No Compounding Without Consent, ₹50K Not Enough Compensation: Himachal Pradesh High Court Rejects Plea to Quash Cheque Bounce Case

Court cannot reward dishonesty or accept minimal payment as justice after 21 years of litigation”— In a firm refusal to permit misuse of judicial process in cheque bounce litigation, the Himachal Pradesh High Court dismissed a plea filed by Kusum Raj to compound an offence under Section 138 of the Negotiable Instruments Act, 1881 without the consent of the complainant, despite partial deposit of compensation. The Court ruled that mere deposit of ₹50,000 against a cheque of ₹1.65 lakh after over two decades cannot qualify as adequate restitution, and that compounding cannot be forced without the complainant’s agreement.
Justice Rakesh Kainthla, deciding Criminal Revision No. 137 of 2012, observed: “If the contention of the applicant is accepted, it would mean that the accused can drag the complainant to different Courts and, after failing, ask the Court to quash proceedings simply by depositing some amount. This can never be the law.”
Cheque Dated March 2004 Still Unresolved; Court Criticizes Delay and Partial Payment
The cheque in question, amounting to ₹1,65,525, was issued on March 17, 2004. Twenty-one years later, the accused had deposited only ₹50,000, prompting a prayer under Section 147 of the NI Act read with Section 482 CrPC to compound the offence.
The complainant, however, refused consent, contesting both the maintainability of the application and the insufficiency of the compensation. The High Court noted that compounding under Section 147 NI Act is not an absolute right, but depends on mutual agreement.
The Court declared: “Section 147 of the NI Act cannot override the principle that compounding requires the ‘consent’ of the complainant. That fundamental safeguard cannot be done away with.”
“Equity Cannot Trump Law”: Supreme Court Precedents Leave No Doubt
Justice Kainthla relied heavily on precedents, including the Supreme Court’s authoritative ruling in JIK Industries Ltd. v. Amarlal Jumani (2012) 3 SCC 255, which held that consent is mandatory for compounding offences under Section 138 of the NI Act. The Court reiterated that: “There is no statutory procedure under the NI Act for compounding without consent. Reading Section 147 in a way that circumvents this would leave the process totally unguided, and that’s impermissible.”
The Court further invoked the recent 2024 ruling in Raj Reddy Kallem v. State of Haryana, in which the Supreme Court, even while acknowledging that full compensation had been paid, still held that refusal of consent by the complainant blocks compounding.
Even the earlier decision in Kanchan Mehta v. Meters & Instruments Pvt. Ltd.—which permitted closure of proceedings where full compensation had been paid—was clarified in subsequent rulings as not a good law, unless backed by consent or constitutional powers of the Supreme Court under Article 142.
Court Calculates True Compensation—Over ₹3.12 Lakhs After 21 Years
In a pointed calculation, the High Court applied the formula laid down in Kalamani Tex v. P. Balasubramanian (2021) 5 SCC 283, which directs courts to impose compensation up to twice the cheque amount with 9% simple interest per annum.
The Court found that: “21 years and 17 days have elapsed since the cheque was issued. The interest component alone amounts to ₹3,12,842. A mere deposit of ₹50,000 cannot be termed ‘adequate compensation’ under any stretch of law or equity.”
The Court also noted the complainant’s long journey through the Trial Court, Appellate Court, and now the High Court, incurring litigation costs. It held that justice requires fair compensation, not symbolic or token payments.
No Power to Quash Complaint Without Consent Under Section 482 CrPC
While rejecting the plea to use inherent powers under Section 482 CrPC to close the case, the Court emphasized that the High Court’s jurisdiction cannot mimic the Supreme Court’s powers under Article 142.
Justice Kainthla held: “This Court cannot assume a discretion that belongs only to the Supreme Court. The Constitution has not conferred that power upon the High Courts. The jurisdiction of the High Court is limited by binding precedent.”
As a result, the application for compounding was dismissed and the Court directed that the criminal revision be listed for final hearing in due course, reaffirming that justice must follow legal procedure, not be circumvented by half-hearted payments or delay tactics.
The High Court concluded: “Giving premium to dishonesty would not only disadvantage the complainant but also clog the dockets of Courts unnecessarily. The application fails and stands dismissed.”

Date of Decision: April 3, 2025