Cheque Dishonour and S.138 of Negotiable Instruments Act, 1881 : Principles of Compounding

Cheque Dishonour and S.138 of Negotiable Instruments Act, 1881 : Principles of Compounding

It has been held in Sanjabij Tari v Kishore S. Borcar [2025] GCtR 1548 (SC) that "if the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the Trial Court may allow compounding of the offence without imposing any cost or penalty on the accused." 

"If the accused makes the payment of the cheque amount post the recording of his evidence but prior to the pronouncement of judgment by the Trial Court, the Magistrate may allow compounding of the offence on payment of additional 5% of the cheque amount with the Legal Services Authority or such other Authority as the Court deems fit. 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. Finally, if the cheque amount is tendered before Supreme Court, the figure would increase to 10% of the cheque amount."