I. Case Identification & Vitals
1. Court
Supreme Court of India
2. Case Title
Rajendra Anant Varik vs. Govind B. Prabhugaonkar
3. Document Type and Date of Judgment
Judgment, May 06, 2025
4. Case Number
CRIMINAL APPEAL/__/2025 (Arising out of SLP (Crl.)/4728/2023)
5. SCR Citation
NA
6. Neutral Citation
2025 INSC 633
7. Disposal Nature
Appeal Allowed
8. Case Type
CRIMINAL APPEAL
9. Law Applicable
Criminal Law, Negotiable Instruments Law
10. Issue for Consideration
The central issue is whether the High Court was justified in reversing an acquittal and convicting the appellant for an offence under Section 138 of the Negotiable Instruments Act, 1882, especially when the First Appellate Court had acquitted him on the ground that the complainant was an unlicensed money-lender, which is a valid defence under the Goa Money-Lenders Act, 2001. A related issue is whether the offence could be compounded by the Supreme Court under Article 142 of the Constitution, given that the appellant had already paid the cheque amount and compensation.
11. Headnote
The Supreme Court, exercising its powers under Article 142 of the Constitution, compounded an offence under Section 138 of the Negotiable Instruments Act, 1882, and acquitted the accused-appellant. The Court noted that the High Court, while reversing the appellant's acquittal, had failed to consider the crucial issue of whether the complainant was an unlicensed money-lender under the Goa Money-Lenders Act, 2001, which was the basis for the acquittal by the First Appellate Court. Finding this omission to be a significant flaw, and considering that the appellant had already paid the entire cheque amount plus the compensation imposed by the trial court, the Supreme Court deemed it fit to compound the offence to do complete justice between the parties.
12. Short Summary in Normal Language
The Supreme Court acquitted a person who was convicted in a cheque bounce case. The Court noted that the High Court had overlooked a key defence: the person who filed the case was allegedly an unlicensed money-lender, which is illegal in Goa. Since the accused had already paid the full cheque amount along with the fine, the Supreme Court used its special powers to close the case and acquit him, ensuring a fair end to the dispute.
13. Bench
Hon’ble Justice Vikram Nath
Hon’ble Justice Sandeep Mehta
14. Judgment Authored by
Hon’ble Justice Sandeep Mehta*
II. Procedural & Factual Background
15. Case Start Date
NA
16. Case Arising From
The appeal challenges a judgment of the High Court of Judicature at Bombay at Goa, dated January 7, 2023. The High Court, in a criminal appeal, had quashed and set aside the judgment of the First Appellate Court (Sessions Judge, South Goa). The First Appellate Court had acquitted the appellant of an offence under Section 138 of the Negotiable Instruments Act, 1882, overturning his initial conviction by the trial court (Judicial Magistrate First Class, Canacona). The High Court restored the trial court's conviction and sentence.
17. Background and Facts
The case originated from a complaint filed by the respondent against the appellant under Section 138 of the Negotiable Instruments Act, 1882, for the dishonor of a cheque. The trial court convicted the appellant and ordered him to pay compensation of ₹2,00,000 (the cheque amount) plus ₹30,000 as costs, with a default sentence of three months' simple imprisonment.
The appellant appealed to the First Appellate Court (the Sessions Court). The Sessions Court allowed the appeal and acquitted the appellant. It found that the complainant was engaged in money-lending activities without a valid license, which is a violation of the Goa Money-Lenders Act, 2001. The court held that this illegality precluded the complainant from prosecuting the appellant under the NI Act.
The complainant then challenged this acquittal in the High Court. The High Court reversed the acquittal, restored the trial court's conviction, and directed the appellant to pay the compensation. The appellant has now challenged the High Court's decision in the Supreme Court.
18. Timeline
August 5, 2016: The trial court convicted the appellant under Section 138 of the NI Act.
February 6, 2017: The First Appellate Court allowed the appellant's appeal and acquitted him.
January 7, 2023: The High Court allowed the complainant's appeal, reversing the acquittal and restoring the conviction.
May 06, 2025: The Supreme Court allowed the appellant's appeal and compounded the offence.
19. Parties Involved
Appellant/Accused: Rajendra Anant Varik
Respondent/Complainant: Govind B. Prabhugaonkar
20. Procedural History
Lower Court/Tribunal Decisions: The Judicial Magistrate First Class, Canacona, convicted the appellant for an offence under Section 138 of the NI Act.
Appeals: The First Appellate Court (Sessions Judge) allowed the appellant's appeal and acquitted him.
The High Court of Bombay at Goa allowed the complainant's appeal, set aside the acquittal, and restored the conviction.
