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2024 DIGILAW 188 (HP)

Dina Nath v. Shankar Dass

2024-03-20

RANJAN SHARMA

body2024
JUDGMENT : RANJAN SHARMA, J. 1. The petitioner, Dina Nath, a convict under Section 138 of the Negotiable Instruments Act, has come up, in this petition under Section 482 of the Code of Criminal Procedure, seeking quashing of the judgments passed by the Learned Chief Judicial Magistrate, Lahaul & Spiti at Kullu [hereinafter referred to as ‘Learned Trial Court’] dated 02.04.2022/12.04.2022 [Annexure P-1], in Complaint No. 211-1 of 2015, titled as Shankar Dass vs. Dina Nath, which was affirmed by the Learned Additional Sessions Judge, Kullu, District Kullu [H.P.] [hereinafter referred to as ‘Learned Appellate Court’] in Criminal Appeal No. 14 of 2022, titled as Dina Nath vs. Shankar Dass, on 08.08.2022 [Annexure P-2]. 2. Consequent upon the conviction and sentence imposed by the Learned Trial Court, which was affirmed by the Learned Appellate Court, the Learned Counsel for the petitioner-accused submits that during the pendency of instant proceedings, the petitioner-accused [Dina Nath], has remitted the entire liability of Rs. 2,80,000/- [Rupees Two Lakh Eighty Thousand] to the respondent-complainant [Shankar Dass], which is borne out from the receipt dated 09.03.2024 [Annexure P-3] and is also corroborated from the statement made by the respondent [Shankar Dass] today in the Court. In this background, the Learned Counsel for the petitioner-accused and the Learned counsel for the Respondent Complainant, jointly submit that once the petitioner has discharged/remitted/liquidated his entire liability therefore, the offence may be compounded and the impugned judgments of conviction and sentence passed by the Learned Trial Court, which stood affirmed by the Learned Appellate Court may kindly be set-aside and the petitioner-accused may kindly be acquitted, so far it relates to accusation/ offence, originating from the cheque in question, in the instant case. 3. Heard Mr. Nand Lal Thakur, learned counsel for the petitioner and Mr. T.S. Chauhan, learned counsel for the respondent No. 1 and Mr. J.K. Sharma, Learned Additional Advocate General, for respondent No. 2. 4. In order to appreciate the controversy involved in the instant case, it is necessary to have a recap of the statutory provisions of Sections 138 and 147 of the Negotiable Instruments Act, as under: “138. Dishonor of cheque for insufficiency, etc. J.K. Sharma, Learned Additional Advocate General, for respondent No. 2. 4. In order to appreciate the controversy involved in the instant case, it is necessary to have a recap of the statutory provisions of Sections 138 and 147 of the Negotiable Instruments Act, as under: “138. Dishonor of cheque for insufficiency, etc. of funds in the account: Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless: (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation - For the purposes of this section “debt of other liability” means a legally enforceable debt or other liability. 147. Explanation - For the purposes of this section “debt of other liability” means a legally enforceable debt or other liability. 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.” (i) In the backdrop of the statutory provisions, since the instant petition has been filed under Section 482 of the Code of Criminal Procedure, therefore, it is necessary to have a look at the relevant provisions of Section 482 of the Code of Criminal Procedure, which reads as under: “482. Saving of inherent power of High Court - Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.” 5. In order to examine the claim of the petitioner -accused, it would be proper to take note of the law dealing with the scope and ambit of compounding of an offence under Section 147 of the Negotiable Instruments Act leading towards acquittal, as mandated by the Hon’ble Supreme Court in K.M. Ibrahim vs. K.P. Mohammed and Another, (2010) 1 SCC 798 , as under: 1. The appellant issued a cheque to the first respondent for an amount of Rs. 95,000/- in discharge of a legally enforceable debt. However, when the cheque was presented by the first respondent to his bank, the same was dishonoured on account of insufficiency of funds in the account of the appellant. The respondent thereupon issued statutory notice to the appellant within the prescribed time limit informing the appellant about the dishonor of the cheque and calling upon him to pay the amount due. 2. Since the appellant failed to pay the amount in time, the respondent filed a complaint before the Chief Judicial Magistrate, Kasargode. Considering the evidence on record, the Trial Court found the accused guilty of the offence with which he had been charged and sentenced him to undergo rigorous imprisonment for a period of one year and to pay a fine of Rs. 1,05,000/- . In default of payment of fine, it was ordered that the appellant would undergo rigorous imprisonment for a further period of three months. 1,05,000/- . In default of payment of fine, it was ordered that the appellant would undergo rigorous imprisonment for a further period of three months. If, however, the fine was realized, directions were given that a sum of Rs. 1,00,000/- should be given to the respondent by way of compensation. 