No Conviction u/s 138 NI Act by Overriding Agreement Between Parties To Compound the Offense : Supreme Court

WHAT DID THE SC SAY?

• In BV Seshaiah vs State of Telangana, the Apex Court set aside a Telengana HC order which validated the conviction of the appellant u/s 138 of the Negotiable Instruments Act.
• A Division Bench comprising Justices Krishna Murari and V. Ramasubramanian in this case, decided not to override an agreement entered between the parties to compound the offence of check dishonour.
• The Ld. Court noted that when the parties are bound by an agreement to compound a compoundable offence, the HC cannot overlook such agreement and impose its will on the parties.  

WHAT IS THE CASE ABOUT? 

• In this case, the parties to the litigation had entered into an agreement to compound a compoundable offences committed by either parties.
• The Ld. Telangana HC overlooked this agreement and passed a sentence for the conviction of the appellant for an offence u/s 138 NI Act.
• Subsequently, an appeal was filed against the decision of the High Court.

APPELLANT’S CONTENTIONS: 

• The contention of the appellant was that Clause 8 of the Memorandum of Understanding (MOU) entered between the parties clearly states that either party will compound a compoundable offences committed by the other party.
• Furthermore, he also contended that the Court should take into consideration the contents of the MOU while deciding upon the conviction of the appellant. 

OBSERVATION OF THE COURT AND DECISION: 

• The Ld. Court noted that the MOU entered between the parties is of importance in the present case. 
• The Court further noted that the HC cannot overlook this MOU and impose its own will on the parties. 
• Consequently, the decision of the HC was set aside and the appeal was allowed. 

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