The Bombay High Court has held that, in proceedings under Section 138 of the NI Act pending at the appellate stage, the appellate court is required to consider the applications of the accused in the light of the decision of Sanjabij Tari v. Kishore S. Borcar [2025 SCC OnLine SC 2069]. Where the accused has paid or is willing to pay the cheque amount along with the applicable costs, the matter must be examined in accordance with the modified compounding framework laid down by the Supreme Court; and where the complainant is unwilling to consent to compounding and seeks payment beyond the cheque amount or settlement of other outstanding dues, the court may consider the course indicated in Sanjabij Tari, including suggestion to plead guilty and exercise of powers under Section 255(2) and/or Section 255(3) of the Code of Criminal Procedure, 1973 or Section 278 of the BNSS, 2023, and/or grant of the benefit of the Probation of Offenders Act, 1958.
The High Court therefore quashed and set aside the impugned orders of the ASJ rejecting the Petitioner’s applications, and restored those applications to the file of the Additional Sessions Judge, Niphad, for fresh consideration. It directed that, in addition to the amount of Rs. 1.60 lakhs already deposited in each criminal appeal, the Petitioner shall deposit a further sum of Rs. 30,000/- in each appeal within eight weeks.
A Single Judge Bench of Justice Madhav J. Jamdar noted the Petitioner’s submission that, in each matter, the cheque amount was Rs. 1.13 lakhs, that Rs. 1.60 lakhs had already been deposited before the Appellate Court, and that the Petitioner was willing to deposit a further sum of Rs. 30,000/- in each appeal, with no objection to withdrawal by Respondent No. 2. The Bench also recorded that the Additional Sessions Judge had rejected the applications on the ground that the amount offered was not sufficient to compensate the complainant and that the complainant was not willing to accept the amount. The Bench further noted the rival submission of Respondent No. 2 that, under Section 138 of the NI Act, fine may extend to twice the cheque amount, and therefore the Petitioner was bound to pay twice the cheque amount before any such order could be passed.
The Bench observed that if the complainant is not willing to consent to compounding and asks for payment other than the cheque amount or settlement of entire loan or other outstanding dues, the Magistrate may suggest to the accused to plead guilty and exercise powers under Section 255(2) and/or Section 255(3) of the Code of Criminal Procedure, 1973 or Section 278 of the BNSS, 2023, and/or give the benefit under the Probation of Offenders Act, 1958.
The Bench also observed that though these directions are issued to the Magistrate, they would equally apply at the appellate stage, because the guidelines in Sanjabij Tari v. Kishore S. Borcar [2025 SCC OnLine SC 2069] govern compounding of offences under Section 138 of the NI Act before the Trial Court, Appellate Court, Revisional Court and even the Supreme Court, and also contemplate exercise of powers under Section 255(2) and/or Section 255(3) of the Code, or Section 278 of the BNSS, 2023, and extension of the benefit of the Probation of Offenders Act, 1958. The Bench therefore held that the directions contained in Sanjabij Tari were squarely applicable to the proceedings pending before the Appellate Court.
Briefly, the Petitioner challenged the orders passed by the Additional Sessions Judge, rejecting the applications seeking acquittal in three criminal appeals arising out of convictions under Section 138 of the Negotiable Instruments Act, 1881. The admitted position was that the Petitioner had been purchasing diesel from Respondent No. 2 and had made several payments from March 24, 2017 to July 12, 2017. The Petitioner thereafter issued three cheques, each for Rs. 1.13 lakhs towards payment for diesel purchased from Respondent No. 2. All three cheques were presented and were dishonoured with the endorsement “Funds Insufficient”. A statutory notice was issued and duly served, to which the Petitioner denied liability and alleged misuse of the cheques.
Respondent No. 2 thereafter filed three separate complaints under Section 138 of the NI Act. Upon conclusion of trial, the Judicial Magistrate First Class, convicted the Petitioner in all three cases and sentenced him to simple imprisonment for three months, and to pay a fine of Rs. 1.60 lakhs in each case, out of which Rs. 1.55 lakhs were to be paid to Respondent No. 2 as compensation and Rs. 5,000/- towards costs. On appeal, sentence was suspended subject to deposit of 20% of the cheque amount, which was deposited on June 28, 2024. Thereafter, the Petitioner first expressed willingness to pay Rs. 1.32 lakhs in each appeal and later filed applications stating willingness to pay Rs. 1.60 lakhs already deposited before the appellate court, and prayed for acquittal. Those applications were however, rejected.
