JIK INDUSTRIES LIMITED & ORS.versusAMARLAL V. JUMANI AND ANOTHER

                          [2012] 3 S.C.R. 114


A                 JIK INDUSTRIES LIMITED & ORS.
                                    v.
                AMARLAL V. JUMANI AND ANOTHER
                  (Criminal Appeal No. 263 of 2012)
B
                          FEBRUARY 1, 2012
                  [ASOK KUMAR GANGULY AND
                  JAGDISH SINGH KHEHAR, JJ.]
         Code of Criminal Procedure, 1973:
c
         s.320- Compounding of offence - Whether sanction of a
    scheme u/s.391 of the Companies Act, 1956 amounts to
    compounding of an offence u/s. 138 read with s. 141 of the N. I.
    Act and whether such sanction has the effect of termination or
D   dismissal of complaint proceedings under N. I. Act - Held: The
    effect of approval of a scheme of compromise and arrangement
    uls.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 - A scheme u/s.391 of the Companies Act
E   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 - The offence under the N.I.
    Act which has already been committed prior to the scheme
    does not get automatically compounded only as a result of the
F   said scheme - 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 - Compounding of an offence cannot be
    achieved indirectly by sanctioning of a scheme by the
G   Company Court- Negotiable Instruments Act, 1881- s.138 rl
    w s.141- Companies Act, 1956- s.391.
        s.320 - Compounding of offence - Historical background
    - Discu$sed - Code of Criminal Procedure, 1861 - Code of
    Criminal Procedure, 1872 - Code of Criminal Procedure, 1898.
H                                 114
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                     115
               JUMANI AND ANR.
     Negotiable Instruments Act, 1881:                                    A
     s. 141 - Mode and manner of compounding offences
under N. I. Act - Held: Compounding of an offence is statutorily
provided uls.320, Cr.P.C. - The act of compounding involves
an element of mutuality and it has to be bilateral and not
unilateral -Thus, representation of the person compounding                8
is essential u/s. 320, Cr. P. C. - s. 4(2), Cr. P. C. deals with
offences under any other law which include offences under the
N./. Act - In view of s.4(2), Cr.P.C., the basic procedure of
compounding an offence laid down in s.320, Cr.P.C. will apply
                                            r
to compounding of an offence under N. Act - Thus, in view of              C
clear mandate of sub-section (2) of s. 4, Cr. P. C., in the absence
of special procedure relating to compounding under the N. I.
Act, the procedure relating to compounding u/s.320 shall
automatically apply.
                                                                          D
      s.147 - Effect of non-obstante clause contained in s.147
- Held: The non-obstante clause used in s.147 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 said fashion the extent of its impact has to be found out          E
on the basis of consideration of the intent and purpose of
insertion of such a clause - s. 147 came by way of amendment
- The amendment introduced was "to make offences under the
Act compoundable"- The offence under the N.I. Act, which was
previously non-compoundable, in view of s.320(9), Cr.P.C.
became compoundable - That would not mean that the effect                 F
of s. 147 is to obliterate all statutory provisions of s. 320, Cr.P. C.
relating to the mode and manner of compounding of an offence
- s.147 will only override s.320(9), Cr.P.C. in so far as offence
u/s. 147 of N.I. Act is concerned.
                                                                          G
      INTERPRETATION OF STATUTES: Non-obstante
  clause- Significance of- Held: The insertion of a non-obstante
. clause is a well known legislative device and in olden times it
  had the effect of non obstante aliquo statuto in contrarium
  (notwithstanding any statute to the contrary) ~ Under the               H
    116       SUPREME COURT REPORTS              [2012] 3 S.C.R.


