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(2010) 5 Supreme Court Cases 663 : (2010) 2 Supreme Court Cases (Civ) 520 :
(2010) 2 Supreme Court Cases (Cri) 1328 : 2010 SCC OnLine SC 546

(BEFORE K.G. BALAKRISHNAN, C.J. AND P. SATHASIVAM AND J.M. PANCHAL, JJ.)
DAMODAR S. PRABHU . . Appellant;
Versus
SAYED BABALAL H. . . Respondent.
Criminal Appeals No. 963 of 2010" with Nos. 964-66 of 2010%, decided on May 3,
2010
A. Negotiable Instruments Act, 1881 — Ss. 138 and 147 — Guidelines/Directions issued:
(i) to encourage litigants in cheque dishonour cases to opt for compounding during early
stages of litigation to ease choking of criminal justice system; (ii) for graded scheme of
imposing costs on parties who unduly delay compounding of offence; and (iii) for controlling
of filing of complaints in multiple jurisdictions relatable to same transaction
Held :
It is directed that the writ of summons in a cheque dishonour case should be suitably modified
making it clear to the accused that he could make an application for compounding of the offences at
the first or second hearing of the case and that if such an application is made, compounding may be
allowed by the court without imposing any costs on the accused. If the accused does not make an
application for compounding as aforesaid, then if an application for compounding is made before the
Magistrate at a subsequent stage, compounding can be allowed subject to the condition that the
accused will be required to pay 10% of the cheque amount to be deposited as a condition for
compounding with the Legal Services Authority, or such authority as the court deems fit. Similarly, if
the application for compounding is made before the Sessions Court or a High Court in revision or
appeal, such compounding may be allowed on the condition

) Page: 664

that the accused pays 15% of the cheque amount by way of costs. Finally, if the application for
compounding is made before the Supreme Court, the figure would increase to 20% of the cheque
amount.

(Para 21)
As far as filing of complaint before multiple jurisdictions relating to same transaction is concerned,
it is directed that it should be mandatory for the complainant to disclose that no other complaint has
been filed in any other court in respect of the same transaction which should be made on a sworn
affidavit which should accompany the complaint filed under Section 200 CrPC. If it is found that such
multiple complaints have been filed, orders for transfer of the complaint to the first court should be
given, generally speaking, by the High Court after imposing heavy costs on the complainant for
resorting to such a practice.
(Para 23)
These directions should be given effect prospectively.
(Para 23)
O.P. Dholakia v. State of Haryana, (2000) 1 SCC 762 : 2000 SCC (Cri) 310; Sivasankaran v. State
of Kerala, (2002) 8 SCC 164 : 2002 SCC (Cri) 1872; Kishore Kumar v. J.K. Corpn. Ltd., (2004)
13 SCC 494 : (2006) 1 SCC (Cri) 348; Sailesh Shyam Parsekar v. Baban, (2005) 4 SCC 162 :
2005 SCC (Cri) 1321; Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd., (2008) 2 SCC
305 : (2008) 1 SCC (Cri) 351; K.M. Ibrahim v. K.P. Mohammed, (2010) 1 SCC 798 : (2010) 1
SCC (Cri) 921, considered
B. Negotiable Instruments Act, 1881 — Ss. 147 & 138 and S. 320, Criminal Procedure
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Code, 1973 — Relative scope — Compounding of cheque dishonour cases — Scheme for —
Held, compounding of offences under the Negotiable Instruments Act, 1881 is controlled by
S. 147 and the scheme contemplated by S. 320 CrPC will not be applicable in the strict
sense
(Paras 10 to 12)
R. Rajeshwari v. H.N. Jagadish, (2008) 4 SCC 82 : (2008) 2 SCC (Cri) 186, considered
C. Negotiable Instruments Act, 1881 — Ss. 147 and 138 — Compounding of offence —
Considerations for — Held, the same is linked to perceived seriousness of offence and
nature of remedy provided — Criminal Procedure Code, 1973, S. 320
(Para 16)
K.N.C. Pillai: R.V. Kelkar's Criminal Procedure, Fifth Edn. (Lucknow: Eastern Book Company, 2008) at
p. 444, relied on
D. Negotiable Instruments Act, 1881 — S. 138 — Offence of dishonour of cheque —
Punishment — Nature of — Held, compensatory aspect of remedy should be given priority
over punitive aspect
(Para 18)
Arun Mohan: Some thoughts towards law reforms on the topic of Section 138, Negotiable
Instruments Act—Tackling an avalanche of cases at p. 5, relied on
E. Constitution of India — Arts. 136 and 142 — Exercise of power — Issue of directions,
orders or guidelines to do complete justice — Legislative vacuum — No explicit guidance as
to at what stage compounding can be done under S. 147, Negotiable Instruments Act and
whether compounding can be done at instance of complainant or with leave of court —
Though conscious of the view that guidelines issued to discourage litigants from unduly
delaying the compounding of the offence in cases involving S. 138 of NI Act could be seen as
an act of judicial law-making and therefore an intrusion into the legislative domain,
directions issued to do complete justice under Article 142 of the Constitution in relation to
the subject-matter where there was a legi: ive vacuum — Negotiable Instruments Act,
1881 — Ss. 138 and 141 — Judiciary — Judicial activism/Role of judiciary — Judicial law-
making
(Paras 24 and 25)

