Cheque dishonour conviction may be quashed after settlement, with compounding allowed on payment of prescribed costs.

A cheque dishonour conviction under Section 138 of the Negotiable Instruments Act can be quashed under Section 482 CrPC where the parties have amicably settled the dispute and the complainant has no objection. The offence remains compoundable under Section 147 of the Act, and when compounding is sought at a later stage before the High Court, payment of 15% of the cheque amount as costs to the Legal Services Authority may be required. In such circumstances, inherent powers may be used to bring the matter to a quietus, and the conviction was quashed subject to deposit of the prescribed costs.

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Issues: Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 could be quashed under Section 482 of the Code of Criminal Procedure, 1973 on the basis of an amicable settlement between the parties, and whether compounding could be permitted on payment of 15% of the cheque amount.

Analysis: The parties had settled the dispute after conviction, and the complainant had no objection to quashing of the conviction. The offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of that Act. The Court applied the guideline that when compounding is sought before the High Court at a later stage, the accused may be required to pay 15% of the cheque amount as costs to the Legal Services Authority. In these circumstances, the inherent power under Section 482 of the Code of Criminal Procedure, 1973 was invoked to bring the dispute to a quietus.

Conclusion: The conviction was quashed and set aside, and the application for compounding was allowed subject to deposit of 15% of the cheque amount with the Gujarat State Legal Services Authority.

Ratio Decidendi: Where a cheque dishonour conviction has been amicably settled and the offence is compoundable, the High Court may exercise its inherent powers to quash the conviction and permit compounding, subject to payment of the prescribed costs.

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