Cheque dishonour compounding at appellate stage upheld after settlement and payment, ending the conviction and sentence.

An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded at the appellate stage under Section 147, as the provision overrides the Code of Criminal Procedure and permits compounding at any stage. Where the parties have settled the dispute, the cheque amount has been paid, and the complainant has no objection, the compensatory element prevails and the conviction and sentence cannot survive. The conviction was set aside and the accused was acquitted.

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Issues: Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded at the appellate stage after conviction, and whether the conviction and sentence were liable to be set aside on the basis of settlement and payment of the cheque amount.

Analysis: The parties acknowledged that the entire outstanding amount had been remitted and the complainant bank raised no objection to compounding. Section 147 of the Negotiable Instruments Act, 1881 makes every offence under the Act compoundable notwithstanding the Code of Criminal Procedure, 1973. The settled position applied was that the power to compound under Section 147 can be exercised at any stage of the proceedings, including appeal, and that in cheque dishonour matters the compensatory element should receive precedence where the dispute has been settled.

Conclusion: The offence was validly compounded at the appellate stage, and the conviction and sentence were set aside. The petitioner was acquitted.

Final Conclusion: The petition succeeded on the basis of compromise and payment, resulting in annulment of the concurrent findings of conviction.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded at the appellate stage under Section 147, and once compounding is permitted, the conviction and sentence cannot survive.

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