Cheque dishonour compromise can justify quashing conviction under inherent powers, with compounding costs imposed as a condition.

An offence under Section 138 of the Negotiable Instruments Act can be compounded even after conviction when the parties have later settled the dispute. The High Court may use its inherent power under Section 482 of the Code of Criminal Procedure to quash the conviction and consequential proceedings once the complainant supports the compromise and the statutory compounding framework under Section 147 is satisfied. The court may also impose compounding costs as a condition for quashing, including a reduced percentage payable in instalments, to secure closure of the matter.

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Issues: Whether the conviction for an offence under Section 138 of the Negotiable Instruments Act, 1881 could be quashed in exercise of inherent powers under Section 482 of the Code of Criminal Procedure, 1973 after the parties had amicably settled the dispute.

Analysis: The dispute arose from a cheque dishonour complaint in which the applicant had already been convicted and the conviction had been affirmed in appeal. The parties subsequently executed a compromise and the complainant filed an affidavit expressing no objection to quashing of the conviction. In view of the statutory scheme under Section 147 of the Negotiable Instruments Act, 1881 making such offences compoundable, and the principles governing compounding and costs laid down in the cited authority, the Court held that the settlement justified exercise of inherent jurisdiction to bring the matter to a quietus. The Court also considered the amount involved and reduced the compounding cost from the usual percentage to 10% of the cheque amount, payable in two instalments to the Gujarat State Legal Services Authority.

Conclusion: The application was maintainable and the conviction and consequential proceedings were quashed on the basis of compromise, with directions to deposit 10% of the cheque amount as compounding cost.

Final Conclusion: The settlement between the parties was accepted, the criminal proceedings under the dishonour of cheque case were set aside, and relief was granted on terms as to deposit of reduced compounding costs.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded even after conviction when the parties have amicably settled the dispute, and the High Court may invoke its inherent powers to quash the proceedings and impose appropriate compounding costs.

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