SC Explained: The Precautions in Compromise in Cheque Bounced Case

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In the event that the compromise deed is found to be void ab initio on account of coercion, the very basis for quashing of the first complaint is removed since the settlement agreement is deemed to have never existed and hence it had no effect on the liability subsisting under the first complaint. The appellants may then approach the competent court for reinstatement of the original complaint and the trial can proceed on that basis.

New Delhi (ABC Live India): Compromise in Cheque Bounced Case : The Supreme Court of India on 08/10/2021 in case titled M/s Gimpex Private Limited Vs Manoj Goel ruled that, how violation of a compromise deed in Section 138 of the Negotiable Instruments Act 1881should be dealt with.

Facts of the case;

On  17  and  27  April  2012,  the  appellant  entered  into  three  High  Seas  Sale   Agreements  with  Aanchal  Cement  Limited.  On  the  request  of  ACL,  the  appellant  paid an amount of Rs. 6.96 crores (Rs. 6,96,74,666/-) as customs duty and Rs. 8.04 crores (Rs. 8,04,12,495/-) as wharfage charges in order to clear the goods on behalf of  ACL  which  is  alleged  to  have  promised  to  repay  the  amount  with  interest.  It  has  been  alleged  that  though  the  appellant  supplied  the  goods,  ACL  failed  to  make  payments. On 6 August 2012, ACL issued 18 cheques dated 8 August 2012, each in the amount of Rs. 50 lakhs, for a total value of Rs. 9 crores in favour of the appellant in part payment of the outstanding liability. On 21 August 2012, the 18 cheques were dishonoured upon presentation with an endorsement: “payments stopped by drawer”/ “insufficient funds”. A complaint was lodged by the appellant on 10 September  2012,  with  the  Commissioner  of  Police,  Egmore,  Chennai,  against  ACL and  its  directors  for  offences  under  Sections  409  and  506(1)  of  the  Indian  Penal  Code 18606, which was registered as an FIR in Central Crime Branch on 1 February 2013  as  Crime  No.  21 of 2013.  Between  22  September  2012  and  5  October  2012, the  appellant  issued  legal  notices  under  Section  138  of  the  NI  Act  to  ACL  and  its  directors - Sitaram Goel, Manoj Goel (the respondent) and Mukesh Goel in respect of the dishonor of the 18 cheques.  

On  22  October  2012  and  6  November  2012,  the  appellant  filed  criminal  complaints  under  Section  138  of  the  NI  Act,  in  respect  of  the  dishonour  of  the  cheques  of  the  value  of  Rs.  9 crores.  This  is  the  first  set  of  complaints  filed  by  the  appellant.

On 3 March 2013, Mukesh Goel, a director of ACL was arrested by the Central Crime Branch.  A bail application was filed by Mukesh Goel on 5 March 2013.

During the pendency of the bail application, ACL approached the appellant to settle the matter and arrived at a compromise. On 12 March 2013, the appellant and ACL entered into a deed of compromise and paid Rs 3 Crore to Appellant and agreed and undertake to pay the balance amount of Rs. 7 crore within 3  months  in  3  equal  instalments  of  Rs.  2,33,33,333/- every  month and issued three cheques for the same but all the cheques issued qua the above mentioned compromise deed were also dishonoured and  a second complaint was instituted on 16 February 2017 by the appellant under Section 138 of the NI Act.  

The one of directors of accused company during the pending filed petition U/s 482 of CrPC to quash the deed of compromise challenged the deed of compromise as illegal, null and void, and for return of the cheques issued to the appellant pursuant to it, and prayed for quashing of second complaint against him U/s 138 as second sets of cheques were not issued for discharging his legal liability and the Madras High Court  accepted the pleadings of accused and set aside the proceeding of second 138 compliant against accused but refused to quash the proceedings of first complaint U/s138.

Thereafter, the Appellants (Complainant) approached the Supreme Court against the order of Madras High Court, wherein second complaint was dismissed and the accused also approached the Supreme Court against the order of High Court as they pray for quashing the first complaint was declined by High Court.

The Apex Court finally ruled that, “ A  submission  was  urged  by  the  appellants  that  in  the  event  the  second  complaint  is  found  to  be  non-maintainable  and  the  compromise  deed  is  held  to  be  invalid,  they  would  be  left  remediless  and  thus,  the  first  trial  should  be  allowed  to  continue.  We do not find any merit in this submission. In the event that  the  compromise deed is found to be void ab initio on account of coercion, the very basis for  quashing  of  the  first  complaint  is  removed  since  the  settlement  agreement  is  deemed  to  have  never  existed  and  hence  it  had  no  effect  on  the  liability  subsisting  under the first complaint. The appellants may then approach the competent court for reinstatement  of  the  original  complaint  and  the  trial  can  proceed  on  that  basis.”

Further operative part of judgment ruled that the order of High Court to quash the second complaint U/s 138 was wrong thus set aside the same, and also quashed the complaint first complaint U/s138 and criminal Complaint against accused.

Read the Complete Judgment of M/s Gimpex Private Limited Vs Manoj Goel

Case law referred in this case

K Bhaskaran v. Sankaran Vaidhyan Balan

P. Mohanraj vs M/S. Shah Brothers Ispat Pvt. Ltd

M/S Meters And Instruments ... vs Kanchan Mehta

Prakash Gupta vs Securities and Exchange Board of India

Damodar S.Prabhu vs Sayed Babalal H

In Re: expeditious trial of cases under section138 of n.i. Act 1881

R. Vijayan vs Baby & Anr

Lalit Kumar Sharma And Anr vs State Of U.P. & Anr

Arun Kumar vs Anita Mishra

Hmt Watches Ltd vs M.A. Abida & Anr

Sampelly Satyanarayan Rao vs Indian Renewable Energy

M/S Kumar Exports vs M/S Sharma Carpets

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