Madras HC Acquits Jailed Cheque-Bounce Convict After Complainant Accepts ₹5 Lakh Settlement, Orders His Release

In brief

The question

1. Whether the High Court, in revision, could permit compounding of a Section 138 offence after the conviction and sentence had been affirmed on appeal, and set them aside on the basis of the parties’ compromise.

The court held

The Court permitted compounding and disposed of the revision in terms of the joint compromise memo.

It also directed

It set aside the conviction and sentence imposed by the trial court and affirmed by the appellate court, treated the petitioner as acquitted, and ordered his immediate release from prison without conditions.

01Facts

The Metropolitan Magistrate-III, George Town, Chennai convicted the petitioner under Section 138 of the Negotiable Instruments Act, 1881, and sentenced him to two years’ simple imprisonment and payment of ₹5,00,000 as compensation.

pp. 2–3

The appellate court upheld the conviction and sentence.

pp. 2–3

While the revision was pending, the parties entered into a compromise: the petitioner paid ₹5,00,000 in full and final settlement, and the complainant acknowledged receipt and consented to compounding and acquittal.

pp. 3–5

The State opposed setting aside the conviction on the basis of the compromise.

pp. 10–11

02Issues

i.1. Whether the High Court, in revision, could permit compounding of a Section 138 offence after the conviction and sentence had been affirmed on appeal, and set them aside on the basis of the parties’ compromise.

p. 11 · ¶ 17

ii.2. Whether the petitioner should be acquitted following the complainant’s receipt of the full settlement amount and consent to compounding.

pp. 14–17 · ¶ 20, 23–25

03Law Applied

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

p. 13

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

pp. 12–14

The Court also relied on Damodar S. Prabhu v. Sayed Babalal H., which provides for graded costs when compounding is sought at later stages, and on M/s Meters and Instruments (P) Ltd. v. Kanchan Mehta and Vinay Devanna Nayak v. Ryot Seva Sahakari Bank Ltd., concerning the compensatory purpose of Section 138 proceedings and the permissibility of settlement.

pp. 5–10

The Court stated that inherent powers should be exercised sparingly to secure the ends of justice and prevent miscarriage of justice.

p. 14 · ¶ 19

Provisions in the judgment · 15 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 438 Section 442 Section 359

Negotiable Instruments Act, 1881 Section 138 Section 139 Section 143 Section 147

Code of Criminal Procedure, 1973 Section 258 Section 264 Section 357 Section 431 Section 482

Indian Penal Code, 1860 Section 64

Bharatiya Nyaya Sanhita, 2023 Section 3 Section 190

04Reasoning

The Court accepted that the conviction had been affirmed on appeal but considered the subsequent, voluntary compromise and full payment of the cheque amount relevant to whether compounding should be permitted.

pp. 14–16 · ¶ 20–23

The complainant confirmed receipt of the settlement and did not wish to pursue the complaint.

pp. 3–5

Applying Section 147 of the Negotiable Instruments Act and the compounding principles in the cited authorities, the Court held that the compromise could be acted upon in revision and that compounding was appropriate.

pp. 15–16 · ¶ 23