A Section 138 prosecution may be compounded by consent, with discharge conditional on payment of the agreed balance.

The appellant had brought a complaint under Section 138 of the Negotiable Instruments Act, alleging dishonour of a cheque.

The trial court convicted the respondent and sentenced him to one year’s simple imprisonment and payment of Rs.11,50,000 as compensation.

The Sessions Court set aside the conviction, prompting the appellant to appeal to the High Court.

During the High Court proceedings, the respondent admitted that Rs.6,10,000 remained payable after a prior payment of Rs.25,000, and stated that Rs.2,00,000 had already been deposited before the trial court.

He undertook to pay the remaining Rs.4,10,000; the appellant accepted the proposal.

Whether the parties’ compromise and the respondent’s undertaking to pay the admitted balance justified compounding the Section 138 offence and disposing of the appeal.

Whether the respondent could be discharged subject to payment of the balance, with the appeal to revive if he failed to comply.

Section 138 of the Negotiable Instruments Act criminalises the dishonour of a cheque in the circumstances specified by that provision.

Section 147 of the Act permits offences under the Act to be compounded.

The appeal was brought under Section 419 of the Bharatiya Nagarik Suraksha Sanhita.

The judgment does not cite Section 147 or discuss its requirements expressly; it records that the Court accepted the parties’ compromise and compounded the case.

The Court did not determine the disputed merits of the cheque transaction or the evidentiary issues raised in the appeal.

Instead, it relied on the respondent’s affidavit admitting the outstanding liability of Rs.6,10,000, the existing Rs.2,00,000 deposit, and his undertaking to pay the remaining Rs.4,10,000.

The appellant accepted that arrangement, enabling the Court to resolve the appeal on the basis of compromise.

It permitted the appellant to withdraw the Rs.2,00,000 deposited before the trial court, with accrued interest if any, and directed the respondent to pay the remaining Rs.4,10,000 by 26 October 2026.

The Court set aside the respondent’s conviction and discharged him, but ordered that, in the event of non-payment or other violation, its order would stand recalled and the appeal would revive for disposal on the merits.