Khub Ram V. Union Bank of India

CRMP/2106/2023

AI Insights

The case revolves around a loan default by Khub Ram, who had availed a term loan from Union Bank of India. To settle his dues, he issued a cheque which was dishonored due to insufficient funds, leading to legal proceedings under Section 138 of the NI Act. After being convicted and facing multiple appeals, Khub Ram filed a petition under Section 482 Cr.P.C. to recall the judgment due to a subsequent settlement with the Bank under an OTS scheme. The Bank, having received the dues, did not object to the quashing of the conviction. The court, referencing Supreme Court precedents, allowed the compounding of the offence, leading to the acquittal of Khub Ram.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 800306 (HC-HIMACHAL_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 19-10-2023
• Assessment Year: misc
• Other Referred Cases: Damodar S. Prabhu V. Sayed Babalal H., K. Subramanian Vs. R. Rajathi, Kunha Yammed and others vs. State of Kerala and others
• Laws Referred To: Code of Criminal Procedure, Negotiable Instruments Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANJAY DALMIA
• Assessee Lawyers: AMAN SHARMA
• Keywords: Cheque Dishonor; Compounding of Offence; Legal Notice; Loan repayment; Settlement
• Section: 147; 138; 401; 482; 397

Judgement Text

" 1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MP No. 2106 of 2023 in Cr. Revision No. 237 of 2017 Decided on: 19.10.2023 ________________________________________________ Khub Ram ....Petitioner Versus Union Bank of India …Respondent Coram The Hon’ble Mr. Justice Sushil Kukreja, Judge. Whether approved for reporting?1 For the petitioner: Mr. Aman Parth Sharma, Advocate. For the respondent: Mr. Sanjay Dalmia, Advocate. ________________________________________________ Sushil Kukreja, Judge (oral) The instant petition has been filed by the petitioner/accused under Section 482 of the Code of Criminal Procedure (for short ‘Cr.P.C.’) read with Section 147 of the Negotiable Instruments Act (for short ‘NI Act’) with a prayer to recall and set-aside judgment dated 21.10.2019, passed by this Court, in Criminal Revision No.237 of 2017, titled as Khub Ram vs. Union Bank of India. 2. The brief facts, giving rise to the present petition, can succinctly be summarized as under: 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 2(a). The petitioner-accused availed loan (Term loan) of Rs.3,40,000/- on 01.12.2007 from the complainant/respondent (hereinafter referred to as the complainant-Bank) and the said loan was to be paid as per the terms and conditions of the agreement, which was executed by the petitioner-accused. The petitioner-accused, in order to liquidate his outstanding loan liability towards the complainant-Bank, issued a cheque, amounting to Rs.3,49,364/-. However, the aforesaid cheque, on being presented for encashment, was dishonored with the remarks “insufficient funds”. Thereafter, the complainant-Bank served legal notice, dated 26.10.2013, upon the accused, but the same was neither replied nor any payment was made by the petitioner-accused. Resultantly, the complainant-Bank filed a complaint under Section 138 of the NI Act before the learned Trial Court. 2(b). The learned Trial Court after conclusion of the trial convicted the accused under Section 138 of the NI Act and sentenced him to undergo simple imprisonment for a period of four months and to pay a sum of Rs.4,50,000/- as compensation to the complainant-Bank. 3 2(c). Being dissatisfied, the accused/petitioner/convict preferred an appeal before the learned Lower Appellate Court, which was dismissed and the judgment of the learned Trial Court was upheld. Thereafter, the accused/petitioner/convict-Khub Ram approached this Court by filing a criminal revision petition (Cr. Revision No. 237 of 2017) under Section 397 read with Section 401 of Cr.P.C., laying challenge to judgment dated 06.07.2017, passed by the learned Additional Sessions Judge, Kullu, in Criminal Appeal No. 26 of 2017, whereby the judgment of conviction and order of sentence, dated 11.01.2017, passed by the learned Additional Chief Judicial Magistrate, Kullu, H.P., was affirmed. The revision petition, so filed by the petitioner- accused was dismissed by this Court, vide judgment dated 21.10.2019, rendered in Criminal Revision No. 237 of 2017, against the said judgment the petitioner-accused preferred Special Leave Petition (Criminal) No. 21477 of 2021, which was dismissed by the Hon’ble Supreme Court, in limine, vide order dated 18.11.2021. Hence the petitioner-accused preferred the instant application under Section 482 Cr.P.C. read with Section 147 of the NI Act, with a prayer to recall the judgment dated 21.10.2019 passed by this Court. 