A Scheme of modern legislation, non-obstante clause has a
  contextual and limited application - The impact of a 'non-
    obstante clause' has to be limited to the extent it is intended '
    by the Parliament and not beyond that.
        JUDGMENT/ORDER: Interpretation of - Held: It is well '
B 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- Negotiable Instruments Act, 1881 - s.147.
c        COMPANIES ACT, 1956: s.391 - Sanction of scheme -
    Held: The proposed scheme cannot be violative of any
    provision of law, nor can it be contrary to public policy.
       The question which arose for consideration in the
  instant appeals was whether the High Court was justified
D in holding that sanction of a scheme under Section 391 of
  the Companies Act, 1956 does not amount to
  compounding of an offence under Section 138 read with
  Section 141 of the N.I. Act and that the sanction do not
  have the effect of termination or dismissal of complaint
E proceedings under N.I. Act.
          Dismissing the appeals, the Court
       HELD: 1. Section 391 of the Companies Act gives very
  wide discretion to the Court to approve any set of
F arrangement between the company and its shareholders.
  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. A
G 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 was
  committed prior to the scheme. Therefore, the offence
H
 JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.              117
              JUMANI AND ANR.
which has already been committed prior to the scheme             A
does not get automatically compounded only as a result
of the said scheme. [Paras 11, 13] [128-D-H; 129-A-C]
    Mis. J.K. (Bombay) Private Ltd. vs. Mis. New Kaiser-I-Hind
Spinning and Weaving Co., Ltd., and others AIR 1970 SC
1041: 1970 SCR 866 - referred to.                                B

     2. The proposed scheme cannot be violative of any
provision of law, nor can it be contrary to public policy. A
scheme under Section 391 of the Companies Act cannot
have the effect of overriding the requirement of any law.        C
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         D
of a scheme by the Company Court. [Paras 15, 18] [129-
G; 130-G-H; 131-A-C]
     3. It is no doubt true that Section 147 of the N.I. Act
makes an offence under N.1. Act a compoundable one. But          E
in order to make the offence compoundable the mode and
manner of compounding such offences must be followed.
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          F
and it has to be bilateral and not unilateral. Compounding
of an offence is statutorily provided under Section 320 of
the Code. It is clear from the list of offences which are
specified in the Table attached to Section 320 of the Code
that there are basically two categories of offences under        G
the provisions of Indian Penal Code which have been
made compoundable. 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         H
all cases of compounding can take place at the instance
    118      SUPREME COURT REPORTS             [2012) 3 S.C.R.


A of persons mentioned in the Third Column of the Table.
  The said Table shows 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. Sub-
  sections 4(a) and 4(b) of Section 320 also reiterate the
B 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
c Court, compound the offence. Legislature has, therefore,
  provided that if the said category of person was suffering
  from some disability, a person to represent the said
  category of persons is only competent to compound the
  offence and in such cases the permission of the Court is
0 statutory required. 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
E such offence. Therefore, representation of the person
  compounding has been statutorily provided in all
  situations. [Paras 24, 38, 40-44] [133-C; 138-F-H; 139-A-F]
       Balmer Lawrie Workers' Union, Bombay and another vs.
  Balmer Lawrie & Co. Ltd. and others 1984 (Supp.) SCC 663;
F Shivanand Gaurishankar Baswanti vs. Laxmi Vishnu Textile
  Mills and others (2008) 13 SCC 323: 2008 (10) SCR 782;
  Mandvi Cooperative Bank Limited vs. Nimesh B. Thakore
    (2010) 3 SCC 83: 2010 (1) SCR 219 - held inapplicable.
       Central Bureau of Investigation, SPE, SIU (X), New Delhi
G vs. Duncans Agro Industries Ltd., Calcutta (1996) 5 SCC 591:
  1996 (3) Suppl. SCR 360; Hira Lal Hari Lal Bhagwati vs. CBI,
  New Delhi (2003) 5 SCC 257: 2003 (3) SCR 1118; Nikhil
  Merchant vs. Central Bureau of Investigation and another
    (2008) 9 SCC 677: 08 (12) SCR 236 - Distinguished.
H
 JIK INDUSTRIES LIMITED & ORS. v. AMARLAL Y.              119
              JUMANI AND ANR.
     4.1. The insertion of a non-obstante clause is a well       A
known legislative device and in olden times it had the
effect of non obstante aliquo statute in contrarium
(notwithstanding any statute to the contrary). Under the
Stuart reign in England the Judges then sitting in
Westminster Hall accepted that the statutes were                 B
overridden by the process but this device of judicial
surrender did not last long. Under the Scheme of modern
legislation, non-obstante clause has a contextual and
limited application. The impact of a 'non-obstante clause'
on the concerned act was considered by this Court in             c
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. [Paras 48-51] [140-D-G]
     4.2. The non-obstante clause used in Section 147 of         D
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 said fashion, the extent
of its impact has to be found out on the basis of
consideration of the intent and purpose of insertion of          E
such a clause. 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         F
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. Pursuant to the recommendations of the                 G
Working Group, the said Bill was introduced in Parliament
and one of the amendments introduced was "to make
offences under the Act compoundable". Pursuant thereto
Section 147 was inserted after Section 142 of the old Act
under Chapter II of Act 55 of 2002. It is clear from a perusal   H
    120      SUPREME COURT REPORTS              [2012] 3 S.C.R.


