Compromise in cheque dishonour cases can justify quashing proceedings and compounding when the complainant settles the dispute.

Where a cheque dishonour prosecution under Section 138 of the Negotiable Instruments Act was genuinely compromised, the High Court treated the matter as fit for compounding and held that continuation of the proceedings would serve no useful purpose. Relying on Section 147 of the Negotiable Instruments Act and the inherent powers under Section 482 of the Code of Criminal Procedure, the Court quashed the proceedings, set aside the conviction and sentence, and acquitted the accused, subject to deposit of the stipulated costs under the cheque dishonour compounding framework.

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Issues: Whether a conviction under Section 138 of the Negotiable Instruments Act, 1881 could be set aside and the proceedings quashed on the basis of a compromise between the parties by invoking the inherent jurisdiction of the High Court.

Analysis: The parties placed the compromise on record and the complainant no longer wished to pursue the matter after receiving the amount agreed upon. In view of the settlement, the Court treated the matter as fit for compounding. Relying on the statutory support under Section 147 of the Negotiable Instruments Act, 1881 and the inherent powers preserved by Section 482 of the Code of Criminal Procedure, 1973, the Court held that continuance of the proceedings would serve no fruitful purpose. The Court also applied the compounding guidelines governing cheque dishonour matters and directed deposit of costs at the prescribed rate.

Conclusion: The conviction and sentence were set aside, the proceedings were quashed, and the petitioner was acquitted of the offence under Section 138 of the Negotiable Instruments Act, 1881, subject to deposit of the stipulated costs.

Ratio Decidendi: In a cheque dishonour prosecution, where the parties have genuinely compromised and the complainant does not wish to proceed, the High Court may invoke its inherent powers, supported by Section 147 of the Negotiable Instruments Act, 1881, to compound the offence and quash the resulting proceedings.

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