Compounding of Section 138 cheque dishonour cases after conviction is permissible on genuine compromise and full payment.

An offence under Section 138 of the Negotiable Instruments Act may be compounded even after conviction where the complainant has voluntarily settled the matter and received full payment. Section 147 of the Act permits compounding notwithstanding the Code of Criminal Procedure, and the bar under Section 320 CrPC does not prevent acceptance of a genuine compromise in such proceedings. On that basis, the conviction and sentence are liable to be set aside and the accused is entitled to acquittal, with the criminal liability extinguished on compounding.

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Issues: Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 can be compounded after conviction on the basis of a compromise between the parties, and whether the conviction and sentence deserve to be set aside.

Analysis: The entire compensation amount was paid to the complainant, who confirmed receipt and expressed no objection to compounding. Section 147 of the Negotiable Instruments Act, 1881 makes offences under the Act compoundable notwithstanding the Code of Criminal Procedure, 1973, and the legal position permits compounding even after conviction. In that situation, the embargo of Section 320 of the Code of Criminal Procedure, 1973 does not prevent acceptance of a genuine compromise in a prosecution under Section 138 of the Act.

Conclusion: The offence was validly compounded after conviction, and the conviction and sentence were liable to be quashed. The petitioner was entitled to acquittal.

Final Conclusion: The compromise was accepted, the criminal liability stood extinguished on compounding, and the proceedings under Section 138 of the Negotiable Instruments Act, 1881 were brought to an end.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded even after conviction where the complainant has voluntarily settled the matter and received full payment, and such compounding warrants setting aside the conviction and sentence.

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