Post-conviction compounding under the Negotiable Instruments Act can be accepted, with reduced costs where facts justify discretion.

Section 147 of the Negotiable Instruments Act, 1881 permits compounding of a Section 138 offence even after conviction, and a subsequent compromise between the parties can validate that course where the cheque amount and additional payment have been accepted in full and final settlement. The note also records that compounding costs are not inflexible; the court may reduce them on the facts, including the accused's financial condition and the stage of settlement, and may direct deposit of token costs. The stated effect is annulment of the conviction upon acceptance of the compromise and payment of reduced compounding costs.

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

Issue (i): Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction on the basis of a subsequent compromise between the parties.

Analysis: The parties had amicably settled the dispute and the complainant had received the cheque amount along with additional payment in full and final settlement. Section 147 of the Negotiable Instruments Act, 1881 makes offences under the Act compoundable notwithstanding the Code of Criminal Procedure, 1973, and the settled law permits compounding even after conviction. The compromise was therefore legally acceptable and there was no impediment to setting aside the conviction.

Conclusion: The offence was validly compounded after conviction, and the conviction was liable to be set aside in favour of the accused.

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

Analysis: The applicable guidelines prescribe graded costs for delayed compounding, but they also permit reduction of such costs depending on the facts and circumstances of the case. Considering the accused's financial condition and the stage at which compounding was sought, the Court exercised discretion to reduce the compounding fee to a token amount.

Conclusion: The compounding fee was reduced and token costs were directed to be deposited.

Final Conclusion: The compromise was accepted, the conviction under Section 138 stood annulled, and the matter was closed on payment of reduced compounding costs.

Ratio Decidendi: Section 147 of the Negotiable Instruments Act, 1881 permits compounding of an offence under Section 138 even after conviction, and the court may reduce the compounding costs where the facts justify such exercise of discretion.

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