The Rajasthan High Court, in a recent judgment, set aside the conviction and sentence of a petitioner in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881, following a compromise between the parties. The court, while acquitting the petitioner, imposed a cost of 7.5% of the cheque amount, adhering to modified guidelines laid down by the Supreme Court for compounding such offences at the revision stage.
The judgment was delivered by Justice Mukesh Rajpurohit in the matter of Shamsuddin vs. State of Rajasthan & Anr.
Background of the Case
The present criminal revision petition was filed by Shamsuddin challenging two lower court judgments. The first was the judgment dated 09.01.2023 by the Special Judicial Magistrate (NI Act Cases), No.4, Udaipur. In this judgment, the trial court had convicted the petitioner for an offence under Section 138 of the Negotiable Instruments Act and sentenced him to one year’s simple imprisonment along with a fine of Rs. 3,00,000. In case of default in payment of the fine, he was to undergo further simple imprisonment of one month.
The petitioner subsequently challenged this conviction in an appeal. However, the appeal was dismissed by the Special Judge SC/ST (Prevention of Atrocities) Cases, Udaipur, vide judgment dated 06.12.2023. Aggrieved by these concurrent findings, the petitioner approached the High Court with the present revision petition.
Submissions of the Parties
Counsel for the petitioner, Mr. Gopal Singh Bhati, submitted that the parties involved had amicably settled the dispute. He presented a settlement deed executed on 08.10.2025, which stated that the complainant, Respondent No. 2 (Mohammad Shafi), had received the entire outstanding amount. Based on this compromise, and in light of Section 147 of the Negotiable Instruments Act, which makes offences under the Act compoundable, the petitioner prayed for the revision petition to be allowed.
Mr. Ashok Kumar, counsel for Respondent No. 2, affirmed the settlement. He stated that since the parties had resolved the issue and the amount had been paid, he had no objection to the petition being allowed.
The Learned Public Prosecutor, Mr. HS Jodha, appearing for the State of Rajasthan, opposed the petition but could not refute the fact that a compromise had been reached between the private parties.
Court’s Analysis and Reasoning
Justice Mukesh Rajpurohit considered the “spirit of the provisions of Section 147 of the Negotiable Instruments Act, 1881,” which explicitly states that every offence punishable under the Act shall be compoundable, notwithstanding anything contained in the Code of Criminal Procedure, 1973.
The Court referred to several landmark Supreme Court judgments to guide its decision. It noted the guidelines formulated in Damodar S. Prabhu vs. Sayed Babalal H (2010), which established a graded scheme for imposing costs on parties who delay the compounding of an offence.
The Court also cited M/s. Meters and Instruments Private Limited and Anr. vs. Kanchan Mehta (2018), where the Apex Court observed:
“i) Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on accused in view presumption under Section 139 but the standard of such proof is ‘preponderance of probabilities’… (ii) The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.”
Most significantly, the High Court relied on the recent Supreme Court decision in Sanjabij Tari v. Kishore S. Borcar & Anr. (2025), which revisited and modified the guidelines from the Damodar S. Prabhu case. The High Court quoted the modified guideline relevant to the current stage of litigation:
“(c) Similarly, if the payment of cheque amount is made before the Sessions Court or a High Court in Revision or Appeal, such Court may compound the offence on the condition that the accused pays 7.5% of the cheque amount by way of costs.”
Final Decision
Based on the settlement deed and the submissions of the parties, and taking guidance from the cited Supreme Court judgments, the High Court allowed the revision petition.
However, the Court observed, “since the compromise has been arrived at after rejection of the appeal preferred by the petitioner, a cost of 7.5% of the cheque amount deserves to be imposed upon the petitioner in light of the decision rendered by the Hon’ble Apex Court in the case of Sanjabij Tari (supra).”
Accordingly, the Court quashed and set aside the conviction and sentence awarded by the lower courts, subject to the petitioner depositing the cost of 7.5% of the cheque amount with the Rajasthan State Legal Services Authority, Jodhpur, within one month. The Court directed that if the cost is not deposited within the stipulated period, the petition would be listed again for appropriate orders.
The petitioner, Shamsuddin, was acquitted of the offence under Section 138 of the Negotiable Instruments Act and his immediate release from Central Jail, Udaipur, was ordered, provided he is not required in any other case.
