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Issues: (i) Whether criminal proceedings arising from a conviction under Section 138 of the Negotiable Instruments Act could be quashed and the conviction set aside after the parties settled the dispute and the amount due was paid. (ii) Whether the High Court could exercise its inherent power under Section 482 of the Code of Criminal Procedure to accept compounding even after conviction and after withdrawal of the Special Leave Petition.
Issue (i): Whether criminal proceedings arising from a conviction under Section 138 of the Negotiable Instruments Act could be quashed and the conviction set aside after the parties settled the dispute and the amount due was paid.
Analysis: The dispute was resolved through an out-of-court settlement under the OTS scheme, and the complainant-bank acknowledged receipt of the settled amount and expressed no objection to quashing of the conviction. The decision relied on the principle that offences under Section 138 of the Negotiable Instruments Act may be compounded at any stage in view of Section 147 of that Act, and that post-conviction compromise can justify setting aside the criminal liability where the offence is essentially private in nature.
Conclusion: The issue was answered in the affirmative in favour of the petitioner; the conviction and sentence were liable to be quashed on the basis of compromise.
Issue (ii): Whether the High Court could exercise its inherent power under Section 482 of the Code of Criminal Procedure to accept compounding even after conviction and after withdrawal of the Special Leave Petition.
Analysis: The Court held that withdrawal of the Special Leave Petition did not bar consideration of the petition for recall or quashing, and that the absence of a speaking order from the Supreme Court did not prevent the High Court from acting on a subsequent compromise. Relying on the principles governing inherent jurisdiction, compounding, and the treatment of non-heinous offences of a private character, the Court held that no impediment existed to exercise power under Section 482 to secure the ends of justice.
Conclusion: The issue was answered in the affirmative in favour of the petitioner; the High Court could quash the proceedings and set aside the conviction notwithstanding the earlier withdrawal of the Special Leave Petition.
Final Conclusion: The petition was allowed on the basis of compromise, the complaint and consequential conviction and sentence were quashed, and the petitioner stood acquitted.
Ratio Decidendi: A criminal proceeding for an offence under Section 138 of the Negotiable Instruments Act may be compounded and quashed even after conviction, if the parties have genuinely settled the dispute, and the High Court may invoke its inherent jurisdiction to secure the ends of justice in a case essentially of private character.
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