A of the said 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 became compoundable. That does not mean that the
  effect of Section 147 is to obliterate all statutory provisions
B 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. (Paras
  52, 55-58) (141-A-B-G-H; 142-A-D]
C       Damodar S. Prabhu vs. Sayed Baba/a/ H. (2010) 5 SCC
    663: 2010 (5) SCR 678 - relied on.
       5. Section 4 of the Code, which is the governing
  statute in India for investigation, inquiry and trial of
  offences has two parts. Section 4 sub-section (1) deals
D 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. In the
  instant case, no special procedure has been prescribed
E under the N.1. Act relating to compounding of an offence.
  In the absence of special procedure relating to
  compounding, the procedure relating to compounding
  under Section 320 shall automatically apply in view of clear
  mandate of sub-section (2) of Section 4 of the Code. In
  view of Section 4(2) of the Code, the basic procedure of
F compounding an offence laid down in Section 320 of the
  Code will apply to compounding of an offence under N.I.
  Act. [Paras 59-61, 64) [142-F-H 143-A-D, E]
       6. The observations made in paragraph 24 of
G Damodar, 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. It is well settled
H that a judgment is always an authority for what it decides.
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.             121
               JUMANI AND ANR.
It is equally well settled that a judgment cannot be read as     A
a statute. It has to be read in the context of the facts
discussed in it. Following the said well settled principles,
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         B
under N.I. Act in view of Section 147 of the same. [paras
68-69] [144-D-G]
     7. Compounding as codified in Section 320 of the
Code has a historical background. In common law,
compounding was considered a misdemeanour. Later on,             C
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. In our country also when the
Criminal Procedure Code, 1861 was enacted it was silent          D
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                   E
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 indicating the offences which were
compoundable but the said Section was only made                  F
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      G
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 the contention
of the appellant is accepted that as a result of incorporation
                                                                 H
    122      SUPREME COURT REPORTS              [2012] 3 S.C.R.


A ofSection 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, then the
  compounding of offence under N.I. Act will be left totally
  unguided or uncontrolled. Such an interpretation apart
B from being an absurd or unreasonable one will also be
  contrary to the provisions of Section 4(2) of the Code.
  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
c 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. [paras 70, 72-74] [144-G-H; 145-
0
  E-G; 146-A-F]
      Raghubar Dayal vs. The Bank of Upper India Ltd. AIR
  1919 P.C. 9; S.K. Gupta and another vs. K.P. Jain and another
  1979 (3) SCC 54: 1979 (2) SCR 1184; Miheer H. Mafat/al vs.
E Mafatla/ Industries Ltd. AIR 1997 SC 506: 1996 (6) Suppl. SCR
    1; Hindustan Lever and another vs. State of Maharashtra and
  another (2004) 9 sec 438: 2003 (5) Suppl. SCR 685;
  Administrator of the Specified Undertaking of the Unit Trust of
  India and another vs. Garware Polyester Ltd. (2005) 10 SCC
F 682: 2005 (1) Suppl. SCR 192; Kausha/ya Devi Massand vs.
  Roopkishore Khore (2011) 4 SCC 593: 2011 (3) SCR 879;
  /CIC/ Bank Ltd. vs. Sidco Leathers Ltd. and Ors. (2006) 10 SCC
  452: 2006 (1) Suppl. SCR 528; Madhav Rao Scindia Bahadur,
  etc. vs. Union of India and Another(1971) 1 sec 85: 1971 (3)
G SCR 9; Central Bank of India vs. State of Kera/a and others
  (2009) 4 SCC 94: 2009 (3) SCR 735; Khatri and Ors. etc. Vs.
  State ofBiharand Ors. AIR 1981SC1068: 1981 (3) SCR 145;
  Vinay Devanna Nayak vs. Ryot Sewa Sahakari Bank Limited
  (2008) 2 SCC 305: 2007 (12) SCR 1134; R. Rajeshwari vs.
H H. N. Jagadish 2008) 4 SCC 82: 2008 (3) SCR 1065- referred
    to.
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.            123
               JUMANI AND ANR.
    Kenny's 'Outlines of Criminal Law' (Nineteenth Edition,    A
1966); Russell on Crime (Twelfth Edition}, Russell on Crime
(Twelfth Edition) - referred to.
                     Case Law Reference:
 AIR 1919 P.C. 9            referred to     Para 8         - B
 1970 SCR 866               referred to     Para12,14
 1979 (2) SCR 1184           referred to    Para 14
 1996 (6) Suppl. SCR 1      referred to     Para 15,16,17
                                                               c
 2003 (5) Suppl. SCR 685    referred to     Para 16
 2005 (1) Suppl. SCR 192    referred to     Para 17
 1984 (Supp.)   sec 663     referred to     Para 19
 2008 (10) SCR 782         · held inapplicable Para 20         D