The appellant then filed the present appeal in the Supreme Court.
III. Legal Analysis & Arguments
21. Issues Framed
Not Applicable
22. Areas of Debate
Whether a prosecution under Section 138 of the NI Act is maintainable if the underlying transaction is based on a loan from an unlicensed money-lender, in violation of a state-specific Money-Lenders Act.
Can the Supreme Court exercise its power under Article 142 of the Constitution to compound an offence under Section 138 of the NI Act, even at the final appeal stage, if the parties have settled the matter?
23. Cases Cited by Petitioner/Appellant
NA
24. Cases Cited by Respondent/Defendant
NA
25. Acts/Rules/Orders Referred
Negotiable Instruments Act, 1882 (NI Act)
Section 138: This section criminalizes the dishonor of a cheque issued for the discharge of a debt or other liability. The entire case revolves around the conviction under this section.
Goa Money-Lenders Act, 2001
Context: This Act prohibits the business of money-lending without a license. The First Appellate Court had acquitted the appellant on the ground that the complainant was violating this Act, which provided a valid defence. The Supreme Court noted that the High Court had failed to consider this important issue.
Constitution of India
Article 142: This article grants the Supreme Court the extraordinary power to pass any decree or make any order necessary for doing "complete justice" in any case or matter pending before it. The Court invoked this power to compound the offence and acquit the appellant.
26. Acts/Rules/Orders Governing the Case
Negotiable Instruments Act, 1882
Goa Money-Lenders Act, 2001
Constitution of India
27. Literature Citation
NA
28. Appearances for Parties
Advocates: Not mentioned, referred to as "Learned counsel."
Witnesses: NA
Other Persons: NA
29. Prayer
The appellant prayed for the setting aside of the High Court's judgment and for his acquittal.
30. Evidence & Findings
Evidence: Admitted fact of payment. Description: It was an admitted position that the appellant had already paid the cheque amount of ₹2,00,000 and the compensation of ₹30,000 as imposed by the trial court.
Findings: This payment was a key factor that persuaded the Supreme Court to exercise its power under Article 142 to compound the offence and bring the matter to a close.
31. Petitioner/Appellant Arguments
The High Court erred in reversing his acquittal without considering the valid defence available to him under the Goa Money-Lenders Act.
He has already returned the entire amount of the loan, including the cheque amount and the compensation ordered by the trial court.
Given the payment, he is entitled to be acquitted by compounding the offence.
32. Respondent/Defendant Arguments
The respondent-complainant did not appear before the Supreme Court despite being served with a notice.
IV. Judgment & Conclusion
33. Ratio Decidendi
When a lower appellate court has acquitted an accused based on a specific legal defence (in this case, the bar under the Goa Money-Lenders Act), the High Court, while considering an appeal against that acquittal, must address that specific issue. A failure to do so is a significant flaw in its judgment.
The Supreme Court can exercise its extraordinary powers under Article 142 of the Constitution to compound an offence under Section 138 of the NI Act to do complete justice, especially when it is an admitted fact that the accused has paid the entire amount due (cheque amount plus compensation/costs).
The compounding of an offence under Section 138 of the NI Act leads to the acquittal of the accused.
34. Final Decision
The appeal is allowed. The Supreme Court, exercising its powers under Article 142 of the Constitution, compounded the offence under Section 138 of the NI Act and acquitted the appellant. This was subject to the condition that the entire amount of ₹2,30,000 deposited by the appellant be paid to the complainant-respondent if it has not already been paid.
35. Legal Jargons and Maxims
Compounding of Offence: A legal process where the parties to a criminal case agree to settle the dispute, leading to the acquittal of the accused. Certain offences, like those under Section 138 of the NI Act, are compoundable.
Acquittal: A formal declaration in a court of law that a person accused of a crime is not guilty.
Article 142 of the Constitution: A provision that gives the Supreme Court the unique power to pass any order necessary to ensure "complete justice" is done in a case.
36. Exhibits
NA
VI. Key Learnings for Law Students and Legal Professionals
37. Key Learnings
This judgment offers several important lessons for students and professionals, particularly in criminal law and the law of negotiable instruments:
The Importance of Addressing All Legal Defences: The most important finding is that an appellate court must engage with all the substantive legal grounds on which a lower court's decision is based. The High Court's failure to consider the First Appellate Court's reasoning regarding the Goa Money-Lenders Act was a critical error. This teaches that a judgment can be set aside not just for an incorrect finding, but for a failure to consider a crucial legal issue altogether.
The Interplay Between Special State Laws and Central Acts: The case highlights how a state-specific law (the Goa Money-Lenders Act) can provide a valid defence against a prosecution under a central law (the Negotiable Instruments Act). This is a vital lesson in understanding the federal structure of Indian law and how different statutes can interact to affect the outcome of a case.
