Section 138 compromise at revision may be accepted with reduced compounding costs.

The applicant was convicted under Section 138 of the Negotiable Instruments Act, 1881, and fined Rs. 6,30,775.

The Sessions Court dismissed his appeal and affirmed the conviction and sentence. The applicant then filed this criminal revision.

During the revision, the parties reached a compromise, which the Principal Registrar verified as voluntary and free from threat, inducement, or coercion. The applicant had paid the entire settled amount to the complainant.

1. Whether the parties’ compromise could be accepted at the revision stage and the applicant acquitted of the offence under Section 138 of the NI Act.

2. Whether costs should be imposed as a condition of compounding, and what amount was appropriate in the circumstances.

Section 147 of the NI Act permits compounding of offences under the Act. In Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, the Supreme Court set out a graded cost scheme for delayed compounding, including a 15% cost where compounding is sought before a Sessions Court or High Court in revision or appeal.

The Court also observed that the suggested scale is intended to encourage early settlement and promote uniformity, but the competent court may reduce costs in light of the case’s specific facts and circumstances, recording reasons for the variance.

The Court accepted the compromise because it had been verified as voluntary, the parties had amicably resolved their dispute, the applicant had paid the entire settled amount, and the dispute was private in nature.

Applying Damodar S. Prabhu, the Court permitted compounding at the revision stage but directed the applicant to pay Rs. 4,000—stated to be 1% of the cheque amount—as costs to the High Court Legal Services Authority, rather than applying the guideline’s 15% figure. The judgment does not set out a specific explanation for that reduction.

The acquittal was made subject to payment of Rs. 4,000 in costs within 10 days; on compliance, the applicant’s bail bonds were to stand discharged. If he failed to pay within that period, the acquittal would not enure to his benefit and he would remain liable to undergo the trial court’s sentence in accordance with law.

The respondent was granted liberty to withdraw the fine amount deposited by the applicant.