 2011 (3) SCR 879           referred to     Para 22
 2010 (1) SCR 219           held inapplicable Para 23,24
 2010 (5) SCR 678           relied on       Para 25,26,
                                                               E
                                            27,47,58,68
 1996 (3) Suppl. SCR 360    Distinguished Para 28, 31,32
 2003 (3) SCR 1118          referred to     Para 32,33
 2008 (12) SCR 236          referred to     Para 34,35         F
 2006 (1) Suppl. SCR 528    referred to     Para 51
 1971 (3) SCR 9             referred to     Para 53, 54
 2009 (3) SCR 735           referred to     Para 54
                                                               G
 1981 (3) SCR 145           referred to    ·Para 63
 2007 (12) SCR 1134         referred to     Para 65
 2008 (3) SCR 1065           referred to    Para 67
                                                               H
    124       SUPREME COURT REPORTS              [2012) 3 S.C.R.


A       CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
    No. 263 of 2012.
        From the Judgment & Order dated 14, 21, 22, 25 &
    26.08.2008 of the High Court of Judicature of Mombay in
    Criminal Writ Petition No. 2781 of 2006.
B
                                   WITH
    Crl. A. Nos. 264, 265, 266, 267, 268, 269, 270, 271, 272, 273,
    274, 275-294, 295-303 of 2012.
c       Mili Thakkar, Jatin Zaveri, Gaurav Aarwal, K.N. Rai for the
    Appellants.
        K. Parameshwar, Anish Shah (for Shivaji M. Jadhav), Asha
    Gopalan Nair, C.N. Sree Kumar, Resmitha R. Chandran, Uday
    B. Dube, Nikhil Nayyar for the Respondents.
D
          The Judgment of the Court was delivered by
          GANGULY, J. 1. Leave granted.
        2. This group of appeals were heard together as they
  involve common questions of law. There are some factual
E 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.
F
       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
G 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 Hig~
  Court after dismissing the writ petitions held that sanction of a
  scheme under Section 391 of the Companies Act, 1956
H (hereinafter 'Companies Act') does not amount to compounding
   JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                   125
   JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
  of an offence under Section 138 read with Section 141 of the           A
  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   B
  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             c
  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 complaint which          D
  was filed under Section 138 of th!:! N.I. Act in respect of pre-
- <:,om promise 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             E
 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        F
 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         G
 they opposed the scheme. Despite the said opposition, the
 appellant(s) succeeded in getting the scheme approved by
 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
                                                                         H
    126       SUPREME COURT REPORTS                 [2012) 3 S.C.R.


A 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
B 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
c proceedings inter alia on the ground that the learned Magistrate
  has no power to quash or terminate the proceedings.
        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
0
    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).
E      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
F Court dated 5th May, 2005 which directed meeting of the different
  classes of creditors for consideration of the scheme. 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
G 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
H have taken advantage of the scheme and did not challenge the
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                  127
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
scheme. However, the scheme was challenged by the                      A
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         B
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 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             c
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       D
and in support of the said contention reliance was placed on a
judgment of the Privy Council in the case of Raghubar Dayal vs.
TheBankofUpperlndia Ltd. reported in AIR 1919 P.C. 9. ltwas
also urged that in a scheme under Section 491 a judgment is in
rem. The learned counsel further submitted that admittedly the         E
respondents objected to the scheme and is a dissenting creditor.
     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            F
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)    G
has drawn the attention of this Court to the order dated 3.10.2006
passed by the Metropolitan Magistrate, XII Court Sandra,
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              H
    128      SUPREME COURT REPORTS                [2012) 3 S.C.R.

