A verified compromise may warrant acquittal under Section 138, subject to costs for delayed compounding.

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, for dishonour of a cheque for ₹2,00,000 and sentenced to three months’ simple imprisonment and compensation of ₹2,64,000.

The Sessions Judge affirmed the conviction and sentence.

In revision, both parties applied to compromise; the complainant confirmed receipt of the entire settled amount, and the Principal Registrar verified that the compromise was voluntary.

The petitioner was in jail when the revision was decided.

1. Whether the parties’ verified compromise and payment of the settled amount justified allowing compounding of the Section 138 offence and setting aside the concurrent judgments of conviction.

2. Whether, given that the compromise was reached at the revision stage, costs should be imposed under the principles in Damodar S. Prabhu v. Sayed Babalal H.

Section 147 of the Negotiable Instruments Act permits compounding of offences under the Act.

Under Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, delayed compounding may generally attract graded costs, including a suggested 15% of the cheque amount where compounding is sought before a Sessions Court or High Court in appeal or revision; however, the competent court may reduce the costs in light of the case’s circumstances, recording reasons.

The revision was brought under Sections 438 and 442 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and the compromise application was made under Section 359 of that Sanhita.

The Court accepted the compromise because it had been independently verified as voluntary, the complainant confirmed receipt of the full settled amount, and the dispute was private in nature.

Applying Damodar S. Prabhu, the Court recognised that the compromise occurred at the revision stage but imposed costs of ₹2,000—1% of the cheque amount—rather than the guideline figure of 15%.

It made the benefit of acquittal conditional on payment of those costs within ten days.

He was directed to deposit ₹2,000 with the Secretary, High Court Legal Services Authority, Indore, within ten days; failing that, the acquittal would not enure to his benefit and he would remain liable to undergo the trial court’s sentence.

He was ordered released forthwith if not required in another case, subject to compliance with the costs direction.