Compounding of cheque dishonour offence after genuine settlement led to recall of dismissal and acquittal.

A review application was entertained on sufficient cause, the delay was condoned, and the earlier order dismissing the special leave petition was recalled with restoration of the matter. The offence under the Negotiable Instruments Act was then treated as compoundable on the basis of a genuine compromise, supported by affidavits evidencing full payment and acceptance of the cheque amount. Applying the compounding framework, the conviction and sentence were set aside and the petitioner was acquitted. The stated principle is that, where parties validly settle a cheque dishonour dispute, compounding remains available and the criminal consequences may be withdrawn.

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Issues: (i) Whether the delay in filing the review application could be condoned and the earlier order dismissing the special leave petition could be recalled. (ii) Whether the offence under Section 138 of the Negotiable Instruments Act could be compounded on the basis of the compromise and the conviction and sentence set aside.

Issue (i): Whether the delay in filing the review application could be condoned and the earlier order dismissing the special leave petition could be recalled.

Analysis: The application for condonation of delay was supported by the record and the Court found sufficient basis to entertain the review. Since the order dismissing the special leave petition had been passed earlier and the matter was sought to be reopened in light of subsequent settlement, the Court accepted the request to restore the matter.

Conclusion: The delay was condoned, the review succeeded, and the earlier dismissal order was recalled with restoration of the special leave petition.

Issue (ii): Whether the offence under Section 138 of the Negotiable Instruments Act could be compounded on the basis of the compromise and the conviction and sentence set aside.

Analysis: The Court relied on the compromise between the parties and the affidavits showing full payment of the cheque amount and acceptance by the respondent. In view of the permissive scheme of Section 147 of the Negotiable Instruments Act and the compounding framework under Section 320 of the Code of Criminal Procedure, the offence was held compoundable notwithstanding the earlier conviction.

Conclusion: The petitioner was permitted to compound the offence, and the conviction and sentence were set aside, resulting in acquittal.

Final Conclusion: The proceedings were reopened on review, the compromise was accepted, and the petitioner obtained complete relief by compounding the offence and securing acquittal.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act can be compounded after a genuine compromise between the parties, and upon such compounding the conviction and sentence are liable to be set aside.

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