) Page: 665

F. Negotiable Instruments Act, 1881 — S. 138 — Object of — Stated

(Paras 3 and 4)
P-D/A/46155/CR
Advocates who appeared in this case:
G.E. Vahanvati (Amicus Curiae), Solicitor General for India (Arun Pedneker and V.N.
Raghupathy, Advocates) for the Appellant;
Sunil Kr. Verma, Advocate, for the Respondent.

Chronological list of cases cited on page(s)

1. (2010) 1 SCC 798 : (2010) 1 SCC (Cri) 921, K.M. Ibrahim v.

K.P. Mohammed 669f

2. (2008) 4 SCC 82 : (2008) 2 SCC (Cri) 186, R. Rajeshwari v.

H.N. Jagadish 669¢
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3. (2008) 2 SCC 305 : (2008) 1 SCC (Cri) 351, Vinay Devanna

Nayak v. Ryot Sewa Sahakari Bank Ltd. 668f-g

4. (2005) 4 SCC 162 : 2005 SCC (Cri) 1321, Sailesh Shyam

Parsekar v. Baban 667d

5. (2004) 13 SCC 494 : (2006) 1 SCC (Cri) 348, Kishore Kumar v.

J.K. Corpn. Ltd. 667d

6. (2002) 8 SCC 164 : 2002 SCC (Cri) 1872, Sivasankaran v.

State of Kerala 667d

7.(2000) 1 SCC 762 : 2000 SCC (Cri) 310, O.P. Dholakia v. State
of Haryana 667a-b

ORDER
1. Leave granted. The present appeals are in respect of litigation involving the
offence enumerated by Section 138 of the Negotiable Instruments Act, 1881
(hereinafter “the Act”). It is not necessary for us to delve into the facts leading up to
the institution of proceedings before this Court since the appellant and the respondent
have arrived at a settlement and prayed for the compounding of the offence as
contemplated by Section 147 of the Act. It would suffice to say that the parties were
involved in commercial transactions and that disputes had arisen on account of the
dishonour of five cheques issued by the appellant. Thereafter, the parties went
through the several stages of litigation before their dispute reached this Court by way
of special leave petitions.
2. With regard to the impugned judgments delivered by the High Court of Bombay
at Goa, the appellant has prayed for the setting aside of his conviction in these
matters by relying on the consent terms that have been arrived at between the
parties. The respondent has not opposed this plea and, therefore, we allow the
compounding of the offence and set aside the appellant's conviction in each of the
impugned judgments.
3. However, there are some larger issues which can be appropriately addressed in
the context of the present case. It may be recalled that Chapter XVII comprising
Sections 138 to 142 was inserted into the Act by the Banking, Public Financial
Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (66 of 1988).
The object of bringing Section 138 into the statute was to inculcate faith in the
efficacy of banking operations and credibility in transacting business on negotiable
instruments. It was to enhance the acceptability of cheques in settlement of liabilities
by making the drawer liable for penalties in case of bouncing of cheques due to
insufficient arrangements made by the drawer, with adequate safeguards to prevent

