Authority: High Court of Judicature at Madras
Order Date: 15-10-2026
Case Overview
- Parties: Petitioners – M/s. Sri Sapthagiri Polymers (represented by its Partner) and K. Balaji, Partner, both of Sipcot Industrial Growth Centre, Kadappamadai, Perundurai, Erode District, Tamil Nadu; Respondent – M/s. Rishabh Triexim LLP, represented by Partner and Authorized Signatory Swaroop J. Bagrecha, Wall Tax Road, Chennai.
- Case Numbers: Criminal Revision Petition (CRL RC No. 2408 of 2026); related matters CRL MP No. 20146 of 2026 and CRL MP No. 20148 of 2026.
- Background: The petitioners were convicted by the III Metropolitan Magistrate, George Town, Chennai (CC No. 1202 of 2020) on 07‑11‑2024 for an offence under Section 138 of the Negotiable Instruments Act, 1881. The magistrate sentenced them to two years simple imprisonment and ordered payment of Rs 2,27,56,380 as compensation, with an additional three‑month imprisonment for default. An appeal (C.A. No. 994 of 2024) was filed before the Principal Sessions Judge, Chennai, which on 09‑01‑2026 confirmed the conviction and sentence.
- Revision Petition: The petitioners filed a Criminal Revision Petition on 14‑07‑2026 seeking to set aside the appellate judgment.
- Settlement: While the revision was pending, the parties amicably settled the dispute. A Joint Memorandum of Compromise of Full and Final Settlement was executed on 12‑10‑2026, acknowledging receipt of an aggregate payment of Rs 2,10,00,000 (Rs 35 lakh paid earlier, Rs 1 crore by demand draft No. 00447803 dated 18‑07‑2026 drawn on City Union Bank Limited, Perundurai Branch, and Rs 75 lakh by RTGS on 12‑10‑2026). The respondent confirmed that the amount represented full and final settlement of all claims arising from CC No. 1202 of 2020.
- Legal Provisions Invoked: Section 147 of the Negotiable Instruments Act (offences are compoundable) and Section 359 of the Bharatiya Nyaya Sanhita, 2023 (BNSS) (compounding of offences). The Court also considered its inherent powers under Section 442 of the BNSS and relevant Supreme Court precedents (e.g., Damodar S. Prabhu vs. Sayed Babalal H, M/s Meters and Instruments Private Ltd vs. Kanchan Mehta, Vinay Devanna Nayak vs. Ryot Seva Sahkari Bank Ltd, and the High Court’s own judgment in K. Balachenniappan vs. Jeyakrishnan dated 19‑09‑2025).
- Counsel Submissions: Petitioners’ counsel argued that the settlement satisfied the complainant and that the Court could compound the offence under Section 147 and BNSS Section 359, invoking the principle that the NI Act’s object is compensatory. The State’s counsel opposed compounding, asserting that the conviction had been upheld and that allowing a compromise would misuse the legal process.
Final Outcome
- The Court exercised its inherent power and, relying on the settlement and statutory provisions, ordered the compounding of the offence under Section 138.
- The conviction and sentence affirmed by the III Metropolitan Magistrate and the Principal Sessions Judge are annulled.
- The petitioners are acquitted of the offence.
- K. Balaji, Partner of Sri Sapthagiri Polymers, is ordered to be released from jail forthwith without any conditions.
- All connected miscellaneous petitions are closed.
Topics: Cheque Bounce Settlement, Criminal Compounding