Bangalore District Court
Sudhakaran N vs Sumithra N on 10 April, 2026
1 Crl.Apl.No.839/2026 JUDGMENT
KABC010134122025
IN THE COURT OF LXIX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE (CCH 70)
Present:
Smt. Shirin Javeed Ansari, B.A.,LL.B (Hon`s) LL.M.,
LXIX Additional City Civil and Sessions Judge,
Bengaluru. (CCH70)
Dated this the 10th day of April, 2026
Crl.A.No.839/2025
Appellant: Sri Sudhakaran.N.
S/o Narayan.A
Aged about 56 years,
R/at Bindumol K.T.
Narivelil
Irupupalam, Valara
Mannamkandam, Idukki District
Kerala-685 561
(Sri A.N.Mattara, Advocate for
appellant)
-V/s-
Respondent: Smt. Sumithra.N.
W/o Narayanaswamy
Aged about 40 years
R/at. Oil Mill Road
2nd Cross, Lingarajapuram
Bengaluru-560 084
(Sri M.K.Chandrashekar, Advocate for
respondent)
2 Crl.Apl.No.839/2026 JUDGMENT
JUDGMENT
This Criminal Appeal is preferred under Section
374(3) of the Code of Criminal Procedure by the appellant/
accused calling in question the legality and correctness of
the Judgment of Conviction and Order of Sentence dated
11.07.2024 passed by the XVIII Addl. Chief Judicial
Magistrate, Bengaluru in C.C. No.32874/2022, whereby
the appellant was convicted for the offence punishable
under Section 138 of the Negotiable Instruments Act, 1881
and sentenced to pay fine of Rs.14,00,000/- with default
simple imprisonment for eight months.
2. Being aggrieved by the impugned judgment and
conviction, the accused has preferred the present appeal
under Sec.374(3) of the Code of Criminal Procedure, 1973
seeking to set aside the same.
3. The accused in CC No.32874/2022 before the
trial court has preferred the instant appeal against the
complainant. The appellant and respondent are hereby
assigned with their original ranks before the trial court i.e.,
the appellant as accused and respondent as complainant
3 Crl.Apl.No.839/2026 JUDGMENT
in CC No.32874/2022 in the instant discussion for the
purpose of brevity and convenience to avoid the confusion
and perplexity.
4. The complainant instituted a private complaint
under Section 200 Cr.P.C. alleging commission of offence
under Section 138 of the Negotiable Instruments Act (for
short, “N.I. Act“). It was the case of the complainant that
the accused, a Government employee in Kerala and also
engaged in business under the name and style “Neo
InfoTech”, approached her during the year 2021 seeking
financial assistance to the tune of Rs.48,00,000/- for
urgent legal necessities and business purposes. It is
alleged that the complainant advanced various amounts
partly by bank transfers to accounts indicated by the
accused and partly by cash, aggregating to Rs.43,50,000/-.
It was further alleged that the accused executed a
Memorandum of Understanding and composite receipt
acknowledging receipt of the amount. According to the
complainant, towards discharge of the said liability, the
accused issued two cheques:
4 Crl.Apl.No.839/2026 JUDGMENT
1. Cheque No.000002 dated 29.07.2022 for
Rs.25,00,000/- drawn on HDFC Bank,
Pazhavangadi Branch, Kerala; and
2. Cheque No.254944 dated 29.07.2022 for
Rs.18,50,000/- drawn on South Indian
Bank, Idukki District, Kerala.
5. Upon presentation, both cheques were
dishonoured with endorsement “Funds Insufficient” dated
30.07.2022. Statutory notice dated 17.08.2022 was issued.
The notice was returned with endorsement “Addressee
Refused”. Alleging failure to pay within the statutory
period, the complaint was filed. The sworn statement and
documents were treated as evidence in terms of the
decision of the Hon’ble Supreme Court in Indian Bank
Association & Ors. v. Union of India & Ors., (2010) 5 SCC
590. The accused appeared and pleaded not guilty.
However, during trial, both parties filed a Joint Memo
stating that they had settled the matter. As per the Joint
Memo, the accused agreed to pay Rs.14,00,000/- in full
and final settlement in four instalments of Rs.3,50,000/-
each on specified future dates. It was further agreed that
5 Crl.Apl.No.839/2026 JUDGMENT
the complainant would hand over the Honda City car
bearing No. KL-68-9999 upon payment of the first
installment. The trial court, instead of recording
compounding, proceeded to convict the accused under
Section 255(2) Cr.P.C., imposed fine of Rs.14,00,000/- and
directed payment of the same as compensation under
Section 357(1) Cr.P.C., with default sentence of eight
months’ simple imprisonment.
