The Supreme Court (on July 23) reiterated that dishonour of cheque cases can be compounded under Section 147 (Offence to be compoundable) of the Negotiable Instruments Act (N.I. Act) only with the consent of a complainant. In the present case, the High Court had compounded the offence, even though the appellants/ complainant had not consented, by invoking its inherent power under Section 482 Cr.P.C. Distinguishing these two sections, the Bench of Justices CT Ravikumar and Sanjay Karol observed: “Thus, a bare perusal of Section 482, Cr.P.C., and Section 147, N.I. Act would reveal they are different and distinct. The former being the inherent power of High Court exercisable even suo motu to give effect to any order under Cr.P.C., or to prevent abuse of the process of any court or otherwise to secure the ends of justice.” The bench added that the power for compounding offence is under N.I. Act is not available without the consent of a complainant. We may further add here that certainly the power under Section 482, Cr.P.C., is not invocable, ignoring the factor which is sine qua non for the exercise of power to compound the offence(s) under N.I. Act viz., the consent of the complainant." Reliance was placed on decisions like JIK Industries Ltd. & Ors v. Amarlal V.Jumani & Anr., (2012) 3 SCC 255. Herein, the Court had refused to accept the contention that in view of Section 147, NI Act, which is a special statute, the requirement of consent of the person compounding the offence under Section 138, N.I. Act is not required. The present issue arose from a complaint case filed by the present appellant under Section 138 (Dishonour of cheque for insufficiency, etc., of funds in the account) of the NI Act. An application for compounding the offence was filed by the respondents. Though the Trial Court dismissed the same, the High Court allowed it. The High Court, while invoking its inherent power, had held: “Broadly speaking, in the considered opinion of this Court, the essence of all the aforesaid pronouncements by the Hon'ble Supreme Court coupled with Section 138 of the N.I. Act read together with the other provisions of the N.I. Act is that the consent of the complainant is not mandatory at the time of compounding of the offence under Section 138 of the N.I. Act, once the complainant has been equitably compensated.” The Supreme Court however found this view to be unsustainable and relied upon several decisions to bolster its decision. One such case was Raj ReddyKallem v. The State of Haryana & Anr. 2024 LiveLaw (SC) 336 wherein the Court in unambiguous terms held that for compounding the offence under Section 138, N.I. Act, 'consent' of the complainant is required. "In that view of the matter, the impugned judgment of the High Court wherein despite the absence of the consent of the appellant-complainant compounded the o*ence under Section 138, N.I. Act, on the ground that the appellant was equitably compensated, could not be sustained," the Supreme Court observed. However, in this case, the Court, taking note of a peculiar factual situation, invoked its inherent powers to quash the proceeding pending under Section 138, N.I. Act. To this effect, the Court, in its judgment, distinguished 'compounding' and 'quashing'.

“We have no doubt in holding that merely because taking into account such aspects and circumstances this Court 'quashed' the proceedings by invocation of the power under Article 142 of the Constitution of India, cannot be a reason for 'compounding' an offence under Section 138, N.I. Act, invoking the power under Section 482, Cr.P.C. and the power under Section 147, N.I. Act, in the absence of consent of the complainant concerned in view of the decision referred hereinbefore.” It was also observed that the use of inherent powers by the Supreme Court under Article 142 of the Indian Constitution, can be no reason at all for High Courts to pass an order quashing proceeding. “In this context, this is to be noted that the fact that this Court quashed the proceedings under Section 138, N.I. Act, invoking the power under Article 142 of the Constitution of India can be no reason at all for High Courts to pass an order quashing proceeding under Section 138, N.I. Act, on the similar lines as the power under Article 142 of the Constitution of India is available only to the Supreme Court of India..” In view of this above projection, the Top Court held that the High Court has erred in invoking the power under Section 482, Cr.P.C., and Section 147, N.I. Act, to compound the offence. However, taking into account the peculiar facts and circumstances being the deposition of a substantial amount by the respondents, the Court quashed the present proceedings. It reasoned that there is no point in restoring the proceedings and permitting their continuance before 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.