Cheque dishonour offence compounded under settlement terms, with conviction set aside and costs imposed under compounding guidelines.

The offence under Section 138 of the Negotiable Instruments Act was treated as compoundable under Section 147 in view of the parties' settlement. As the cheque amount had been tendered before the SC, the applicable compounding guidelines permitted compounding on payment of 10% of the cheque amount as costs. The conviction and sentence were accordingly quashed and set aside, and the offence was compounded on those terms.

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Issues: Whether the offence under Section 138 of the Negotiable Instruments Act, 1881 could be compounded on the basis of the settlement between the parties, and whether the conviction and sentence deserved to be set aside in view of the compromise and the applicable compounding guidelines.

Analysis: The parties had entered into a memorandum of settlement for payment of the compromise amount, part of which had already been paid and the balance was stated to be ready for payment. The offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of the Act. In light of the governing compounding guidelines, where the cheque amount is tendered before the Supreme Court, compounding is permissible on payment of 10% of the cheque amount as costs.

Conclusion: The offence was compounded, and the appeal was allowed. The conviction and sentence were quashed and set aside, and the appellant was directed to pay 10% of the cheque amount as compounding cost.

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