Compounding of Section 138 cheque dishonour offence after conviction was allowed on compromise, with conviction quashed and reduced costs imposed.

Section 147 of the Negotiable Instruments Act was treated as an enabling provision with a non obstante clause, allowing compounding of a Section 138 offence notwithstanding Section 320 CrPC. As the parties compromised and the complainant had received the full compensation amount, the basis for further prosecution was removed and the conviction and sentence were quashed. The Court also applied the graded cost principle for belated compounding and, considering the petitioner's financial condition, reduced the compounding fee to a token amount. The petitioner was acquitted subject to deposit of that fee.

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Issues: Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction and after the complainant had received the entire compensation amount, and whether the conviction and sentence deserved to be quashed with reduction of compounding costs.

Analysis: Section 147 of the Negotiable Instruments Act, 1881 was treated as an enabling provision with a non obstante clause, permitting compounding of offences under the Act notwithstanding the scheme of Section 320 of the Code of Criminal Procedure, 1973. The compromise between the parties and receipt of the full compensation amount by the complainant removed the basis for further prosecution. The Court also relied on the graded cost principle for belated compounding, while noting that the amount could be reduced in appropriate facts and circumstances. Considering the compromise and the petitioner's financial condition, the Court directed payment of a token compounding fee.

Conclusion: The offence was permitted to be compounded, the conviction and sentence were quashed, and the petitioner was acquitted, subject to deposit of the reduced compounding fee.

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