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2026 Supreme(Mad) 2635
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Shamim Ahmed, J.
Kandasamy - Petitioner
Versus
Murugesan - Respondent
Crl.R.C.No. 1848 of 2024 & Crl.M.P.No. 15587 of 2024
Decided On : 06-07-2026
For the Petitioner: Mr. Illanchezhian
For the Respondent: Mr. S. Sarath Chandran
Offences under Section 138 of the Negotiable Instruments Act are essentially compensatory and can be compounded at any stage, including during revision, due to the overriding nature of Section 147 of the Act, which permits court-sanctioned settlement to ensure substantial justice.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138, 147 - Code of Criminal Procedure, 1973 - Section 320, 401 - Dishonour of cheque - Compounding of offence - Offence under Section 138 is primarily compensatory in nature and can be compounded at any stage of proceedings, including in revision or appeal - The non-obstante clause in Section 147 of the NI Act has an overriding effect on the provisions of the CRPC regarding compounding - While inherent powers under Section 482 Cr.P.C. or revisional powers should be exercised sparingly, the court must prioritize the settlement between parties to secure the ends of justice and avoid miscarriage of justice. (Paras 14, 16, 24, 35, 37, 49)
Facts of the case:
The accused was convicted for the offence of dishonour of a cheque and sentenced to imprisonment and compensation by the trial court. The conviction and sentence were confirmed by the appellate court. While the revision petition was pending before the High Court, the parties entered into a voluntary compromise and settled the entire amount due. The petitioner sought an acquittal based on the compounding of the offence via a joint memo.
Findings of Court:
The court found that the legislative intent behind the Negotiable Instruments Act is to ensure recovery of money rather than pure retribution. Given the consensual settlement reached between the parties, the court held that it was in the interest of justice to permit compounding and quash the conviction.
Issues: Whether an appellate-confirmed conviction for an offence under the Negotiable Instruments Act can be nullified by the High Court during revision based on a post-conviction settlement between the parties.
Ratio Decidendi: Section 147 of the Negotiable Instruments Act is a special law that prevails over the general procedure for compounding under the Code of Criminal Procedure. Compounding at the revisional stage is permissible and advisable when the complainant has been fully compensated, ensuring the compensatory objectives of the Act are met and justice is served at the doorstep of the litigants.
Result: Criminal Revision allowed; conviction and sentence set aside; accused acquitted on the basis of compounding.
| Table of Content |
|---|
| 1. procedural history and factual background of the cheque dishonor dispute. (Para 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. parties seeking compounding of offence under section 147 of the negotiable instruments act via joint compromise. (Para 9 , 10 , 12 , 13 , 14) |
| 3. legal precedents supporting compounding of section 138 ni act offences at any stage. (Para 15 , 16 , 17 , 18 , 19) |
| 4. identification of the core legal issue regarding the permissibility of compounding post-conviction. (Para 20 , 21 , 22 , 23 , 24 , 25) |
| 5. analysis of the overriding nature of section 147 ni act over general procedure in section 320 crpc. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48) |
| 6. final order annulling previous convictions, acquitting the petitioner upon compromise. (Para 49 , 50 , 51) |
ORDER :
Shamim Ahmed, J.
Heard Mr.Illanchezhian, learned counsel appearing for the Revision Petitioner and Mr.S. Sarath Chandran , learned counsel appearing for the respondent.
2. The instant Criminal Revision Case has been filed challenging the conviction and sentence passed in C.A.No.11 of 2022, dated 16.07.2024 by the learned Principal District and Sessions Judge, Ariyalur, confirming the conviction and sentence made in STC.No.425 of 2019, dated 10.08.2022 passed by the District Munsif cum Judicial Magistrate, Sendurai, Ariyalur District.
3. The learned trial Judge has convicted the Revision Petitioner/accused under section 138 of Negotiable Instruments Act and sentenced him to undergo Simple Imprisonment for six months and to pay a compensation of Rs.11,00,000/-, (i.e., the amount due upon the cheque along with Rs.1,00,000/- as compensation to the complainant for mental agony), in default, to undergo, two months simple imprisonment. The conviction and sentence imposed by the trial court was also confirmed by the First Appellate Court.
4. The facts leading to filing of this Criminal Revision Case is as follows;
(i) The revision petitioner, borrowed a sum of Rs.10,00,000/- from the respondent and to discharge his liability, the revision petitioner issued cheque, dated 06.06.2014. When the cheque was presented for encashment, the same was returned with an endorsement ‘Funds Insufficient’. Immediately, the respondent issued legal notice demanding the cheque amount and it was received by the petitioner on 19.08.2014. Since the petitioner neither returned the amount, nor gave any reply, the respondent filed a complaint for the offence of section 138 of the Negotiable Instruments Act before the District Munsif-cum-Judicial Magistrate, Sendurai.
5. After recording the sworn statement of the respondent and after being satisfied that prima facie case has been made out to proceed further against the Revision Petitioner for the offence under section 138 of NI Act, the trial Court has issued summon to the Revision Petitioner. On the appearance of the Revision Petitioner, copies have been furnished and the substance of allegation has been put to him. The Revision Petitioner has denied the allegation and has claimed to be tried.
6. After considering the arguments, the learned trial court has found the Revision Petitioner guilty of the offence under section 138 of the Negotiable Instruments Act and the Revision Petitioner has been convicted and sentenced to undergo SI for a period of six months and also directed him to pay a compensation of Rs.11,00,000/- to the complainant, (I.e.the amount due upon the cheque along with Rs.1,00,000/- as compensation for the mental agony) in default to undergo two months simple imprisonment. The conviction and sentence imposed by the trial court was also confirmed by the First Appellate Court.
7. Aggrieved by the judgment, the Revision Petitioner has preferred the appeal in C.A.No.11 of 2022 before the Principal District and Sessions Judge, Ariyalur and the first appellate court dismissed the appeal vide judgment and order dated 16.07.2024, by confirming the judgment of convic
