Cheque dishonour offence compoundable after genuine settlement; conviction and sentence set aside, accused acquitted.

An offence under Section 138 of the Negotiable Instruments Act was treated as compoundable under Section 147, which overrides the restriction in Section 320 of the Code of Criminal Procedure for offences under that Act. Because the parties had genuinely settled the dispute and the cheque amount was paid and accepted in full and final settlement, there was no reason to refuse compounding. The conviction and sentence were therefore set aside, and the accused was entitled to acquittal.

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Issues: Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded on the basis of a subsequent settlement and whether the conviction and sentence could be set aside on that basis.

Analysis: The dispute had been settled between the parties and the cheque amount had been paid and accepted in full and final settlement. Section 320 of the Code of Criminal Procedure, 1973 restricts compounding to offences covered by that provision, but Section 147 of the Negotiable Instruments Act, 1881 expressly makes every offence under that Act compoundable notwithstanding the Code. In view of the legislative purpose of Section 138 and the settlement recorded between the parties, there was no justification to refuse compounding.

Conclusion: The offence was held compoundable, and the appellant was entitled to acquittal. The conviction and sentence were set aside.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of that Act, and once the parties have genuinely settled the dispute, the conviction can be set aside and the accused acquitted.

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