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M/s Ganga Bhavani Constructions v. The State of Andhra Pradesh & Anr.

Criminal Appeal · 2019 INSC 974Decided 28 Aug 2019
Criminal Appeal No. 1290 of 2019
Justice R. Banumathi · Justice A.S. Bopanna

Background

The appellant's proprietor had borrowed Rs. 10,00,000 from the second respondent and issued a cheque towards repayment, which was returned unpaid with the endorsement "payment stopped by drawer." He was convicted under Section 138 of the Negotiable Instruments Act by the Trial Court and sentenced to two years' imprisonment; the First Appellate Court upheld the conviction, and the High Court affirmed the conviction while reducing the sentence to one year. The appellant then appealed to the Supreme Court, having already deposited Rs. 5,00,000 with the Trial Court pursuant to an earlier Supreme Court order.

Decision Breakdown

By the time the matter reached the Supreme Court, the appellant and the complainant (second respondent) had reached a compromise, under which the complainant received the full cheque amount of Rs. 10,00,000 and filed a notarised Compromise Memo in court, with the complainant personally present and identified by Aadhar card. In view of this compromise, the Court set aside the conviction and sentence under Section 138 and acquitted the appellant under Section 320(8) of the Code of Criminal Procedure, which allows compounding (settlement) of certain offences even at the appellate stage. The Court also directed that the Rs. 5,00,000 earlier deposited with the Trial Court be refunded to the appellant since the complainant had already received the full amount through the compromise.

Lesson Learnt

Offences under Section 138 of the Negotiable Instruments Act (cheque bounce) are compoundable, meaning that even after conviction, parties can settle the dispute and have the conviction set aside if the complainant confirms receipt of the amount: a practical route for resolving cheque-dishonour disputes without exhausting the full appellate process.

Official source (sci.gov.in)View Judgment (PDF)

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