A Section 138 conviction may be set aside in revision when the parties compound the offence.

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, by the Fast Track Court–IV, George Town, Chennai. His appeal was dismissed by the III Additional Sessions Court, Chennai, and he challenged the concurrent decisions in revision

During the revision proceedings, the parties settled: the petitioner stated that he had paid the cheque amount of ₹60,000, comprising ₹35,000 deposited before the trial court and ₹25,000 paid to the respondent through counsel.

Both parties sought compounding under Section 147 of the Act and agreed to file a joint compromise memo

Whether the High Court could set aside the conviction and sentence under Section 138 of the Negotiable Instruments Act on the basis of a compromise reached after the appeal had been dismissed

Whether the parties’ settlement and payment of the cheque amount justified permitting compounding at the revision stage

Section 147 of the Negotiable Instruments Act makes every offence punishable under that Act compoundable, notwithstanding the ordinary criminal procedure.

Section 359(6) of the Bharatiya Nagarik Suraksha Sanhita, 2023, empowers a High Court or Court of Session exercising revisional jurisdiction to allow compounding; under Section 359(8), compounding results in acquittal.

The Court also relied on Damodar S. Prabhu v. Sayed Babalal H., which provides for graded costs where compounding is sought at later stages, and cited Meters and Instruments (P) Ltd. v. Kanchan Mehta and Vinay Devanna Nayak v. Ryot Seva Sahkari Bank Ltd. in support of encouraging settlement in Section 138 proceedings.

It further referred to its decision in K. Balachenniappan v. Jeyakrishnan

The Court considered that the petitioner had paid the full cheque amount and that both parties had settled the dispute and sought compounding.

Although the conviction had been affirmed on appeal, the Court held that the subsequent compromise constituted a basis to permit compounding and that intervention was justified to secure the ends of justice.

It accordingly accepted the settlement, set aside the conviction and sentence, and treated the petitioner as acquitted upon compounding

The petitioner’s conviction and sentence under Section 138 of the Negotiable Instruments Act were set aside, and he was acquitted on account of compounding

The respondent was permitted to apply to the trial court to withdraw the ₹35,000 deposited there; the trial court was directed to release it within three weeks of the application

No order as to costs was made