3. Aggrieved by the said judgment, the appellant filed Criminal Appeal No. 74 of 2003. While affirming the conviction, the Appellate Court reduced the sentence to a period of one month and a fine of Rs. 95,000/- . In default of said payment, the appellant was directed to undergo imprisonment for a further period of two months. The said order was challenged before the High Court, which decided the matter in the light of Section 357(3) Cr.P.C. The High Court dismissed the revision against which the present appeal has been filed. 4. At the very initial stage of hearing, a question was raised on behalf of the appellant as to whether an offence under Section 138 of the Negotiable Instruments Act, 1881, could be compounded under Section 147 of the said Act read with Section 320 Cr.P.C. 7. Mr. Rohtagi submitted that the said position had been accepted by this Court in various decisions, such as in the case of O.P. Dholakia vs. State of Haryana and Another, wherein it was held that since the petitioner had already entered into a compromise with the complainant and the complainant had appeared through counsel and stated that the entire money had been received by him and he had no objection if the conviction already recorded under Section 138 of the Negotiable Instruments Act is set aside, the Hon’ble Judges thought it appropriate to grant permission, in the peculiar facts and circumstances of the case, to compound the offence. While doing so, this Court also indicated that necessarily the conviction and sentence under Section 138 of the Act stood annulled. 8. While doing so, this Court also indicated that necessarily the conviction and sentence under Section 138 of the Act stood annulled. 8. The said view has been consistently followed in the case of (1) Anil Kumar Haritwal and Another vs. Alka Gupta and Another, (2) B.C. Seshadri vs. B.N. Suryanarayana Rao decided by a three Judge Bench, (3) G. Sivarajan vs. Little Flower Kuries and Enterprises Ltd. and Another, (4) Kishore Kumar vs. J.K. Corporation Ltd. (5) Sailesh Shyam Parsekar vs. Baban, (6) K. Gyansagar vs. Ganesh Gupta and Another, (7) K.J.B.L. Rama Reddy vs. Annapurna Seeds and Another, (8) Sayeed Ishaque Menon vs. Ansari Naseer Ahmed, (9) Vinay Devanna Nayak vs. Ryot Sewa Sahakari Bank Ltd. wherein some of the earlier decisions have been noticed and (10) Sudheer Kumar vs. Manakkandi M.K. Kunhiraman and Another, which was a decision of a Division Bench of the Kerala High Court, wherein also the issue has been gone into in great detail. 9. The golden thread in all these decisions is that once a person is allowed to compound a case as provided for under Section 147 of the Negotiable Instruments Act, the conviction under Section 138 of the said Act should also be set aside. In the case of Vinay Devanna Nayak (supra), the issue was raised and after taking note of the provisions of Section 320 Cr.P.C. this Court held that since the matter had been compromised between the parties and payments had been made in full and final settlement of the dues of the Bank, the appeal deserved to be allowed and the appellant was entitled to acquittal. Consequently, the order of conviction and sentence recorded by all the courts were set aside and the appellant was acquitted of the charge leveled against him. 9. The object of Section 320 Cr.P.C. which would not in the strict sense of the term apply to a proceeding under the Negotiable Instruments Act, 1881, gives the parties to the proceedings an opportunity to compound offences mentioned in the table contained in the said section, with or without the leave of the court, and also vests the court with jurisdiction to allow such compromise. By virtue of Sub-Section (8), the Legislature has taken one step further in vesting jurisdiction in the Court to also acquit the accused/convict of the offence on the same being allowed to be compounded. By virtue of Sub-Section (8), the Legislature has taken one step further in vesting jurisdiction in the Court to also acquit the accused/convict of the offence on the same being allowed to be compounded. Inasmuch as, it is with a similar object in mind that Section 147 has been inserted into the Negotiable Instruments Act, 1881, by amendment, an analogy may be drawn as to the intention of the Legislature as expressed in Section 320(8) Cr.P.C. although, the same has not been expressly mentioned in the amended section to a proceeding under Section 147 of the aforesaid Act. 14. It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. Accordingly, we find no reason to reject the application under Section 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution. 15. Since the parties have settled their disputes, in keeping with the spirit of Section 147 of the Act, we allow the parties to compound the offence, set aside the judgment of the courts below and acquit the appellant of the charges against him. (i) Likewise, in Meters and Instruments Private Limited and Another vs. Kanchan Mehta, (2018) 1 SCC 560 , the Hon’ble Supreme Court in context of compounding has held as under: “6. The object of introducing Section 138 and other provisions of Chapter XVII in the Act in the year 1988 was to enhance the acceptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonor of cheque with safeguards to prevent harassment of honest drawers. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to amend the Act was brought in, inter alia, to simplify the procedure to deal with such matters. The amendment includes provision for service of summons by speed post/courier, summary trial and making the offence compoundable. 7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. The amendment includes provision for service of summons by speed post/courier, summary trial and making the offence compoundable. 7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. Dishonor of cheque causes incalculable loss, injury and inconvenience to the payee and credibility of business transactions suffers a setback. At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 Amendment specifically made it compoundable. The offence was also described as “regulatory offence.” The burden of proof was on the accused in view of presumption under Section 139 and the standard of proof was of “preponderance of probabilities.” The object of the provision was described as both punitive as well as compensatory. The intention of the provision was to ensure that the complainant received the amount of cheque by way of compensation. Though proceedings under Section 138 could not be treated as civil suits for recovery, the scheme of the provision, providing for punishment with imprisonment or with fine which could extend to twice the amount of the cheque or to both, made the intention of law clear. The complainant could be given not only the cheque amount but double the amount so as to cover interest and costs. Section 357 (1) (b) Cr.P.C. provides for payment of compensation for the loss caused by the offence out of the fine. Where fine is not imposed, compensation can be awarded under Section 357 (3) Cr.P.C. to the person who suffered loss. Sentence in default can also be imposed. The object of the provision is not merely penal but to make the accused honour the negotiable instruments. 18. From the above discussion the following aspects emerge: 18.1. Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on the accused in view of presumption under Section 139 but the standard of such proof is “preponderance of probabilities.” The same has to be normally tried summarily as per provisions of summary trial under Cr.P.C. but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Burden of proof is on the accused in view of presumption under Section 139 but the standard of such proof is “preponderance of probabilities.” The same has to be normally tried summarily as per provisions of summary trial under Cr.P.C. but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of Section 258 Cr.P.C. will apply and the court can close the proceedings and discharge the accused on satisfaction that the cheque amount with assessed costs and interest is paid and if there is no reason to proceed with the punitive aspect. 18.2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the court. 18.3. Though compounding requires consent of both parties, even in absence of such consent, the court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused. 18.4. Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the court has jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C. With this approach, prison sentence of more than one year may not be required in all cases. 18.5. Since evidence of the complaint can be given on affidavit, subject to the court summoning the person giving affidavit and examining him and the bank's slip being prima facie evidence of the dishonour of cheque, it is unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit evidence can be read as evidence at all stages of trial or other proceedings. Such affidavit evidence can be read as evidence at all stages of trial or other proceedings. The manner of examination of the person giving affidavit can be as per Section 264 Cr.P.C. The scheme is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of one year may have to be awarded and compensation under Section 357(3) is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other circumstances. 19. In view of the above, we hold that where the cheque amount with interest and cost as assessed by the Court is paid by a specified date, the Court is entitled to close the proceedings in exercise of its powers under Section 143 of the Act read with Section 258 Cr.P.C. As already observed, normal rule for trial of cases under Chapter XVII of the Act is to follow the summary procedure and summons trial procedure can be followed where sentence exceeding one year may be necessary taking into account the fact that compensation under Section 357(3) Cr.P.C. with sentence of less than one year will not be adequate, having regard to the amount of cheque, conduct of the accused and other circumstances. 