6. Being aggrieved by the impugned judgment
passed by the trial court, the appellant being accused
before the trial court has preferred the instant appeal
against the respondent who was the complainant before
the trial court on the following:
GROUNDS OF APPLEAL
a) It is submitted that the trial court failed to
properly appreciate the legal effect of the
joint compromise memo filed under
Section 147 of the N.I. Act. Once the
complainant and accused voluntarily
entered into a settlement agreement for the
cheque dispute, the court ought to have
6 Crl.Apl.No.839/2026 JUDGMENTtreated the offence as compounded and
terminated the proceedings without a
conviction. Section 147 of the N.I. Act
provides that every offence under the Act
“shall be compoundable” (by virtue of its
non-obstante clause) meaning the parties
have the unfettered right to resolve the
matter between themselves at any stage. In
the present case, both parties
unequivocally agreed to settle the matter
for Rs.14 lakhs and jointly requested the
court to pass orders accordingly. The
conviction of the appellant despite this
compromise is a patent illegality that
defeats the very purpose of Section 147. It
is respectfully submitted that the trial
court ought to have recorded the
compounding of the offence in view of the
joint memo, instead of proceeding to find
the accused guilty. The impugned
judgment thus suffers from a gross
miscarriage of justice due to the
misapplication of Section 147 N.1. Act.
b) It is submitted that the impugned
conviction and sentence run contrary to
the settled law declared by the Hon’ble
7 Crl.Apl.No.839/2026 JUDGMENTSupreme Court and High Courts regarding
compounding of cheque bounce cases. The
Apex Court has made it clear that once
parties enter into a settlement regarding a
cheque dishonour, that settlement “is
nothing but a compounding of the offence”
In B.V. Seshaiah v. State of Telangana
(Supreme Court, 2023), the Hon’ble
Supreme Court set aside a conviction in a
Section 138 case where a post-conviction
Memorandum of Understanding (MoU) had
been executed between the parties. It was
held that when parties have taken steps to
amicably settle the dispute, the courts
cannot impose their will by ignoring such
settlement and continuing the conviction.
The Court observed that it was “a very
clear case of the parties entering into an
agreement for compounding the
offence…when the law clearly allows them
to do so, the court cannot override such
compounding”.
c) It is submitted that the court below erred
in failing to treat the joint memo as a valid
compounding of the offence under Section
147 of the N.I. Act. The terms of the joint
8 Crl.Apl.No.839/2026 JUDGMENT
mema clearly reflected a full and final
settlement voluntarily agreed upon by both
parties. Even though the memo did not use
any technical phrase such as “the case is
compounded” or “charges are not pressed,”
the intent of the parties was clearly to
resolve the dispute and end the
proceedings. The trial Court ought to have
construed the memo as an effective
compounding and recorded the
compromise accordingly. The refusal to do
so, and instead relying on the memo to
infer guilt, is a misapplication of the law
and contrary to the spirit of Section 147 of
the N.I. Act.
d) It is submitted that the trial court’s
reasoning – that the settlement proved the
appellant’s liability and therefore justified
conviction is wholly flawed. If such logic is
accepted, no accused would ever attempt
settlement, since any offer to pay would be
construed as proof of guilt. This not only
discourages settlements but also
undermines the alternative dispute
resolution mechanism intended by the
legislature for cheque bounce cases. The
9 Crl.Apl.No.839/2026 JUDGMENThon’ble courts have repeatedly encouraged
settlements in Section 138 matters to
reduce litigation and ensure compensatory
outcomes, even permitting compounding at
appellate and revisional stages (sometimes
with modest costs as per guidelines in
Damodar S. Prabhu vs. Sayed Babalal H.,
(2010) 5 SCC 663). The approach of the
trial court completely negates this ethos.
