In Brief
A construction company proprietor was convicted under Section 138 of the Negotiable Instruments Act for issuing a cheque that was dishonoured with a "payment stopped by drawer" endorsement. The trial and high courts upheld the conviction. The Supreme Court, after the appellant deposited Rs 5 lakh and both parties agreed to settle (the respondent having received the full Rs 10 lakh owed), granted leave to compromise. The conviction and sentence were set aside, and the deposited amount was ordered refunded to the appellant.
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