Summary
Accused convicted under Section 138 of the Negotiable Instruments Act, 1881 entered, during their revision before the High Court, into a memorandum of understanding with the complainant requiring amicable settlement or arbitration; the complainant failed to file the agreed compromise petition and the Hyderabad High Court confirmed the conviction. The Supreme Court set the conviction aside: the Section 138 offence is primarily a civil wrong made compoundable, as explained in Meters and Instruments v. Kanchan Mehta, the settlement amounted to compounding which the High Court could not override, and the complainant's failure to file the compromise petition withheld key information and led to an unwarranted confirmation. The parties remain free to settle under the memorandum.
Issues
- Whether a conviction under Section 138 of the Negotiable Instruments Act, 1881 can be sustained where the parties, during the pendency of revision, settled the dispute by a memorandum of understanding providing for amicable resolution or arbitration, but the complainant failed to file a compromise petition.
Provisions considered
- Section 138 read with Section 147, Negotiable Instruments Act, 1881The offence is primarily a civil wrong and was made compoundable by the 2002 amendment; a settlement between the parties is nothing but a compounding of the offence which the court cannot override. (¶¶ 8, 9, 10, 11)
Held
- Clause 8 of the memorandum bound the parties to resolve any dispute amicably or by reference to a named sole arbitrator; the complainant was duty bound to file a compromise petition and his failure to do so led to an unwarranted confirmation of the conviction, so the appellants cannot be convicted on the basis of the orders below. (¶¶ 6, 7, 8, 9, 11, 12)
Result
Appeals allowed; order of conviction under Section 138 of the Negotiable Instruments Act, 1881 passed by the trial court and confirmed by the High Court in Criminal Revision Case Nos. 1678 and 1679 of 2014 set aside; parties left free to settle their dispute in terms of the memorandum of understanding.