Meters and Instruments v. Kanchan Mehta (Compounding)
Supreme Court of India(2017) 7 SCC 752Bench: J. A.K. Goel, J. U.U. Lalit
The Supreme Court held that Section 147 NI Act makes Section 138 offences compoundable — they can be compounded at any stage of the proceedings, including before the Magistrate, before the Sessions Court on appeal, before the High Court, and even before the Supreme Court. Compounding after conviction results in acquittal of the accused. The Court also held that in Section 138 cases, courts may take note of settlement between the parties and "close the proceedings" even without formal compounding under Section 320 CrPC — the payment of the cheque amount plus reasonable compensation to the complainant substantially achieves the purpose of Section 138. Courts are encouraged to actively facilitate settlement in Section 138 matters given that the legislative intent is essentially to protect the financial interest of the payee.