.\ Page: 666

harassment of honest drawers. If the cheque is dishonoured for insufficiency of funds

in the drawer's account or if it exceeds the amount arranged to be paid from that
account, the drawer is to be punished with imprisonment for a term which may extend
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to two years, or with fine which may extend to twice the amount of the cheque, or
with both.

4. It may be noted that when the offence was inserted in the statute in 1988, it
carried the provision for imprisonment up to one year, which was revised to two years
following the amendment to the Act in 2002. It is quite evident that the legislative
intent was to provide a strong criminal remedy in order to deter the worryingly high
incidence of dishonour of cheques. While the possibility of imprisonment up to two
years provides a remedy of a punitive nature, the provision for imposing a “fine which
may extend to twice the amount of the cheque” serves a compensatory purpose. What
must be remembered is that the dishonour of a cheque can be best described as a
regulatory offence that has been created to serve the public interest in ensuring the
reliability of these instruments. The impact of this offence is usually confined to the
private parties involved in commercial transactions.
5. Invariably, the provision of a strong criminal remedy has encouraged the
institution of a large number of cases that are relatable to the offence contemplated by
Section 138 of the Act. So much so, that at present a disproportionately large number
of cases involving the dishonour of cheques is choking our criminal justice system,
especially at the level of Magistrates' Courts. As per the 213th Report of the Law
Commission of India, more than 38 lakh cheque bouncing cases were pending before
various courts in the country as of October 2008. This is putting an unprecedented
strain on our judicial system.
6. Mr Goolam E. Vahanvati, Solicitor General (now Attorney General for India) had
appeared as amicus curiae in the present matter and referred to the facts herein as an
illustration of how parties involved in cheque bounce cases usually seek the
compounding of the offence at a very late stage. The interests of justice would indeed
be better served if parties resorted to compounding as a method to resolve their
disputes at an early stage instead of engaging in protracted litigation before several
forums, thereby causing undue delay, expenditure and strain on part of the judicial
system. This is clearly a situation that is causing some concern, since Section 147 of
the Act does not prescribe as to what stage is appropriate for compounding the offence
and whether the same can be done at the instance of the complainant or with the
leave of the court.
7. The learned Attorney General stressed on the importance of using compounding
as an expedient method to hasten the disposal of cases. In this regard, the learned
Attorney General has proposed that this Court should frame some guidelines to
disincentivise litigants from seeking the compounding of the offence at an unduly late
stage of litigation. In other words, judicial directions have been sought to nudge
litigants in cheque bounce cases to opt for compounding during the early stages of
litigation, thereby bringing down the arrears.