20. In every complaint under Section 138 of the Act, it may be desirable that the complainant gives his bank account number and if possible e-mail ID of the accused. If e-mail ID is available with the Bank where the accused has an account, such Bank, on being required, should furnish such e-mail ID to the payee of the cheque. In every summons, issued to the accused, it may be indicated that if the accused deposits the specified amount, which should be assessed by the Court having regard to the cheque amount and interest/cost, by a specified date, the accused need not appear unless required and proceedings may be closed subject to any valid objection of the complainant. If the accused complies with such summons and informs the Court and the complainant by e-mail, the Court can ascertain the objection, if any, of the complainant and close the proceedings unless it becomes necessary to proceed with the case. In such a situation, the accused presence can be required, unless the presence is otherwise exempted subject to such conditions as may be considered appropriate. In such a situation, the accused presence can be required, unless the presence is otherwise exempted subject to such conditions as may be considered appropriate. The accused, who wants to contest the case, must be required to disclose specific defence for such contest. It is open to the Court to ask specific questions to the accused at that stage. In case the trial is to proceed, it will be open to the the provisions of plea bargaining. Subject to this, the trial can be on day to day basis and endeavor must be to conclude it within six months. The guilty must be punished at the earliest as per law and the one who obeys the law need not be held up in proceedings for long unnecessarily.” (ii) Likewise in Madan Tiwari vs. Yashwant Kumar Sahu and Another, 2020 SCC Online 1310, the Hon’ble Apex Court, quashed the conviction and sentence in a case where the parties had arrived at a settlement under the provisions of the Negotiable Instruments Act, read as under: “7. Now, the applicant-appellant has filed an application being Criminal Misc Petition No. 176956 of 2019 seeking modification of the Order dated 27.09.2019 stating therein that the matter has been compromised between the parties. The appellant as per Settlement Agreement dated 05.09.2019 made payment of entire sum of Rs. 3,16,000/- to respondent No. 1-complainant. It has further been stated in the said application that respondent No 1-complainant on his own after having been received a sum of Rs. 3,16,000/- along with Rs. 50,000/- as interest, from the appellant, filed an application under Section 147 of the Negotiable Instruments Act, 1881, for compounding of offence before the Chief Judicial Magistrate, 1st Class, Durg, Chhattisgarh. 8. It has been averred in the above-mentioned application that when the Order dated 27.09.2019 was passed by this Court, the appellant had already paid Rs. 3,16,000/- to respondent No. 1-complainant, vide Settlement Agreement dated 05.09.2019, along with interest amounting to Rs. 50,000 and respondent No. 1 is completely satisfied with the amount received, which he has received wilfully, and he does not wish to continue the proceedings further. 9. Respondent No 1-complainant has also filed an affidavit dated 08.11.2019 stating therein that he does not want to pursue the litigation further qua the appellant, since the matter has been amicably settled between the parties vide Settlement Agreement dated 5.09.2019. 9. Respondent No 1-complainant has also filed an affidavit dated 08.11.2019 stating therein that he does not want to pursue the litigation further qua the appellant, since the matter has been amicably settled between the parties vide Settlement Agreement dated 5.09.2019. It has further been stated in the affidavit that he has received an amount of Rs. 3,16,000/- along with interest of Rs. 50,000/- from the appellant and he has no further claim against the appellant. It has also been stated in the said affidavit that respondent No 1 has entered into the agreement with the appellant out of his own free will and without any coercion or undue pressure from the appellant. 10. Having perused the averments made in Criminal Misc. Petition No. 176956 of 2019 filed by the applicant-appellant, as also the statement made by respondent No 1-complainant in the affidavit dated 08.11.2019, more particularly keeping in view the settlement arrived at between the parties, we hereby allow the applications and set aside the conviction and sentence of two years' rigorous imprisonment with fine of Rs. 5,000/- awarded to the appellant under Section 138 of the Negotiable Instruments Act, 1881 by the trial court as affirmed by the appellate court and the High Court.” (iii) The Hon’ble Apex Court while dealing with the object of the scope of Section 138 and compounding under Section 147 of the Negotiable Instruments Act has held as under in P. Mohanraj and Others vs. Shah Brothers Ispat Private Limited, (2021) 6 SCC 258 in the following terms: “53. A perusal of this judgment in Ishwar Lal Bhagwandas would show that a civil proceeding is not necessarily a proceeding which begins with the filing of a suit and culminates in execution of a decree. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. It would include a revenue proceeding as well as a writ petition filed under Article 226 of the Constitution, if the reliefs therein are to enforce rights of a civil nature. Interestingly, criminal proceedings are stated to be proceedings in which the larger interest of the State is concerned. Given these tests, it is clear that a Section 138 proceeding can be said to be a “civil sheep” in a “criminal wolf’s” clothing, as it is the interest of the victim that is sough to be protected, the larger interest of the State being subsumed in the victim alone moving a court in cheque bouncing cases, as has been seen by us in the analysis made hereinabove of Chapter XVII of the Negotiable Instruments Act. 56. Damodar S. Prabhu vs. Sayed Babalal H. (2010) 5 SCC 663 is an important judgment of three Hon’ble Judges of this Court. This judgment dealt, in particular, with the compounding provision contained in Section 147 of the Negotiable Instruments Act. Setting out the provision, the Court held: “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 “Cr.P.C.”) will not be applicable in the strict sense since the latter is meant for the specified offences under the Penal Code, 1860. 11. So far as Cr.P.C. 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 are compoundable without the leave of the court, while Sub-Section (2) of the said Section specifies the offences which are compoundable with the leave of the court. 12. Sub-Section (1) of Section 320 enumerates the offences which are compoundable without the leave of the court, while Sub-Section (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 Cr.P.C. 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 Penal Code also cannot be compounded. However, since Section 147 was inserted by way of an amendment to a special law, the same will override the effect of Section 320 (9) Cr.P.C. especially keeping in mind that Section 147 carries a non-obstante clause.” *** *** *** 15. The compounding of the offence at later stages of litigation in cheque bouncing cases has also been held to be permissible in a recent decision of this Court, reported as K.M. Ibrahim vs. K.P. Mohammed wherein Kabir, J. has noted: “13. As far as the non-obstante clause included in Section 147 of the 1881 Act is concerned, the 1881 Act being a special statute, the provisions of Section 147 will have an overriding effect over the provisions of the Code relating to compounding of offences. 14. It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the appellate forum. However, Section 147 of the aforesaid Act does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings. Accordingly, we find no reason to reject the application under Section 147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution.” 18. It is quite obvious that with respect to the offence of dishonor of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. 57. The judgment in Damodar S. Prabhu was followed by a Division Bench of this Court in JIK Industries Ltd. vs. Amarlal V. Jumani, (2012) 3 SCC 255 , stating: “68. 57. The judgment in Damodar S. Prabhu was followed by a Division Bench of this Court in JIK Industries Ltd. vs. Amarlal V. Jumani, (2012) 3 SCC 255 , stating: “68. It is clear from a perusal of the aforesaid Statement of Objects and Reasons that offence under the NI Act, which was previously non-compoundable in view of Section 320 Sub-Section (9) of the Code has now become compoundable. That does not mean that the effect of Section 147 is to obliterate all statutory provisions of Section 320 of the Code relating to the mode and manner of compounding of an offence. Section 147 will only override Section 320 (9) of the Code insofar as offence under Section 147 of the NI Act is concerned. This is also the ratio in Damodar. Therefore, the submission of the learned counsel for the appellant to the contrary cannot be accepted.” 60. In R. Vijayan vs. Baby, (2012) 1 SCC 260 , this Court referred to the provisions of Chapter XVII of the Negotiable Instruments Act, observing that Chapter XVII is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. The Court held: “16. We propose to address an aspect of the cases under Section 138 of the Act, which is not dealt with in Damodar S. Prabhu. It is sometimes said that cases arising under Section 138 of the Act are really civil cases masquerading as criminal cases. The avowed object of Chapter XVII of the Act is to “encourage the culture of use of cheques and enhance the credibility of the instrument.” In effect, its object appears to be both punitive as also compensatory and restitutive, in regard to cheque dishonor cases. Chapter XVII of the Act is a unique exercise which blurs the dividing line between civil and criminal jurisdictions. It provides a single forum and single proceeding, for enforcement of criminal liability (for dishonoring the cheque) and for enforcement of the civil liability (for realization of the cheque amount) thereby obviating the need for the creditor to move two different fora for relief.......... 