The Rajasthan High Court has affirmed that a post-conviction compromise in a cheque dishonour case under Section 138 of the Negotiable Instruments Act permits acquittal, even after appellate affirmation of guilt, provided the compromise is genuine and voluntary. The judgment underscores the compoundable nature of the offence and the court’s discretion to impose costs for procedural delay.
Background & Facts
The Dispute
The petitioner, Vinay Sahu, was prosecuted for the offence under Section 138 of the Negotiable Instruments Act for issuance of a cheque dated 15.11.2014 for Rs.7,00,000 in favour of the complainant, Late Jagannath Dangi, which was dishonoured on 20.12.2014 due to insufficient funds. A legal notice was issued on 05.01.2015, which remained unheeded. The complaint was filed on 10.06.2015, leading to the initiation of criminal proceedings.
Key Facts
- Cheque amount: Rs.7,00,000
- Date of cheque: 15.11.2014
- Date of dishonour: 20.12.2014
- Legal notice issued: 05.01.2015
- Complaint filed: 10.06.2015
- Trial Court conviction: 01.02.2019
- Appeal dismissed: 13.03.2026
- Compromise deed executed: 03.04.2026
- Payment made by petitioner: Full amount of Rs.7,00,000 paid to legal heirs of deceased complainant
- All respondents, including legal heirs of the deceased complainant, jointly executed the compromise
Procedural History
- 10.06.2015: Complaint filed before Special Judicial Magistrate (NI Act Cases) No.05, Udaipur (Case No.2415/2015, CIS No.686/2016)
- 01.02.2019: Trial Court convicted petitioner under Section 138 NI Act, sentenced to one year simple imprisonment and ordered payment of Rs.7,00,000 as compensation
- 13.03.2026: Additional Sessions Judge No.4, Udaipur dismissed the petitioner’s appeal (Criminal Appeal No.16/2019)
- 29.04.2026: Criminal Revision Petition No.656/2026 filed before Rajasthan High Court
- 03.04.2026: Compromise deed executed between petitioner and all legal heirs of the complainant, confirming full payment and withdrawal of proceedings
Relief Sought
The petitioner sought quashing of the conviction order dated 01.02.2019 and the appellate judgment dated 13.03.2026, acquittal from charges, discharge of bail bonds, and withdrawal of any outstanding warrant.
The Legal Issue
The central question was whether Section 147 of the Negotiable Instruments Act, which renders offences under Section 138 compoundable without court permission, permits acquittal after conviction and appellate affirmation, and whether courts may impose costs for belated compromise.
Arguments Presented
For the Petitioner
Learned counsel submitted that the compromise deed dated 03.04.2026 was duly executed by all legal heirs of the deceased complainant, confirming full payment of Rs.7,00,000 and voluntary withdrawal of proceedings. Reliance was placed on Section 147 of the NI Act and Damodar S. Prabhu v. Sayed Babulal H. to argue that the compoundable nature of the offence permits withdrawal even at the revision stage, and that the court’s power to impose costs for delay is well-established.
For the Respondent
The Additional Government Advocate conceded that the compromise was valid and that the complainant’s legal heirs had no objection to the quashing of proceedings. No opposition was raised to the prayer for acquittal, but the State supported the imposition of costs due to the prolonged litigation and waste of judicial time.
The Court's Analysis
The Court observed that Section 147 of the NI Act explicitly permits compounding of offences under Section 138 without requiring prior court permission. The compromise deed dated 03.04.2026 was found to be voluntary, signed by all legal heirs, and accompanied by proof of payment. The Court noted that the complainant’s family had no grievance left and the dispute had been fully resolved.
"The statutory provision under Section 147 of the NI Act is clear and unambiguous: the offence is compoundable at any stage, even after conviction, provided the compromise is genuine and the complainant consents."
The Court further held that while the law permits acquittal upon compromise, the delay in settlement - nearly seven years after the dishonour and after two levels of adjudication - wasted valuable judicial resources. Citing Damodar S. Prabhu v. Sayed Babulal H., the Court emphasized that courts have the inherent power to impose costs to deter litigants from prolonging proceedings and to compensate for the misuse of judicial time.
The Court rejected any notion that acquittal upon compromise undermines the seriousness of the offence, noting that the remedy under Section 138 is primarily civil in nature - recovery of debt - rather than punitive.
The Verdict
The revision petition was allowed. The conviction order dated 01.02.2019 and the appellate judgment dated 13.03.2026 were quashed and set aside. The petitioner was acquitted of the charge under Section 138 NI Act. The petitioner was directed to deposit a cost of Rs.30,000 with the District Legal Services Authority, Udaipur, within four weeks. Failure to deposit the cost shall result in automatic rejuvenation of the trial court’s conviction and sentence. The petitioner’s bail bonds were discharged, and any outstanding warrant was ordered to be withdrawn upon proof of cost deposit. The petitioner need not surrender.
What This Means For Similar Cases
Compromise After Conviction Is Legally Valid
- Practitioners may now file revision petitions seeking acquittal even after conviction and appeal, provided a genuine compromise is recorded with proof of payment
- The burden is on the petitioner to produce a signed compromise deed by all legal heirs if the complainant is deceased
- No court permission is required under Section 147, but courts retain discretion to scrutinize the genuineness of compromise
Costs Are Mandatory for Delayed Settlements
- Courts will routinely impose costs for compromises filed after conviction, especially where proceedings have spanned multiple years
- The cost amount should reflect the extent of judicial time wasted, not merely be nominal
- Non-payment triggers automatic revival of conviction - this is a critical procedural trap practitioners must warn clients about
Acquittal Does Not Require Withdrawal of Complaint
- Withdrawal of complaint is not mandatory; a compromise deed signed by the complainant or heirs suffices
- The court’s focus is on the finality of settlement and absence of coercion, not procedural formality
- Practitioners should ensure compromise deeds are notarized and include clear recitals of payment, discharge, and withdrawal of all claims