)\ Page: 667

8. Before examining the guidelines proposed by the learned Attorney General, it

would be useful to clarify the position relating to the compounding of offences under
the Negotiable Instruments Act, 1881. Even before the insertion of Section 147 in the
Act (by way of an amendment in 2002) some High Courts had permitted the
compounding of the offence contemplated by Section 138 during the later stages of
litigation. In fact, in O.P. Dholakia v. State of HaryanaL a Division Bench of this Court
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had permitted the compounding of the offence even though the petitioner's conviction
had been upheld by all the three designated forums. After noting that the petitioner
had already entered into a compromise with the complainant, the Bench had rejected
the State's argument that this Court need not interfere with the conviction and
sentence since it was open to the parties to enter into a compromise at an earlier
stage and that they had not done so. The Bench had observed: (SCC p. 763, para 3)
“3. ... taking into consideration the nature of offence in question and the fact that
the complainant and the accused have already entered into a compromise, we think
it appropriate to grant permission, in the peculiar facts and circumstances of the
present case, to compound.”
Similar reliefs were granted in the orders reported as Sivasankaran v. State of Kerala,
Kishore Kumar v. J.K. Corpn. Ltd.> and Sailesh Shyam Parsekar v. Baban* among other
cases.
9. As mentioned above, the Negotiable Instruments Act, 1881 was amended by the
Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 which
inserted a specific provision i.e. Section 147 “to make the offences under the Act
compoundable”. We can refer to the following extract from the Statement of Objects
and Reasons attached to the 2002 amendment which is self-explanatory:
“Prefatory Note—Statement of Objects and Reasons.—The Negotiable
Instruments Act, 1881 was amended by the Banking, Public Financial Institutions
and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter
XVII was incorporated for penalties in case of dishonour of cheques due to
insufficiency of funds in the account of the drawer of the cheque. These provisions
were incorporated with a view to encourage the culture of use of cheques and
enhancing the credibility of the instrument. The existing provisions in the
Negotiable Instruments Act, 1881, namely, Sections 138 to 142 in Chapter XVII
have been found deficient in dealing with dishonour of cheques. Not only the
punishment provided in the Act has proved to be inadequate, the procedure
prescribed for the courts to deal with such matters has been found to be
cumbersome. The courts are unable to dispose of such cases expeditiously in a time
bound manner in view of the procedure contained in the Act.”
(emphasis supplied)

.\ Page: 668

In order to address the deficiencies referred to above, Section 10 of the 2002

amendment inserted Sections 143, 144, 145, 146 and 147 into the Act, which deal
with aspects such as the power of the court to try cases summarily (Section 143),
mode of service of summons (Section 144), evidence on affidavit (Section 145),
bank's slip to be considered as prima facie evidence of certain facts (Section 146) and
offences under the Act to be compoundable (Section 147).
10. At present, we are of course concerned with Section 147 of the Act, which reads
as follows:
“147. Offences to be compoundable.—Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable under this
Act shall be compoundable.”
At this point, it would be apt to clarify that in view of the non obstante clause, the
compounding of offences under the Negotiable Instruments Act, 1881 is controlled by
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Section 147 and the scheme contemplated by Section 320 of the Code of Criminal
Procedure (hereinafter “CrPC") will not be applicable in the strict sense since the latter
is meant for the specified offences under the Penal Code, 1860.
11. So far as CrPC is concerned, Section 320 deals with offences which are
compoundable, either by the parties without the leave of the court or by the parties
but only with the leave of the court. Sub-section (1) of Section 320 enumerates the
offences which are compoundable without the leave of the court, while sub-section (2)
of the said section specifies the offences which are compoundable with the leave of the
court.
12. Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an
enabling provision which provides for the compounding of offences prescribed under
the same Act, thereby serving as an exception to the general rule incorporated in sub-
section (9) of Section 320 CrPC which states that “No offence shall be compounded
except as provided by this section”. A bare reading of this provision would lead us to
the inference that offences punishable under laws other than the Penal Code also
cannot be compounded. However, since Section 147 was inserted by way of an
amendment to a special law, the same will override the effect of Section 320(9) CrPC,
especially keeping in mind that Section 147 carries a non obstante clause.
13. In Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd.> this Court had
examined “whether an offence punishable under Section 138 of the Act which is a
special law can be compounded”. After taking note of a divergence of views in past
decisions, this Court took the following position (C.K. Thakker, J. at SCC p. 310, para
17):
“17. ... This provision is intended to prevent dishonesty on the part of the drawer
of negotiable instruments in issuing cheques without sufficient funds or with a view
to inducing the payee or holder in due course to act upon it. It thus seeks to
promote the efficacy of bank

operations and ensures credibility in transacting business through cheques. In such

