S.138 NI Act: Accused's willingness to settle at later stage, is indicative of merit in Complainant's case (Read Judgement)

Allahabad High Court was dealing an application filed under Section 482 of Cr.P.C. with a prayer to quash the entire criminal proceedings under Sections 138 of NI Act pending in the court of Additional Civil Judge/Additional Chief Judicial Magistrate.

Applicant’s case:

All the contentions raised by the counsel for the applicant related to disputed questions of fact. Veracity and credibility of material furnished on behalf of the prosecution was questioned and false implication was pleaded.

Later, the Counsel urged before the Court that the litigating parties should be given a chance to settle this matter amicably and for this purpose some protective direction may be given by this Court so that adequate steps may be taken in furtherance of the same

High Court’s observations:

Observing that applicant called for adjudication on pure questions of fact which may be adequately adjudicated upon only by the trial court, the High Court stated that it does not deem it proper, and therefore cannot be persuaded to have a pre-trial before the actual trial begins.

The Court further observed that it is quite obvious that with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect. The bench noted that a majority of cheque bounce cases are indeed being compromised or settled by way of compounding, albeit during the later stages of litigation thereby contributing to undue delay in justice delivery. The problem herein is with the tendency of litigants to belatedly choose compounding as a means to resolve their dispute, as parties choose compounding as a method of last resort instead of opting for it as soon as the Magistrates take cognizance of the complaints.

While rationalizing such behaviour the bench stated that, “One explanation for such behaviour could be that the accused persons are willing to take the chance of progressing through the various stages of litigation and then choose the route of settlement only when no other route remains. While such behaviour may be viewed as rational from the viewpoint of litigants, the hard facts are that the undue delay in opting for compounding contributes to the arrears pending before the courts at various levels. If the accused is willing to settle or compromise by way of compounding of the offence at a later stage of litigation, it is generally indicative of some merit in the complainant's case. In such cases it would be desirable if parties choose compounding during the earlier stages of litigation.”

If, however, the accused has a valid defence such as a mistake, forgery or coercion among other grounds, then the matter can be litigated through the specified forums.

High Court held:
The Court refused the prayer for quashing the criminal proceeding as it did not see any abuse of the Court's process, and directed that the accused may appear before the court below within a period of one month and move an application seeking compounding of offence through compromise.

Bench: Justice Suresh Kumar Gupta
Case Title: Raj Trading Company v. State of U.P. and Another
Case Details: Application u/s 482 No. - 12828 of 2020
Counsel for Applicant: Adv. Rajeev Chaddha
Counsel for Respondent: Adv. G.A.

Read the Judgement: