Consent of Complainant Is Mandatory for Compounding Offence Under Section 138 NI Act: Punjab & Haryana High Court

“An offence under Section 138 of the NI Act can be compounded only with the consent of the complainant — this position is no longer res integra.” - Punjab and Haryana High Court refused to interfere with the trial court’s order rejecting an application for compounding of offence under Section 138 of the Negotiable Instruments Act, 1881. Justice Harpreet Singh Brar held that the complainant’s consent is an essential prerequisite for compounding and that the petitioner cannot invoke Section 147 of the NI Act in isolation to override this statutory requirement. The Court further noted that the application was moved more than twelve years after the filing of the complaint, and the complainant was well within their right to withhold consent.

“The question whether the offence under Section 138 of the NI Act could be compounded without consent of the complainant is no longer res integra.”

The petition arose from dishonour of two cheques dated 1st January 2013, amounting to ₹3,00,000 and ₹4,61,314, issued by petitioner No.2 on behalf of M/s Stanely Products in discharge of a liability owed to Vee Kay Concast Pvt. Ltd. The respondent served a legal notice on 17th January 2013, but the amount remained unpaid. A complaint was accordingly filed under Section 138 of the NI Act.

In 2025, more than a decade later, the petitioners approached the trial court seeking compounding of the offence by offering to pay the cheque amount along with interest. The application was rejected by the Judicial Magistrate, leading to the present revision before the High Court.

“Though compounding requires consent of both parties, even in absence of such consent, the court, in the interest of justice, may close the proceedings — however, this view was later held to be not a good law.”

Justice Harpreet Singh Brar held that while Section 147 of the NI Act declares offences under the Act to be compoundable, the requirement of complainant’s consent remains indispensable. The Court observed:

“While Section 138 of NI Act allows compounding of the offence, it is no longer res integra that compounding requires the complainant’s consent, and the Court cannot compel the complainant to agree to it.”

The High Court relied heavily on the Supreme Court’s ruling in A.S. Pharma Pvt. Ltd. v. Nayati Medical Pvt. Ltd., 2025 (1) RCR (Criminal) 714, where the Apex Court held: “An offence under Section 138 of the NI Act could be compounded under Section 147 thereof, only with the consent of the complainant concerned.”

It also examined earlier precedents such as JIK Industries Ltd. v. Amarlal Jumani [(2012) 3 SCC 255], where the Supreme Court clarified: “Quashing of a case is different from compounding. In quashing, the Court applies it; but in compounding, it is primarily based on consent of the injured party. Therefore, the two cannot be equated.”

Furthermore, the Court took note of the Constitution Bench’s decision in Expeditious Trial of Cases under Section 138 NI Act, In re [(2021) 16 SCC 116], which overruled the view expressed in Kanchan Mehta v. Kanchan Mehta [(2018) 1 SCC 560], where the Court had allowed closure of cases even without consent if compensation had been paid.

In light of these decisions, the High Court held: “The learned counsel for the petitioner has not been able to indicate any perversity in the impugned order… the petition is hereby dismissed.”

Reinforcing the principle that compounding is consensual and cannot be imposed, the Punjab and Haryana High Court declined to interfere with the trial court’s refusal to allow compounding after a twelve-year delay. The ruling reiterates that Section 147 of the NI Act does not override the basic tenet of consent in compounding criminal offences and affirms that quashing and compounding are fundamentally distinct remedies under criminal jurisprudence.

Date of Decision: 8th April 2025