Once the complainant agreed to settle for
Rs. 14 lakhs – a figure much lower than
the original cheque amounts it clearly
signified that she no longer insisted on the
full face value of the cheques or the
criminal punishment of the accused. The
proper course for the court was to facilitate
the settlement by either adjourning the
case to allow payment of installments or by
obtaining a clear statement from the
complainant that she consents to
compounding, and then to acquit the
accused under Section 147 of the N.I. Act
(perhaps upon payment of any nominal
compounding costs if required). By instead
rushing to convict, the trial court defeated
the compromise and placed the parties in
an awkward situation complainant must
10 Crl.Apl.No.839/2026 JUDGMENT
now chase a fine/compensation through
enforcement, and the accused is subjected
to a criminal penalty that the complainant
ostensibly no longer wanted once she
settled. The ends of justice were not served
by this outcome. The conviction and
sentence therefore deserve to be set aside
and the case treated as compounded in
law.
e) It is submitted that the trial court neither
recorded the compounding of the offence
nor did he follow the procedure of
obtaining statements from the parties
regarding the compromise as is usually
done. It is submitted that this procedural
lapse has caused grave prejudice to the
appellant. Had the court inquired with the
complainant at the time of filing of the
joint memo, the complainant would have
confirmed her consent to compound the
case (since she signed the joint memo
willingly). The court could then have
passed an order recording compounding
under Section 147 N.I. Act and Section
320 Cr.P.C. (to whatever extent necessary)
and terminated the proceedings. Instead,
11 Crl.Apl.No.839/2026 JUDGMENT
the court kept silent about the
compounding aspect and gave a finding of
guilt. The appellant, on his part, did not
lead further evidence or press any defense
during trial because a settlement was
already reached. In essence, the appellant
changed his position in reliance on the
compromise he reasonably believed that a
formal trial verdict was no longer needed.
The trial court’s failure to clearly allow
compounding or at least hold further
proceedings in abeyance misled the
appellant and deprived him of a fair
opportunity to defend himself. This is a
serious infraction of fair trial rights. The
conviction, arrived at without a full contest
(due to the expected compounding), cannot
be sustained. The appellant humbly
requests this Hon’ble Court to correct this
by recognizing the compromise and setting
aside the conviction.
f) It is submitted that the impugned
judgment ignores that every offence under
the N.I. Act is compoundable without
restrictions, as explicitly stated in Section
147. The Karnataka High Court (as well as
12 Crl.Apl.No.839/2026 JUDGMENT
other High Courts) have reiterated that
there is “no bar for the parties to
compound the offence” under Section 138
N.I. Act at any stage of the proceedings. In
fact, even after a conviction is recorded by
a trial court, if during appeal the parties
settle the matter, appellate courts regularly
permit compounding and set aside the
conviction and sentence, to give effect to
the compromise (often citing the mandate
of Section 147). In the present case, the
settlement was reached before the
judgment thus the trial court had full
authority to end the case then and there.
By not doing so, the trial court acted
contrary to the letter and spirit of Section
147 N.I. Act and the liberal approach
mandated by higher courts. This Hon’ble
Sessions Court is duty-bound to give effect
to the compounding that ought to have
been recorded in the court below. The
continued execution of the sentence
against the appellant is unjust and
unlawful in view of the binding settlement
between the parties.
g) It is submitted that without prejudice to
13 Crl.Apl.No.839/2026 JUDGMENT
the above grounds which challenge the
very legality of the conviction, the
appellant submits that the sentence
imposed is unduly harsh and improper,
especially in the context of the settlement.
The trial court imposed a fine of Rs.
14,00,000/-which is the exact settlement
amount, and a default imprisonment of 8
months. While ordinarily such a sentence
might fall within the statutory limits for
Section 138, in the peculiar facts of this
case it is excessive. The court gave the
appellant no time or opportunity to
actually pay the Rs.14 lakhs as per the
schedule – instead, upon conviction, the
entire sum became immediately payable,
which was unrealistic for the appellant to
arrange on the spot. Consequently, the
default imprisonment kicked in at once
and the appellant was sent to jail, which
has also made it practically harder for him
to arrange funds to pay the complainant.
