Post-conviction compounding under the Negotiable Instruments Act may be allowed after settlement, with compounding costs reduced in suitable cases.

Offences under the Negotiable Instruments Act may be compounded even after conviction where the parties have reached an amicable settlement and the complainant raises no objection. The Court applied the special statutory scheme for cheque dishonour cases and treated the post-conviction settlement as sufficient to justify compounding, with the conviction and sentence set aside and the accused acquitted. It also recognised that compounding costs are intended to encourage early settlement, but may be reduced in appropriate circumstances; on the financial position and settlement in this matter, the fee was reduced to a token amount.

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

Issue (i): whether the offence under the Negotiable Instruments Act, 1881 could be compounded after conviction on the basis of an amicable settlement between the parties.

Analysis: Section 147 of the Negotiable Instruments Act, 1881 makes offences under the Act compoundable. The settlement between the parties was recorded before the Court, and the complainant had no objection to compounding. Reliance was placed on the settled principle that compounding can be permitted even after conviction, and that the special statutory scheme governing cheque dishonour cases permits such compounding notwithstanding the general rule under the criminal procedure code.

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

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

Analysis: The graded cost structure for compounding is intended to encourage early settlement, but the competent Court may reduce the amount in appropriate facts and circumstances. Considering the petitioner's financial condition and the settlement already achieved, a reduced token amount was warranted.

Conclusion: The compounding fee was reduced and fixed at Rs. 10,000.

Final Conclusion: The petition was allowed on the basis of compounding, the conviction and sentence were quashed, the petitioner stood acquitted, and the matter was disposed of with directions for release of the deposited amounts to the complainant on verification.

Ratio Decidendi: Offences under the Negotiable Instruments Act, 1881 may be compounded even after conviction when the parties have settled the dispute, and the Court may reduce the compounding costs in appropriate circumstances.

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