Supreme Court Reaffirms: High Court Cannot Quash Cheque Dishonour Case Without Complainant's Consent To Compounding

Supreme Court Reaffirms: High Court Cannot Quash Cheque Dishonour Case Without Complainant's Consent To Compounding

The Supreme Court of India, on July 23, reaffirmed that cases involving the dishonor of cheques under Section 138 of the Negotiable Instruments Act (N.I. Act) can only be compounded with the explicit consent of the complainant, as mandated by Section 147 of the N.I. Act. The ruling came after the Court reviewed a High Court decision that had compounded an offence under Section 138, despite the complainant's lack of consent, by invoking its inherent powers under Section 482 of the Criminal Procedure Code (Cr.P.C.).

A bench comprising Justices C.T. Ravikumar and Sanjay Karol clarified the distinct nature of the two sections, emphasizing that while Section 482 Cr.P.C. grants inherent powers to the High Court to secure the ends of justice, it cannot override the statutory requirement of consent outlined in the N.I. Act. The Court stated, "The power for compounding offences under the N.I. Act is not available without the consent of the complainant."

The judgment referred to previous decisions, including JIK Industries Ltd. & Ors v. Amarlal V. Jumani & Anr., where the Supreme Court held that the consent of the complainant is essential for compounding offences under Section 138, despite the provisions of Section 147, N.I. Act.

In the case at hand, the High Court had allowed the compounding of the offence, arguing that the complainant had been equitably compensated. However, the Supreme Court found this reasoning unsustainable, citing the recent decision in Raj Reddy Kallem v. The State of Haryana & Anr. (2024), which reaffirmed the necessity of the complainant's consent for compounding under Section 138.

Nevertheless, recognizing the peculiar circumstances of the case and the substantial compensation already paid by the respondents, the Supreme Court quashed the proceedings using its inherent powers under Article 142 of the Constitution, distinguishing this action from compounding. The Court cautioned that the inherent powers available under Article 142 are exclusive to the Supreme Court and should not be misinterpreted as a basis for High Courts to quash proceedings similarly.

In conclusion, the Supreme Court ruled that the High Court had erred in invoking its powers under Section 482 Cr.P.C. and Section 147 of the N.I. Act to compound the offence without the complainant's consent. However, the Supreme Court, considering the facts, chose to quash the ongoing proceedings to ensure justice, thereby preventing the need for further litigation in the trial court.

“Hence, despite the lack of consent from the appellant complainant, we found that it is a befitting case to invoke the power of this Court under Article 142 of the Constitution of India to do complete justice between the parties and to quash Complaint Case No.5564 of 2022 as also all proceedings emerging therefrom.,” the Court concluded.