Thus, the sentencing approach not only
prejudices the appellant but also does not
truly benefit the complainant. If the
conviction is not set aside on
compounding, then at the very least the
14 Crl.Apl.No.839/2026 JUDGMENT
sentence requires interference by this
appellate court to prevent injustice. The
default term of 8 months may kindly be set
aside, and the appellant be given a chance
to fulfill the payment obligation under
supervision of the court.
h) It is submitted that the impugned judgment
is otherwise contrary to law, facts, and
weight of evidence. The trial court heavily
relied on the joint memo to infer guilt, but
did not equally give weight to the joint
memo as a plea for
clemency/compounding this inconsistent
treatment itself is unjust. The reasoning
adopted by the court effectively converts a
beneficial provision (settlement) into a
weapon against the accused, which is
impermissible in criminal jurisprudence.
The appellant submits that the findings in
the judgment suffer from legal infirmity
and the order of conviction and sentence is
liable to be overturned in the interest of
justice. The appellant craves leave to urge
any other grounds at the time of hearing
with permission of the Court.
On these and other allied grounds, the
15 Crl.Apl.No.839/2026 JUDGMENT
appellant/accused pray before this court to call for entire
records from the trial court, set aside the impugned
judgment conviction and sentence passed by Trial Court in
CC No.32874/2022 dated 11.07.2024 and acquit the
accused from the alleged offence by allowing this appeal in
the interest of justice and equity.
7. Learned counsel for appellant submitted written
arguments. In spite of giving sufficient opportunities
learned counsel for respondent has not submitted his
arguments.
8. On the basis of the materials available on
record following points arise for my consideration:
1) Whether the appellant has made out
grounds to Condone the delay in
preferring the present appeal?
2) Whether the learned Magistrate was
justified in convicting the accused
under Section 138 of the N.I. Act
despite the filing of a Joint Memo
of settlement?
3) Whether the Joint Memo filed
before the trial court amounted to
compounding of offence under
Section 147 of the N.I. Act?
16 Crl.Apl.No.839/2026 JUDGMENT
4) Whether the conviction and
sentence warrant interference by
this appellate court?
5) What order?
9. My findings to the above points are as under:
Point No.1: In the Affirmative
Point No.2: In the Negative
Point No.3: In the Affirmative
Point No.4: In the Affirmative
Point No.5: As per final order for
the following:
REASONS
10. Point No.1:- Upon perusal of the averments
made in the application and the material placed on record,
it is evident that the impugned judgment in C.C. No.
32874/2022 came to be passed on 11.07.2024. The
appellant has computed the delay at various stages and
has attempted to explain the same by furnishing a
chronological account of events. The total delay, after
excluding the statutory period of limitation, is stated to be
substantial; however, the explanation offered requires
17 Crl.Apl.No.839/2026 JUDGMENTjudicial scrutiny in the backdrop of settled principles
governing condonation of delay.
11. It is the specific case of the appellant that he
was arrested on 27.03.2025 at Angamali, Kerala, and was
remanded to judicial custody on 28.03.2025. The period
during which the appellant remained in custody has
materially impacted his ability to promptly pursue legal
remedies. The constraints faced by a litigant in custody,
particularly in coordinating with legal counsel and
arranging for filing of appeal, cannot be ignored. The
Hon’ble Supreme Court has consistently held that
procedural delays arising out of incarceration deserve
liberal consideration, provided the explanation does not
suffer from mala fides.
12. Further, it is submitted that the certified copy of
the impugned judgment was obtained on 12.05.2025. The
time consumed in securing the certified copy is a relevant
factor which is liable to be excluded while computing
limitation. The appellant has explained that upon receipt of
the certified copy, steps were taken to prefer the appeal
18 Crl.Apl.No.839/2026 JUDGMENTwithin a reasonable time. The intervening period, thus,
cannot be viewed with strict rigidity, particularly when the
statutory scheme itself contemplates such exclusion.
13. The explanation tendered by the appellant
regarding his residence in the State of Kerala and the
absence of any competent person to effectively pursue the
matter before the Court at Bengaluru also merits
consideration. It is specifically stated that the appellant’s
wife, being the only available person, was unfamiliar with
legal procedures and geographical constraints, which
resulted in some delay in initiating appropriate
proceedings. The said circumstances, though not
constituting a perfect explanation, do reflect a bona fide
difficulty rather than deliberate inaction or negligence.