A Magistrate rejected the prayer for compounding made by the
  appellant(s) under Section 147 of the N.I. Act.
        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
8 appellant(s) were given an opportunity to file a petitiQn 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,
C 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
0
  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 set of arrangement
  between the company and its shareholders.
E       12. Learned counsel for the appellant(s) placed reliance on
  the decision of this Court in Mis. J.K. (Bombay) Private Ltd. vs.
  Mis. 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
F 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
G 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 proceedings initiated
  by the respondent creditors for non-payment of debts of the
H company arising out of dishonour of cheques. Factually the
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                    129
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
allegation of the respondent is that even payment under the              A
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.        B
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              c
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
underthe N.l.Act.
      14. The learned counsel for the appellant(s) also relied on D
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) sec 54.
In the case of S.K. Gupta (supra) also the ratio in the case of Ml E
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.                       F
     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. Mafat/a/ vs. Mafatla/ Industries Ltd. reported in AIR
1997 SC 506. From a perusal of the various principles laid down
in Mafatlal (supra), it is clear that the proposed scheme cannot         G
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 H
    130       SUPREME COURT REPORTS                 [2012] 3 S.C.R.


A 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
B 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
c the law (see para 18 page 451 of the report)
         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
D 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
E 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 appeilant(s) that once a scheme under Section 391 of the
  Companies Act is sanctioned by the Court the same operates
F as compounding of offence under Section 138 read with 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
G 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
H features must be satisfied before it can be claimed by the offender
   JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                   131
   JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
that the offence has been compounded. Thus, compounding of               A
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 same will have the effect of restructuring     B
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 Lawri~ Workers' Union, Bombay
and another vs. Balmer Lawrie & Co. Ltd. and others reported
in 1984 (Supp.) SCC 663. That decision related to a settlement           C
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.                                                     D
     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 sec 323. In that case
also the question of an agreement under Section 18 of Industrial         E
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           F
we are concerned in the facts and circumstances of the case.
      21. The learned counsel forthe 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          G
 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                       H
    132      SUPREME COURT REPORTS                  [2012] 3 S.C.R.

A dishonoured, the same is a cheque relating to the debt of the
  company in respect of 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
s 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
c 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. Roopkfstlbre Khore
D reported in (2011) 4 sec 593. The learned counsel relied on
  the observation made in para 11, at page 595 of the report and
  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
E 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
  8. Thakore reported in (2010) 3 SCC 83. This Court in Mandvi
F (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
G 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 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
H
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                  133
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
Act. In order to deal with such situation, several amendments          A
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 197~) ••every offence punishable under this Act shall       8
     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       c
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).
      25. On the nature of the offence under N.I. Act learned          D
counsel for the appellant(s) also placed reliance on a decision
of this Court in the case of Damodar S. Prabhu vs. Sayed
Baba/al 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            E
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       F
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          G
stage of litigation and 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. Actand held thatthe same      H
    134        SUPREME COURT REPORTS                 [2012) 3 S.C.R.


A 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
B 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
c submissions of the learned Attorney General framed certain
  guidelines for compounding of offence under Section 138 of the
  N.I. Act. Those guidelines are as follows:
                             "THE GUIDELINES
          (1) In the circumstances, it is proposed as follows:
D
          (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
E         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
F         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
G
          (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.
H
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                   135
  JUMANI AND A~R. [ASOK KUMAR GANGULY, J.]
     (cf) Finally, if the application for compounding is made before   A
     the Supreme Court, the figure would increase to 20% of the
     cheque amount."
      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   B
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.       C
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 D
decision of this Court in Duncans Agro (supra) was on the
question of quashing the complaint under 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 E
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 F
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 G
the case" the decision of the High Court in quashing the
complaint does not require any interference under Article 136
of the Constitution.                                       ·
    29. Quashing of a case is different from compounding. In
quashing the Court applies it but in compounding it is primarily       H
    136      SUPREME COURT REPORTS                 [2012) 3 S.C.R.


