Settlement in cheque dishonour prosecution led to substitution of imprisonment with compensation and termination of proceedings.

In a prosecution under Section 138 of the Negotiable Instruments Act, the Himachal Pradesh High Court applied Section 482 CrPC and Section 147 of the Negotiable Instruments Act to give effect to an amicable settlement. As the complainant had been compensated through deposit, partial court payment, and a post-dated cheque for the balance, the Court treated the offence as essentially compensatory and held that continuation of proceedings would serve no useful purpose. The conviction and sentence were interfered with to secure the ends of justice and prevent abuse of process, and the substantive sentence of simple imprisonment was substituted by the compensation already paid and deposited.

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Issues: Whether, in a prosecution under Section 138 of the Negotiable Instruments Act, 1881, the conviction and sentence could be interfered with and the proceedings given quietus after settlement and payment of the cheque amount and compensation.

Analysis: The petitioner and the complainant reported an amicable settlement. The entire compensation amount stood deposited, a part had been paid in court, and the balance was covered by a post-dated cheque. The Court relied on the settled principles governing exercise of inherent power under Section 482 of the Code of Criminal Procedure, 1973, together with Section 147 of the Negotiable Instruments Act, 1881, as explained in the cited Supreme Court decisions, to hold that offences arising from commercial or financial transactions with a civil flavour may be terminated where the complainant has been duly compensated and continuation of the proceedings would not serve the ends of justice. The offence under Section 138 was treated as primarily compensatory in nature, and the Court considered that the prolonged litigation had already served no useful punitive purpose.

Conclusion: The Court held that the matter was fit for exercise of jurisdiction to secure the ends of justice and prevent abuse of process, and the substantive sentence of simple imprisonment was modified and substituted by the compensation already paid and deposited.

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