Parties Can Compound Offence U/S 138 NI Act At Any Stage, Even After Dismissal Of Revision/Appeal: Madras High Court

Justice Shamim Ahmed added that the offences under Section 138 of the Act read with Section 147 of the Act were compoundable at any stage, even after the dismissal of the revision/appeal. The court noted that even a convict undergoing imprisonment could compound the offence.

“In reference to offence under section 138 of N.I. Act read with section 147 of the said Act, the parties are at liberty to compound the matter at any stage even after the dismissal of the revision/appeal. Even a convict undergoing imprisonment with the liability to pay the amount of fine imposed by the court and/or under an obligation to pay the amount of compensation if awarded, as per the scheme of N.I. Act, can compound the matter,” the court said.

The court was hearing a criminal revision petition filed by Balachenniappan against the order of the Additional District and Sessions Judge, Madurai, confirming an order of the District Munisff cum Judicial magistrate court, Peraiyur. The District Judge had convicted him and sentenced him one year imprisonment and a fine of Rs. 2,000 under Section 138 of the Negotiable Instruments Act.

While admitting the criminal revision petition, the court had suspended the sentence and directed the Petitioner to deposit Rs. 40,000 to the credit of the Judicial Magistrate. After depositing the amount, the petitioner informed the court that he was ready to pay the entire balance amount of Rs. 1,60,000 to the respondents and requested the court to compound the offence under Section 147 of the Negotiable Instruments Act. The respondent also informed the court that they had no objection. The parties also filed a Memorandum of Compromise before the court.

The Government Advocate, however, opposed the proposal and submitted that the revision petitioner had already been convicted by the trial court and thus, the sentence could not be compounded based on a compromise entered into between the parties.

In the present case, though the court agreed that the conviction and sentence had been upheld by the appellate court, it also added that the court had a power to intervene to do substantial justice or to avoid a miscarriage of justice and in spirit of the compromise arrived at between the parties.

The court noted that Section 147 of the NI Act began with a non obstante clause and as such, a dispute in the nature of a complaint under Section 138 of the NI Act could be compromised irrespective of any other legislation, including the BNSS. The court noted that though BNSS laid down procedures, it crystallised some enforceable rights and obligations and hence, could be given the status of a general law of procedure. Thus, as per the accepted proposition of law, the court reiterated that a special law would prevail over a general law, and the provisions of the NI Act would prevail over the provisions of the BNSS.

The court also noted that there was no formal embargo in Section 147 of the NI Act and provided an explicit guideline on what stage the compounding can be done or whether the compounding can be done at the instance of the complainant or with the leave of the court.

Thus, exercising the inherent jurisdiction, the court was inclined to accept the Joint Memorandum of Compromise entered into between the parties and annulled the conviction and sentence imposed on the petitioner.

Counsel for Petitioner: Mr. J. Vishnu

Counsel for Respondents: Mr. S. Prabhu

Case Title: K Balachenniappan v. Jeyakrishnan

Citation: 2025 LiveLaw (Mad) 328

Case No: CRL.R.C.(MD)No.875 of 2025