14. It is a well-settled principle of law that while
considering an application under Section 5 of the
Limitation Act, the Court is required to adopt a liberal and
justice-oriented approach, so as to advance substantial
justice rather than defeat it on technical grounds. Unless
the delay is shown to be deliberate, intentional, or arising
19 Crl.Apl.No.839/2026 JUDGMENTout of gross negligence, the same ought to be condoned. In
the present case, the reasons assigned by the appellant do
not indicate any mala fide intention or dilatory tactics, but
rather disclose circumstances beyond his effective control.
15. In view of the foregoing discussion, this Court is
of the considered opinion that the appellant has shown
“sufficient cause” within the meaning of Section 5 of the
Limitation Act for condoning the delay in preferring the
appeal. Consequently, the delay, if any, in filing the appeal
is hereby condoned in the interest of justice, subject to all
just exceptions. Accordingly, The delay stands condoned by
answering Point No.1 in the Affirmative.
16. Point No.2 to 4:- The principal contention of
the appellant is that once a Joint Memo of settlement was
filed, the learned Magistrate ought to have treated the
offence as compounded under Section 147 of the N.I. Act
and terminated proceedings without recording conviction.
It is contended that the conviction despite settlement
defeats the legislative intent of Section 147 and is contrary
to settled law.
20 Crl.Apl.No.839/2026 JUDGMENT
17. The appellant has also challenged the sentence
as harsh and contends that the learned Magistrate failed to
follow proper procedure in recording compromise.
18. The gravamen of the controversy lies not in the
factual substratum of issuance and dishonour of cheques,
but in the legal effect of the Joint Memo filed by the parties
before the trial court.
19. At the outset, it is necessary to advert to the
statutory scheme. Section 138 of the N.I. Act criminalises
dishonour of cheque for insufficiency of funds, subject to
compliance with statutory conditions. Section 139 raises a
presumption in favour of the holder that the cheque was
issued towards discharge of legally enforceable debt or
liability. However, significantly, Section 147 of the N.I. Act
reads thus:
“Notwithstanding anything contained
in the Code of Criminal Procedure, every
offence punishable under this Act shall be
compoundable.”
20. The non-obstante clause confers overriding
effect and renders offences under the N.I. Act
21 Crl.Apl.No.839/2026 JUDGMENT
compoundable irrespective of limitations under Section
320 Cr.P.C.
21. The Hon’ble Supreme Court in Damodar S.
Prabhu v. Sayed Babalal H., (2010) 5 SCC 663,
authoritatively laid down guidelines encouraging
compounding at all stages of proceedings and recognised
the compensatory and primarily civil nature of proceedings
under Section 138.
22. Again, in Meters and Instruments (P) Ltd. v.
Kanchan Mehta, (2018) 1 SCC 560, the Hon’ble Supreme
Court observed that the object of Section 138 proceedings
is primarily compensatory and punitive element is mainly
to ensure credibility of commercial transactions.
23. More recently, in B.V. Seshaiah v. State of
Telangana, (2023) 2 S.C.R. 293 (Criminal Appeal No. 284
of 2023, decided on February 1, 2023), the Hon’ble Apex
Court reiterated that once parties enter into settlement, it
partakes the character of compounding and courts ought
to give effect to such compromise rather than insist upon
continuation of conviction.
22 Crl.Apl.No.839/2026 JUDGMENT
24. In the case on hand, both parties voluntarily
filed a Joint Memo expressly stating that they have settled
the matter; Rs.14,00,000/- is agreed as full and final
settlement; Payment schedule is specified; Ancillary terms
regarding vehicle handover are incorporated; They prayed
the court to pass judgment in terms of Joint Memo.
25. The intention of parties is the cornerstone of
compounding. Compounding is essentially a bilateral act–
an agreement between complainant and accused to bury
the dispute.
26. The trial court, instead of recording
compounding, drew an inference that settlement implied
admission of liability and proceeded to convict. With
profound respect, such reasoning conflates civil
compromise with criminal adjudication. If settlement is
treated as admission of guilt warranting conviction, it
would produce a chilling effect upon amicable resolution.
No prudent accused would enter into compromise if such
act itself seals conviction. The legislative intent behind
Section 147 is facilitative–not punitive.
