Compounding of cheque dishonour offences may be allowed even at the appellate stage, with conviction and sentence set aside.

Section 147 of the Negotiable Instruments Act, 1881, has overriding effect through its non-obstante clause and permits compounding of an offence under Section 138 notwithstanding the Code of Criminal Procedure, 1973. The text states that the settlement objective of the provision allows compounding even after conviction and at the appellate stage. It further notes that, once compounding is accepted, the conviction and sentence are set aside and the accused is acquitted, with Article 142 of the Constitution invoked to do complete justice between the parties.

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Issues: Whether an offence under Section 138 of the Negotiable Instruments Act, 1881, could be compounded after conviction and at the appellate stage, and whether the conviction and sentence were liable to be set aside on such compounding.

Analysis: Section 147 of the Negotiable Instruments Act, 1881, contains a non-obstante clause and gives overriding effect to the provision for compounding notwithstanding the Code of Criminal Procedure, 1973. The object of the provision is to facilitate settlement of disputes, and there is no bar against compounding even after the proceedings have reached the appellate stage. Section 320(8) of the Code of Criminal Procedure, 1973, though not directly applicable, supports the legislative approach that once compounding is permitted, the accused is entitled to acquittal. The Court also invoked its powers under Article 142 of the Constitution of India to do complete justice between the parties.

Conclusion: The offence was held compoundable at the appellate stage, and the conviction and sentence were set aside; the appellant was acquitted.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881, may be compounded at any stage, including after conviction in appeal, and once compounded the conviction and sentence must be set aside and the accused acquitted.

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