The Supreme Court of India has ruled that a cheque bounce conviction can be set aside if the parties involved reach a settlement and the full amount is paid. This decision emphasizes the importance of amicable resolutions in financial disputes and reduces the burden on the judicial system.
The Supreme Court allowed an appeal arising from a conviction under Section 138 of the Negotiable Instruments Act,1881 and quashed the sentence imposed on the appellant. The Court held that once parties voluntarily enter into a compromise, the conviction cannot stand, observing that the offence of cheque dishonour is primarily civil in nature and compoundable at any stage.
The case originated from a complaint filed by the payee alleging dishonour of a cheque issued by the appellant towards repayment of a loan. The trial court convicted the appellant and sentenced him to six months simple imprisonment along with a fine. The conviction was upheld by both the appellate court and the High Court.
Counsel for the appellant argued that in light of the compromise, the conviction should be set aside, since Section 147 of the Negotiable Instrument Act specifically makes the offence compoundable. It was further urged that continuing the conviction despite a full settlement would defeat the very purpose of compounding.
The Court concluded that Once parties voluntarily entered into such an agreement and agree to abide by the consequence of non-compliance of the settlement agreement, they cannot be allowed to reverse the effects of the agreement by pursuing both the original complaint and the subsequent complaint arising from such non-compliance.
The Supreme Court’s ruling underscores the significance of settlements in cheque bounce cases, allowing parties to resolve disputes amicably and avoid prolonged litigation. By quashing convictions when full payments are made and settlements reached, the court promotes a pragmatic approach to dispute resolution, balancing the interests of both parties while upholding the principles of justice and fairness.