23 Crl.Apl.No.839/2026 JUDGMENT
27. The Joint Memo does not employ technical
phraseology such as “offence is compounded.” However,
law does not mandate incantation of ritualistic words.
Compounding depends upon substance and not form.
Where parties unequivocally state that matter is settled in
full and final settlement and pray for disposal accordingly,
such memorandum constitutes compounding in
substance.
28. The Hon’ble Supreme Court in JIK Industries
Ltd. v. Amarlal V. Jumani, (2012) 3 SCC 255, observed
that compounding under Section 147 is guided by
consensual settlement and is not fettered by rigid
procedural technicalities. Therefore, absence of specific
terminology cannot defeat manifest intention.
29. The trial court did not record statements of
parties regarding compromise nor did the court pass an
order recording compounding. Instead, the trial judge used
the compromise as corroborative circumstance to hold that
presumption under Section 139 stood unrebutted. Such
approach, in the considered view of this Court, is legally
24 Crl.Apl.No.839/2026 JUDGMENT
unsustainable. Once parties settle the matter before
conclusion of trial, the proper course is:
ï‚· To ascertain voluntariness of compromise;
ï‚· To record compounding under Section 147;
ï‚· To acquit the accused.
30. Conviction after settlement defeats statutory
mandate. The offence under Section 138, though criminal
in form, is quasi-civil in substance. The object is recovery
of money and preservation of commercial confidence.
31. The complainant herself agreed to accept
Rs.14,00,000/- as full and final settlement–substantially
lower than cheque amount. This clearly indicates that the
complainant was not insisting upon punitive
consequences. In such scenario, recording conviction
places the complainant in anomalous position: she must
now execute fine recovery proceedings rather than
implement settlement schedule. The very purpose of
compromise–expeditious resolution–is frustrated.
32. Even otherwise, the sentence imposed–making
entire Rs.14,00,000/- immediately payable with default
25 Crl.Apl.No.839/2026 JUDGMENT
imprisonment–ignores installment structure agreed in
Joint Memo. The sentencing order does not reflect judicial
application of mind to the settlement schedule.
33. This Court is of the considered and firm view
that:
ï‚· The Joint Memo filed before the trial court
amounted in substance to compounding of
offence under Section 147 of the N.I. Act;
ï‚· The trial court erred in not recording
compounding;
ï‚· Conviction recorded despite settlement is
legally unsustainable;
ï‚· Interests of justice require recognition of
compromise.
Therefore, Point No.2 is answered in Negative and
Point No.3 and 4 are answered in the Affirmative.
34. Point No.5: In view of the reasons mentioned
above and the findings arrived at on Point No.1 to 4, I
proceed to pass the following:
ORDER
The application filed by the appellant
under Section 5 of the Limitation Act, 1963,
seeking condonation of delay, if any, in
26 Crl.Apl.No.839/2026 JUDGMENTpreferring the present criminal appeal is hereby
allowed.
The delay in filing the appeal is condoned.
The Criminal Appeal filed under under
Sec.374(3) of the Code of Criminal Procedure,
1973 by the appellant/accused is hereby
allowed.
The Judgment of Conviction and Order of
Sentence dated 11.07.2024 passed in C.C.
No.32874/2022 by the XVIII Addl. Chief Judicial
Magistrate, Bengaluru is hereby set aside.
The offence under Section 138 of the
Negotiable Instruments Act is treated as
compounded in terms of Section 147 of the N.I.
Act in view of the Joint Memo filed before the
trial court.
The appellant/accused is acquitted of the
offence under Section 138 of the N.I. Act.
The terms of settlement embodied in the
Joint Memo shall bind both parties and shall be
enforceable in accordance with law.
Bail bonds, if any, stand discharged.
Office is hereby directed to transmit the
entire trial court records forthwith along with
copy of this judgment.
(Dictated to Stenographer Grade-I directly on computer, typed by
him, revised and corrected by me and then pronounced in open court on
this the 10th day of April, 2026)
Digitally signed by
SHIRIN SHIRIN JAVEED
JAVEED ANSARI (Shirin Javeed Ansari)
ANSARI
Date: 2026.04.10
18:17:38 +0530 LXIX Addl.C.C. & Sessions Judge,
Bengaluru.