Negotiable Instruments Act - Punishments -substantive punishments- concurrently - default of fine punishment- consecutively = whether the High Court was right in declining the prayer made by the appellant for a direction in terms of Section 427 read with Section 482 of the Code of Criminal Procedure for the sentences awarded to the appellant in connection with the cases under Section 138 of the Negotiable Instruments Act filed against him to run concurrently. = Applying the principle of single transaction referred to above to the above fact situations we are of the view that each one of the loan transactions/financial arrangements was a separate and distinct transaction between the complainant on the one hand and the borrowing company/appellant on the other. If different cheques which are subsequently dishonoured on presentation, are issued by the borrowing company acting through the appellant, the same could be said to be arising out of a single loan transaction so as to justify a direction for concurrent running of the sentences awarded in relation to dishonour of cheques relevant to each such transaction. That being so, the substantive sentence awarded to the appellant in each case relevant to the transactions with each company referred to above ought to run concurrently. We, however, see no reason to extend that concession to transactions in which the borrowing company is different no matter the appellant before us is the promoter/Director of the said other companies also. - We make it clear that the direction regarding concurrent running of sentence shall be limited to the substantive sentence only. The sentence which the appellant has been directed to undergo in default of payment of fine/compensation shall not be affected by this direction. We do so because the provisions of Section 427 of the Cr.P.C. do not, in our opinion, permit a direction for the concurrent running of the substantive sentences with sentences awarded in default of payment of fine/compensation.= In the result, these appeals succeed but only in part and to the following extent: 1) Substantive sentences awarded to the appellant by the Courts of Judicial Magistrate, First Class, Hissar and Additional Chief Judicial Magistrate, Hissar, in Criminal complaint cases No.269-II/97; No.549-II/97; No.393-II/97; No.371-II/97; No.372-II/97; No.373-II/97; No.877-II/96; No.880-II/96; No.878-II/96; No.876-II/96; No.879-II/96; No.485-II/96 relevant to the loan transaction between Haryana Financial Corporation and Arawali Tubes shall run concurrently. 2) Substantive sentences awarded to the appellant by the Court of Judicial Magistrate, First Class, Hissar in Criminal complaint cases No.156-II/1997 and No.396-II/1998 between Haryana Financial Corporation and Arawali Alloys relevant to the transactions shall also run concurrently; 3) Substantive sentences inter se by the Court of Judicial Magistrate,First Class, Hissar in the above two categories and that awarded in complaint case No.331-II/97 shall run consecutively in terms of Section 427 of the Code of Criminal Procedure. 4) No costs.

               published in http://judis.nic.in/supremecourt/imgs1.aspx?filename=40532

                                         REPORTABLE



                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

          publi      
 CRIMINAL APPEAL NOS.836-851  OF 2013
            (Arising out of S.L.P. (Crl.) Nos.10023-10038 of 2011


V.K. Bansal                                  …Appellants

      Versus

State of Haryana and Ors. etc. etc.                …Respondents

                               J U D G M E N T

T.S. THAKUR, J.

1.    Leave granted.

2.    The short question that falls for determination in  these  appeals  by
special leave is
whether the High Court was right in  declining  the  prayer
made by the appellant for a direction in terms  of  Section  427  read  with Section 482 of the Code of Criminal Procedure for the sentences  awarded  to the appellant in  connection  with  the  cases  under  Section  138  of  the Negotiable Instruments Act filed against him to run concurrently.
3.    The material facts are not in dispute. The appellant is a Director  in
a group of companies including Arawali  Tubes  Ltd.,  Arawali  Alloys  Ltd.,
Arawali Pipes Ltd. and Sabhyata Plastics Pvt.  Ltd.   The  appellant’s  case
before us in that in connection with his business conducted in the  name  of
the above companies, he had approached  the  respondent,  Haryana  Financial
Corporation for financial assistance and  facilities.  The  Corporation  had
accepted  the  requests  made  by  the  Companies  and   granted   financial
assistance to the  first  three  of  the  four  companies  mentioned  above.
Several cheques towards repayment of the amount borrowed  by  the  appellant
in the name of the above companies were issued  in  favour  of  the  Haryana
Financial Corporation which on presentation were dishonoured  by  the  banks
concerned  for  insufficiency  of  funds.  Consequently,   the   Corporation
instituted complaints under Section 138 of the  Negotiable  Instruments  Act
against the appellant in his capacity  as  the  Director  of  the  borrowing
companies. These complaints were tried by  Judicial  Magistrates  at  Hissar
culminating in the conviction of the appellant and sentence of  imprisonment
which ranged between 6 months in some cases  to  one  year  in  some  others
besides imposition of different amounts of fine  levied  in  each  complaint
case and a default sentence in the event of non payment  of  amount  awarded
in each one of those cases.
4.    Aggrieved by his conviction  and  the  sentence  in  the  cases  filed
against him the appellant preferred appeals which were heard  and  dismissed
by the Additional Sessions Judge, Hissar in terms of separate orders  passed
in each case. In some of the cases the Appellate Court reduced the  sentence
from one year to nine months.
5.    The appellant then approached  the  High  Court  by  way  of  revision
petitions.  The High Court dismissed 15 out of  17  revisions  petitions  in
which the appellant was convicted.  The  remaining  two  revision  petitions
are still pending before the High Court.  The High Court  noticed  that  the
appellant had not questioned the correctness of the  conviction  before  the
appellate Court which disentitled him to do so in revision.   That  position
was, it appears, not disputed even by the  appellant,  the  only  contention
urged before the High Court being that instead of the sentences  awarded  to
him running consecutively they ought to run concurrently.   That  contention
was turned down by the High Court holding that the sentence of  imprisonment
awarded to the appellant was not excessive so as to  warrant  its  reduction
or a direction for concurrent running of the same. The High Court noted:


           “As regards sentence, keeping in view  the  amount  of  cheques,
           sentence of simple imprisonment for  six  months  in  each  case
           cannot be said to  be  excessive  so  as  warrant  reduction  or
           direction for concurrent running of the sentences in all  the  8
           cases.  Even sentence in default of payment of  fine,  which  is
           huge amount, also cannot be said to be excessive”.




6.    The revision petitions filed by the appellant along with the  criminal
miscellaneous applications moved under  Section  482  of  the  Cr.P.C.  were
accordingly dismissed. The present appeals assail  the  correctness  of  the
orders passed by the High Court which are no doubt separate but  in  similar
terms.
7.    Learned counsel appearing for the appellant  strenuously  argued  that
the High Court has committed an error in declining the prayer  made  by  the
appellant for an appropriate direction to  the  effect  that  the  sentences
awarded to the appellant in the cases in which he was found guilty ought  to
run concurrently and not consecutively.  It was urged that the  trial  Court
and so also the appellate  and  the  revisional  Courts  were  competent  to
direct that the sentences awarded to the appellant should run  concurrently.
The power vested in them to issue such a direction  has  not  been  properly
exercised, contended the learned counsel.  Reliance in  support  was  placed
upon the decision of this Court in State of Punjab v.  Madan  Lal  (2009)  5
SCC 238.
8.    Section 427 of the Code of Criminal Procedure  deals  with  situations
where an offender who is already undergoing a sentence  of  imprisonment  is
sentenced on a subsequent conviction to  imprisonment  or  imprisonment  for
life. It provides that such imprisonment  or  imprisonment  for  life  shall
commence at the  expiration  of  the  imprisonment  to  which  he  has  been
previously sentenced unless the Court directs that the  subsequent  sentence
shall run concurrently with such previous  sentence.   Section  427  may  at
this stage be extracted:

           “427. Sentence on offender already sentenced for another offence
           -   (1)  when  an  person   already   undergoing   sentence   of
           imprisonment  is  sentenced  on  a  subsequent   conviction   to
           imprisonment or imprisonment  for  life,  such  imprisonment  or
           imprisonment for life shall commence at the  expiration  of  the
           imprisonment to which he has been  previously  sentenced  unless
           the  Court  directs  that  the  subsequent  sentence  shall  run
           concurrently  with such previous sentence.


