Cheque bounce cases can be compounded at any stage of litigation: HC

The Punjab and Haryana High Court has held that cheque dishonour offence under Section 138 of the Negotiable Instruments Act can be compounded at any stage of litigation — even after an accused has been convicted by a magistrate and the appeal against the conviction has been dismissed by the sessions court.

Relying on the new statutory scheme under the BNSS, and established Supreme Court precedents, Justice Sumeet Goel ruled that the high court retained the plenary powers to quash convictions where disputes were essentially personal in nature and the parties have reached a genuine compromise.

“The statutory provision of Section 359 of BNSS and Section 147 of the Negotiable Instruments Act, when examined along with Section 528 of BNSS, in the guiding light of Supreme Court judgments, lead to the unequivocal conclusion that the offence under Section 138 can be compounded at all stages of litigation, including when the matter has reached the high court after having been conclusively dealt with by the Magisterial as also the Sessions Court,” the court observed.

It clarified that its inherent jurisdiction under Section 528, BNSS, was not merely procedural. “The inherent jurisdiction... is primarily aimed at preventing abuse of judicial process and securing the ends of justice. In other words, such powers are intrinsic to the high court, forming its very life-blood, its very essence, its immanent attribute. Without such powers, a high court would retain form but lack substance,” the ruling stated.

Emphasising that such powers were meant to prevent injustice in unforeseen circumstances where statutory provisions might fall short, Justice Goel added: “A high court which exists for the furtherance of justice in an indefatigable manner should therefore have unfettered powers to deal with situations which, though not expressly provided for by the law, need to be dealt with, to prevent injustice or the abuse of the process of law and courts.”

The Bench noted that the juridical basis of these powers lay in the “seminal duty and responsibility” of the high court to ensure justice.

The ruling came on a petition where the accused was convicted by the Gurugram Judicial Magistrate First Class in July 2022 under Section 138 of the NI Act. The conviction was upheld by the Additional Sessions Judge in June. During pendency of the revision before the high court, the parties arrived at a compromise before the Mediation and Conciliation Centre, agreeing to settle their dispute “in toto and bury the hatchet.”

Recording the settlement, the high court observed that continuing the conviction proceedings would serve no purpose in light of the amicable resolution. “Consequently, in the considered opinion of this Court, the factual matrix of the case requires that the offence(s) ought to be permitted to be compounded and the petitioner deserves to be acquitted,” Justice Goel concluded.