A 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
B 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
C 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 of the case', did not interfere with the order of
  the High Court dated 23.12.1992 whereby the criminal
D 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
E 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
F in the case of Hira Lal Hari Lal Bhagwati vs. CBI, New Delhi
  reported in (2003) 5 sec 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 introduced by the
G 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
H any penal proceedings under any law. The Court also came to
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.              137
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
the conclusion that under the Customs Act, 1962 the appellant(s) A
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 B
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) af any intentional
deception or of fraudulent or dishonest intention. On those facts
the Court held that once a civil case has been compromised and c
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         D
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         E
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 which is there with the Court should be        F
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            G
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      H
    138       SUPREME COURT REPORTS                  [2012] 3 S.C.R.


A 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
8 on correct principles inasmuch as the effect of a Scheme under
  Section 391 of the 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
C 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.
D
        37. Learned counsel distinguished between a Scheme
  under SecUon 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
E basis of the consent of the person compounding and his consent
  cannot be assumed under any situation.
       38. Learned counsel further submitted that the impugned
  judgment of the High Court correctly formulated the principle of
F 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.
G      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
H been made compoundable.
    JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.               139
                                                                r
    JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
      41. There is a category of offence for the compounding of       A
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 Cplumn of the Table.
If the said Table is perused, it will be clear thatyompounding can    B
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                C
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 was suffering from some disability, a person to             D
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         E
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           F
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            G
     this section."
      46. Section 147 ofthe Negotiable Instrument Act reads as
followsO:

                                                                      H
    140       SUPREME COURT REPORTS                [2012] 3 S.C.R.


A         "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."
B        47. Relying on the aforesaid non-obstante clause in Section
    147 of the N.I. Act, learned counsel forthe 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
c   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
D legislative device and in olden times it had the effect of non
  obstante aliquo statute 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
E 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
F 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.
G
        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
H Parliament and not beyond that. [See /CIC/ Bank Ltd. vs. Sidco
 JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                      141
 JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]
Leathers Ltd. and Ors. - (2006) 10 SCC 452 para 37 at page                    A
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 B
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.
     53. Reference in this connection may be made to the
Constitution Bench decision of this Court in the case of Madhav C
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- D
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 Kera/a and others                 E
reported in (2009) 4 sec 94, following the principles as laid down
in Madhav Rao (supra) this Court in Central Bank (supra) held
as follows:-
                                                                          /
       "... When the section containing the said clause does not              F
       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                      G
       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                 H
    142       SUPREME COURT REPORTS                 (2012] 3 S.C.R.'.


A 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
B such pendency.
         56. Pursuant to the recommendations of the Working Group,
    the aforesaid Bill was introduced in Parliament and one of the
    amendments introduced was "to make offences under the Act
    compoundable".
c
        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
D previously non-compoundable in view of Section 320 sub-
  section 9 of the Code hqs 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
E 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 Oamodar(supra), see para 12. Therefore, the submission of
  the learned counsel for the appellant to the contrary cannot be
  accepted.
F        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.
G        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
H prescribed under the N.I. Act relating to compounding of an
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                 143
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]

offence. In the absence of special procedure relating to              A
compounding, the procedure relating to compounding under
Section 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
                                                                      8
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             C
    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 ofBiharand Ors. -AIR 1981 SC
1068 held that the provisions of the Code are applicable where        D
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).
      64. In view of Section 4(2) of the Code, the basic procedure    E
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      F
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          G
    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."
                                                                      H
    144       SUPREME COURT REPORTS                  [2012] 3 S.C.R.


A         (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 refuse compromise between the parties. But the
B 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
c ·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
D approved inDamodar(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 compounding the offence early.
E 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
F 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,
G 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.
          70. Compounding as codified in Section 320 of the Code
H
  JIK INDUSTRIES LIMITED & ORS. v. AMARLAL V.                   145
  JUMANI AND ANR. [ASOK KUMAR GANGULY, J.]

has a historical background. In common law compounding was             A
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
                                                                       B
     (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              C
     must not sell mercy. This offence of compounding is
     committed by the bare act of ?greement; 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      D
     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:-
                                                                       E
     "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                F
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                G
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            H
    146       SUPREME COURT REPORTS                  [2012] 3 S.C.R.


A by reference to the exception to Section 214 of the Indian Penal
    Code. The subsequent Code of 1898 provided Section 345
    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
B 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
c 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
0
    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
    been discussed above. There is no other statutory procedure for
E· 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
F 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
G under Section 138 of the N.I. Act even without the consent of the
  complainant.
        75. The appeals are dismissed. The judgment of the High
    Court is affirmed.
H D.G.                                            Appeals dismissed.