Offences under Section 138 NI Act can be compounded at any stage, including post-conviction, fostering timely justice.

JUDGMENT :

Sumeet Goel, J.

The present petition has been filed impugning the judgment dated 28.08.2025 passed by the learned Additional Sessions Judge, Sangrur & the judgment as also the order of sentence dated 12.08.2024 passed by Judicial Magistrate Ist Class, Sunam whereby the petitioner has been convicted and sentenced for offence under Section 138 of Negotiable Instruments Act, 1881 .

2. Learned counsel for the petitioner has submitted that during the pendency of proceedings, the petitioner and the complainant have entered into a settlement/compromise dated 19.09.2025 (copy whereof appended as Annexure R-2 with the present petition). Learned counsel for the petitioner has further submitted that since the parties have amicably settled their dispute(s), the matter may be compounded and the petitioner be acquitted.

3. Learned counsel appearing for the respondent has ratified the factum of compromise/settlement having been arrived at between the parties and has further vouched the genuineness of the compromise/settlement dated 19.09.2025 stated to be arrived between the parties. Accordingly, she has iterated that the respondent-complainant has no objection in case the offence is permitted to be compounded and the petitioner is ordered to be acquitted.

4. I have heard learned counsel for the rival parties and have perused the available record.

5. It would be apposite to refer herein to a judgment passed by three Judge Bench of the Hon'ble Supreme Court titled as Damodar S. Prabhu vs. Sayed Babalal H. , AIR 2010(SC) 1907, relevant whereof reads thus:

'15. With regard to the progression of litigation in cheque bouncing cases, the learned Attorney General has urged this Court to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. It was submitted that the requirement of deposit of the costs will act as a deterrent for delayed composition, since at present, free and easy compounding of offences at any stage, however belated, gives an incentive to the drawer of the cheque to delay settling the cases for years. An application for compounding made after several years not only results in the system being burdened but the complainant is also deprived of effective justice. In view of this submission, we direct that the following guidelines be followed:-

THE GUIDELINES

(i) In the circumstances, it is proposed as follows:

Let it also be clarified that any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate's Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority.

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17. We are also conscious of the view that the judicial endorsement of the above quoted guidelines could be seen as an act of judicial law-making and therefore an intrusion into the legislative domain. It must be kept in mind that Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act. We have already explained that the scheme contemplated under Section 320 of the CrPC cannot be followed in the strict sense. In view of the legislative vacuum, we see no hurdle to the endorsement of some suggestions which have been designed to discourage litigants from unduly delaying the composition of the offence in c