Compounding of cheque dishonour prosecution permitted after genuine settlement and receipt of dues, leading to annulment of conviction.

A prosecution under Section 138 of the Negotiable Instruments Act may be compounded where the parties have genuinely settled the dispute and the complainant has received the dues. Although the State objected because the conviction and sentence had already been affirmed below and the compromise was reached at a late stage, the Court treated the settlement as decisive in the peculiar facts and granted permission to compound. The conviction and sentence were accordingly annulled in the interests of justice.

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Issues: Whether the conviction and sentence for the offence under Section 138 of the Negotiable Instruments Act could be annulled on the basis of a compromise between the parties.

Analysis: The complainant stated that the entire amount had been received and expressed no objection to setting aside the conviction. Although the State opposed interference on the ground that the conviction and sentence had been affirmed by the courts below and the compromise came at a late stage, the Court considered the nature of the offence and the fact that the parties had already settled the matter. In the peculiar facts and circumstances of the case, permission to compound was granted.

Conclusion: The conviction and sentence under Section 138 stood annulled.

Ratio Decidendi: Where the parties have genuinely compromised a prosecution under Section 138 of the Negotiable Instruments Act and the complainant has received the dues, the Court may permit compounding and set aside the conviction and sentence in the interests of justice.

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