17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under Section 357 (1)(b) of the Code. 17. The apparent intention is to ensure that not only the offender is punished, but also ensure that the complainant invariably receives the amount of the cheque by way of compensation under Section 357 (1)(b) of the Code. Though a complaint under Section 138 of the Act is in regard to criminal liability for the offence of dishonoring the cheque and not for the recovery of the cheque amount (which strictly speaking, has to be enforced by a civil suit), in practice once the criminal complaint is lodged under Section 138 of the Act, a civil suit is seldom filed to recover the amount of the cheque. This is because of the provision enabling the court to levy a fine linked to the cheque amount and the usual direction in such cases is for payment as compensation, the cheque amount, as loss incurred by the complainant on account of dishonour of cheque, under Section 357(1)(b) of the Code and the provision for compounding the offences under Section 138 of the Act. Most of the cases (except those where liability is denied) get compounded at one stage or the other by payment of the cheque amount with or without interest. Even where the offence is not compounded, the courts tend to direct payment of compensation equal to the cheque amount (or even something more towards interest) by levying a fine commensurate with the cheque amount. A stage has reached when most of the complainants, in particular the financing institutions (particularly private financiers) view the proceedings under Section 138 of the Act, as a proceeding for the recovery of the cheque amount, the punishment of the drawer of the cheque for the offence of dishonour, becoming secondary.” 6. While dealing with the similar issue, in the of the Act, in the context of Section 147 of the coordinate bench of this Court has held in Devinder Kewla vs. Rakesh Kumar, 2023 SCC Online HP 322, as under: “6. While dealing with the similar issue, in the of the Act, in the context of Section 147 of the coordinate bench of this Court has held in Devinder Kewla vs. Rakesh Kumar, 2023 SCC Online HP 322, as under: “6. Having taken note of the fact that entire amount of compensation stands paid to the respondent-complainant and respondent/complainant has no objection in compounding the offence, this Court sees no impediment in accepting the prayer made on behalf of the petitioner for compounding of offence while exercising power under Section 147 of the Act as well as in terms of guidelines issued by the Hon'ble Apex Court in Damodar S. Prabhu vs. Sayed Babalal H. (2010) 5 SCC 663 . 7. Consequently, in view of the above, order dated 18.8.2022, is quashed and set-aside and offence alleged to have been committed by the petitioner under Section 138 of the Act is ordered to be compounded. The petitioner-accused is acquitted of the charge framed against him under Section 138 of the Act. Since respondent-complainant was unnecessarily compelled to institute the legal proceedings against the accused that too for realization of his own money, this court deems it fit to direct the accused to pay sum of Rs. 10,000/- to the respondent as litigation cost, payable within three weeks. Ordered accordingly. It is made clear that in case, aforesaid amount of Rs. 10,000/- is not paid within the time stipulated by this court, accused besides rendering himself liable for penal consequences would also invite contempt proceedings.” 7. In the background, of the facts of the instant case and the statutory provisions and the mandate of the Hon’ble Supreme Court, in cases of Kanchan Mehta, Madan Tiwari and P. Mohanraj [supra], once the proceedings under Section 138 have been held to be proceedings in the form of a civil sheep in a criminal wolf’s clothing, therefore, once during the pendency of these proceedings, once the petitioner has settled or liquidated or discharged his liability, therefore, even though, the proceedings under Section 138 of the Negotiable Instrument Act have a tinge of criminal liability, yet, on settling the entire liability; the parties can seek invocation of the principle of “compounding of offence”, in view of Section 147 of the Negotiable Instruments Act, for the reason that compounding of an offence, on discharge of liability is certainly a step towards securing the ends of justice. It is relevant to observe that once the Respondent-Complainant, who had initiated the proceedings under Section 138 of the Negotiable Instruments Act, 1881, has received his cake then, no useful purpose will be achieved in continuing the criminal proceedings, against the accused-petitioner who has discharged/liquidated his liability, in relation to the alleged cheque in question, which had led to the institution of the alleged complaint and the alleged offence under Section 138 of the Act. 8. It is not in dispute that the cheque dated 15.01.2015, was issued by the petitioner [Dina Nath], which was presented by the Respondent-Complainant before the Bank, which was dishonored. Consequently, respondent No. 1 [Shankar Dass], instituted a Complaint No. 211-1 of 2015, before the Learned Chief Judicial Magistrate, Lahaul & Spiti, at Kullu, which was decided on 02.04.2022/12.04.2022 [Annexure P-1], whereby, the petitioner-accused was convicted and sentenced for six months’ imprisonment and was also fastened with the liability of compensation of Rs. 2,80,000/- [Rupees Two Lakh Eighty Thousand Only] [i.e. cheque amount and compensation thereon], which was payable to the Respondent No1-complainant. 