Compounding of cheque dishonour offences after conviction may be permitted on settlement, with reduced costs in suitable cases.

Section 138 offences under the Negotiable Instruments Act, 1881 may be compounded even after conviction when the parties reach a genuine settlement, because Section 147 overrides the Code of Criminal Procedure and permits compounding at the revisional stage. The text also notes that graded compounding costs are discretionary and may be reduced for recorded reasons, including the parties' settlement circumstances and the petitioner's financial condition. On those facts, the conviction and sentence were set aside, the petitioner was acquitted, and the reduced compounding fee was directed to be paid.

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Issues: (i) Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction in view of the compromise between the parties. (ii) Whether the compounding fee could be reduced on the facts of the case.

Issue (i): Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction in view of the compromise between the parties.

Analysis: The parties arrived at a compromise after conviction, the complainant had received most of the compensation amount and the balance had been deposited before the trial court. Section 147 of the Negotiable Instruments Act, 1881 makes offences under the Act compoundable notwithstanding the Code of Criminal Procedure, and compounding is permissible even at the revisional stage. The settlement between the parties therefore furnished a valid basis to accept compounding.

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

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

Analysis: The graded cost principle for late-stage compounding permits reduction in appropriate cases for recorded reasons. Considering the petitioner's financial condition and the circumstances of settlement, the Court exercised discretion to reduce the fee from the usual percentage basis to a token amount.

Conclusion: The compounding fee was reduced to Rs. 5,000.

Final Conclusion: The revision petition succeeded on compounding, the conviction and sentence were set aside, and the petitioner stood acquitted, with directions for release of the deposited balance amount and payment of the reduced compounding fee.

Ratio Decidendi: Offences under Section 138 of the Negotiable Instruments Act, 1881 may be compounded even after conviction under Section 147 of that Act, and the court may reduce compounding costs on case-specific grounds while applying the graded cost scheme.

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