The High Court of Himachal Pradesh has ruled that an offence punishable under Section 138 of the Negotiable Instruments Act (NI Act) cannot be compounded under Section 147 of the Act without the explicit consent of the complainant.
Justice Rakesh Kainthla dismissed an application for compounding an offence, holding that a court cannot compel a complainant to give consent for compromise, even if the accused has deposited the compensation amount awarded by the Trial Court.
The key legal issue before the Court was whether a criminal proceeding under Section 138 of the NI Act could be compounded under Section 147 solely on the basis that the accused had deposited the compensation amount, despite the complainant’s refusal to settle. The Court answered in the negative, reiterating that the “consent of the person aggrieved” is indispensable for compounding offences. Consequently, the application filed by the accused was rejected.
Background of the Case
The case arose from an application (Cr. MP No. 5046 of 2025) filed by the applicant/accused, Devi Ram, in the matter of Devi Ram vs. State of HP and another. The applicant sought to compound the matter under Section 147 of the NI Act.
According to the applicant, he had deposited the entire amount of compensation as awarded by the learned Trial Court. The applicant, who is currently under judicial custody, submitted that he had arranged the funds by taking a loan from relatives and was interested in compounding the matter. He further pleaded that he was not in a position to deposit the composition fee as directed by the Supreme Court guidelines and sought exemption from the same.
Arguments
Mr. H.S. Rangra, learned counsel for the applicant/petitioner, submitted that since the applicant had deposited the whole compensation amount, the matter should be allowed to be compounded. He emphasized the applicant’s financial inability to pay the compounding fee and prayed for the application to be allowed.
Mr. Jitender Sharma, Additional Advocate General, appeared for the State. The judgment notes that despite the deposit, the complainant did not consent to the compounding.
Court’s Analysis and Observations
Justice Kainthla conducted a detailed analysis of the statutory provisions and binding precedents regarding the compounding of offences under the NI Act.
1. Consent is Non-Negotiable
The Court placed heavy reliance on the Supreme Court’s judgment in JIK Industries Ltd. v. Amarlal V. Jumani (2012), which established that Section 147 of the NI Act does not override the basic principles of compounding found in Section 320 of the Code of Criminal Procedure (CrPC). The Court quoted the Supreme Court’s observation:
“Section 147 of the NI Act must be reasonably construed to mean that as a result of the said section the offences under the NI Act are made 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.”
2. Compounding vs. Quashing
The Court referred to the decision in Raj Reddy Kallem v. State of Haryana (2024), distinguishing between “quashing” a case and “compounding” an offence. The judgment noted that while the Supreme Court has exercised powers under Article 142 of the Constitution to quash proceedings when a complainant refused settlement despite being compensated, this power is unique to the Supreme Court and does not extend to High Courts exercising power under Section 482 CrPC or Section 147 NI Act.
The Court cited A.S. Pharma (P) Ltd. v. Nayati Medical (P) Ltd., 2024, stating:
“An offence under Section 138, N.I. Act could be compounded under Section 147 thereof, only with the consent of the complainant concerned.”
3. Inadequacy of Compensation
Justice Kainthla observed that merely depositing the Trial Court’s awarded compensation was insufficient in this case. The Court noted that the complainant had been “dragged to the Court of Sessions and thereafter to this Court.”
The Court observed:
“He [the complainant] also lost interest on the money which he would have earned had the compensation been deposited immediately after the order passed by the learned Trial Court.”
Decision
The High Court held that in view of the binding precedents, it is “impermissible to direct the settlement of the matter without the consent of the complainant.”
The Court concluded that the complainant had not been adequately compensated, and given the absence of consent, the offence could not be compounded. Accordingly, the prayer to settle the matter was rejected. The main matter (Cr.MP(M) No. 2619 of 2025) has been listed for consideration after a week.
Case Details:
- Case Title: Devi Ram vs. State of HP and another
- Case Number: Cr. MP No. 5046 of 2025 in Cr. MP(M) No. 2619 of 2025
- Bench: Justice Rakesh Kainthla