9. Feeling aggrieved against the judgment passed by the Learned Trial Court, the petitioner-accused [Dina Nath], assailed the same before the Learned Appellate Court in Criminal Appeal No. 14 of 2022, but this appeal also met the fate of dismissal on 08.08.2022 [Annexure P-2], whereby, the judgment of conviction and sentence was upheld. 10. Consequent upon the order of conviction and sentence passed by the Learned Trial Court, which was affirmed by the Learned Appellate Court, the petitioner [Dina Nath] is undergoing sentence in Central Jail, at Nahan, District Sirmaur [H.P.] as on day. 11. Now, the petitioner-accused [Dina Nath] has come up before this Court, primarily basing his claim on the basis of receipt dated 09.03.2024 [Annexure P-3], stating that the petitioner-accused has discharged/remitted his outstanding entire liability of Rs. 2,80,000/- [Rupees Two Lakh Eighty Thousand], in favour of the respondent [Shankar Dass], who is present in this Court. 12. Respondent-complainant [Shankar Dass], admits, by way of a separate statement recorded in the Court that he has received the entire amount and nothing is outstanding from the petitioner-accused [Dina Nath], in relation to the cheque, in question, as on day. 13. 12. Respondent-complainant [Shankar Dass], admits, by way of a separate statement recorded in the Court that he has received the entire amount and nothing is outstanding from the petitioner-accused [Dina Nath], in relation to the cheque, in question, as on day. 13. This Court is of the considered view that the petitioner-accused herein, has discharged/liquated his entire outstanding liability in relation to the cheque in question, in the instant case, and even the Respondent-Complainant [Shankar Dass], as per his statement recorded in the Court today, admits that he has received the entire amount from the petitioner-accused [Dina Nath]. Further the petitioner-accused and the Respondent-Complainant have amicably resolved the dispute, as they belong to the same village and both have good relations as on day. 14. Notably, the object of Section 147 of the Negotiable Instruments Act, 1881, is that in case a person fails to discharge/liquidate his liability then, he is liable for criminal prosecution but in case, the accused discharges or liquidates or remits the amount to the complainant and the parties to the litigation under Section 138 of the Negotiable Instruments Act agree that the bone of contention and the alleged stigma originating from the cheque in question, no longer exists between the parties and no surviving claim/dispute remains with relation to the aforesaid cheque which was the subject matter in a case; therefore, in such an eventuality, the accused, alike the petitioner herein, deserves to be extended the benefit of compounding of the offence under Section 147 of the Negotiable Instruments Act, 1881. 15. Moreover, once the petitioner-accused herein, has discharged/liquidated his liability and Respondent-Complainant admits that he has received the due and payable amounts and is satisfied with the share of cake due to him and in these circumstances the complainant does not intend to pursue the matter, any further therefore, the continuance of the present proceedings any further will not serve any fruitful purpose. In these circumstances, the continuance of the present proceedings will be an abuse of process and may defeat the object behind Section 147 of the Act. Further, the continuance of proceedings in present circumstances, when the matter has been amicably settled may result in restoring or may give rise to enmity between the parties and may also lead to multiplicity of litigation, resulting in burdening the docket of Courts. Even the accusation, is trivial in nature. Further, the continuance of proceedings in present circumstances, when the matter has been amicably settled may result in restoring or may give rise to enmity between the parties and may also lead to multiplicity of litigation, resulting in burdening the docket of Courts. Even the accusation, is trivial in nature. Allowing the prosecution to continue in such case would not only lead to disturbing the peace amount themselves but will create or give rebirth to bitterness between the litigating parties, despite having amicably resolved the matter/controversy. Continuance of proceedings any further, despite the fact that the petitioner-accused and the Respondent-complainant have amicably resolved the matter, by remitting or discharging or liquidating its liability either in terms of the judgments passed by the Trial Court/Appellate Court or have amicably resolved the matter on mutual terms and conditions by way of a compromise/settlement before this Court, then, continuance of proceedings despite compromise settlement; shall also lead to miscarriage of justice. 