4 3. Today, the Shri Prajanam Rana, Manager (Law), Union Bank of India, Regional Office Shimla, H.P., is present before this Court and his statement has been recorded and separately placed on the file. 4. In his statement, Shri Prajanam Rana stated that on the basis of the complaint of the respondent-Bank, a complaint under Section 138 of the NI Act was registered against the petitioner-accused before the Court of learned Additional Chief Judicial Magistrate, Kullu, District Kullu, H.P., and vide judgment of conviction/order of sentence dated 11.01.2017, the petitioner-accused was convicted under Section 138 of the NI Act and sentenced to undergo simple imprisonment for a period of four months and also to pay a compensation in the sum of Rs.4,50,000/-, which judgment/order was affirmed by the Court of learned Additional Sessions Judge, Kullu, District Kullu, H.P., vide judgment dated 06.07.2017, further by this Court in Criminal Revision No. 237 of 2017, decided on 21.10.2019 and by the Hon’ble Supreme Court in SLP No. 21477 of 2021. He further stated that now the matter has been settled between the parties and the petitioner-accused has no legal liability towards the respondent-Bank as he has settled the accounts 5 under OTS scheme. He has also stated that in view of the settlement arrived at between the parties, the respondent- Bank has no objection in case the judgment of conviction/order of sentence dated 11.01.2017 and affirmed by the Court of learned Additional Sessions Judge, Kullu, District Kullu, H.P., vide judgment dated 06.07.2017, further by this Court in Criminal Revision No. 237 of 2017, dated 21.10.2019, and by the Hon’ble Supreme Court in SLP No. 21477 of 2021, decided on 18.11.2021, is quashed and set- aside and the petitioner-accused is acquitted of the offence under Section 138 of the NI Act. 5. I have heard the learned counsel for the parties and have also gone through the material available on record. 6. Having taken note of the fact that the petitioner- accused and the complainant-Bank have settled the matter, now the petitioner-accused has no liability towards the complainant-Bank and the complainant has no objection in compounding the offence, therefore, this Court sees no impediment in accepting the prayer made on behalf of the accused-petitioner for compounding of offence while exercising powers under Section 482 of Cr.P.C. read with Section 147 of the NI Act as well as in terms of guidelines 6 issued by the Hon’ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H., (2010) 5 SCC 663, wherein the Hon’ble Apex Court has held as under:- “10. At present, we are of course concerned with Section 147 of the Act, which reads as follows:- “147. Offences to be compoundable– Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this Act shall be compoundable.” At this point, it would be apt to clarify that in view of the non-obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure (hereinafter “CrPC”) will not be applicable in the strict sense since the latter is meant for the specified offences under the Indian Penal Code, 1860. 11. So far as the CrPC is concerned, Section 320 deals with offences which are compoundable, either by the parties without the leave of the court or by the parties but only with the leave of the Court. Sub-section (1) of Section 320 enumerates the offences which 9 are compoundable without the leave of the Court, while subsection (2) of the said section specifies the offences which are compoundable with the leave of the Court. 12. Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 of the CrPC which states that ‘No offence shall be compounded except as provided by this Section’. A bare reading of this provision would lead us to the inference that offences punishable under laws other than the Indian Penal Code also cannot be compounded. However, since Section 147 was inserted by way of 7 an amendment to a special law, the same will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a non obstante clause.” 