matters, therefore, normally compounding of offences should not be denied.
Presumably, Parliament also realised this aspect and inserted Section 147 by the
Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (55 of
2002).”
In the same decision, the Court had also noted: (SCC p. 308, para 11)
“11. ... Certain offences are very serious in which compromise or settlement is
not permissible. Some other offences, on the other hand, are not so serious and the
law may allow the parties to settle them by entering into a compromise. The
compounding of an offence signifies that the person against whom an offence has
been committed has received some gratification to an act as an inducement for his
abstaining from proceeding further with the case.”
14. It would also be pertinent to refer to this Court's decision in R. Rajeshwari v.
H.N. Jagadish® wherein the following observations were made (S.B. Sinha, J. at SCC p.
85, para 12):
“12. Negotiable Instruments Act is a special Act. Section 147 of the Act provides
for a non obstante clause, stating:
*147. Offences to be compoundable.—Notwithstanding anything contained in
the Code of Criminal Procedure, 1973 (2 of 1974), every offence punishable
under this Act shall be compoundable.’
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Indisputably, the provisions of the Code of Criminal Procedure, 1973 would be applicable to the
proceedings pending before the courts for trial of offences under the said Act. Stricto sensu,
however, the table appended to Section 320 of the Code of Criminal Procedure is not attracted as
the provisions mentioned therein refer only to provisions of the Penal Code and none other.”
15. The compounding of the offence at later stages of litigation in cheque bouncing
cases has also been held to be permissible in a recent decision of this Court, reported
as K.M. Ibrahim v. K.P. Mohammed” wherein Kabir, J. has noted (at SCC p. 802, paras
13-14):
“13. As far as the non obstante clause included in Section 147 of the 1881 Act is
concerned, the 1881 Act being a special statute, the provisions of Section 147 will
have an overriding effect over the provisions of the Code relating to compounding of
offences. ...
14. It is true that the application under Section 147 of the Negotiable
Instruments Act was made by the parties after the proceedings had been concluded
before the appellate forum. However, Section 147 of the aforesaid Act does not bar
the parties from compounding an offence under Section 138 even at the appellate
stage of the proceedings. Accordingly, we find no reason to reject the application
under Section

) Page: 670

147 of the aforesaid Act even in a proceeding under Article 136 of the Constitution.”

16. It is evident that the permissibility of the compounding of an offence is linked

to the perceived seriousness of the offence and the nature of the remedy provided. On
this point we can refer to the following extracts from an academic commentary [cited
from: K.N.C. Pillai, R.V. Kelkar's Criminal Procedure, Fifth Edn. (Lucknow: Eastern
Book Company, 2008) at p. 444]:
“17.2. Compounding of offences.—A crime is essentially a wrong against the
society and the State. Therefore any compromise between the accused person and
the individual victim of the crime should not absolve the accused from criminal
responsibility. However, where the offences are essentially of a private nature and
relatively not quite serious, the Code considers it expedient to recognise some of
them as compoundable offences and some others as compoundable only with the
permission of the court.”
17. In a recently published commentary, the following observations have been
made with regard to the offence punishable under Section 138 of the Act [cited from:
Arun Mohan, Some thoughts towards law reforms on the topic of Section 138,
Negotiable Instruments Act—Tackling an avalanche of cases (New Delhi: Universal Law
Publishing Co. Pvt. Ltd., 2009) at p. 5]:
“... Unlike that for other forms of crime, the punishment here (insofar as the
complainant is concerned) is not a means of seeking retribution, but is more a
means to ensure payment of money. The complainant's interest lies primarily in
recovering the money rather than seeing the drawer of the cheque in jail. The threat
of jail is only a mode to ensure recovery. As against the accused who is willing to
undergo a jail term, there is little available as remedy for the holder of the cheque.
If we were to examine the number of complaints filed which were ‘compromised’
or ‘settled’ before the final judgment on one side and the cases which proceeded to
judgment and conviction on the other, we will find that the bulk was settled and
only a miniscule number continued.”
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18. It is quite obvious that with respect to the offence of dishonour of cheques, it is
the compensatory aspect of the remedy which should be given priority over the
punitive aspect. There is also some support for the apprehensions raised by the
learned Attorney General that a majority of cheque bounce cases are indeed being
compromised or settled by way of compounding, albeit during the later stages of
litigation thereby contributing to undue delay in justice delivery. The problem herein is
with the tendency of litigants to belatedly choose compounding as a means to resolve
their dispute. Furthermore, the written submissions filed on behalf of the learned
Attorney General have stressed on the fact that unlike Section 320 CrPC, Section 147
of the Negotiable Instruments Act provides no explicit guidance as to what stage
compounding can or cannot be done and whether