                 Provided that where a person who  has  been  sentenced  to
           imprisonment by  an  order  under  Section  122  in  default  of
           furnishing  security  is,  whilst  undergoing   such   sentence,
           sentenced to imprisonment for an offence committed prior to  the
           making  of  such  order,  the  latter  sentence  shall  commence
           immediately.


           (2)    When  a  person  already   undergoing   a   sentence   of
           imprisonment for life is sentenced on a subsequent conviction to
           imprisonment for a term or imprisonment for life, the subsequent
           sentence shall run concurrently with such previous sentence.”


9.    That upon a subsequent conviction  the  imprisonment  or  imprisonment
for life shall commence at the expiration  of  the  imprisonment  which  has
been previously awarded is manifest from a plain reading of the  above.  The
only contingency in which this position will not  hold  good  is  where  the
Court directs otherwise. Proviso to sub-section (1) to Section  427  is  not
for the present relevant as the same  deals  with  cases  where  the  person
concerned is sentenced to imprisonment by an  order  under  Section  122  in
default of furnishing security which is not the  position  in  the  case  at
hand.  Similarly sub-section (2) to Section 427 deals with situations  where
a  person  already  undergoing  a  sentence  of  imprisonment  for  life  is
sentenced  on  a  subsequent  conviction  to  imprisonment  for  a  term  or
imprisonment  for  life.  Sub-section  (2)  provides  that  the   subsequent
sentence shall in such a case run concurrently with such previous  sentence.

10.   We are in the case at hand concerned more with  the  nature  of  power
available to the Court under Section  427(1)  of  the  Code,  which  in  our
opinion  stipulates  a  general  rule  to  be  followed  except   in   three
situations, one falling under the proviso  to  sub-section  (1)  to  Section
427, the second falling under sub-section (2) thereof and  the  third  where
the Court directs that the sentences shall run concurrently. It is  manifest
from Section 427(1) that the Court has  the  power  and  the  discretion  to
issue a direction but in the very nature of the power so conferred upon  the
Court the discretionary  power shall have to  be  exercised  along  judicial
lines and not in a mechanical, wooden or pedantic manner.  It  is  difficult
to lay down any strait jacket approach in the matter  of  exercise  of  such
discretion by the Courts. There is no cut and dried formula  for  the  Court
to follow in the matter of issue  or  refusal  of  a  direction  within  the
contemplation of Section 427(1). Whether or not  a  direction  ought  to  be
issued in a given case would depend  upon  the  nature  of  the  offence  or
offences committed,  and  the  fact  situation  in  which  the  question  of
concurrent running of the sentences arises.  High  Courts  in  this  country
have, therefore, invoked and exercised their discretion to issue  directions
for concurrent running of sentence  as  much  as  they  have  declined  such
benefit to the prisoners. For instance a direction  for  concurrent  running
of the sentence has been declined by the  Gujarat  High  Court  in  Sumlo  @
Sumla Himla Bhuriya and Ors. v. State of Gujarat and Ors. 2007 Crl.L.J.  612
 that related to commission of offences at three different places  resulting
in three different prosecutions before three  different  Courts.   The  High
Court observed:
           “The rule of 'single  transaction'  even  if  stretched  to  any
           extent will not bring the cases aforesaid under the umbrella  of
           'single transaction' rule and therefore, this application fails.
           The application is rejected.”




11.   Similarly a direction for concurrent  running  of  sentence  has  been
declined by the same High Court in State of Gujarat  v.  Zaverbhai  Kababhai
1996 Crl.L.J. 1296  which  related  to  an  offence  of  rape  committed  at
different places resulting in conviction in each one of  those  offences  in
different prosecutions. The High Court observed:
           “….It is true that it is left to the  discretion  of  the  Court
           while ordering the  sentence  to  run  either  consecutively  or
           concurrently. However,  such  discretion  has  to  be  exercised
           judicially, having regard to the facts and circumstances of  the
           case. As observed by the Supreme Court, the rule with regard  to
           sentencing  concurrently  will  have  no  application,  if   the
           transaction relating to offence is not the same  and  the  facts
           constituting  the  two  offences  are   quite   different.   The
           respondent-accused  is  found  to  be  guilty  for  the  offence
           punishable under Section 376 of the Indian  Penal  Code  in  two
           different and distinct occurrences on two different  dates,  and
           the transactions relating to the commission of the offences have
           no nexus with each other…


12.   There are also  cases  where  the  High  Courts  have  depending  upon
whether facts forming the  basis  of  prosecution  arise  out  of  a  single
transaction or transactions that are akin to each other  directed  that  the
sentences awarded should run concurrently.  As for instance the  High  Court
of Allahabad has in Mulaim Singh v. State 1974 Crl. L.J. 1397  directed  the
sentence to run concurrently  since  the  nature  of  the  offence  and  the
transactions thereto were akin to each other. Suffice it  to  say  that  the
discretion vested in the Court for a direction in terms of Section  427  can
and ought to be exercised  having  regard  to  the  nature  of  the  offence
committed and the facts situation, in which the question arises.
13.   We may at this stage refer to the decision  of  this  Court  in  Mohd.
Akhtar Hussain v. Assistant Collector of Customs (1988) 4 SCC 183  in  which
this Court recognised the basic rule of convictions arising out of a  single
transaction justifying concurrent running of the  sentences.  The  following
passage is in this regard apposite:
           “The basic rule of thumb over the years has been the  so  called
           single transaction rule for concurrent  sentences.  If  a  given
           transaction  constitutes  two  offences  under  two   enactments
           generally, it is wrong to  have  consecutive  sentences.  It  is
           proper and legitimate to have  concurrent  sentences.  But  this
           rule has no application if the transaction relating to  offences
           is not the same or the facts constituting the two  offences  are
           quite different.”

14.   In. Madan Lal’s case (supra) this Court relied upon  the  decision  in
Akhtar Hussain’s case (supra) and affirmed the direction of the  High  Court
for the sentences to run concurrently. That too was  a  case  under  Section
138 of the Negotiable Instruments Act.   The  State  was  aggrieved  of  the
direction that the sentences shall run  concurrently  and  had  appealed  to
this Court against the same.  This  Court,  however,  declined  interference
with the order passed by the High Court and upheld the direction  issued  by
the High Court.
15.   In conclusion, we may say that the legal position favours exercise  of
discretion to the benefit of the prisoner in cases where the prosecution  is
based on a single transaction no matter  different  complaints  in  relation
thereto may have been filed as is the position in cases involving  dishonour
of cheques issued by the  borrower  towards  repayment  of  a  loan  to  the
creditor.
16.   Applying the above test to the 15 cases  at  hand  we  find  that  the
cases  against  the  appellant  fall  in  three  distinct  categories.   The
transactions forming the basis of the prosecution relate to three  different
corporate entities who had either entered into loan  transactions  with  the
State Financial Corporation or  taken  some  other  financial  benefit  like
purchase  of  a  cheque  from  the  appellant  that  was   on   presentation
dishonoured. The 15 cases that have culminated  in  the  conviction  of  the
appellant and the award of sentences of imprisonment and fine  imposed  upon
him may be categorised as under:
   1)  Cases  in  which  complainant-Haryana  State  Financial   Corporation
      advanced a loan/banking facility to M/s Arawali  Tubes  Ltd.    acting
      through the appellant as its Director viz. No.269-II/97; No.549-II/97;
      No.393-II/97; No.371-II/97; No.372-II/97; No.373-II/97;  No.877-II/96;
      No.880-II/96; No.878-II/96; No.876-II/96; No.879-II/96; No.485-II/96


   2)  Cases  in  which  complainant-Haryana  State  Financial   Corporation
      advanced a loan/banking facility  to  the  appellant  to  M/s  Arawali
      Alloys Ltd.   acting through the appellant as its Director viz. No.156-
      II/1997 and  No.396-II/1998

   3) Criminal complaint No. 331-II/97 in which complainant- State  Bank  of
      Patiala purchased/discounted the cheque offered by  Sabhyata  Plastics
      acting through the appellant as its Director.


