A Section 138 conviction may be set aside when the offence is compounded during revision.

The petitioners were convicted under Section 138 of the Negotiable Instruments Act, 1881, and sentenced to two years’ simple imprisonment, with compensation of ₹2,27,56,380 and a default sentence.

The Principal Sessions Judge, Chennai, dismissed their appeal and affirmed the conviction and sentence.

While the revision was pending, the parties entered into a compromise dated 12 October 2026.

The respondent acknowledged receiving ₹2,10,00,000 and accepted it in full and final settlement, with no further monetary claim; it also consented to compounding the offence.

The petitioners sought to set aside the conviction and sentence on that basis.

Whether the High Court could nullify the appellate judgment confirming a conviction under Section 138 of the Negotiable Instruments Act on the basis of a compromise between the parties.

Whether the offence could be compounded after the appeal had been dismissed and the conviction and sentence affirmed.

Section 147 of the Negotiable Instruments Act provides that every offence punishable under that Act is compoundable.

Section 359(5), (6) and (8) of the Bharatiya Nagarik Suraksha Sanhita, 2023, addresses composition after conviction when an appeal is pending, permits a High Court exercising revision jurisdiction to allow compounding, and provides that composition results in acquittal.

The Court also stated that inherent powers may be used sparingly to secure the ends of justice and prevent miscarriage of justice.

It considered the principles in Damodar S. Prabhu v. Sayed Babalal H., M/s. Meters and Instruments Private Limited v. Kanchan Mehta, and Vinay Devanna Nayak v. Ryot Seva Sahkari Bank Limited, as well as the Madras High Court’s decision in K. Balachenniappan v. Jeyakrishnan.

The Court noted that the conviction had been affirmed on appeal but treated the parties’ subsequent, voluntary settlement as a relevant circumstance for exercising its powers in revision.

The respondent confirmed full and final receipt of the agreed amount, disclaimed any further monetary claim, and expressly consented to compounding.

Relying on Section 147 and the approach in K. Balachenniappan, the Court concluded that the compromise could be given effect notwithstanding the prior appellate decision, in order to secure the ends of justice.

It also directed the release of petitioner No. 2 from jail forthwith, without conditions, and closed the connected miscellaneous petitions.