Section 138 cheque dishonour dispute compounded after settlement, with reduced costs and acquittal following compromise.

Offences under Section 138 of the Negotiable Instruments Act, 1881 may be compounded even after settlement is reached at a later stage, and the court should give effect to a voluntary compromise when the complainant acknowledges full receipt and no surviving claim. In the present matter, the compounding was allowed, while the request for complete waiver of costs was declined; the court instead reduced the compounding fee in light of the mitigating circumstances. The conviction and sentence were set aside, the petitioner was acquitted, and the revision petition was disposed of on compromise with reduced costs.

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Issues: (i) Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after the parties had entered into a settlement. (ii) Whether the compounding fee could be waived or reduced in the facts of the case.

Issue (i): Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after the parties had entered into a settlement.

Analysis: The dispute was shown to have been amicably settled, and the complainant confirmed receipt of the settled amount with no subsisting claim. The decision notes that offences under Section 138 are compoundable and that compounding is permissible even at later stages of the proceedings. Reliance was placed on the principle that, once the parties have lawfully compounded the matter, the court should give effect to the compromise.

Conclusion: The offence was permitted to be compounded in favour of the petitioner.

Issue (ii): Whether the compounding fee could be waived or reduced in the facts of the case.

Analysis: The prayer for complete waiver was declined, but the mitigating circumstances placed before the court were accepted for limited relief. The court exercised discretion to reduce the costs instead of insisting on the usual compounding fee, balancing the settled nature of the dispute with the need to impose costs.

Conclusion: The compounding fee was reduced and costs of Rs.10,000 were directed to be deposited.

Final Conclusion: The conviction and sentence were set aside, the petitioner was acquitted, and the revision petition was disposed of on the basis of compromise with reduced costs.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded at a later stage when the parties have voluntarily settled the dispute, and the court may, in appropriate cases, reduce the compounding costs instead of refusing compounding.

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