Section 138 cheque dishonour offence can be compounded after conviction when parties settle, with compounding costs reduced on special facts.

An offence under Section 138 of the Negotiable Instruments Act, 1881 remained compoundable after conviction because the parties settled the dispute and the complainant consented; the conviction and sentence were therefore quashed, and the petitioner was treated as acquitted. The Court also accepted that compounding costs may be moderated on special facts, including financial hardship, and reduced the usual fee by directing deposit of a token amount.

---

---

Issues: (i) Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded after conviction on the basis of a compromise between the parties and the impugned conviction and sentence set aside; (ii) Whether the compounding fee could be reduced having regard to the facts and financial condition of the petitioner.

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

Analysis: The parties stated that they had settled the dispute and the entire cheque amount had been deposited. The offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of that Act, and compounding is permissible even after conviction. The compromise therefore removed the basis for continuation of the proceedings.

Conclusion: The offence was compounded and the conviction and sentence were quashed and set aside, resulting in acquittal of the petitioner.

Issue (ii): Whether the compounding fee could be reduced having regard to the facts and financial condition of the petitioner.

Analysis: The standard graded scheme for compounding costs was noticed, but the Court took into account the petitioner's financial condition and exercised discretion to reduce the fee.

Conclusion: The petitioner was directed to deposit a token compounding fee of Rs. 10,000.

Final Conclusion: The proceedings were brought to an end on the basis of a valid compromise, the conviction did not survive, and the petitioner obtained relief through compounding with reduced costs.

Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act, 1881 may be compounded even after conviction if the complainant consents, and the court may reduce compounding costs on special facts and reasons.

---