2026 (3) TMI 1584 - HC - Indian Laws

Cheque dishonour offences can be compounded after conviction; withdrawn special leave does not bar recall on genuine settlement.

Section 138 cheque dishonour proceedings could be compounded even after conviction and affirmation by the appellate court and HC, because Section 147 ... Negotiable Instruments Act - Dishonour of cheque - Compounding of offence under Section 138, after conviction - Post-conviction compromise - Doctrine of merger - withdrawn or non-speaking dismissal of special leave - power to recall its judgment u/s 147. Compounding after conviction - Statutory compounding - Post-conviction settlement - HELD THAT:- Since in the case at hand, petitioner after being convicted under Section 138 of the Act has compromised the matter with the respondent complainant and in terms thereof has already paid the entire amount of compensation, prayer for compounding the offence can be accepted in terms of judgment passed by the Hon’ble Apex Court in Damodar S. Prabhu V. Sayed Babalal H [2010 (5) TMI 380 - SUPREME COURT] wherein it has been categorically held that court, while exercising power under Section 147 of the Act, can proceed to compound the offence even after recording of conviction by the courts below. Hon’ble Apex Court in K. Subramanian v. R. Rajathi represented by P.O.A.P. Kaliappa [2009 (11) TMI 1013 - SUPREME COURT] has held that in view of the provisions contained under Section 147 of the Act read with Section 320 of Cr.PC, compromise arrived can be accepted even after recording of the judgment of conviction. The Court held that the power under Section 147 of the Negotiable Instruments Act permits compounding of the offence even after conviction. Relying on the principle noticed in earlier decisions, the Court accepted that where the complainant has received the entire compensation and raises no objection, the compromise can be given effect to notwithstanding the earlier affirmation of conviction. On the facts recorded, since the settlement was admitted and the whole compensation had already been paid, the petitioner was entitled to have the offence compounded and the conviction order recalled for that purpose. [Paras 12, 13] The compromise was accepted, the offence was compounded, and the conviction and sentence were quashed with acquittal of the petitioner. Final Conclusion: The petition was allowed on the basis of the post-conviction compromise. The Court permitted compounding of the offence under Section 138 of the Negotiable Instruments Act, set aside the conviction and sentence, and acquitted the petitioner. Issues: (i) Whether the offence under Section 138 of the Negotiable Instruments Act could be compounded after conviction and sentence had already been affirmed by the appellate court and the High Court. (ii) Whether dismissal of the special leave petition as withdrawn barred the High Court from entertaining the present request for compounding and recalling its earlier judgment.Issue (i): Whether the offence under Section 138 of the Negotiable Instruments Act could be compounded after conviction and sentence had already been affirmed by the appellate court and the High Court.Analysis: Section 147 of the Negotiable Instruments Act gives overriding effect to compounding in cheque dishonour cases. The settlement was complete, the complainant had received the entire compensation, and the legal position recognised in the cited decisions permitted compounding even after conviction. The power to accept compromise was not confined to the trial stage and could be exercised to give effect to a genuine settlement.Conclusion: The offence was compoundable even after conviction, and the compromise was accepted in favour of the petitioner.Issue (ii): Whether dismissal of the special leave petition as withdrawn barred the High Court from entertaining the present request for compounding and recalling its earlier judgment.Analysis: A dismissal as withdrawn, and a non-speaking dismissal of special leave, does not result in merger of the High Court judgment with the order of the Supreme Court. Such dismissal does not amount to a declaration on merits and does not extinguish the High Court's ability to act on a subsequent lawful compromise where the governing statute permits compounding.Conclusion: The present petition was maintainable and the earlier judgment could be recalled to give effect to the compromise.Final Conclusion: The conviction and sentence stood set aside on the basis of a lawful compromise, and the petitioner was acquitted of the charge under Section 138 of the Negotiable Instruments Act.Ratio Decidendi: An offence under Section 138 of the Negotiable Instruments Act may be compounded at any stage, including after conviction, and a withdrawn or non-speaking dismissal of special leave does not bar the High Court from recalling its earlier judgment to record the compromise where no merger has taken place.