Compounding of cheque dishonour offence after settlement led to setting aside conviction and acquittal.

A conviction under Section 138 of the Negotiable Instruments Act was treated as unsustainable after the parties entered into a voluntary settlement during pendency of the revision petition and the complainant accepted the compromise. The court relied on Section 147 of the Negotiable Instruments Act, which makes the offence compoundable notwithstanding the Code of Criminal Procedure, and on Section 320 CrPC, under which composition has the effect of acquittal. On that basis, the offence was held fit for compounding and the conviction and sentence were set aside, resulting in acquittal of the accused.

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Issues: Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 could be set aside and the accused acquitted on the basis of a voluntary settlement between the parties.

Analysis: The matter stood settled during the pendency of the revision petition and the compromise was accepted by the complainant. Section 147 of the Negotiable Instruments Act, 1881 makes the offence compoundable notwithstanding the Criminal Procedure Code, and Section 320 of the Code of Criminal Procedure, 1973 gives composition of an offence the effect of acquittal. In view of the settlement, the offence was fit to be compounded and the conviction could not survive.

Conclusion: The revision petition was allowed, the conviction and sentence were set aside, and the petitioner was acquitted of the charge under Section 138 of the Negotiable Instruments Act, 1881.

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