7. In K. Subramanian Vs. R. Rajathi; (2010) 15 Supreme Court Cases 352, it has been held by the Hon’ble Apex Court that in view of the provisions contained in Section 147 of the Act read with Section 320 of Cr.P.C., compromise arrived at can be accepted even after recording of the judgment of conviction. The relevant portion of the judgment is reproduced as under:- “6. Thereafter a compromise was entered into and the petitioner claims that he has paid Rs. 4,52,289 to the respondent. In support of this claim, the petitioner has produced an affidavit sworn by him on 1.12.2008. The petitioner has also produced an affidavit sworn by P. Kaliappan, Power of attorney holder of R. Rajathi on 1.12.2008 mentioning that he has received a sum of Rs. 4,52,289 due under the dishonoured cheques in full discharge of the value of cheques and he is not willing to prosecute the petitioner. 7. The learned counsel for the petitioner states at the Bar that the petitioner was arrested on 30.7.2008 and has undergone the sentence imposed on him by the trial Court and confirmed by the Sessions Court, the High Court as well as by this Court. The two affidavits sought to be produced by the petitioner as additional documents would indicate that indeed a compromise has taken place between the petitioner and the respondent and the respondent has accepted the compromise offered by the petitioner pursuant to which he has received a sum of Rs.4,52,289. In the affidavit filed by the respondent a prayer is made to permit the petitioner to compound the offence and close the proceedings. 8. Having regard to the salutary provisions of Section 147 of the Negotiable Instruments Act read with Section 320 of the Code of Criminal Procedure, this 8 Court is of the opinion that in view of the compromise arrived at between the parties, the petitioner should be permitted to compound the offence committed by him under Section 138 of the Code.” 8. In Kunha Yammed and others vs. State of Kerala and others; (2000) 6 Supreme Court Cases 359, it has been held by the Hon’ble Apex Court that an order dismissing a Special Leave Petition by a non-speaking order does not result in merger of the impugned order into the order of the Supreme Court. The relevant portion of the aforesaid judgment reads as under: “22. We may refer to a recent decision, by Two- Judges Bench, of this Court in V.M. Salgaocar & Bros. Pvt. Ltd. Vs. Commissioner of Income Tax 2000 (3) Scale 240, holding that when a special leave petition is dismissed, this Court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. What the Court means is that it does not consider it to be a fit case for exercising its jurisdiction under Article 136 of the Constitution. That certainly could not be so when appeal is dismissed though by a nonspeaking order. Here the doctrine of merger applies. In that case the Supreme Court upholds the decision of the High Court or of the Tribunal. This doctrine of merger does not apply in the case of dismissal of special leave petition under Article 136. When appeal is dismissed, order of the High Court is merged with that of the Supreme Court. We find ourselves in entire agreement with the law so stated. We are clear in our mind that an order dismissing a special leave petition, more so when it is by a non- speaking order, does not result in merger of the order impugned into the order of the Supreme Court. 27. A petition for leave to appeal to this Court may be dismissed by a non-speaking order or by a speaking order. Whatever be the 9 phraseology employed in the order of dismissal, if it is a non-speaking order, i.e. it does not assign reasons for dismissing the special leave petition, it would neither attract the doctrine of merger so as to stand substituted in place of the order put in issue before it nor would it be a declaration of law by the Supreme Court under Article 141 of the Constitution for there is no law which has been declared. If the order of dismissal be supported by reasons then also the doctrine of merger would not be attracted because the jurisdiction exercised was not an appellate jurisdiction but merely a discretionary jurisdiction refusing to grant leave to appeal. We have already dealt with this aspect earlier. Still the reasons stated by the Court would attract applicability of Article 141 of the Constitution if there is a law declared by the Supreme Court which obviously would be binding on all the courts and tribunals in India and certainly the parties thereto. The statement contained in the order other than on points of law would be binding on the parties and the court or tribunal, whose order was under challenge on the principle of judicial discipline, this Court being the Apex court of the country. No court or tribunal or parties would have the liberty of taking or canvassing any view contrary to the one expressed by this Court. The order