Offences under Section 138 of the Negotiable Instruments Act are primarily civil wrongs and can be compounded at any stage of the legal proceedings, including the revision stage, with the court holding discretion to reduce compounding costs based on mitigating circumstances.

AMAN CHAUDHARY, J. (ORAL)

1. The challenge in the present criminal revision is to the order dated 09.02.2026 passed by learned Additional Sessions Judge, Fazilka, dismissing the appeal preferred against the judgment of conviction and order of sentence dated 11.06.2020 passed by learned Judicial Magistrate First Class, Abohar, vide which the petitioner was convicted and sentenced to undergo simple imprisonment for six months under Section 138 of the Negotiable Instrument Act, 1881 (for short, ‘the Act’) and to pay compensation to the tune of Rs.65,000/-

2. The facts relevant as narrated in the complaint filed under Section 138 of the NI Act by complainant-respondent No.1 are that the accused-petitioner had taken a friendly loan from the complainant amounting to Rs.65,000/-, in discharge of which, she had issued a cheque of Rs.55,000/- bearing No.880887 dated 14.12.2018. However, on presentation thereof, the same was returned unpaid with the remarks “Funds Insufficient” vide memo dated 19.12.2018. Despite issuance of legal notice, the petitioner failed to make the payment within the stipulated period. The proceedings against her were initiated under Section 138 of the NI Act. On finding prima facie case under Section 138 of the NI Act, notice of accusation was served upon her, to which she pleaded not guilty and claimed trial.

3. In order to prove his case, the complainant examined himself as CW-1 and also led documentary evidence. On closure of his evidence, statement of accused-petitioner under Section 313 Cr.P.C. was recorded, she denied all the allegations raised against her and pleaded innocence. In defence, she did not plead any oral or documentary evidence.

4. After scrutinizing the evidence led by the parties, the trial Court came to the conclusion that the complainant has successfully proved his case against the petitioner-accused, and convicted and sentenced her, as mentioned in para no.1 above. Aggrieved convict-petitioner filed appeal, which was dismissed by learned Addl. Sessions Judge, Fazilka, vide impugned judgment dated 09.02.2026.

5. Hence, the present revision petition.

6. Learned counsel for the petitioner submits that during the pendency of the petition, a settlement has been arrived at between the parties and matter between them was resolved. He, thus, prays the offence under Section 138 N.I.Act be compounded and fee with regard to the same be waived off, in view of the fact that the petitioner, aged 44 years; is a poor person; having no source of income and only bread earner of the family. The petitioner has with great difficulty managed to collect the money and settled the dispute as he wanted to put an end to the same, 7 years having gone by.

7. Learned counsel for the complainant-respondent No.1 admits the factum of compromise and states that as per the settlement, the complainant has received the agreed amount. Thus, he, on instructions, submits that there is no objection, if the prayer made by the petitioner is accepted.

8. It is apposite to refer to the judgment of Hon’ble The Supreme Court in B.V. Seshaiah vs. The State of Telangana and another 2023 Live Law (SC) 75, wherein it was held thus:

“10. In the case of M/S Meters and Instruments Private Limited & Anr. Vs Kanchan Mehta1,this court held that the nature of offence under section 138 of the N.I Act is primarily related to a civil wrong and has been specifically made a compoundable offence. The relevant paragraph of the judgment has been extracted herein:

“This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions’ cheques were issued merely as a device to defraud the creditors. Dishonor of cheque causes incalculable loss, injury and inconvenience to the payee and credibility of business transactions suffers a setback. At the same time, it was also noted that nature of offence under Section 138 pri