) Page: 671

compounding can be done at the instance of the complainant or with the leave of the
court.
19. As mentioned earlier, the learned Attorney General's submission is that in the
absence of statutory guidance, parties are choosing compounding as a method of last
resort instead of opting for it as soon as the Magistrates take cognizance of the
complaints. One explanation for such behaviour could be that the accused persons are
willing to take the chance of progressing through the various stages of litigation and
then choose the route of settlement only when no other route remains. While such
behaviour may be viewed as rational from the viewpoint of litigants, the hard facts are
that the undue delay in opting for compounding contributes to the arrears pending
before the courts at various levels. If the accused is willing to settle or compromise by
way of compounding of the offence at a later stage of litigation, it is generally
indicative of some merit in the complainant's case. In such cases it would be desirable
if parties choose compounding during the earlier stages of litigation. If however, the
accused has a valid defence such as a mistake, forgery or coercion among other
grounds, then the matter can be litigated through the specified forums.
20. It may be noted here that Section 143 of the Act makes an offence under
Section 138 triable by a Judicial Magistrate, First Class (JMFC). After trial, the
progression of further legal proceedings would depend on whether there has been a
conviction or an acquittal.
* In the case of conviction, an appeal would lie to the Court of Sessions under
Section 374(3)(a) CrPC; thereafter a revision to the High Court under Sections
397/401 CrPC and finally a petition before the Supreme Court, seeking special leave
to appeal under Section 136 of the Constitution of India. Thus, in case of conviction
there will be four levels of litigation.
e In the case of acquittal by JMFC, the complainant could appeal to the High
Court under Section 378(4) CrPC, and thereafter for special leave to appeal to the
Supreme Court under Article 136. In such an instance, therefore, there will be three
levels of proceedings.
21. With regard to the progression of litigation in cheque bouncing cases, the
learned Attorney General has urged this Court to frame guidelines for a graded scheme
of imposing costs on parties who unduly delay compounding of the offence. It was
submitted that the requirement of deposit of the costs will act as a deterrent for
delayed composition, since at present, free and easy compounding of offences at any
stage, however belated, gives an incentive to the drawer of the cheque to delay
settling the cases for years. An application for compounding made after several years
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not only results in the system being burdened but the complainant is also deprived of
effective justice. In view of this submission, we direct that the following guidelines be
followed:

