A Section 138 offence may be compounded on settlement even without a formal compromise petition.

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) and sentenced to six months’ simple imprisonment, with a direction to pay Rs. 3,27,000 as compensation and a further two months’ simple imprisonment in default.

The conviction and sentence were affirmed on appeal.

During the revision hearing, the complainant filed an affidavit confirming that the petitioner had paid the full compensation amount by bank transfer, that the payment was accepted in full and final settlement, and that he had no objection to the conviction and sentence being set aside.

The complainant also produced a bank statement evidencing receipt of the amount.

Whether the offence under Section 138 of the NI Act could be compounded in revision after the petitioner’s conviction and sentence had been affirmed on appeal, in light of the parties’ settlement.

Whether the conviction and sentence should be set aside and the petitioner released following the complainant’s confirmation of full payment and no objection to that relief.

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

The Court also relied on Madhya Pradesh State Legal Services Authority v. Prateek Jain and Another, (2014) 10 SCC 690, in considering whether to permit compounding in light of the parties’ settlement.

The Court treated the complainant’s affidavit and evidence of full payment as sufficient grounds to allow compounding, notwithstanding that no separate compromise petition had been filed.

The Court verified that the complainant had received the full compensation amount and had accepted it as a full and final settlement.

The complainant’s affidavit expressly stated that he had no remaining grievance and did not oppose setting aside the conviction and sentence; the bank statement corroborated payment.

Applying Section 147 and the cited precedent, the Court considered it appropriate to permit compounding despite the absence of a separate compromise petition.

The Court permitted the parties to compound the Section 138 offence and set aside and quashed the trial court’s conviction and sentence, as affirmed by the appellate court.

The petitioner was not required to be taken into custody pursuant to those orders and was to be set at liberty.