appeal on the basis of the settlement arrived at between
the appellant and the respondent.
19. For the foregoing reasons the appeal deserves to be
allowed and is accordingly allowed by holding that since the
matter has been compromised between the parties and the
amount of Rs.45,000/- has been paid by the appellant
towards full and final settlement to the respondent-bank
towards its dues, the appellant is entitled to acquittal. The
order of conviction and sentence recorded by all courts is set
aside and he is acquitted of the charge levelled against him.”
18. Learned counsel for the Revision Petitioner has argued that the law
regarding compounding of offences under the N.I. Act is very clear and is no
more resintegra and the offences under the N.I. Act can be compounded even at
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any stage of the proceedings. He submits that in terms of the aforesaid law laid
down by the Hon’ble Supreme Court, the parties may be permitted to compound
the offence and the conviction of the petitioner be set aside.
19. I have heard the learned counsel for the Revision Petitioner as well as
the learned counsel for the respondent and perused the materials placed on
record.
20. Considering the facts as narrated above, the following question arose
for consideration.
‘Whether the order passed by the Appellate Court confirming the
conviction of the trial court under section 138 of Negotiable
Instruments Act can be nullified by the High Court on the basis of
compromise entered between the parties’
21. Before answering the aforesaid question as framed, I shall examine
the relevant provision of the Cr.P.C., as well as the Negotiable Instrument Act. I
may extract Section 320 of Cr.P.C., and section 147 of Negotiable Instruments
Act.
Section 320 Cr.P.C. – Compounding of Offences –
1) The offences punishable under the sections of the Indian
Penal Code (45 of 1860), specified in the first two columns of
the Table next following may be compounded by the persons
mentioned in the third column of that Table –
2) The offences punishable under the Sections of the Indian
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Penal Code (45 of 1860), specified in the first two columns of
the Table next following may, with the permission of the
Court before which any prosecution for such offence is
pending be compounded by the persons mentioned in the third
column of that Table –
3) When any offence is compoundable under this section, the
abetment of such offence or an attempt to commit such
offence (when such attempt is itself an offence) may be
compounded in like manner.
4) (a) When the person who would otherwise be competent to
compound an offence under this section is under the age of
eighteen years or is an idiot or a lunatic, any person
competent to contract on his behalf may, with the permission
of the Court, compound such offence.
(b) When the person who would otherwise be competent to
compound an offence under this section is dead, the legal
representative, as defined in the Code of Civil Procedure,
1908 (5 of 1908) of such person may, with the consent of the
Court, compound such offence.
5) When the accused has been committed for trial or when he
has been convicted and an appeal is pending, no composition
for the offence shall be allowed without the leave of the Court
to which he is committed, or as the case may be, before which
the appeal is to be heard.
6) A High Court or Court of Session acting in the exercise of
its powers of revision under Section 401 may allow any
person to compound any offence which such person is
competent to compound under this section.
7) No offence shall be compounded if the accused is, by
reason of a previous conviction, liable either to enhanced
punishment or to a punishment of a different kind for such
offence.
8) The composition of an offence under this section shall have
the effect of an acquittal of the accused with whom the offence
has been compounded.
9) No offence shall be compounded except as provided by this
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section.
Section 147 of the Negotiable Instrument Act :’
“Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), every offence punishable under
this Act shall be compoundable.”
21. I have to refer the Settlement Agreement which is on the record for
proper adjudication:-
“SETTLEMENT AGREEMENT
This settlement agreement entered into on 06th April 2026
between both the parties
1.Disputes and differences has arisen between the parties hereto
and Criminal Revision was filed on 24.10.2025 before Hon’ble
High Court.
2. The matter was referred to mediation vide an order dated
24.10.2025 before Hon’ble High Court, Madras.
3. The parties agreed that D.Palani would act as their
Mediator/Conciliator.
4. Several meetings were held during the process of Mediation /
Conciliation from 05.11.2025 to 26.03.2026 and the parties have
with the assistance of the Mediator voluntarily arrived at an
amicable solution resolving the above mentioned disputes and
differences.
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5. The parties hereto confirm and declare that they have
voluntarily and of their own free will arrived at his Settlement
Agreement in the presence of the Mediator / Conciliator.
6. The following settlement has been arrived at between the parties
hereto:
(a) The first party agreed to pay Rs.12,00,000/- (Rupees
Twelve Lakhs only) towards full and final settlement in the above
case. The 2nd party to received the amount in the following manner.
