Supreme Court: Conviction Under Cheque Bounce Law Not Valid After Settlement

The Supreme Court held that once a complainant signs a compromise deed accepting full settlement of the disputed amount, a conviction under Section 138 of the Negotiable Instruments Act cannot be sustained.

The Court set aside the High Court’s order that dismissed an application to alter the conviction following a post-appeal settlement. The Bench of Justices Aravind Kumar and Sandeep Mehta emphasised the compounding nature of cheque dishonour offences under Section 147.

Relying on precedent, the Court noted parties cannot later reverse the settlement effects by pursuing the complaint if they voluntarily agreed to the compromise.

The conviction in the case was accordingly set aside.

[Gian Chand Garg v Harpal Singh]