) Page: 672

THE GUIDELINES
(/) In the circumstances, it is proposed as follows:
(a) That directions can be given that the writ of summons be suitably
modified making it clear to the accused that he could make an application for
compounding of the offences at the first or second hearing of the case and that if
such an application is made, compounding may be allowed by the court without
imposing any costs on the accused.
(b) If the accused does not make an application for compounding as aforesaid,
then if an application for compounding is made before the Magistrate at a
subsequent stage, compounding can be allowed subject to the condition that the
accused will be required to pay 10% of the cheque amount to be deposited as a
condition for compounding with the Legal Services Authority, or such authority as
the court deems fit.
(c) Similarly, if the application for compounding is made before the Sessions
Court or a High Court in revision or appeal, such compounding may be allowed
on the condition that the accused pays 15% of the cheque amount by way of
costs.
(d) Finally, if the application for compounding is made before the Supreme
Court, the figure would increase to 20% of the cheque amount.
22. Let it also be clarified that any costs imposed in accordance with these
Guidelines should be deposited with the Legal Services Authority operating at the level
of the court before which compounding takes place. For instance, in case of
compounding during the pendency of proceedings before a Magistrate's Court or a
Court of Session, such costs should be deposited with the District Legal Services
Authority. Likewise, costs imposed in connection with composition before the High
Court should be deposited with the State Legal Services Authority and those imposed
in connection with composition before the Supreme Court should be deposited with
the National Legal Services Authority.
23. We are also in agreement with the learned Attorney General's suggestions for
controlling the filing of multiple complaints that are relatable to the same transaction.
It was submitted that complaints are being increasingly filed in multiple jurisdictions
in a vexatious manner which causes tremendous harassment and prejudice to the
drawers of the cheque. For instance, in the same transaction pertaining to a loan taken
on an instalment basis to be repaid in equated monthly instalments, several cheques
are taken which are dated for each monthly instalment and upon the dishonour of each
of such cheques, different complaints are being filed in different courts which may also
have jurisdiction in relation to the complaint. In light of this submission, we direct that
it should be mandatory for the complainant to disclose that no other complaint has
been filed in any other court in respect of the same transaction. Such a disclosure
should be made on a sworn affidavit which should accompany the complaint filed
under Section 200 CrPC. If it is found that such multiple complaints have been filed,
orders
 ® SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd
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63
) Page: 673

for transfer of the complaint to the first court should be given, generally speaking, by
the High Court after imposing heavy costs on the complainant for resorting to such a
practice. These directions should be given effect prospectively.

24. We are also conscious of the view that the judicial endorsement of the
abovequoted Guidelines could be seen as an act of judicial law-making and therefore
an intrusion into the legislative domain. It must be kept in mind that Section 147 of
the Act does not carry any guidance on how to proceed with the compounding of
offences under the Act. We have already explained that the scheme contemplated
under Section 320 CrPC cannot be followed in the strict sense. In view of the
legislative vacuum, we see no hurdle to the endorsement of some suggestions which
have been designed to discourage litigants from unduly delaying the composition of
the offence in cases involving Section 138 of the Act.
25. The graded scheme for imposing costs is a means to encourage compounding
at an early stage of litigation. In the status quo, valuable time of the court is spent on
the trial of these cases and the parties are not liable to pay any court fee since the
proceedings are governed by the Code of Criminal Procedure, even though the impact
of the offence is largely confined to the private parties. Even though the imposition of
costs by the competent court is a matter of discretion, the scale of costs has been
suggested in the interest of uniformity. The competent court can of course reduce the
costs with regard to the specific facts and circumstances of a case, while recording
reasons in writing for such variance. Bona fide litigants should of course contest the
proceedings to their logical end.
26. Even in the past, this Court has used its power to do complete justice under
Article 142 of the Constitution to frame guidelines in relation to the subject-matter
where there was a legislative vacuum.
27. The present set of appeals are disposed of accordingly.

" Arising out of SLP (Crl.) No. 6369 of 2007. From the Judgment and Order dated 14-8-2007 of the High Court of
Bombay at Goa in Crl. A. No. 74 of 2006

* Arising out of SLPs (Crl.) Nos. 6370-72 of 2007

! (2000) 1 SCC 762 : 2000 SCC (Cri) 310

2 (2002) 8 SCC 164 : 2002 SCC (Cri) 1872

3 (2004) 13 SCC 494 : (2006) 1 SCC (Cri) 348

4 (2005) 4 SCC 162 : 2005 SCC (Cri) 1321

5 (2008) 2 SCC 305 : (2008) 1 SCC (Cri) 351

©(2008) 4 SCC 82 : (2008) 2 SCC (Cri) 186

7 (2010) 1 SCC 798 : (2010) 1 SCC (Cri) 921 : (2009) 14 Scale 262

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