Compounding of cheque dishonour offence allowed on compromise; conviction and sentence were set aside under the Negotiable Instruments Act.

Compounding of a Section 138 Negotiable Instruments Act offence was permitted on the basis of a joint compromise between the parties. The Court noted that Section 147 of the Act makes such offences compoundable notwithstanding the general framework under Section 320 CrPC, and that compounding may be allowed even at the appellate stage. In view of the settlement, the conviction and sentence could not survive and were set aside.

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

Analysis: A joint compromise agreement was brought on record and the complainant was represented before the Court. The offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of that Act, which has overriding effect notwithstanding the general compounding framework under Section 320 of the Code of Criminal Procedure, 1973. In view of the settlement and the legal position that such compounding can be permitted even at the appellate stage, the punishment imposed on the petitioners could not survive.

Conclusion: The offence was permitted to be compounded and the conviction and sentence were set aside.

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