The Scope of Article 142 for Compounding Offences: The judgment is a clear example of the Supreme Court's use of its extraordinary power under Article 142 to do "complete justice." It shows that even at the final stage, the Court can compound an offence like the one under Section 138 NI Act, especially when the monetary dispute has been settled. This is a crucial insight into the equitable jurisdiction of the Supreme Court.
The Goal of Section 138 of the NI Act: The Court's decision to compound the offence after the payment was made reinforces the underlying purpose of Section 138, which is not merely to punish the defaulter but to ensure the credibility of negotiable instruments and to provide a remedy for the complainant to recover their money.
Procedural Lapses in Appellate Review: For legal professionals, this case serves as a reminder to ensure that all grounds of appeal are thoroughly argued and that the appellate court's judgment addresses all the key findings of the lower court. The High Court's oversight in this case became the very basis for the Supreme Court's intervention.
Important Keywords for Rajendra Anant Varik vs. Govind B. Prabhugaonkar Judgment
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2025 INSC 633
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). OF 2025
(Arising out of SLP (Crl.) No (s). 4728 of 2023)
RAJENDRA ANANT VARIK ….APPELLANT(S)
VERSUS
GOVIND B. PRABHUGAONKAR ….RESPONDENT(S)
JUDGMENT
Mehta, J.
Heard.
Leave granted.
The accused-appellant has approached this Court, through this appeal by special leave, assailing the judgment dated 7th January, 2023, passed by the High Court of Judicature at Bombay at Goa¹ in Criminal Appeal No. 53 of 2017 whereby the High Court quashed and set aside the judgment dated 6th February 2017, passed by the First Appellate Court being the Court of Sessions Judge, South Goa at Margao² in Criminal Case No. 29/NI/2014. The First Appellate Court had allowed the Criminal Appeal No. 72 of 2016 filed by the accused-appellant against the conviction order dated 5th August, 2016 passed by the learned Judicial Magistrate First Class, Canacona³, and acquitted him while setting aside his conviction for the offence punishable under Section 138 of the Negotiable Instruments Act, 1882⁴ as recorded by the trial Court.
While reversing the acquittal of the accused-appellant, the High Court restored the judgment dated 5th August, 2016, passed by the trial Court in Criminal Case No. 29/NI/2014, convicting the accused-appellant for the offence punishable under Section 138 of the NI Act and directing that he shall pay compensation to the tune of Rs. 2,00,000/- to the complainant-respondent under Section 357 of Code of Criminal Procedure, 1973⁵ towards the cheque amount and further compensation to the tune of Rs. 30,000/- in the form of cost and, in default, shall undergo sentence of simple imprisonment for a period of three months. In addition, the accused-appellant was directed to undergo sentence till the rising of the Court.
The First Appellate Court had allowed the appeal, preferred by the accused-appellant, holding that the complainant-respondent was indulging in money lending activities, without acquiring a license and was thereby acting in breach of the provisions of the Goa Money-Lenders Act, 2001⁶ and hence, he was precluded from prosecuting the accused-appellant under NI Act.
No one has put in appearance on behalf of the respondent-complainant despite service of notice.
Learned counsel appearing for the accused-appellant, urged that the accused-appellant had returned the entire amount of loan taken from the complainant-respondent between January 2012 to July 2013. He further submitted that since the accused-appellant has returned the amount of the cheque to the complainant-respondent with interest payable thereupon, he is entitled to be acquitted by compounding the offence.
Upon having considered the entirety of the facts and circumstances as emerging from the record, we find that the High Court, while reversing the acquittal of the accused-appellant, as recorded by the First Appellate Court, did not advert to the important issue regarding applicability of the Goa Act which provided a valid defense available to the accused-appellant. Thus, apparently, the judgment rendered by the High Court does not stand to scrutiny.
Furthermore, it is an admitted position that the cheque amount to the tune of Rs. 2,00,000/- and the compensation amount to the tune of Rs. 30,000/-, as imposed by the trial Court, has already been paid by the accused-appellant.
In view of the facts noted above and considering the aspect that the accused-appellant has already paid the cheque amount and the fine of Rs. 30,000/- imposed by the trial Court, we hereby, exercise our powers under Article 142 of the Constitution of India, to compound the offence and acquit the accused-appellant of the accusation under Section 138 of the NI Act subject to the condition that the entire amount of Rs.2,30,000/- deposited by the accused-appellant shall be paid to the complainant-respondent, if the same has not been paid till date.
Consequently, the present appeal is allowed in these terms.