16. In the considered opinion of this Court, the compounding of an offence would enable both the parties to lead life of respect and dignity in the society. Once, there is no dispute between them, then obviously the law cannot be so harsh so as to stand as wall between the parties, because the law has to secure the future of the parties, and continuation of criminal proceedings in such circumstances, would only cause an irreparable harassment and hardship and may even tarnish and spoil the reputation of the petitioner-accused. The Court proceedings cannot be permitted to de-generate into a weapon of harassment and persecution. The power to do complete justice is the very essence of every judicial justice dispensation system. It cannot be diluted by distorted perceptions and the plenary and inherent power vested in it can certainly be invoked so as to done the cloak of compassion to achieve the ends of justice. 17. The compromise, in a modern society, is the sine qua non of harmony and orderly behavior. It is the soul of justice and if the power under Section 482 of the Cr.P.C. or power under other statutes, including Section 147 of the Negotiable Instruments Act, 1881, is used to enhance such a compromise which, in turn, enhances the social amity and reduces friction, then it truly is “finest hour of justice.” The Hon'ble Supreme Court in Mrs. Shakuntala Sawhney vs. Mrs. Shakuntala Sawhney vs. Mrs. Kaushalya Sawhney and Others, 1980 (1) SCC 63 , while summing up the essence of compromise, observed as under: “........The finest hour of justice arrives propitiously when parties, despite falling apart, bury the hatchet and weave a sense of fellowship of reunion.” 18. This Court on the basis of the material placed on record has satisfied itself that the petitioner-accused and the respondent-complainant have settled the dispute and the respondent-complainant has no grudges against the petitioner-accused, who has liquidated/discharged/remitted his liability in favour of the complainant. In these circumstances, allowing the prosecution to continue in such case would not only lead to disturbing the peace amount themselves but will create or give rebirth to bitterness and enmity amongst them and in these circumstances, ends of justice would be satisfied in case the parties herein are allowed to compromise. This Court is further satisfied that compromise arrived at between the petitioner-accused and the respondent-complainant but such compromise is based on the consent given voluntarily by the parties; which is borne out from the depositions-statements recorded before this Court. Moreover, once the settlement/discharge/remission of liability by the petitioner-accused is agreeable and is not disputed by the respondent-complainant; then, in order to promote and meet the ends of justice the entire proceedings need to be given a Quietus, by permitting the offence which was the subject matter of the complaint under Section 138 to be compounded by invoking Section 147 of the Negotiable Instruments Act, for the reasons mentioned above and also in view of the fact that continuance of the proceedings, would otherwise lead to abuse of process; will lead to bitterness inter se the parties. Continuance of proceedings will not bring any fruitful results but will result in making the parties to face judicial proceedings, despite the fact that they have settled the matter and the bone of contention no longer exists, in relation to the cheque in question, in the instant case. Continuance of proceedings will not bring any fruitful results but will result in making the parties to face judicial proceedings, despite the fact that they have settled the matter and the bone of contention no longer exists, in relation to the cheque in question, in the instant case. However, once the entire proceedings between the petitioner-accused as well as the Respondent-Complainant was an off-shoot of personal animosity or misunderstandings or the ill effects or any like causes, which had led to the initiation of complaint resulting in conviction and sentence and also fastening the petitioner-accused with compensation then, once the parties herein have amicably settled/compromised/resolved the matter and the closure of entire proceedings and annulling the stigmatic effect by invoking compounding under the Act which will not have any adversarial societal ramifications therefore, this Court accepts the prayer, for compounding of the offence and in annulling the impugned judgments. 19. Consequently, the judgments dated 02.04.2022/12.04.2022 [Annexure P-1], passed by the Learned Trial Court, in Complaint No. 211-1 of 2015, titled as Shankar Dass versus Dina Nath and affirmed by the Learned Appellate Court, in Criminal Appeal No. 14 of 2022, titled as Dina Nath vs. Shankar Dass, on 08.08.2022 [Annexure P-2], convicting and sentencing the petitioner-accused [Dina Nath] herein, are rendered inoperative, for all purposes, in relation to the cheque, in dispute, in the instant case. Accordingly, the petitioner-accused, shall also stand acquitted of the alleged offence, under Section 138 of the Negotiable Instruments Act, 1881. 20. Since the petitioner-accused is in custody, therefore, the Respondents/State Authorities are directed to release the petitioner-accused (Dina Nath) as per norms, if he is not required in any other case. Release warrants be prepared and consequential action be taken expeditiously, in accordance with law. 21. In the aforesaid terms, the petition stands disposed of accordingly. All the pending miscellaneous applications, if any, also stands disposed of.