(b) The first party paid a sum of Rs.10,00,000/- (Ten Lakhs
Only) by way of RTGS through SBI JayaNagar Branch to the
account of second party vide transfer No.SBINR 341240 dated
03.01.2026 and
(c) The first party paid a sum of Rs.80,000/- (Rupees Eighty
thousand only) by IMPS through SBI Jainagar to second party
vide transaction No.607015533494 dated 11.03.2026.
(d) The first party paid a sum of Rs.60,000/- (Sixty thousand
only) by IMPS through SBI Jainagar to second party vide
transaction No.4698294162096 dated 27.03.2026.
(e) The first party paid a sum of Rs.60,000/-(Rupees Sixty
Thousand only) by IMPS through SBI Jainagar to second party
vide transaction No.608617627277 dated 27.03.2026.
7. By signing this agreement the parties hereto state that they
have no further claims or demands against each other with
respect to Crl.R.C.No.2047 of 2024 connected with C.C.No.3652
of 2019 Fast Track Court, Allikulam (Case No) and all disputes
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and differences in this regard have been amicably settled by the
parties hereto through the process of conciliation/mediation.”
22. It is well settled that inherent power of the Court can be exercised
only when no other remedy is available to the litigants and nor a specific
remedy as provided by the statute. It is also well settled that if an effective,
alternative remedy is available, the High Court will not exercise its inherent
power, especially when the Revision Petitioner may not have availed of that
remedy. The power can be exercised by the High Court to secure the ends of
justice, prevent abuse of the process of any court and to make such orders as
may be necessary to give effect to any order under this Code or Act, depending
upon the facts of the given case. This Court can always take note of any
miscarriage of justice and prevent the same by exercising its power. These
powers are neither limited, nor curtailed by any other provision of the Code or
Act. However, such inherent powers are to be exercised sparingly and with
caution
23. In the instant case, it is true that the appeal was dismissed and the
conviction and sentence was upheld by the appellate court, but it cannot be lost
sight of the fact that this Court has power to intervene in exercise of its power
only with a view to do the substantial justice or to avoid a miscarriage and the
spirit of compromise arrived at between the parties. This is perfectly justified
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and legal too.
24. I have considered the judgments cited by the learned counsel for the
Revision Petitioner as well as the other decisions of the Hon’ble Apex Court and
I do not think it necessary to enlist those decisions which are taken into
consideration for the purpose of the present proceedings.
25. In the instant case, the Revision Petitioner is invoking the inherent
power of this court after dismissal of the appeal confirming his conviction and
sentence. In these circumstances, I have to examine as to whether for
entertaining the aforesaid case, any special circumstances are made out or not,
so it can be legitimately argued and inferred and held that in all cases where the
Revision Petitioner is able to satisfy this Court that there are special
circumstances which can be clearly spelt out subsequent proceeding invoking
inherent power of this court can be modified and cannot be thrown away on that
technical argument as to its sustainability once the contesting parties entered
into subsequent compromise.
26. In the case of Krishan Vs. Krishnaveni, reported in (1997) 4 SCC
241, Hon’ble the Apex Court has held that though the inherent power of the
High Court is very wide, yet the same must be exercised sparingly and
cautiously particularly in a case where the applicant is shown to have already
invoked the revisional jurisdiction under section 397 of the Code. Only in cases
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where the High Court finds that there has been failure of justice or misuse of
judicial mechanism or procedure, sentence or order was not correct, the High
Court may in its discretion prevent the abuse of process or miscarriage of justice
by exercising its power.
27. In the case of S.W. Palankattkar & others Vs. State of Bihar, 2002
(44) ACC 168, it has been held by the Hon’ble Apex Court that quashing of the
criminal proceedings is an exception than a rule. The inherent powers of the
High Court itself envisages three circumstances under which the inherent
jurisdiction may be exercised:-(i) to give effect an order under the Code, (ii) to
prevent abuse of the process of the court ; (iii) to otherwise secure the ends of
justice. The power of High Court is very wide but should be exercised very
cautiously to do real and substantial justice for which the court alone exists.
28. For adjudicating the instant case, the facts as stated herein above are
very relevant. Here, the Revision Petitioner has attempted to invoke the
jurisdiction of this court.
