Compounding of Section 138 offence on settlement led to acquittal, with exemplary costs imposed for use of judicial time.

Settlement between the parties led to compounding of the Section 138 Negotiable Instruments Act offence, and the concurrent conviction and sentence were set aside with the appellant acquitted. The Court also held that exemplary costs could be imposed as a condition of granting such relief, because judicial time had been consumed, and non-compliance would attract consequences. The operative effect was that compromise secured relief from conviction, but the relief was made conditional on payment of costs.

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Issues: (i) Whether the conviction for the offence under Section 138 of the Negotiable Instruments Act, 1881 could be set aside on the basis of settlement and compounding of the offence; (ii) whether exemplary costs could be imposed on the appellant while granting such relief.

Issue (i): Whether the conviction for the offence under Section 138 of the Negotiable Instruments Act, 1881 could be set aside on the basis of settlement and compounding of the offence.

Analysis: The parties stated that the dispute had been settled during the pendency of the proceedings and that the entire amount due had been paid and received. In view of the compromise, the offence was permitted to be compounded and the concurrent findings of conviction and sentence were set aside.

Conclusion: The conviction was set aside and the appellant was acquitted.

Issue (ii): Whether exemplary costs could be imposed on the appellant while granting such relief.

Analysis: The Court held that the appellant had consumed public time and therefore imposed exemplary costs as a condition accompanying the relief, with a consequence attached to non-compliance.

Conclusion: Exemplary costs were imposed on the appellant.

Final Conclusion: The compromise between the parties resulted in the appellant's acquittal, but the relief was coupled with a direction to pay exemplary costs.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded on settlement between the parties, leading to setting aside of the conviction and acquittal, while the Court may impose exemplary costs to mark the misuse of judicial time.

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