Pending application(s), if any, shall stand disposed of.
………….J.
(VIKRAM NATH)
……….J.
(SANDEEP MEHTA)
NEW DELHI;
MAY 06, 2025.
¹ Hereinafter, being referred to as the ‘High Court'.
² Hereinafter, being referred to as the ‘First Appellate Court'.
³ Hereinafter, being referred to as the 'trial Court.'
⁴ Hereinafter, being referred to as ‘NI Act'.
⁵ Hereinafter, being referred to as ‘CrPC’.
⁶ Hereinafter, being referred to as the 'Goa Act'.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). OF 2025
(Arising out of SLP (Crl.) No (s). 4728 of 2023)
RAJENDRA ANANT VARIK ….APPELLANT(S)
VERSUS
GOVIND B. PRABHUGAONKAR ….RESPONDENT(S)
JUDGMENT
Mehta, J.
Heard.
Leave granted.
The accused-appellant has approached this Court, through this appeal by special leave, assailing the judgment dated 7th January, 2023, passed by the High Court of Judicature at Bombay at Goa¹ in Criminal Appeal No. 53 of 2017 whereby the High Court quashed and set aside the judgment dated 6th February 2017, passed by the First Appellate Court being the Court of Sessions Judge, South Goa at Margao² in Criminal Case No. 29/NI/2014. The First Appellate Court had allowed the Criminal Appeal No. 72 of 2016 filed by the accused-appellant against the conviction order dated 5th August, 2016 passed by the learned Judicial Magistrate First Class, Canacona³, and acquitted him while setting aside his conviction for the offence punishable under Section 138 of the Negotiable Instruments Act, 1882⁴ as recorded by the trial Court.
While reversing the acquittal of the accused-appellant, the High Court restored the judgment dated 5th August, 2016, passed by the trial Court in Criminal Case No. 29/NI/2014, convicting the accused-appellant for the offence punishable under Section 138 of the NI Act and directing that he shall pay compensation to the tune of Rs. 2,00,000/- to the complainant-respondent under Section 357 of Code of Criminal Procedure, 1973⁵ towards the cheque amount and further compensation to the tune of Rs. 30,000/- in the form of cost and, in default, shall undergo sentence of simple imprisonment for a period of three months. In addition, the accused-appellant was directed to undergo sentence till the rising of the Court.
The First Appellate Court had allowed the appeal, preferred by the accused-appellant, holding that the complainant-respondent was indulging in money lending activities, without acquiring a license and was thereby acting in breach of the provisions of the Goa Money-Lenders Act, 2001⁶ and hence, he was precluded from prosecuting the accused-appellant under NI Act.
No one has put in appearance on behalf of the respondent-complainant despite service of notice.
Learned counsel appearing for the accused-appellant, urged that the accused-appellant had returned the entire amount of loan taken from the complainant-respondent between January 2012 to July 2013. He further submitted that since the accused-appellant has returned the amount of the cheque to the complainant-respondent with interest payable thereupon, he is entitled to be acquitted by compounding the offence.
Upon having considered the entirety of the facts and circumstances as emerging from the record, we find that the High Court, while reversing the acquittal of the accused-appellant, as recorded by the First Appellate Court, did not advert to the important issue regarding applicability of the Goa Act which provided a valid defense available to the accused-appellant. Thus, apparently, the judgment rendered by the High Court does not stand to scrutiny.
Furthermore, it is an admitted position that the cheque amount to the tune of Rs. 2,00,000/- and the compensation amount to the tune of Rs. 30,000/-, as imposed by the trial Court, has already been paid by the accused-appellant.
In view of the facts noted above and considering the aspect that the accused-appellant has already paid the cheque amount and the fine of Rs. 30,000/- imposed by the trial Court, we hereby, exercise our powers under Article 142 of the Constitution of India, to compound the offence and acquit the accused-appellant of the accusation under Section 138 of the NI Act subject to the condition that the entire amount of Rs.2,30,000/- deposited by the accused-appellant shall be paid to the complainant-respondent, if the same has not been paid till date.
Consequently, the present appeal is allowed in these terms.
Pending application(s), if any, shall stand disposed of.
………….J.
(VIKRAM NATH)
……….J.
(SANDEEP MEHTA)
NEW DELHI;
MAY 06, 2025.
¹ Hereinafter, being referred to as the ‘High Court'.
² Hereinafter, being referred to as the ‘First Appellate Court'.
³ Hereinafter, being referred to as the 'trial Court.'
⁴ Hereinafter, being referred to as ‘NI Act'.
⁵ Hereinafter, being referred to as ‘CrPC’.
⁶ Hereinafter, being referred to as the 'Goa Act'.