29. I am not in agreement that when the adjudication of a criminal
offence has reached to the state of revisional level, there cannot be any
compromise without permission of the court in all case including the offence
punishable under ‘N.I. Act‘ or the offence mentioned in Table-1 (one) can be
compounded only if High Court or Court of Sessions grants permission for such
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purpose. The Court presently, concerned with an offence punishable under ‘N.I.
Act‘.
30. It is evident that the permissibility of the compounding of an offence
is linked to the perceived seriousness of the offence and the nature of the
remedy provided. On this point I can refer to the following extracts from an
academic commentary [Cited from : K.N.C. Pillai, R.V. Kelkar’s Criminal
Procedure, 5th Edition :
“17.2 – compounding of offences – A crime is essentially a
wrong against the society and the State. Therefore, any
compromise between the accused person and the individual
victim of the crime should not absolve the accused from
criminal responsibility. However, where the offences are
essentially of a private nature and relatively not quite serious,
the Code considers it expedient to recognize some of them as
compoundable offences and some others as compoundable only
with the permission of the court…”
31. Section 147 of NI Act begins with a non obstante clause and such
clause is being used in a provision to communicate that the provision shall
prevail despite anything to the contrary in any other or different legal
provisions. So, in light of the compass provided, a dispute in the nature of
complaint under section 138 of N.I. Act, can be settled by way of
compromise irrespective of any other legislation including Cr.P.C. In
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general and section 320 (1)(2) or (6) of the Cr.P.C. in particular. The
scheme of section 320 Cr.P.C. deals mainly with procedural aspects; but it
simultaneously crystallizes certain enforceable rights and obligation.
Hence, this provision has an element of substantive legislation and
therefore, it can be said that the scheme of section 320 does not lay down
only procedure; but still, the status of the scheme remains under a general
law of procedure and as per the accepted proposition of law, the special law
would prevail over general law. For the sake of convenience, I would like to
quote the observations of Hon’ble the Apex Court in the case of Municipal
Corporation, Indore vs. Ratnaprabha reported in (AIR 1977 SC 308) which
reads as under :
“As has been stated, clause (b) of section 138 of the Act
provides that the annual value of any building shall
“notwithstanding anything contained in any other law for the
time being in force” be deemed to be the gross annual rent for
which the building might “reasonably at the time of the
assessment be expected to be let from year to year” While
therefore, the requirement of the law is that the reasonable
letting value should determine the annual value of the building,
it has also been specifically provided that this would be so
“notwithstanding anything contained in any other law for the
time being in force”. It appears to us that it would be a proper
interpretation of the provisions of clause (b) of Section 138 of
the Act to hold that in a case where the standard rent of a
building has been fixed under Section 7 of the Madhya
Pradesh Accommodation Control Act, and there is nothing to
show that there has been fraud or collusion, that would be its
reasonable letting value, but, where this is not so, and the
building has never been let out and is being used in a manner
where the question of fixing its standard rent does not arise, it
would be permissible to fix its reasonable rent without regard__________
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Control Act, 1961. This view will, in our opinion, give proper
effect to the non-obstante clause in clause (b) with due regard
to its other provision that the letting value should be
“reasonable”
32. The expression ‘special law’ means a provision of law, which is not
applicable generally but which applies to a particular or specific subject or class
of subjects. Section 41 of Indian Penal Code stands on the same footing and
defines the phrase special law. In this connection I would like to quote the well
accepted proposition of law emerging from various observations made by the
Hon’ble Apex Court in different decisions as a gist of the principle and it can be
summarised as under:
“When a special law or a statute is applicable to a particular
subject, then the same would prevail over a general law with
regard to the very subject, is the accepted principle in the
field of interpretation of statute.”
33. In reference to offence under section 138 of N.I. Act read with
section 147 of the said Act, the parties are at liberty to compound the
matter at any stage even after the dismissal of the revision/appeal. Even a
convict undergoing imprisonment with the liability to pay the amount of
fine imposed by the court and/or under an obligation to pay the amount of
compensation if awarded, as per the scheme of N.I. Act, can compound the
matter. The complainant i.e. person or persons affected can pray to the
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court that the accused, on compounding of the offence may be released by
invoking jurisdiction of this court. If the parties are asked to approach the
Apex Court then, what will be situation, is a question which is required to
be considered in the background of another accepted progressive and
pragmatic principle accepted by our courts that if possible, the parties
should be provided justice at the door step. The phrase “justice at the door
step” has taken the court to think and reach to a conclusion that it can be
considered and looked into as one of such special circumstances for the
purpose of compounding the offence under section 147 of the N. I. Act.
