Rajendra Anant Varik v. Govind B. Prabhugaonkar

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Citations: 2025 INSC 633
Court: Supreme Court of India
Bench: Vikram Nath, Sandeep Mehta, JJ.
Case Number: Criminal Appeal No(s). of 2025 (Arising out of SLP (Crl.) No(s). 4728 of 2023)
Decided on: May 06, 2025

Negotiable Instruments Act, 1881 – Section 138 – Compounding of Offence – Goa Money-Lenders Act, 2001 – Acquittal.

The accused-appellant was convicted by the trial court under Section 138 of the Negotiable Instruments Act for dishonour of a cheque amounting to Rs. 2,00,000, with compensation of Rs. 2,30,000 ordered under Section 357 CrPC. The First Appellate Court acquitted the accused, holding that the complainant was engaged in unlicensed money-lending, violating the Goa Money-Lenders Act, 2001. The High Court reversed the acquittal, restoring the trial court’s conviction. On appeal, the Supreme Court noted the High Court’s failure to consider the applicability of the Goa Act as a valid defence. Considering the accused had already paid the cheque amount and compensation, the Supreme Court, exercising powers under Article 142 of the Constitution, compounded the offence, acquitted the accused, and directed that the deposited amount of Rs. 2,30,000 be paid to the complainant if not already done.

Appeal allowed.

Facts

The accused-appellant, Rajendra Anant Varik, was convicted by the Judicial Magistrate First Class, Canacona, on August 5, 2016, under Section 138 of the Negotiable Instruments Act, 1881 (NI Act), for dishonour of a cheque worth Rs. 2,00,000. The trial court ordered compensation of Rs. 2,00,000 to the complainant-respondent, Govind B. Prabhugaonkar, under Section 357 of the Code of Criminal Procedure, 1973 (CrPC), and an additional Rs. 30,000 as costs, with a default sentence of three months’ simple imprisonment. The First Appellate Court (Sessions Judge, South Goa) acquitted the accused on February 6, 2017, citing the complainant’s unlicensed money-lending activities under the Goa Money-Lenders Act, 2001. The High Court of Bombay at Goa reversed this acquittal on January 7, 2023, restoring the trial court’s conviction. The accused appealed to the Supreme Court, claiming repayment of the loan and challenging the High Court’s judgment.

Issues

1. Whether the High Court erred in reversing the acquittal without addressing the applicability of the Goa Money-Lenders Act, 2001, as a defence.
2. Whether the offence under Section 138 of the NI Act could be compounded given the accused’s repayment of the cheque amount and compensation.

Holding

The Supreme Court allowed the appeal, compounded the offence under Section 138 of the NI Act, and acquitted the accused-appellant, subject to the condition that the total amount of Rs. 2,30,000 (cheque amount plus compensation) be paid to the complainant if not already paid.

Reasoning

The Supreme Court found that the High Court failed to consider the applicability of the Goa Money-Lenders Act, 2001, which the First Appellate Court had relied upon to acquit the accused due to the complainant’s unlicensed money-lending. This omission rendered the High Court’s judgment unsustainable. Additionally, the Court noted that the accused had already paid the cheque amount of Rs. 2,00,000 and the Rs. 30,000 compensation ordered by the trial court. Exercising its powers under Article 142 of the Constitution of India, the Supreme Court compounded the offence, acquitting the accused while ensuring the complainant received the full amount owed.

Disposition

• The appeal was allowed.
• The offence under Section 138 of the NI Act was compounded.
• The accused-appellant was acquitted, subject to the payment of Rs. 2,30,000 to the complainant if not already paid.
• Pending applications, if any, were disposed of.

Key Legal Principles

Section 357, CrPC: Courts may order compensation to victims as part of sentencing.

Section 138, NI Act: Dishonour of a cheque for insufficient funds or exceeding arrangement is an offence, but it can be compounded under certain conditions.

Goa Money-Lenders Act, 2001: Unlicensed money-lending may provide a valid defence in prosecutions under the NI Act.

Article 142, Constitution of India: The Supreme Court can pass orders to do complete justice, including compounding offences.

Multiple Choice Questions (MCQs)

1. What was the primary legal issue in Rajendra Anant Varik v. Govind B. Prabhugaonkar (2025 INSC 633)?
   a) Validity of the cheque issued by the accused
   b) Applicability of the Goa Money-Lenders Act, 2001, as a defence
   c) Jurisdiction of the Supreme Court under Article 142
   d) Calculation of compensation under Section 357 CrPC
   Answer: b) Applicability of the Goa Money-Lenders Act, 2001, as a defence
2. Which court initially convicted the accused-appellant under Section 138 of the Negotiable Instruments Act?
   a) High Court of Bombay at Goa
   b) Sessions Judge, South Goa
   c) Judicial Magistrate First Class, Canacona
   d) Supreme Court of India
   Answer: c) Judicial Magistrate First Class, Canacona
3. What was the basis of the First Appellate Court’s acquittal of the accused?
   a) Lack of evidence for cheque dishonour
   b) Complainant’s unlicensed money-lending under the Goa Money-Lenders Act
   c) Non-payment of compensation by the accused
   d) Procedural errors in the trial court
   Answer: b) Complainant’s unlicensed money-lending under the Goa Money-Lenders Act
4. What power did the Supreme Court exercise to compound the offence in this case?
   a) Section 320 of the CrPC
   b) Article 142 of the Constitution of India
   c) Section 138 of the Negotiable Instruments Act
   d) Section 357 of the CrPC
   Answer: b) Article 142 of the Constitution of India
5. What was the total amount the accused was required to pay to the complainant, as confirmed by the Supreme Court?
   a) Rs. 2,00,000
   b) Rs. 2,30,000
   c) Rs. 30,000
   d) Rs. 2,50,000
   Answer: b) Rs. 2,30,000

Frequently Asked Questions (FAQs)

1. What was the outcome of the case Rajendra Anant Varik v. Govind B. Prabhugaonkar?
   The Supreme Court allowed the appeal, compounded the offence under Section 138 of the Negotiable Instruments Act, 1881, and acquitted the accused-appellant, subject to the condition that Rs. 2,30,000 (cheque amount of Rs. 2,00,000 plus Rs. 30,000 compensation) be paid to the complainant if not already paid.
2. Why did the Supreme Court reverse the High Court’s decision?
   The Supreme Court found that the High Court failed to address the applicability of the Goa Money-Lenders Act, 2001, which the First Appellate Court had relied on to acquit the accused due to the complainant’s unlicensed money-lending activities. This omission made the High Court’s judgment unsustainable.
3. What role did the Goa Money-Lenders Act, 2001, play in this case?
   The Goa Money-Lenders Act, 2001, was central to the defence, as the First Appellate Court held that the complainant’s unlicensed money-lending activities barred prosecution under the Negotiable Instruments Act. The Supreme Court noted the High Court’s failure to consider this defence.
4. How did the Supreme Court use Article 142 in this case?
   The Supreme Court exercised its powers under Article 142 of the Constitution of India to do complete justice by compounding the offence under Section 138 of the Negotiable Instruments Act, acquitting the accused, and ensuring the complainant received the owed amount.
5. What was the significance of the accused’s payment of Rs. 2,30,000?
   The accused’s payment of the cheque amount (Rs. 2,00,000) and compensation (Rs. 30,000) was a key factor in the Supreme Court’s decision to compound the offence, as it demonstrated that the financial obligation to the complainant had been fulfilled, justifying acquittal.