17.   Applying the principle of single transaction referred to above to  the above fact situations 
we  are  of  the  view  that  each  one  of  the  loan
transactions/financial arrangements was a separate and distinct  transaction between the complainant on the one hand and the borrowing  company/appellant on the other.  
If different cheques which are  subsequently  dishonoured  on
presentation, are  issued  by  the  borrowing  company  acting  through  the appellant, the same could be said  to  be  arising  out of  a  single  loan transaction so as to justify a  direction  for  concurrent  running  of  the sentences awarded in relation to dishonour of cheques relevant to each  such transaction. 
That being so, the substantive sentence  awarded to the appellant in each  case  relevant  to  the  transactions  with  each company referred to above ought to run concurrently.  
We,  however,  see  no
reason to extend that concession to  transactions  in  which  the borrowing company  is  different  no  matter  the   appellant   before us is the promoter/Director of the said other companies also.  
Similarly  we  see  no
reason to direct running of the sentence concurrently in the case  filed  by
the State Bank of Patiala  against  M/s  Sabhyata  Plastics  and  M/s  Rahul
Plastics which transaction is also independent  of  any  loan  or  financial
assistance  between  the  State  Financial  Corporation  and  the  borrowing
companies.
We make it clear that the direction regarding concurrent  running
of sentence shall be limited to the substantive sentence only. 
The  sentence
which the appellant has been directed to undergo in default  of payment  of fine/compensation shall not  be  affected  by  this direction.   
We  do  so
because the provisions of  Section  427  of  the  Cr.P.C.  do  not,  in  our opinion, permit a direction for the concurrent running  of  the  substantive sentences   with   sentences   awarded   in   default  of   payment  of fine/compensation.

18.   In the result, these appeals succeed but  only  in  part  and  to  the
following extent:
1) Substantive sentences awarded to the appellant by the Courts of  Judicial Magistrate, First Class, Hissar and Additional Chief Judicial Magistrate, Hissar, in Criminal complaint cases No.269-II/97;  No.549-II/97;  No.393-II/97; No.371-II/97; No.372-II/97;  No.373-II/97;  No.877-II/96;  No.880-II/96; No.878-II/96; No.876-II/96; No.879-II/96; No.485-II/96 relevant to the loan transaction between Haryana Financial  Corporation  and  Arawali Tubes shall run concurrently.
2)  Substantive sentences awarded to the appellant by the Court of  Judicial Magistrate, First Class,  Hissar  in  Criminal  complaint  cases  No.156-II/1997 and  No.396-II/1998 between  Haryana  Financial  Corporation  and Arawali Alloys relevant to the transactions shall also run concurrently;
3) Substantive sentences inter se  by  the  Court  of  Judicial  Magistrate,First Class, Hissar in the above  two  categories  and  that  awarded  in complaint case No.331-II/97 shall run consecutively in terms  of  Section 427 of the Code of Criminal Procedure.
4) No costs.
                                                             ………………...…………J.
                                             (T.S. THAKUR)



                                                             …………………...………J.
                                                          (GYAN SUDHA MISRA)
New Delhi
July 5, 2013

"The assignment of a promissory note by the payee is a part of the "cause of action" within the meaning of S.20 (c), C.P.C. and the assignee can sue on it in the Court having jurisdiction where the assignment took place:

THE HONOURABLE SRI JUSTICE N.R.L.NAGESWARA RAO            

SECOND APPEAL NO.598 OF 2011      

24-08-2012

M.R.Venu

Smt.Veluchuri Lakshmi and others

Counsel for the Appellant :      Sri K.G.Krishna Murthy

Counsel for the Respondent:      Sri Ravi Cheemalapati

<Gist :

>Head Note:

? Cases referred:
1.AIR 2005 A.P. 37
2.AIR 1958 A.P. 451
3.1969 An.W.R. 222
4.AIR 1966 A.P. 334
5. 2010 (5) ALT 96 (D.B)
6.AIR 1917 MADRAS 221  

JUDGMENT:-

        The unsuccessful defendant in O.S.No.119 of 1994 on the file of the Court
of Senior Civil Judge, Vizianagaram is the appellant herein.

02.     The suit was one filed for recovery of a sum of Rs.70,800/- alleging that
the defendant has borrowed a sum of Rs.50,000/- on 06-09-1992 and executed a 
promissory note in favour of one Laxmi Narsu who in turn transferred the
promissory note on      06-11-1993 for consideration in favour of the first
plaintiff at Srungavarapu Kota.

03.     The defendant claimed that he did not borrow any amount from the original
holder Laxmi Narsu who is an employee of I.O.B at Chittoor. The defendant
obtained some loan from IOB, Chittoor and at that time the original holder
obtained signatures on blank papers and the suit promissory note might have been
fabricated. The suit is, therefore, not maintainable. He also pleaded that the
court at Vizianagaram has no jurisdiction to try the case.

04.     After considering the evidence on record, the trial court has decreed the
suit and in an appeal the District Judge, Vizianagaram in A.S.No.95 of 2004 has
dismissed the appeal.  Aggrieved by the concurrent judgments of the Courts
below, the present Second Appeal is sought to be filed.


05.     The Second Appeal has been admitted on the following substantial questions
of law.
1. Whether the suit was properly instituted in the Court of the Senior Civil
Judge at Vizianagaram and whether the plaintiff is a holder in due course?
2. Whether the judgments of the Courts below are not proper as the Courts have
no jurisdiction to entertain the suits?

06.     So far as the execution of the promissory note is concerned, there is a
dispute and the defendant has come up with a theory of contributing signatures
on blank papers. But, however, the evidence of PWs.1 and 2 clearly goes to show
that the transaction of lending money is true and PW.2 supports the above
version.  His acquaintance with the original holder of the promissory note is
not in dispute. PW.2 is the scribe of the promissory note and is also the scribe
of the indorsement of transfer. This evidence has been accepted by the Court
below and, therefore, in view of the above circumstances, the question of non-
execution of the promissory note by the defendant cannot be accepted and it is a
question of fact appreciated by the Courts below, which does not call for any
interference.

07.     However, the thrust of the argument of the counsel for the appellant is
that the transfer indorsement for consideration does not create jurisdiction to
the Court at Srungavarapu Kota as no transaction has taken place except the
alleged transfer and as the defendant resides at Chittoor and following the
decision reported in S.S.V.Prasad v. Y. Suresh Kumar1 the suit should have been
dismissed. No doubt, in the above decision, it was held that a transfer
endorsement does not create jurisdiction to the Court.  The learned Judge has
taken into consideration the provisions of Section 20 C.P.C and took into
consideration the provisions of the Negotiable Instruments Act, 1881. Evidently,
according to the learned Judge, the provisions of Sections 68 to 70 of N.I Act
prescribes the place of presentation and if no place is agreed between the
parties, it should be the place where the defendant resides or carries on
business. Evidently, Sections 68 to 70 of N.I.Act deals with presentation of the
negotiable instrument claiming the amount. None of those sections refer to the
jurisdiction of a Court where the suit has to be filed.  Presentation of a
negotiable instrument for honouring or dishonouring is quite different from the
institution of a suit for recovery of the amount due under the negotiable
instrument.  Therefore, the purport under Sections 68 to 70 of the N.I Act
cannot be imported to consider the cause of action under Section 20 of C.P.C
which mandates the procedure for filing of the suits. Having considered the
scope of Section 20(C) of C.P.C, ultimately, the learned Judge found that cause
of action in the larger context has two components, viz.,    (a) existence of a
duty in the defendant towards the plaintiff and its breach; and (b) the damage
or loss arising out of that breach.  Therefore, the scope of cause of action
evidently is from a bundle of facts. It does not start with the right of the
defendant and it starts with the right of the plaintiff in instituting a suit.
In this connection, it is useful to refer to a Division Bench decision of this
Court reported in N.Narayana Murthy v. G.Ganga Raju2 wherein it was held as
under
"Cause of action is a bundle of essential facts which the plaintiff has to prove
in order to sustain his action.  This connotes that both the right to sue and
cause of action are the same and the cause of action is synonymous with the
right to sue."

08.     The above judgment clearly lays down that a cause of action starts with
the right to sue and it is evidently vested with the plaintiff.  In the decision
relied on by the counsel for the appellant in S.S.V.Prasad (1st supra) the
learned Judge has referred to the judgment of this Court reported in
P.S.Kothandarama Gupta v. Sidamsetty Vasant Kumar3, but, differed with the 
learned Judge in holding that Section 70 of the N.I Act does not lay the place
of suing. In this connection, the judgment reported in Radhakrishnamurthy v.
Chandrasekhara Rao4  also deals with the situation of this nature and it was
held that a transfer of assignment on promissory note creates cause of action
within whose jurisdiction the transferor endorsement has taken place.
Therefore, the opinion of the two earlier single Judges of this Court is in
favour of holding that the cause of action is created by virtue of the transfer
of the promissory note at a place where it was transferred and particularly for
consideration.



