Compounding of Section 138 cheque dishonour offence accepted after full settlement, leading to acquittal and setting aside conviction.

A conviction under Section 138 of the Negotiable Instruments Act can be set aside where the parties file a joint compromise petition showing full and final settlement and no surviving dispute. On that basis, the High Court accepted compounding of the offence, held that the conviction and sentence imposed by the courts below could not stand, and set aside those judgments. The petitioner was acquitted following the settlement.

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Issues: Whether the conviction for the offence under Section 138 of the Negotiable Instruments Act, 1881 could be set aside and the offence compounded on the basis of the compromise between the parties.

Analysis: The parties placed before the Court a joint compromise petition stating that the cheque amount had been received in full and final settlement and that no further dispute survived. In view of the settlement and the request to compound, the Court accepted that the offence could be compounded and that the conviction and sentence recorded by the courts below could not stand.

Conclusion: The offence was compounded, the judgments of the courts below were set aside, and the petitioner was acquitted.

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