Compounding of cheque dishonour offence permitted on genuine settlement, leading to setting aside conviction and sentence.

A genuine, voluntary compromise can justify compounding of a Section 138 Negotiable Instruments Act offence where the cheque amount has been repaid and no dispute survives. The court noted that the complainant and the State raised no objection, and treated the offence as having a compensatory character. On that basis, it recognised that a revisional court may give effect to compounding in the interest of justice under Section 147 of the Negotiable Instruments Act read with Section 320(6) of the Code of Criminal Procedure. The compromise was accepted, and the conviction and sentence were set aside, resulting in acquittal subject to costs.

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Issues: Whether the conviction and sentence under Section 138 of the Negotiable Instruments Act, 1881 could be set aside and the offence compounded on the basis of a genuine compromise between the parties.

Analysis: The parties placed a compromise on record showing that the cheque amount had been repaid and that no dispute survived between them. The complainant and the State raised no objection to compounding. The Court treated the offence under Section 138 as having a compensatory profile and held that, in a fit case of genuine and voluntary settlement, the revisional court can give effect to compounding in the interest of justice under Section 147 of the Negotiable Instruments Act, 1881 read with Section 320(6) of the Code of Criminal Procedure, 1973.

Conclusion: The compromise was accepted as genuine, and the conviction and sentence were set aside. The petitioner was acquitted, subject to deposit of costs as directed.

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