09.     It is to be noted that exception to Section 64 of the N.I.Act is as
follows:-
        "Exception:-- Where a promissory note is payable on demand and is not 
payable at a specified place, no presentment is necessary in order to charge the
maker thereof."
        Therefore, the above provision makes it clear that a presentation of the
promissory note is not necessary and when presentation is not necessary, the
provisions of Sections 68 to 70 of N.I.Act can have no application.
Consequently, the jurisdiction has to be decided only under Section.20 C.P.C.

10.     It is to be noted that this Court is a Court established by merger of
Andhra High Court and Hyderabad High Court.  Andhra High Court being one carved 
out of Madras High Court, which is a Court of record, all its decisions prior to
establishment of Andhra High Court are binding on High Court of Andhra Pradesh,
subject of course to other rules of doctrine of precedent. [vide decision
reported in Lakshminagar Housing Welfare Association Vs. Syed Sami @ Syed    
Samiuddin(5)].

11.   In this connection, it is useful to refer to the decision of a Division
Bench of Madras High Court reported in Manepalli Magamma and others v. Manepalli  
Sathi Raju6 which was referred by the learned single Judge in Radhakrishnamurthy
(4th supra) with whom the learned Judge differed in the decision         1st
supra. Exactly, the similar question arose before the Division Bench of Madras
High Court and the question was whether assignee of a promissory note can sue in
the Court having jurisdiction where his assignment was made. Ultimately, it was
found that assignment is part of cause of action under Section 20 (c ) and
further it was held as under:-
"The expression within 'cause of action', in Section 20 C.P.C must be read with
reference to the suit instituted by the plaintiff; it means plaintiff's cause of
action, and not the cause of action on the documents, sued on irrespective of
the rights of the plaintiff under it, in other words, the cause of action as it
existed when the right to sue on the note arose for the first time."
"The assignment of a promissory note by the payee is a part of the "cause of
action" within the meaning of S.20 (c), C.P.C. and the assignee can sue on it in
the Court having jurisdiction where the assignment took place: Read Vs.Brown [
(1989) 22 Q B D 128."
     
12.     It is to be noted under Section 48 of the N.I.Act a promissory note is
negotiable by the holder by endorsement and delivery thereof. There is not of
much difference with reference to an "assignment" or a "transfer of a promissory
note". They only create the right of the person in whom the endorsement or
assignment was made to recover the money against the executant.

13.     In-fact, it was also held in the above decision that the above
interpretation may cause inconvenience to the defendant in particular cases,
but, it cannot be a factor.  In-fact, the learned Judge in the decision relied
on by the appellant in S.S.V. Prasad (1st supra) referred to the inconvenience
of the defendants in para 33 opining that if the interpretation of right to sue
is given, it will result in disastrous consequences and the defendant will be
subjected to face litigation with a person who is a stranger to him and at a
place where he is neither resident nor undertaken any activity, if the suit is
filed on the strength of a promissory note said to have been endorsed by the
holder.  In view of the judgment of the Division Bench which is binding and
which has been relied on by the other two single Judges, it is to be held that
jurisdiction of the Court to entertain the suit at Srungavarapu Kota on the
basis of the transfer for consideration cannot be doubted.  Therefore, the
appeal is liable to be dismissed.
Accordingly, the Second Appeal is dismissed.  No costs.   Miscellaneous
petitions pending, if any, in this Second Appeal shall stand closed.
_______________________  
N.R.L. NAGESWARA RAO,J    
24-08-2012

whether the consent of the complainant is required for compounding an offence like that off under sec.320 of Cr.P.C. due to non-abstante clause of sec.147 of N.I.ACT ?=this Court is unable to accept the contentions of the learned counsel for the appellant(s) that as a result of sanction of a scheme under Section 391 of the Companies Act there is an automatic compounding of offences under Section 138 of the N.I. Act even without the consent of the complainant.

REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO_263_ OF 2012 (Arising out of SLP (Crl.) No.4445/2009) JIK Industries Limited & Ors. ....Appellant(s) - Versus - Amarlal V. Jumani and Another ....Respondent(s) WITH Crl.A. No...264/2012 @ SLP(Crl) No.4446/2009, Crl.A. No 265/2012 @ SLP(Crl) No.4447/2009, Crl.A. No.266/2012 @ SLP(Crl) No.4448/2009, Crl.A. No.267/2012 @ SLP(Crl) No.4449/2009, Crl.A. No.268/2012 @ SLP(Crl) No.4450/2009, Crl.A. No.269/2012 @ SLP(Crl) No.4451/2009, Crl.A. No.270/2012 @ SLP(Crl) No.4452/2009, Crl. A.No.271/2012 @ SLP(Crl) No.4453/2009, Crl.A. No.272/2012 @ SLP(Crl) No.4454/2009, Crl.A. No.273/2012 @ SLP(Crl) No.4456/2009, Crl.A. No.274/2012 @ SLP(Crl) No.4457/2009, Crl.A. No...275-294/2012 @ SLP(Crl) No.843-862/2010, Crl.A. No...295-303/2012 @ SLP(Crl) No.6643-6651/2010. J U D G M E N T GANGULY, J. 1. Leave granted. 1 2. This group of appeals were heard together as they involve common questions of law. There are some factual differences but the main argument by the appellant(s) in this matter was advanced by Mr. Chander Uday Singh, Senior Advocate on behalf of the Sharp Industries Limited in SLP (Crl.) No.6643-6651 of 2010 and the facts are taken mostly from the said case. 3. The learned counsel assailed the judgment of the High Court wherein by a detailed judgment High Court dismissed several criminal writ petitions which were filed challenging the processes which were issued by the learned Trial Judge on the complaint filed by the respondents in proceedings under Section 138 read with Section 141 of Negotiable Instruments Act, 1881 (hereinafter `N.I. Act'). By way of a detailed judgment, the High Court after dismissing the writ petitions held that sanction of a scheme under Section 391 of the Companies Act, 1956 (hereinafter `Companies 2 Act') does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act. The High Court also held that sanction of a scheme under Section 391 of the Companies Act will not have the effect of termination or dismissal of complaint proceedings under N.I. Act. However, the learned Judge made it clear that the judgment of the High Court will not prevent the petitioners from filing separate application invoking the provisions of Section 482 Criminal Procedure Code, if they are so advised. Assailing the said judgment the learned counsel submitted that an unsecured creditor who does not oppose the scheme of compromise or arrangement under Section 391 of the Companies Act must be taken to have supported the scheme in its entirety once such a scheme is sanctioned by the High Court, even a dissenting creditor cannot file a criminal complaint under Section 138 of the N.I. Act for enforcement of a pre-compromise debt. Nor can such a creditor oppose the compounding of criminal 3 complaint which was filed under Section 138 of the N.I. Act in respect of pre-compromise debt. 4. The material facts of the case are that the appellant company on or about 12th May, 2005 came out with a scheme by which it was agreed that the appellant company should be revived and thereafter payments will be made to the creditors. Pursuant to such scheme the appellant company filed a petition under Section 391 of the Companies Act to the High Court. The whole scheme was placed before the High Court and according to the appellant(s), first order of the scheme came to be passed by the Hon'ble High Court by its order dated 5th May, 2005 in Company Petition No.92 of 2005. At the time the said company petition was pending, a meeting was convened by the appellant company on 1.6.05 and the same was attended by several creditors including representative of the first respondents and they opposed the scheme. Despite the said opposition, the appellant(s) succeeded in getting the scheme approved by 4 statutory majority as required under the law. Thereafter, on 17.11.2005 another company petition with a fresh scheme (Company petition No. 460 of 2005) was filed. After the said company petition was filed all proceedings which were initiated by different companies against the appellant(s) came to be stayed by the High Court. In view of the aforesaid scheme the appellant company filed application for compounding under Section 147 of the N.I. Act read with Section 320 of the Criminal Procedure Code (hereinafter, `the Code') and Section 391 of the Companies Act. However, the respondents opposed the said prayer of the petitioner and by an order dated 19th January, 2007, the learned Chief Judicial Magistrate, Ahmednagar rejected the application filed by the appellant for termination of the proceedings inter alia on the ground that the learned Magistrate has no power to quash or terminate the proceedings. 5 5. Being aggrieved by the said order of the Magistrate, the appellants filed writ petitions before the High court. 6. Similar petitions were filed on 6.7.2009 by JIK Industries Limited and another. All those petitioners were dismissed by the High court on 18.3.2010 in view of an order dated 14.8.2008 passed by the High Court in connection with the petitions filed by other similarly placed companies (JIK Industries). 7. In the background of the aforesaid facts the contentions raised by the appellant company is that the scheme envisaged a compromise between the company and the secured creditors on the one hand and its unsecured creditors on the other hand. Such scheme was framed pursuant to the order of the Company Court dated 5th May, 2005 which directed meeting of the different classes of creditors for consideration of the scheme. 6 Thereafter, meeting was convened of unsecured creditors and the scheme was approved on 1st June, 2005 by the requisite majority of the shareholders and unsecured creditors. Then the scheme was taken up for sanction by the Company Court. The Court considered the objections of some of the unsecured creditors and workmen but ultimately by its judgment dated 17th November, 2005 approved the scheme with a few minor modifications. It was also urged that some of the secured and unsecured creditors have taken advantage of the scheme and did not challenge the scheme. However, the scheme was challenged by the appellant(s) in respect of certain observations made therein by the learned Company Judge and the said appeal is pending before the Bombay High court. The learned counsel for the appellant(s) argued that the effect of a scheme of compromise between the company and its creditors under Section 391 of the Companies Act is binding upon all class of creditors whether they are assenting or dissenting. The purpose of a scheme under Section 391 and 392 is restructure 7 and alteration of the old debts which were payable prior to the scheme so as to make the debts payable in the manner and to the extent provided under the scheme. 8. In so far as the case of JIK Industries is concerned, it has been urged that the scheme in JIK is different that Sharp. The learned counsel for the appellant(s) urged that the once the scheme is sanctioned, it relates back to the date of the meeting and in support of the said contention reliance was placed on a judgment of the Privy Council in the case of Raghubar Dayal vs. The Bank of Upper India Ltd. reported in AIR 1919 P.C. 9. It was also urged that in a scheme under Section 491 a judgment is in rem. The learned counsel further submitted that admittedly the respondents objected to the scheme and is a dissenting creditor. 8 9. The learned counsel for the respondents (in Sharp Industries case) on the other hand submitted that in the petition which was filed before the Magistrate on behalf of the Sharp Industries the prayer was only for quashing of the criminal proceedings and there was no prayer for compounding of the offences. While the Magistrate refused to quash the said proceeding then while challenging the same in the High Court the prayer for compounding was made for the first time. The learned counsel for the respondents (in the case of JIK Industries) has drawn the attention of this Court to the order dated 3.10.2006 passed by the Metropolitan Magistrate, XII Court Bandra, Mumbai whereby the learned Magistrate passed an order on the application of the accused, the appellant, for compounding of offences under Section 138. By the said order the learned Magistrate rejected the prayer for compounding made by the appellant(s) under Section 147 of the N.I. Act. 9 10. It was also pointed out by some of the respondents that after the High Court passed the impugned order whereby the prayer for compounding by the appellant(s) was rejected and the appellant(s) were given an opportunity to file a petition under Section 482 of the Criminal Procedure Code for quashing of the complaint, some of the appellant(s) availing of that liberty also filed application for quashing of the proceedings. They have also filed SLPs before this Court. This Court should, therefore, dismiss the SLPs. 11. Considering the aforesaid submissions of the rival parties, this Court finds that the effect of approval of a scheme of compromise and arrangement under Section 391 of the Companies Act is that it binds the dissenting minority, the company as also the liquidator if the company is under winding up. Therefore, Section 391 of the Companies Act gives very wide discretion to the Court to approve any 1 set of arrangement between the company and its shareholders. 12. Learned counsel for the appellant(s) placed reliance on the decision of this Court in M/s. J.K. (Bombay) Private Ltd. vs. M/s. New Kaiser-I- Hind Spinning and Weaving Co., Ltd., and others reported in AIR 1970 SC 1041 in support of his contention that a scheme under Section 391 of the Companies Act is not a mere agreement but it has a statutory force. The learned counsel also urged, relying on the said judgment that the scheme is statutorily binding even on dissenting creditors and shareholders. The effect of the scheme is that so long as it was carried out by the company by regular payment in terms of the scheme, a creditor is bound by it and cannot maintain even a winding- up petition. 