Compounding of Section 138 cheque dishonour cases may justify setting aside conviction, subject to costs for delayed settlement.

An offence under Section 138 of the Negotiable Instruments Act is compoundable under Section 147 at any stage of the proceedings, and a settlement between the parties with receipt of the cheque amount, interest and costs can justify compounding and setting aside the conviction. Where compounding is sought at the revision stage, the principles on delayed compounding permit imposition of costs, and the revision court may direct deposit of a specified percentage of the cheque amount with the Legal Services Committee as a condition for relief. On compliance, the conviction and sentence are liable to be set aside.

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Issues: Whether a conviction under Section 138 of the Negotiable Instruments Act, 1881 could be set aside on the basis of compromise between the parties, and whether costs should be imposed for compounding at the revision stage.

Analysis: The offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of that Act at any stage of the proceedings. The settlement between the parties and receipt of the cheque amount with interest and costs justified compounding of the offence and setting aside the conviction. The principles laid down by the Supreme Court on delayed compounding required imposition of costs where compounding was sought at a later stage in revision. The Court therefore accepted the compromise and directed deposit of 15% of the cheque amount with the High Court Legal Services Committee within the stipulated time.

Conclusion: The conviction and sentence were liable to be set aside upon compliance with the directed cost deposit, and the revision was allowed in favour of the revisionist.

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