The High Court of Himachal Pradesh, in a significant ruling, has reiterated the settled principle of law that an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) cannot be compounded without the consent of the complainant. Justice Rakesh Kainthla dismissed a petition filed by an accused who sought to settle a cheque dishonour case by unilaterally depositing the cheque amount in court, thereby upholding a trial court order that had rejected the accused’s application for compounding the offence due to the complainant’s refusal to compromise.
Background of the Case
The matter originated from a complaint filed by Rakesh Kumar against Himani before the Chief Judicial Magistrate, Solan. The complainant alleged that he was engaged by the accused to carry out civil construction work on her building at Deonghat, Solan. Against a total due amount of ₹5,00,000, the accused issued a cheque for ₹2,00,000, drawn on Canara Bank, Solan Branch.
When the complainant presented the cheque, it was dishonoured by the bank with the remarks “funds insufficient.” Despite receiving a valid demand notice, the accused failed to pay the amount, leading the complainant to file a criminal complaint under Section 138 of the NI Act.
After being summoned by the learned Trial Court, the accused, Himani, filed an application under Section 147 read with Section 143 of the NI Act and Section 258 of the Code of Criminal Procedure (Cr.P.C.). She stated her readiness to pay the cheque amount and requested the court to permit her to deposit the amount and settle the matter, claiming the complainant was not agreeing to an amicable settlement.
Arguments of the Parties
The complainant opposed the application, arguing that the cheque was issued for part payment and that the accused had failed to repay the amount despite being given multiple opportunities. He contended that merely depositing the cheque amount would deprive him of effective justice and refused to consent to the compromise.
Before the High Court, the petitioner’s counsel, Mr. Parkshit Rathour, argued that the Trial Court had erred in dismissing the application. He submitted that the offence under Section 138 of the NI Act is primarily civil in nature and its purpose is compensatory. Therefore, when the accused was willing to repay the cheque amount, the court should have settled the dispute.
Trial Court’s Decision
The learned Chief Judicial Magistrate, Solan, dismissed the accused’s application on August 2, 2025. The court held that the consent of the complainant is necessary to compromise the matter. Since the complainant did not consent, the matter could not be settled. The court noted that the complainant would not be adequately compensated by the mere deposit of the cheque amount. Aggrieved by this order, the accused filed the present petition before the High Court.
High Court’s Analysis and Ruling
Justice Rakesh Kainthla, after a careful review of the records and legal precedents, affirmed the trial court’s decision. The Court relied on several landmark judgments of the Hon’ble Supreme Court to underscore that the complainant’s consent is a prerequisite for compounding an offence under Section 138.
The Court first cited JIK Industries Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255, where the Supreme Court held that Section 147 of the NI Act makes the offence compoundable, but “the main principle of such compounding, namely, the consent of the person aggrieved or the person injured or the complainant cannot be wished away nor can the same be substituted by virtue of Section 147 of the NI Act.”
The judgment further referred to Raj Reddy Kallem v. State of Haryana (2024) 8 SCC 588, in which the Apex Court observed that even if a complainant has been adequately compensated, “the courts cannot compel the complainant to give ‘consent’ for compounding of the matter.”
Most significantly, the High Court discussed the recent Supreme Court decision in A.S. Pharma (P) Ltd. v. Nayati Medical (P) Ltd., 2024 SCC OnLine SC 2539, which held that the question is “no longer res integra.” The Court noted that in A.S. Pharma, the Supreme Court had clarified that a High Court could not invoke its inherent jurisdiction under Section 482 of the Cr.P.C. to compound a Section 138 offence without the complainant’s consent. The Supreme Court had distinguished the High Court’s power from its own extraordinary power under Article 142 of the Constitution, which is exercised “for doing complete justice.”
Applying these principles to the present case, Justice Kainthla observed that the accused had only offered to repay the cheque amount issued on July 20, 2020, nearly five years later, without any compensation for the loss suffered by the complainant during this period. The Court stated, “The complainant was entitled to be compensated for the loss suffered by him, and he was justified in refusing to compromise the matter without having been adequately compensated. Therefore, the learned Trial Court had taken a reasonable view while dismissing the application filed by the accused.”
Decision
Concluding that there was no abuse of the process of law and that the ends of justice did not justify compounding the offence without the complainant’s consent, the High Court found no grounds to exercise its extraordinary jurisdiction.
The petition was dismissed, and the order of the learned Chief Judicial Magistrate, Solan, was upheld. The Court clarified that its observations would have no bearing on the merits of the case during the trial.