34. It is also well settled that the operation or effect of a general Act may
be curtailed by special Act even if a general Act contains a non obstante clause.
But here is not a case where the language of section 320 Cr.P.C. would come in
the way in recording the compromise or in compounding the offence punishable
under section 138 of the N.I. Act. On the contrary provisions of section 147 of
N.I. Act though starts with a non obstante clause, is an affirmative enactment
and this is possible to infer from the scheme that has overriding effect on the
intention of legislature reflected in section 320 Cr.P.C.
35. Merely because the litigation has reached to a revisional stage or that
even beyond that stage, the nature and character of the offence would not
change automatically and it would be wrong to hold that at revisional stage, the
nature of offence punishable under Section 138 of the N.I. Act should be treated
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as if the same is falling under table-II of Section 320 IPC. I would like to
reproduce some part of the statement of objects and reasons of the Negotiable
Instruments (Amendment & Miscellaneous Provisions) Act, 2002
“The Negotiable Instrument Act 1881 was amended by the
Banking,Public Financial Institutions and Negotiable Instrument
Laws (Amendment) Act, 1988 wherein a new Chapter XVII was
incorporated for penalties in case of dishonour of cheques due to
insufficiency of funds in the account of the drawer of the cheque.
These provisions were incorporated with a view to encourage the
culture of use of cheques and enhancing the credibility of the
instrument. The existing provisions in the Negotiable Instrument
Act, 1981, namely Section 138 to 142 in ChapterXVII have been
found deficient in dealing with dishonour of cheques. Notonly the
punishment provided in the Act has proved to be inadequate,
theprocedure prescribed for the courts to deal with such matters
has beenfound to be cumbersome. The Courts are unable to
dispose of such casesexpeditiously in a time bound manner in
view of the procedure contained in the Act.
2. A large number of cases are reported to be pending under
Sections 138 and 142 of the Negotiable Instruments Act in
various courts in the country. Keeping in view the large number
of complaints under the saidAct, pending in various courts, a
Working Group was constituted to review Section 138 of the
Negotiable Instruments Act, 181 and make recommendations as
to what changes were needed to effectively achieve the purpose of
that Section.
3.. ……….…
4. Keeping in view the recommendations of the Standing
Committee on finance and other R/SCR.A/2491/2018 ORDER
representations, it hasbeen decided to bring out, inter alia the
following amendments in theNegotiable Instrument Act 1881,
namely.
(i) xxxxxx
(ii) xxxxxx
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(iii) xxxxxx
(iv) to prescribe procedure for dispensing with preliminary
evidence of
the complainant.
(v) xxxxxx
(vi) xxxxx
(vii) to make the offences under the Act compoundable. …..…
5. xxxxxx
6. The Bill seeks to achieve the above objects.”
36. In a commentary the following observations have been made with
regard to offence punishable under section 138 of the N.I. Act. [ Cited from :
Arun Mohan, Some thoughts towards law reforms on the topic of Section 138
Negotiable Instrument Act -Tackling an avalanche of cases] :
“… … Unlike that for other forms of crime, the punishment here
(in so far as the complainant is concerned) is not a means of
seeking retribution,but is more a means to ensure payment of
money. The complainant’s interest lies primarily in recovering
the money rather than seeing the drawer of the cheque in jail.
The threat of jail is only a mode to ensure recovery. As against
the accused who is willing to undergo a jail term, there is little
available as remedy for the holder of the cheque. If we were to
examine the number of complaints filed which were
‘compromised’ or ‘settled’ before the final judgment on one side
and the cases which proceeded to judgment and conviction on the
other, we will find that the bulk was settled and only a miniscule
number continued.”
37. It is quite obvious that with respect to the offence of dishonour of
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cheques, it is the compensatory aspect of the remedy which should be given
priority over the punitive aspect.
