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M/S New Win Export & Anr. vs A. Subramaniam

Not available · 2024 INSC 535Decided 11 Jul 2024
Not available
Justice Sudhanshu Dhulia · Justice Ahsanuddin Amanullah

Background

In 2006, one of the appellants borrowed Rs. 5,25,000 from the respondent but did not repay it. To settle the debt, he issued a cheque in the name of his partnership firm, which was dishonoured for insufficient funds. The Trial Court convicted the appellants under Section 138 of the Negotiable Instruments Act and sentenced them to one year's simple imprisonment; the Appellate Court acquitted them, but the High Court later restored the conviction, prompting the appellants to approach the Supreme Court.

Decision Breakdown

While the appeal was pending, the parties entered into a settlement in which the appellants paid the full amount of Rs. 5,25,000 to the respondent, who confirmed by affidavit that he had no objection to the conviction being set aside. The Court held that dishonour-of-cheque offences under the NI Act are compoundable under Section 147, and reiterated that once a genuine settlement is verified, courts should prioritize the "compensatory aspect" of the remedy over the "punitive aspect" given the large backlog of such cases. Satisfied that the settlement was genuine and fully complied with, the Court allowed the appeal, set aside both the High Court's and Trial Court's orders, and acquitted the appellants.

Lesson Learnt

Cheque-bounce cases under Section 138 of the NI Act are compoundable, and courts actively encourage genuine settlements between parties. Once the complainant is fully compensated and confirms no objection, the accused's conviction can be set aside even at the Supreme Court stage.

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

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