In Brief
The appellants were convicted under Section 138 of the Negotiable Instruments Act for cheque dishonour. During their High Court revision, both parties signed a Memorandum of Understanding agreeing to settle the dispute amicably or through arbitration. However, the complainant failed to file the promised compromise petition, leading the High Court to dismiss the revision and uphold the conviction. The Supreme Court held that since Section 138 offences are compoundable and the parties had validly agreed to settle, the conviction could not stand. The Court emphasised that when law permits compounding and parties agree to it, courts must give effect to such settlement and cannot override it.
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