An accused in a cheque bounce case can escape conviction by settling the dispute and paying the compounding fee, the Supreme Court has said.
Interpreting Section 147 of the Negotiable Instruments Act, the apex court said every offence committed under the Act was compoundable.
The apex court noted that there has been conflicting judgements from High Court as to whether an offence relating to bouncing of cheque was compoundable.
While some High Courts had held that the offence was not compoundable, others took the view that it was compoundable, provided the parties to the dispute reached an amicable settlement.
However, the apex court pointed out that Section 147 gave the liberty for an accused to escape conviction by paying the compounding fee.
The apex court passed the ruling while allowing the appeal filed by Vinay Devanna Nayak charged with issuing a cheque for Rs 24,000 that had bounced at the bank.
He was convicted to six months imprisonment by a trial court in Karnataka which noted that the accused failed to pay the amount despite issuance of a notice.
Nayak was further ordered to pay a compensation of Rs 48,000 to the complainant Ryot Seva Shakhari Bank. But on an appeal, the appellate court reduced the amount of compensation to Rs 33,000, following which he moved the Karnataka High Court.
However, the High Court dismissed the appeal after the accused failed to deposit the compensation amount in the court as directed by it.
During the hearing of the case, Nayak and the bank both filed affidavits stating that the dispute was amicably settled as the former had agreed to pay a compensation of Rs 45,000.
Since the Act provided for compounding the offence, the apex court felt that Nayak can be acquitted of the charge accordingly it quashed the conviction.