Parsharvanath Weld Wires Pvt Ltd & Anr. v. State of Chhattisgarh & Anr. Criminal Appeal No. 2904/2026
Bench – Aravind Kumar and Prasanna B. Varale, JJ.
Delivered on May 27, 2026
Facts:
The case originated from a criminal complaint (No. 143/2012) filed by the second respondent (the complainant) against the appellants under Section 138 of the Negotiable Instruments Act (NI Act) for a cheque bounce.
On May 6, 2014, the trial court convicted the appellants, sentencing them to one year of simple imprisonment and ordering a compensation of Rs. 28,00,000 (the cheque amount) to be paid to the complainant under Section 357(3) of the CrPC.
This conviction was affirmed by the Sessions Judge on January 7, 2015, and a subsequent revision petition in the High Court of Chhattisgarh was dismissed on August 12, 2024.
On April 23, 2026, the second appellant (the Director of the company, Mr. Hemant Jain) was taken into custody to serve the sentence.
Just two days after being taken into custody, on April 25, 2026, the parties entered into a settlement. The appellants paid the complainant Rs. 30,00,000 via Demand Draft as a full and final settlement, and the complainant agreed to compound the offence.
Despite the settlement, an application for compounding filed before the Judicial Magistrate First Class (JMFC) was rejected, a decision later affirmed by the High Court on the grounds that a judgment cannot be reviewed.
Issue: Whether the offence under Section 138 of the NI Act could be compounded after the conviction had been upheld by higher courts and the accused was already in custody, particularly when a full settlement had been reached between the parties.
Reasoning by Court:
Statutory Provision for Compounding: The Court highlighted Section 147 of the NI Act, which specifically provides for the compounding of offences under the Act. The Court cited its earlier ruling in Gian Chand Garg vs. Harpal Singh and Another (2025 SCC OnLine SC 2317). Using this precedent, the Court noted it had “no hesitation” in accepting the compromise, even at this late stage of the proceedings.
Fulfillment of Grievance: The Court observed that the complainant’s grievance stood fully complied with, as they had acknowledged receiving the payment of Rs. 30,00,000, which was actually higher than the original court-ordered compensation of Rs. 28,00,000.
Correction of Lower Court Errors: The Supreme Court disagreed with the High Court’s stance that the compounding could not be accepted because a “judgment cannot be reviewed”. By setting aside the High Court’s order, the Supreme Court prioritized the resolution of the dispute through the agreed-upon settlement over technical procedural limitations.
The Supreme Court allowed the appeal and set aside the High Court’s judgment dated May 11, 2026. The Court officially quashed the conviction and sentence imposed on the appellants. Regarding the immediate welfare of the accused, the Court noted that Mr. Hemant Jain had been in custody since April 23, 2026. Consequently, the Jail Superintendent of Central Jail, Raipur, was directed to release him forthwith. The Court also required the jail authorities to confirm compliance with this direction to the Registry via email.