38. So the intention of the legislature and object of enacting “Banking”,
Public Financial Institutions and the Negotiable Instrument Laws (Amended
Act) 1988 and subsequent enactment, i.e., Negotiable Instruments (Amendment
& Miscellaneous Provisions Act 2002 leads this Court to a conclusion that the
offence made punishable under Section 138 of N.I. Act is not only an offence
qua property but it is also of the nature of an economic offence, though not
covered in the list of statutes enacted in reference to Section 468 of Cr.P.C.
Thus, the parties, in reference to offence under Section 138 N.I. Act read with
Section 147 of the said Act are at liberty to compound the matter at any stage
even after the dismissal of the proceedings.
39. In the instant case, the problem herein is with the tendency of litigants
to belatedly choose compounding as a means to resolve their dispute,
furthermore, the arguments on behalf of the Govt. Advocate (crl.side) on the
fact that unlike Section 320 Cr.P.C., Section 147 of the Negotiable Instruments
Act provides no explicit guidance as to what stage compounding can or cannot
be done and whether compounding can be done at the instance of the
complainant or with the leave of the court.
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40. I am also conscious of the view that judicial endorsement of the above
quoted guidelines as given in the case of Damodar S. Prabhu (supra) 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. I have already explained that the scheme contemplated under Section
320 of the Cr.P.C. cannot be followed in the strict sense.
41. In view of the aforesaid discussion, the parties, in reference to offence
under Section 138 N.I. Act read with Section 147 of the said Act are at liberty to
compound the matter at any stage. The complainant i.e. the person or persons
affected can pray to the court that the accused, on compounding of the offence
may be released by invoking inherent jurisdiction of this Court.
42. Generally, the powers available would not have been exercised when
a statutory remedy under the law is available, however, considering the peculiar
set of facts and circumstances it would not be in the interest of justice to
relegate the parties to the court. Additionally when both the parties have
invoked the jurisdiction of this Court and there is no bar on exercise of powers
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and the inherent powers of this court can always be invoked for imparting
justice and bringing a quietus to the issue between the parties.
43. As discussed above, the court is inclined to hold accordingly only
because there is no formal embargo in section 147 of the N.I. Act. This
principle would not help any convict in any other law where other applicable
independent provisions are existing as the offence punishable under section 138
of the N.I. Act is distinctly different from the normal offences made punishable
under Chapter XVII of IPC (i.e. the offences qua property).
44. In view of the observations and in view of the guidelines as laid down
in the case of Damodar S. Prabhu (Supra) and also in view of the
observations made in the judgment referred above and taking into account the
fact that the parties have settled the dispute amicably by way of compromise,
this Court is of the view that the compounding of the offence as required to be
permitted.
45. Accordingly, the present Criminal Revision Case is disposed of in
terms of Settlement Agreement arrived at between the parties to this litigation
out of Court. The Settlement Agreement dated 09.04.2026 is taken on record.
The impugned conviction and sentence passed in C.A.No.632 of 2023 dated
19.06.2024 on the file of Principal Sessions Judge, Chennai, confirming the
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order of the Trial Court in CC.No.3652 of 2019 dated 12.09.2023 are hereby
modified. The conviction and sentence under section 138 of the Negotiable
Instruments Act in CC.No.3652 of 2019 stands anulled as this Court intends,
otherwise to secure the ends of justice. The Revision Petitioner shall be treated
as acquitted on account of compounding of the offence with the
complainant/person affected.
46. Office is directed to communicate this order to the learned trial court
concerned immediately.
47. In the result,
The Criminal Revision Case is disposed of in terms of Settlement
Agreement dated 06.03.2026.
The impugned conviction and sentence passed in C.A.No.632 of
2023, dated 19.06.2024 by the learned Principal Sessions Judge,
Chennai, confirming the conviction and sentence made in
C.C.No.3652 of 2019, dated 12.09.2023 by the learned
Metropolitan Magistrate, Fast Track Court-II, Egmore, Allikulam
are hereby modified.
The conviction and sentence imposed on the Revision Petitioner
by both the courts below stands anulled. The Revision Petitioner
shall be treated as acquitted on account of the compounding of
the offence.
06-07-2026
Index: Yes
Speaking order
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Neutral Citation: Yes
GSA
To
1.The Principal Sessions Judge,
Chennai.
2.The Metropolitan Magistrate,
FTC-II Egmore at Allikulam,
Chennai.
3.The Public Prosecutor,
Madras High Court.
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SHAMIM AHMED J.
GSA
CRL RC No. 2047 of 2024
06-07-2026
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