Vinay Devanna Nayak vs Ryot Seva Sahakari Bank Ltd

3. Brief facts of the case are that the appellant herein was a member of Ryot Sewa Sahakari Bank Ltd., Basgod, Taluka Ankola ('Complainant Bank' for short). He had obtained a loan of Rs.20,000/- from the Complainant-Bank on April 3, 1998 for business. The amount was not paid by the appellant. The appellant issued a cheque of Rs.24,000/- on October 13, 2000 in favour of the Complainant-Bank and assured the Bank that it would be honoured. But when the cheque was submitted for clearance, it was dishonored and returned to the drawer on December 22, 2000 with endorsement; "Loan account due date is over and account is not in operation". The complainant, therefore, issued a registered legal notice on December 26, 2000 which was duly served upon the accused-loanee on December 30, 2000. In spite of the notice, no payment was made by the accused and hence a criminal case was filed by the Bank against him under the Negotiable Instruments Act, 1881 (hereinafter referred to as 'the Act'). A summons was issued to the accused for an offence punishable under Section 138 of the Act. He pleaded not guilty to the charge and claimed to be tried.

4. The Trial Court on the basis of evidence adduced by the complainant Bank, held that the accused had issued a cheque of Rs.24,000/- which was dishonored and even after receipt of legal notice, he failed to pay the amount and thereby he had committed an offence punishable under 138 of Act. The Court, hence, convicted the accused and ordered him to undergo imprisonment for a period of six months. The accused was also ordered to pay a sum of Rs.48,000/- as compensation within one month from the date of the order. The Court ordered that out of the said amount of compensation, Rs.43,000/- should be paid to the complainant towards the compensation and Rs.5,000/- to be appropriated to the State. In default of payment of compensation, the accused was ordered to undergo imprisonment for a period of six months.

5. Being aggrieved by the order of conviction and sentence, the appellant preferred an appeal. The Appellate Court confirmed the order of conviction and sentence recorded by the Trial Court. It, however, reduced the amount of compensation from Rs.43,000/- to Rs.30,000/- and fine from Rs.5,000/- to Rs.3,000/-. Order of default- sentence was maintained.

10. In view of the fact that the matter has been settled and the amount of Rs.45,000/- has been paid by the appellant and accepted by the bank as 'full and final settlement' and there are no further dues by the bank, prima facie, there should be no objection to grant the prayer of the accused and acquit him of the offence with which he was charged and convicted by the Courts below.

18. Taking into consideration even the said provision (Section 147) and the primary object underlying Section 138, in our judgment, there is no reason to refuse compromise between the parties. We, therefore, dispose of the appeal on the basis of the settlement arrived at between the appellant and the respondent.

19. For the foregoing reasons the appeal deserves to be allowed and is accordingly allowed by holding that since the matter has been compromised between the parties and the amount of Rs.45,000/- has been paid by the appellant towards full and final settlement to the respondent-bank towards its dues, the appellant is entitled to acquittal. The order of conviction and sentence recorded by all courts is set aside and he is acquitted of the charge levelled against him.

20. Ordered accordingly.