13. Even if the aforesaid position is accepted the same does not have much effect on any criminal 1 proceedings initiated by the respondent creditors for non-payment of debts of the company arising out of dishonour of cheques. Factually the allegation of the respondent is that even payment under the scheme has not been made. However, without going into those factual controversies, the legal position is that a scheme under Section 391 of the Companies Act does not have the effect of creating new debt. The scheme simply makes the original debt payable in a manner and to the extent provided for in the scheme. In the instant appeal in most of the cases the offence under the N.I. Act has been committed prior to the scheme. Therefore, the offence which has already been committed prior to the scheme does not get automatically compounded only as a result of the said scheme. Therefore, even by relying on the ratio of the aforesaid judgment, this Court cannot accept the appellant's contention that the scheme under Section 391 of the Companies Act will have the effect of automatically compounding the offence under the N.I. Act. 1 14. The learned counsel for the appellant(s) also relied on various other judgments to show the effect of the scheme under Section 391 of the Companies Act. Reliance was also placed on the decision of this Court in the case of S.K. Gupta and another vs. K.P. Jain and another reported in 1979 (3) SCC 54. In the case of S.K. Gupta (supra) also the ratio in the case of M/s. J.K. (Bombay) Private Ltd. (supra) was relied upon and it was held that a scheme under Section 391 of the Companies Act has a statutory force and is also binding on the dissenting creditor. Various other questions were discussed in the said judgment with which we are not concerned in this case. 15. The scheme under Section 391 of the Companies Act has been very elaborately dealt with by this Court in the case of Miheer H. Mafatlal vs. Mafatlal Industries Ltd. reported in AIR 1997 SC 506. From a perusal of the various principles laid down in 1 Mafatlal (supra), it is clear that the proposed scheme cannot be violative of any provision of law, nor can it be contrary to public policy. (see paragraph 29 sub-paragraph 6 at page 602 of the report). 16. In Hindustan Lever and another vs. State of Maharashtra and another reported in (2004) 9 SCC 438 it has been reiterated that a scheme under Section 391 of the Companies Act is binding on all shareholders including those who oppose it from being sanctioned. It has also been reiterated that the jurisdiction of the Company Court while sanctioning the scheme is supervisory. This Court in Hindustan Lever (supra) also accepted the principle laid down in sub-para 6 of para 29 in Mafatlal (supra) discussed above and held that a scheme under Section 391 of the Companies Act cannot be unfair or contrary to public policy, nor can it be unconscionable or against the law (see para 18 page 451 of the report) 1 17. In the case of Administrator of the Specified Undertaking of the Unit Trust of India and another vs. Garware Polyester Ltd. reported in (2005) 10 SCC 682, this Court held that a scheme under Section 391 of the Companies Act is a commercial document and the principles laid down in the case of Mafatlal (supra) have been relied upon and in para 32 at page 697 of the report it has been reiterated that the scheme must be fair, just and reasonable and should not contravene public policy or any statutory provision and in paragraph 33 at page 697 of the report, sub-paragraph 6 of para 29 of Mafatlal (supra) has been expressly quoted and approved. 18. Therefore, the main argument of the learned counsel for the appellant(s) that once a scheme under Section 391 of the Companies Act is sanctioned by the Court the same operates as compounding of offence under Section 138 read with 1 Section 141 of the N.I. Act cannot be accepted. Rather the principle which has been reiterated by this Court repeatedly in the aforesaid judgments is that a scheme under Section 391 of the Companies Act cannot be contrary to any law. From this consistent view of this Court it clearly follows that a scheme under Section 391 of the Companies Act cannot have the effect of overriding the requirement of any law. The compounding of an offence is always controlled by statutory provision. There are various features in the compounding of an offence and those features must be satisfied before it can be claimed by the offender that the offence has been compounded. Thus, compounding of an offence cannot be achieved indirectly by the sanctioning of a scheme by the Company Court. 19. The learned counsel also relied on a few other judgments in order to contend the scheme of compromise operates a statutory consent and the 1 same will have the effect of restructuring legally enforceable debts or liabilities of the company. In support of the said contention reliance was placed on the judgment of this Court in the case of Balmer Lawrie Workers' Union, Bombay and another vs. Balmer Lawrie & Co. Ltd. and others reported in 1984 (Supp.) SCC 663. That decision related to a settlement reached in a proceeding under Industrial Disputes Act in which a representative union was a party. The Court held that such a settlement is binding on all the workmen of the undertaking. This Court fails to understand the application of this ratio to the facts of the present case. 20. Reliance was also placed by the learned counsel for the appellant(s) on the decision of this Court in the case of Shivanand Gaurishankar Baswanti vs. Laxmi Vishnu Textile Mills and others reported in (2008) 13 SCC 323. In that case also the question of an agreement under Section 18 of Industrial 1 Disputes Act came up for consideration by this Court. The wide sweep of an agreement under Section 18 of the Industrial Disputes Act for the purpose of maintaining industrial peace is not in issue in this case. Therefore, the decision in Shivanand (supra) does not have any relevance to the question with which we are concerned in the facts and circumstances of the case. 21. The learned counsel for the appellant(s) then advanced his argument on the provisions of N.I. Act and the nature of the offence under the N.I. Act. Reliance was placed on explanation to Section 138 of the N.I. Act in order to show that for the purposes of an offence under Section 138 of the N.I. Act, debt or other liability must mean a legally enforceable debt or liability. The learned counsel urged that even if a cheque is issued by the appellant company and which has been subsequently dishonoured, the same is a cheque relating to the debt of the company in respect of 1 which there is a sanctioned scheme. Therefore, the same is not a legally enforceable debt in as much as after the sanctioning of the scheme the debt of the company can only be enforced against the company by a creditor in accordance with the said scheme and not otherwise. Reliance was also placed on Section 139 of the N.I. Act in order to contend that the statutory presumption must be construed in favour of the appellant company in as much as the cheque which has been received by the respondent is not for the discharge of any debt of the company which is legally enforceable. The learned counsel relied on several judgments of this Court on the question of the nature of the offence under Section 138 of the N.I. Act. 22. Reliance was placed on the decision of this Court in the case of Kaushalya Devi Massand vs. Roopkishore Khore reported in (2011) 4 SCC 593. The learned counsel relied on the observation made in para 11, at page 595 of the report and 1 contended that the gravity of a complaint under the N.I. Act cannot be equated with an offence under the provisions of Indian Penal Code and further urged that this Court held that a criminal offence under Section 138 of the N.I. Act is almost in the nature of a civil wrong which has been given criminal overtones. 23. Reliance was also placed on the judgment of this Court in the case of Mandvi Cooperative Bank Limited vs. Nimesh B. Thakore reported in (2010) 3 SCC 83. This Court in Mandvi (supra) discussed the scope of N.I. Act including the first amendment to the Act inserted under Chapter XVII in the Act. This Court looked into the Statement of Objects and Reasons introducing the amendment and noted the rationale for introduction of Section 147 of N.I. Act. Section 147 of N.I. Act made the offences under the said Act compoundable. The Court noted that from the Statement and Objects and Reasons it is clear that the Parliament became 2 aware of the fact that the courts are not able to dispose of, in a time bound manner, large number of cases coming under the said Act in view of the procedure in the Act. In order to deal with such situation, several amendments were introduced and one of them is making offences under the said Act compoundable. Section 147 of the N.I. Act is 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." 24. This Court fails to understand the applicability of the principle laid down in Mandvi (supra) to the facts of the present case. It is no doubt true that Section 147 of the N.I. Act makes an offence under N.I. Act a compoundable one. But in order to make the offence compoundable the mode and manner of compounding such offences must be followed. No contrary view has been expressed by this Court in Mandvi (supra). 2 25. On the nature of the offence under N.I. Act learned counsel for the appellant(s) also placed reliance on a decision of this Court in the case of Damodar S. Prabhu vs. Sayed Babalal H. reported in (2010) 5 SCC 663. In paragraph 4, this Court held that the dishonour of a cheque can be best described as a regulatory offence which has been created to serve the public interest in ensuring the reliability of these instruments and the Court has further held that the impact of the offence is confined to private parties involvement in commercial transactions. The Court also noted the situation that large number of cases involving dishonour of cheques are choking the criminal justice system and putting an unprecedented strain on the judicial functioning. In paragraph 7 of the judgment this Court noted the submissions of the learned Attorney General to the extent that the Court should frame certain guidelines so as to motivate the litigants from seeking compounding of the offence at an early stage of litigation and 2 not at an unduly late stage. It was argued that if compounding is early the pendency of arrears can be tackled. 26. In paragraph 12 of Damodar (supra) this Court dealt with the provision of Section 147 of the N.I. Act and held that the same is an enabling provision for compounding of the offence and is an exception to the general rule incorporated in sub- section 9 of Section 320 of the Code. This Court harmonised the provision of Section 320 of the Code along with Section 147 of N.I. Act by saying that an offence which is not otherwise compoundable in view of the provisions of Section 320 sub-section 9 of the Code has become compoundable in view of Section 147 of N.I. Act and to that extent Section 147 of N.I. Act will override Section 320 sub-section 9 of the Code since Section 147 of N.I. Act carries a non- obstante clause. This Court on the basis of the submissions of the learned Attorney General framed 2 certain guidelines for compounding of offence under Section 138 of the N.I. Act. Those guidelines are as follows: "THE GUIDELINES (i) 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." 2 27. The Court held in paragraph 26 of Damodar (supra) that those guidelines have been issued by this Court under Article 142 of the Constitution in order to fill-up legislative vacuum which exists in Section 147 of the N.I. Act. The Court held that Section 147 of the N.I. Act does not carry any guidance on how to proceed with the compounding of the offence under the N.I. Act and the Court felt that Section 320 of the Code cannot be strictly followed in the compounding of offence under Section 147 of the N.I. Act. Those guidelines were given to fill up a legislative vacuum. 