of Supreme Court would mean that it has declared the law and in that light the case was considered not fit for grant of leave. The declaration of law will be governed by Article 141 but still, the case not being one where leave was granted, the doctrine of merger does not apply. The Court sometimes leaves the question of law open. Or it sometimes briefly lays down the principle, may be, contrary to the one laid down by the High Court and yet would dismiss the special leave petition. The reasons given are intended for purposes of Article 141. This is so done because in the event of merely dismissing the special leave petition, it is likely that an argument could be advanced in the High Court that the Supreme Court has to be understood as not to have differed in law with the High Court.” 9. It is quite apparent from the aforesaid exposition of law laid down by the Hon’ble Apex Court that 10 doctrine of merger does not apply in the case of dismissal of special leave petition by a non-speaking order. In the case at hand, special leave to appeal having been filed by the petitioner/applicant has been dismissed in limine by a non- speaking order as such, it does not result in the merger of impugned order into the order of the Hon’ble Supreme Court. 10. Consequently, in view of the detailed discussion made hereinabove as well as law laid down by the Hon’ble Apex Court, this Court holds that petition under Section 482 Cr.P.C. filed after dismissal of Special Leave Petition, praying therein for recalling/modification of judgment dated 21.10.2019, passed by this Court in Criminal Revision No.237 of 2017, is maintainable. 11. Since, in the instant case, the petitioner-accused after being convicted under Section 138 of the Act, has compromised the matter with the complainant-Bank and now there is no legal liability of the petitioner-accused towards the complainant-Bank, prayer for compounding the offence can be accepted in terms of the aforesaid judgments passed by the Hon’ble Apex Court. 12. Therefore, in view of the detailed discussion made hereinabove as well as law laid down by the Hon’ble 11 Apex Court, the petition is allowed and matter is ordered to be compounded. 13. Accordingly, the impugned judgment of conviction and order of sentence dated 11.01.2017, passed by the learned Additional Chief Judicial Magistrate, Kullu, District Kullu, H.P., in Complaint No. 1566-I/2013/297-I/2015 (old) 836-I/2016/13/836-III/2016/13 (New), affirmed by learned Additional Sessions Judge, Kullu, District Kullu, H.P., vide judgment dated 06.07.2017, in Criminal Appeal No. 26 of 2017, and further by this Court in Criminal Revision No. 237 of 2017, vide judgment dated 21.10.2019, is quashed and set-aside. The petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Bail bonds, if any, stand discharged. 14. Undisputedly, the amount of the cheque is Rs.3,49,364/-, however, the learned counsel for the petitioner submitted that the petitioner is a poor person and the imposition of compounding fee may be reduced. 15. In case K. Subramanian vs. R. Rajathi (supra), the Hon’ble Apex Court had issued the guidelines with respect to the imposition of compounding fee, which read as under:- 12 “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 Curt deems fit. (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. ... ... ... ... ... ... ... 25. The graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation. In the status quo, valuable time of the court is spent on the trial of these cases and the parties are not liable to pay any court fee since the proceedings are governed by the Code of Criminal Procedure, even though the impact of the offence is largely confined to the private parties. Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should of course contest the proceedings to their logical end.” 13 16. Therefore, taking into consideration the law laid down by the Hon’ble Apex Court (supra) and the financial condition of the petitioner, as he is a poor person, since the competent Courts can reduce the compounding fee with regard to the specific facts and circumstances of the case, the petitioner is directed to deposit token compounding fee to the extent of 5% of the cheque amount, i.e. Rs. 17,468/- (rupees seventeen thousand four hundred sixty eight), only with the H.P. State Legal Services Authority, Shimla, H.P., within four weeks from today. 17. The petition stands disposed of accordingly, so also the pending miscellaneous application(s), if any. ( Sushil Kukreja ) 19th October, 2023 Judge (virender) "