Complainant’s Interest Primarily in Recovering Money, Not Seeing Drawer in Jail: Bombay High Court Allowed Compounding Offences Under NI Act Without Consent

In a landmark judgment, the Bombay High Court Bench at Nagpur, led by Justice Anil L. Pansare, set a new precedent regarding the compounding of offences under Section 138 of the Negotiable Instruments Act (NI Act). The court, in its profound observation, stated, “Complainant’s interest lies primarily in recovering the money rather than seeing the drawer of the cheque in jail.”

The case, centered around the rejection of a compounding application by the Magistrate, involved multiple applicants, including Anuradha Kapoor, Sanjay Chhabra, Arvind Dham, Gautam Malhotra, Bhavya Sehra, and Sanjay Arora, against the State of Maharashtra and M/s MPM Private Limited.

The applicants, accused of cheque dishonor amounting to Rs. 15 lakhs, sought relief under Section 138 of the NI Act. The High Court’s decision highlighted the intersection of criminal liability with insolvency proceedings, as the accused company was admitted to insolvency and an Interim Resolution Professional was appointed.

Justice Pansare’s ruling emphasized the compensatory over the punitive aspect of the NI Act. “With respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect,” the judgment read.

The court’s decision to set aside the Magistrate’s order for non-compounding of the offence underlines the judicial discretion in compounding offences. It was observed that even in the absence of the complainant’s consent, the court could compound the offence, ensuring the complainant is adequately compensated. This aspect of the judgment is particularly noteworthy as it aligns with the Supreme Court’s guidelines and interpretations in similar cases.

Further, the court made a significant observation regarding piecemeal compromise and compounding, stating that such measures are permissible and can enhance social harmony. The ruling underscored the court’s inherent power under Section 482 of the Code of Criminal Procedure to ensure justice and fairness in legal proceedings.

Date of Decision: 29.11.2023

Anuradha Kapoor and Others  VS State of Maharashtra