28. Reliance was also placed by the learned counsel for the appellant(s) on the judgment of this Court in Central Bureau of Investigation, SPE, SIU (X), New Delh vs. Duncans Agro Industries Ltd., Calcutta reported in (1996) 5 SCC 591. The decision of this Court in Duncans Agro (supra) was on the question of quashing the complaint under 2 Section 482 of Criminal Procedure Code. In the facts of that case the learned Judges held that the Bank filed suits for recovery of the dues on account of grant of credit facility and the suits have been compromised on receiving the payments from the company concerned. The learned Court held if an offence of cheating is prima facie constituted, such offence is a compoundable offence and compromise decrees passed in the suits instituted by the Banks, for all intents and purposes amount to compounding of the offence of cheating. In that case the Court came to the conclusion since the claims of the Banks have been satisfied and the suits instituted by the Banks have been compromised on receiving payments, the Court felt that the complaint should not be perused any further and, therefore, the Court felt "in the special facts of the case" the decision of the High Court in quashing the complaint does not require any interference under Article 136 of the Constitution. 2 29. Quashing of a case is different from compounding. In quashing the Court applies it but in compounding it is primarily based on consent of injured party. Therefore, the two cannot be equated. 30. It is clear from the discussion made hereinabove that the said case was not one relating to compounding of offence. Apart from that the Court found that the dues of the Banks have been satisfied by receiving the money and the suits filed by the Bank in the Civil Court have been compromised. The FIRs were filed in 1987-1988 and the investigation had not been completed till 1991. On those facts the Court, rendering the judgment in July, 1996, felt that having regard to the lapse of time and also having regard to the fact that there is a compromise decree satisfying the Banks' dues, there is no purpose in allowing the criminal prosecution to proceed. On those consideration, this Court, in the `special facts 2 of the case', did not interfere with the order of the High Court dated 23.12.1992 whereby the criminal prosecution was quashed. 31. It is, therefore, clear that no legal proposition has been laid down on the compounding of offence in Duncans Agro (supra). This Court proceeded on the peculiar facts of the case discussed above. Therefore, the said decision cannot be an authority to contend that by mere sanctioning of a scheme, the offences committed by the appellant company, prior to the scheme, stand automatically compounded. 32. Reliance was also placed on the decision of this Court in the case of Hira Lal Hari Lal Bhagwati vs. CBI, New Delhi reported in (2003) 5 SCC 257. In that case reliance was placed on the decision of this Court in Duncans Agro (supra). In Hira Lal (supra) this Court was discussing the voluntary scheme namely, Kar Vivad Samadhan scheme 1998 2 introduced by the Government of India. The Court found that the aforesaid scheme being a voluntary scheme has provided that if the dispute and demand is settled by the authority and pending proceedings were withdrawn by an importer the balance demand against the importer shall be dropped and the importer shall be immune from any penal proceedings under any law. The Court also came to the conclusion that under the Customs Act, 1962 the appellant(s) have been discharged and the scheme granted them immunity from prosecution. On those facts the Court held that the immunity which has been granted under the provisions of Customs Act will also extend to such offences that may, prima facie, be made out on identical allegation, namely, evasion of customs duty and violation of any notification under the said Act. The Court also found, on a reading of the chargesheet and the FIR that there was no allegation against the appellant(s) of any intentional deception or of fraudulent or dishonest intention. On those facts the Court held that once a civil case has been 2 compromised and the alleged offence has been compounded, the continuance of the criminal proceedings thereafter would be an abuse of the judicial process. 33. We fail to appreciate how the ratio in the case of Hira Lal (supra) rendered on completely different facts has any application to the facts of the present case. 34. Reliance was also placed on the judgment of this Court in the case of Nikhil Merchant vs. Central Bureau of Investigation and another reported in (2008) 9 SCC 677. In paragraphs 30 and 31 of the judgment this Court held that dispute between company and the Bank have been set at rest on the basis of compromise arrived at between them. The Court noted that Bank does not have any claim against the company. The Court poses the question whether the power of quashing criminal proceeding 3 which is there with the Court should be exercised. (See para 30 at page 684 of the judgment) 35. The Court answered the same in Nikhil Merchant (supra) by saying in para 31 that technicality should not be allowed to stand in the way of quashing of the criminal proceedings since in the view of the Court the continuance of the same after the compromise could be a futile exercise. Therefore, the said decision in Nikhil Merchant (supra) was rendered in the peculiar facts of the case and it was done in exercise of quashing power by the Court. It was not a case of automatic compounding of an offence on the sanctioning of a scheme under Section 391 of the Companies Act. 36. Mr. K. Parameshwar, learned counsel appearing for the respondent in special leave petition Nos.4445- 4454/2009 argued that the impugned judgment of the High Court is based on correct principles inasmuch as the effect of a Scheme under Section 391 of the 3 Companies Act can only be made applicable to a civil proceeding and it cannot affect criminal liability. Learned counsel further submitted that under the criminal law there is nothing known as deemed compounding. It was further urged that under the very concept of compounding, it cannot take place without the explicit consent of the complainant or the person aggrieved. It was also urged that in the instant case the offence has been completed prior to the scheme under Section 391 of the Companies Act was sanctioned by the Court. 37. Learned counsel distinguished between a Scheme under Section 391 and an act of compounding by urging that a Scheme under section 391 can at most be a Scheme to forego a part of a debt or to restructure the payment schedule of a debt but the act of compounding an offence must proceed on the basis of the consent of the person compounding and his consent cannot be assumed under any situation. 3 38. Learned counsel further submitted that the impugned judgment of the High Court correctly formulated the principle of compounding by holding that the act of compounding involves an element of mutuality and it has to be bilateral and not unilateral. 39. This Court finds lot of substance in the aforesaid submission. 40. Compounding of an offence is statutorily provided under Section 320 of the Code. If we look at the list of offences which are specified in the Table attached to Section 320 of the Code, it would be clear that there are basically two categories of offences under the provisions of Indian Penal Code which have been made compoundable. 3 41. There is a category of offence for the compounding of which leave of the Court is required and there is another category of offences where for compounding the leave of the Court is not required. But all cases of compounding can take place at the instance of persons mentioned in the Third Column of the Table. If the said Table is perused, it will be clear that compounding can only be possible at the instance of the person who is either a complainant or who has been injured or is aggrieved. 42. Sub-sections 4(a) and 4(b) of Section 320 also reiterate the same principle that in case of compounding, the person competent to compound, must be represented in a manner known to law. If the person compounding is a minor or an idiot or a lunatic, the person competent to contract on his behalf may, with the permission of the Court, compound the offence. Legislature has, therefore, provided that if the aforesaid category of person 3 was suffering from some disability, a person to represent the aforesaid category of persons is only competent to compound the offence and in such cases the permission of the Court is statutory required. 43. Section 320 (4) (b) also reiterates the same principle by providing that when a person who is otherwise competent to compound an offence is dead, his legal representatives, as defined under the Code of Civil Procedure may, with the consent of the Court, compound such offence. 44. Therefore, representation of the person compounding has been statutorily provided in all situations. 45. Sub-section (9) of Section 320 which is relevant in this connection is set out below: "No offence shall be compounded except as provided by this section." 3 46. Section 147 of the Negotiable Instrument Act 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." 47. Relying on the aforesaid non-obstante clause in Section 147 of the N.I. Act, learned counsel for the appellant argued that a three-Judge Bench decision of this Court in Damodar (supra), held that in view of non-obstante clause in Section 147 of N.I. Act, which is a special statute, the requirement of consent of the person compounding in Section 320 of the Code is not required in the case of compounding of an offence under N.I. Act. This Court is unable to accept the aforesaid contention for various reasons which are discussed below. 48. The insertion of a non-obstante clause is a well known legislative device and in olden times it had 3 the effect of non obstante aliquo statuto in contrarium (notwithstanding any statute to the contrary). 49. Under the Stuart reign in England the Judges then sitting in Westminster Hall accepted that the statutes were overridden by the process but this device of judicial surrender did not last long. On the device of non-obstante clause, William Blackstone in his Commentaries on the Laws of England (Oxford: The Claredon Press, 1st Edn. 1765- 1769) observed that the devise was "...effectually demolished by the Bill of Rights at the revolution, and abdicated Westminster Hall when James II abdicated the Kingdom" (See Bennion on Statutory Interpretation, 5th Edition, Section 48). 50. Under the Scheme of modern legislation, non- obstante clause has a contextual and limited application. 3 51. The impact of a `non-obstante clause' on the concerned act was considered by this Court in many cases and it was held that the same must be kept measured by the legislative policy and it has to be limited to the extent it is intended by the Parliament and not beyond that. [See ICICI Bank Ltd. vs. Sidco Leathers Ltd. and Ors. - (2006) 10 SCC 452 para 37 at page 466] 52. In the instant case the non-obstante clause used in Section 147 of N.I. Act does not refer to any particular section of the Code of Criminal Procedure but refers to the entire Code. When non-obstante clause is used in the aforesaid fashion the extent of its impact has to be found out on the basis of consideration of the intent and purpose of insertion of such a clause. 