Cheque dishonour compounding after conviction permitted when parties settle, and compounding fee may be reduced for recorded reasons

Offences under the Negotiable Instruments Act are compoundable even after conviction when the parties settle the dispute and the complainant has received the cheque amount in full and final settlement; Section 147 overrides the scheme of Section 320 CrPC to that extent, and the conviction and sentence were quashed on compounding. The court also held that the graded compounding fee may be reduced in an appropriate case for recorded reasons, and on the petitioner's financial condition the fee was reduced to 5% of the cheque amount. The revision petition was allowed, the offence was compounded, and the petitioner was treated as acquitted subject to deposit of the reduced fee.

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Issues: (i) Whether the offence under the Negotiable Instruments Act could be compounded after conviction on the basis of a settlement between the parties. (ii) Whether the compounding fee could be reduced having regard to the facts and circumstances of the case.

Issue (i): Whether the offence under the Negotiable Instruments Act could be compounded after conviction on the basis of a settlement between the parties.

Analysis: Section 147 of the Negotiable Instruments Act makes offences under the Act compoundable and overrides the scheme of Section 320 of the Code of Criminal Procedure, 1973 to that extent. Where the parties have settled the dispute and the complainant has received the cheque amount in full and final settlement, compounding may be permitted even after conviction.

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

Issue (ii): Whether the compounding fee could be reduced having regard to the facts and circumstances of the case.

Analysis: The graded scheme for compounding costs is intended to encourage early settlement, but the competent court may reduce the cost in appropriate cases for recorded reasons. Considering the financial condition of the petitioner, the Court exercised discretion to reduce the fee.

Conclusion: The compounding fee was reduced to 5% of the cheque amount.

Final Conclusion: The revision petition was allowed on settlement, the offence stood compounded, the conviction and sentence were set aside, and the petitioner was treated as acquitted, subject to deposit of the reduced compounding fee.

Ratio Decidendi: An offence under the Negotiable Instruments Act may be compounded even after conviction if the parties settle the dispute, and the court may reduce the compounding fee in an appropriate case for reasons recorded.

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