Cheque dishonour settlement permits compounding after conviction, with quashing available subject to delayed-compounding costs.

A conviction for dishonour of cheque proceedings may be quashed under inherent jurisdiction where the parties have amicably settled the dispute and the complainant does not oppose compounding. Section 138 offences are compoundable under Section 147 of the Negotiable Instruments Act, and compounding after conviction may be permitted subject to the applicable costs for delayed compounding, including deposit with the Legal Services Authority. The court may exercise this power to bring the dispute to an end and give effect to the settlement, provided the prescribed costs are paid.

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Issues: Whether a conviction 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 on the basis of an amicable settlement between the parties, with compounding subject to payment of costs.

Analysis: The dispute had been settled between the accused and the complainant, and the complainant filed an affidavit expressing 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 decision also applied the guidelines governing compounding after conviction, under which compounding before the High Court attracts costs quantified at 15% of the cheque amount, to be deposited with the Legal Services Authority. In these circumstances, exercise of inherent jurisdiction was considered appropriate to bring a quietus to the dispute.

Conclusion: The conviction and all consequential proceedings were quashed, and the application was allowed, subject to deposit of the quantified compounding costs.

Ratio Decidendi: Where an offence under Section 138 of the Negotiable Instruments Act, 1881 has been amicably settled, the High Court may permit compounding and quash the conviction in exercise of inherent powers, subject to the applicable costs for delayed compounding.

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