3 53. Reference in this connection may be made to the Constitution Bench decision of this Court in the case of Madhav Rao Scindia Bahadur, etc. vs. Union of India and Another reported in (1971) 1 SCC 85, Chief Justice Hidayatullah delivering the majority opinion, while construing the provision of Article 363, which also uses non-obstante clause without reference to any Article in the Constitution, held that when non-obstante clause is used in such a blanket fashion the Court has to determine the scope of its use very strictly (see paragraph 68- 69 at page 138-139 of the report). 54. This has been followed by a three-Judge Bench of this Court in Central Bank of India vs. State of Kerala and others reported in (2009) 4 SCC 94, following the principles as laid down in Madhav Rao (supra) this Court in Central Bank (supra) held as follows:- 3 "...When the section containing the said clause does not refer to any particular provisions which it intends to override but refers to the provisions of the statute generally, it is not permissible to hold that it excludes the whole Act and stands all alone by itself. `A search has, therefore, to be made with a view to determining which provision answers the description and which does not'." (Para 105, page 132 of the report) 55. Section 147 in N.I. Act came by way of amendment. From the Statement of Objects and Reasons of Negotiable Instrument (Amendment) Bill 2001, which ultimately became Act 55 of 2002, these amendments were introduced to deal with large number of cases which were pending under the N.I. Act in various Courts in the country. Considering the said pendency, a Working Group was constituted to review Section 138 of the N.I. Act and make recommendations about changes to deal with such pendency. 56. Pursuant to the recommendations of the Working Group, the aforesaid Bill was introduced in 4 Parliament and one of the amendments introduced was "to make offences under the Act compoundable". 57. Pursuant thereto Section 147 was inserted after Section 142 of the old Act under Chapter II of Act 55 of 2002. 58. It is clear from a perusal of the aforesaid Statement of Objects and Reasons that offence under the N.I. Act, which was previously non- compoundable in view of Section 320 sub-Section 9 of the Code has now become compoundable. That does not mean that the effect of Section 147 is to obliterate all statutory provisions of Section 320 of the Code relating to the mode and manner of compounding of an offence. Section 147 will only override Section 320 (9) of the Code in so far as offence under Section 147 of N.I. Act is concerned. This is also the ratio in Damodar (supra), see para 12. Therefore, the submission 4 of the learned counsel for the appellant to the contrary cannot be accepted. 59. In this connection, we may refer to the provisions of Section 4 of the Code. Section 4 of the Code, which is the governing statute in India for investigation, inquiry and trial of offences has two parts. 60. Section 4 sub-section (1) deals with offences under the Indian Penal Code. Section 4 sub-section (2) deals with offences under any other law which would obviously include offences under the N.I. Act. (See 2007 Crl. Law Journal 3958) 61. In the instant case no special procedure has been prescribed under the N.I. Act relating to compounding of an offence. In the absence of special procedure relating to compounding, the procedure relating to compounding under Section 4 320 shall automatically apply in view of clear mandate of sub-section (2) of Section 4 of the Code. 62. Sub-section (2) of Section 4 of the code is set out below:- "4(2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences." 63. Interpreting the said Section, this Court in the case of Khatri and Ors. etc. Vs. State of Bihar and Ors. - AIR 1981 SC 1068 held that the provisions of the Code are applicable where an offence under the Indian Penal Code or under any other law is being investigated, inquired into, tried or otherwise dealt with (See para 3 page 1070). 4 64. In view of Section 4(2) of the Code, the basic procedure of compounding an offence laid down in Section 320 of the Code will apply to compounding of an offence under N.I. Act. 65. In Vinay Devanna Nayak vs. Ryot Sewa Sahakari Bank Limited reported in (2008) 2 SCC 305, this Court also considered the object behind the insertion of Section 138 of the N. I. Act by Banking Financial Institutions and Negotiable Instruments (Amendment) Act 1988. This Court held:- "...The incorporation of the provision is designed to safeguard the faith of the creditor in the drawer of the cheque, which is essential to the economic life of a developing country like India. The provision has been introduced with a view to curb cases of issuing cheques indiscriminately by making stringent provisions and safeguarding interest of creditors." (para 16, page 309 of the report) 66. The Court also looked into the scope of Section 147 of the N.I. Act, and held after considering the two sections, that there is no reason to 4 refuse compromise between the parties. But the Court did not hold that in view of Section 147, the procedure relating to compounding under Section 320 of the Code has to be given a go bye. 67. Subsequently in the case of R. Rajeshwari vs. H. N. Jagadish reported in (2008) 4 SCC 82, another Bench of this Court also construed the provisions of Section 147 of the N.I. Act, as well as those of Section 320 of the Code. Here also it was not held that all the requirements of Section 320 of the Code for compounding were to be given a go bye. 68. Both these aforesaid decisions were referred to and approved in Damodar (supra). The decision in Damodar (supra) was rendered by referring to Article 142 of the Constitution insofar as guidelines were framed in relation to compounding for reducing pendency of 138 cases. In doing so the Court held that attempts should be made for 4 compounding the offence early. Therefore, the observations made in paragraph 24 of Damodar (supra), that the scheme contemplated under Section 320 of the Code cannot be followed `in the strict sense' does not and cannot mean that the fundamental provisions of compounding under Section 320 of the Code stand obliterated by a side wind, as it were. 69. It is well settled that a judgment is always an authority for what it decides. It is equally well settled that a judgment cannot be read as a statute. It has to be read in the context of the facts discussed in it. Following the aforesaid well settled principles, we hold that the basic mode and manner of effecting the compounding of an offence under Section 320 of the Code cannot be said to be not attracted in case of compounding of an offence under N.I. Act in view of Section 147 of the same. 4 70. Compounding as codified in Section 320 of the Code has a historical background. In common law compounding was considered a misdemeanour. In Kenny's `Outlines of Criminal Law' (Nineteenth Edition, 1966) the concept of compounding has been traced as follows:- "It is a misdemeanour at common law to `compound' a felony (and perhaps also to compound a misdemeanour); i.e. to bargain, for value, to abstain from prosecuting the offender who has committed a crime. You commit this offence if you promise a thief not to prosecute him if only he will return the goods he stole from you; but you may lawfully take them back if you make no such promise. You may show mercy, but must not sell mercy. This offence of compounding is committed by the bare act of agreement; even though the compounder afterwards breaks his agreement and prosecutes the criminal. And inasmuch as the law permits not merely the person injured by a crime, but also all other members of the community, to prosecute, it is criminal for anyone to make such a composition; even though he suffered no injury and indeed has no concern with the crime." 71. Russell on Crime (Twelfth Edition) also describes:- 4 "Agreements not to prosecute or to stifle a prosecution for a criminal offence are in certain cases criminal". (Chapter 22 - Compounding Offences, page 339) 72. Later on compounding was permitted in certain categories of cases where the rights of the public in general are not affected but in all cases such compounding is permissible with the consent of the injured party. 73. In our country also when the Criminal Procedure Code, 1861 was enacted it was silent about the compounding of offence. Subsequently, when the next Code of 1872 was introduced it mentioned about compounding in Section 188 by providing the mode of compounding. However, it did not contain any provision declaring what offences were compoundable. The decision as to what offences were compoundable was governed by reference to the exception to Section 214 of the Indian Penal Code. The subsequent Code of 1898 provided Section 345 4 indicating the offences which were compoundable but the said Section was only made applicable to compounding of offences defined and permissible under Indian Penal code. The present Code, which repealed the 1898 Code, contains Section 320 containing comprehensive provisions for compounding. A perusal of Section 320 makes it clear that the provisions contained in Section 320 and the various sub-sections is a Code by itself relating to compounding of offence. It provides for the various parameters and procedures and guidelines in the matter of compounding. If this Court upholds the contention of the appellant that as a result of incorporation of Section 147 in the N.I. Act, the entire gamut of procedure of Section 320 of the Code are made inapplicable to compounding of an offence under the N.I. Act, in that case the compounding of offence under N.I. Act will be left totally unguided or uncontrolled. Such an interpretation apart from being an absurd or unreasonable one will also be contrary to the provisions of Section 4(2) of the Code, which has 4 been discussed above. There is no other statutory procedure for compounding of offence under N.I. Act. Therefore, Section 147 of the N.I. Act must be reasonably construed to mean that as a result of the said Section the offences under N.I. Act are made compoundable, but the main principle of such compounding, namely, the consent of the person aggrieved or the person injured or the complainant cannot be wished away nor can the same be substituted by virtue of Section 147 of N.I. Act. 74. For the reasons aforesaid, this Court is unable to accept the contentions of the learned counsel for the appellant(s) that as a result of sanction of a scheme under Section 391 of the Companies Act there is an automatic compounding of offences under Section 138 of the N.I. Act even without the consent of the complainant. 5 75. The appeals are dismissed. The judgment of the High Court is affirmed. .......................J. (ASOK KUMAR GANGULY) .......................J. New Delhi (JAGDISH SINGH KHEHAR) February 1, 2012 5