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Issues: (i) Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded at the appellate stage after conviction on the basis of a settlement between the parties. (ii) Whether the conviction and sentence were liable to be set aside in view of the compromise and payment made to the complainant.
Issue (i): Whether an offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded at the appellate stage after conviction on the basis of a settlement between the parties.
Analysis: Offences under the Negotiable Instruments Act are compoundable under Section 147, and post-conviction compounding requires the leave of the appellate court in terms of Section 320(5) of the Code of Criminal Procedure, 1973. The settlement was verified through the complainant's affidavit, which confirmed receipt of the agreed amount and expressed no objection to setting aside the conviction. The compromise was found to be genuine and legally permissible.
Conclusion: The offence could be compounded at the appellate stage on the basis of the verified settlement.
Issue (ii): Whether the conviction and sentence were liable to be set aside in view of the compromise and payment made to the complainant.
Analysis: Since the amount due was paid and the complainant accepted the settlement, continuation of the conviction would serve no useful purpose. The decision reflects the principle that, in cheque dishonour matters, the compensatory aspect of the remedy deserves preference and courts should encourage bona fide compounding. On that basis, the impugned judgments were liable to be interfered with.
Conclusion: The conviction and sentence were set aside and the appellants were acquitted.
Final Conclusion: The dispute stood resolved by a lawful compromise, and the criminal liability arising from the cheque dishonour prosecution was extinguished by setting aside the conviction.
Ratio Decidendi: A cheque dishonour conviction may be set aside at the appellate stage where the offence is compoundable, the settlement is genuine, and the complainant has received the settled amount with no objection to compounding.
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