The Supreme Court has exercised its inherent powers under Article 142 of the Constitution to compound the offence under Section 138 of the Negotiable Instruments Act, 1881, and acquit the accused, Rajendra Anant Varik. The Court observed that the entire cheque amount and additional compensation, as imposed by the trial court, had already been paid by the appellant. It also noted that the High Court failed to consider a valid statutory defence under the Goa Money-Lenders Act, 2001, while reversing the appellant’s acquittal.
Background:
The case originated from Criminal Case No. 29/NI/2014 before the Judicial Magistrate First Class, Canacona (referred to in the judgment as the ‘trial court’), wherein Rajendra Anant Varik was convicted under Section 138 of the NI Act for issuing a dishonoured cheque to the complainant, Govind B. Prabhugaonkar. The trial court, by its judgment dated 5 August 2016, sentenced him to pay Rs. 2,00,000 towards the cheque amount and an additional Rs. 30,000 as compensation, failing which he was to undergo simple imprisonment for three months. He was also directed to remain in custody till the rising of the Court.
The accused challenged his conviction before the Sessions Court, South Goa at Margao (First Appellate Court), which set aside the conviction on 6 February 2017. The Appellate Court allowed Criminal Appeal No. 72 of 2016, holding that the complainant had been indulging in money-lending activities without obtaining a licence under the Goa Money-Lenders Act, 2001, and was, therefore, not entitled to prosecute under the NI Act.
However, on further appeal by the complainant, the High Court of Bombay at Goa, vide judgment dated 7 January 2023 in Criminal Appeal No. 53 of 2017, reversed the acquittal and restored the conviction imposed by the trial court.
Submissions before the Supreme Court:
Counsel for the appellant argued that:
- The entire loan amount had been repaid between January 2012 and July 2013.
- The accused had also paid the cheque amount and compensation as per the trial court’s direction.
- Given the full repayment, the matter should be treated as compounded.
It was further submitted that the High Court erred in overlooking the applicability of the Goa Money-Lenders Act, 2001, which provided a valid statutory defence to the accused. Notably, no representation was made before the Supreme Court on behalf of the complainant despite service of notice.
Court’s Analysis:
The Bench comprising Justice Vikram Nath and Justice Sandeep Mehta critically examined the High Court’s judgment and held that the appellate decision did not withstand legal scrutiny due to its failure to consider the relevance and impact of the Goa Money-Lenders Act.
“We find that the High Court, while reversing the acquittal… did not advert to the important issue regarding applicability of the Goa Act which provided a valid defense available to the accused-appellant.”
The Court also recorded that the monetary obligations imposed by the trial court had already been fulfilled:
“It is an admitted position that the cheque amount to the tune of Rs. 2,00,000/- and the compensation amount to the tune of Rs. 30,000/-, as imposed by the trial Court, has already been paid by the accused-appellant.”
Invocation of Article 142 and Final Order:
In view of the fulfilment of monetary liability and in the interest of complete justice, the Court exercised its powers under Article 142:
“We hereby, exercise our powers under Article 142 of the Constitution of India, to compound the offence and acquit the accused-appellant of the accusation under Section 138 of the NI Act…”
The acquittal was made subject to the condition that the total amount of Rs. 2,30,000 shall stand paid to the complainant if not already disbursed.
The appeal was allowed accordingly. All pending applications were disposed of.
