Damodar S.Prabhu vs Sayed Babalal H

The Supreme Court held that under Section 138 of the Negotiable Instruments Act, 1881, the offence of cheque dishonour can be compounded as per Section 147 of the Act, provided both parties consent to the settlement. The Court set aside the appellant's conviction based on the consent terms agreed upon by the parties, emphasizing the legislative intent behind Section 138 to enhance the credibility of negotiable instruments and deter dishonour. The judgment reinforces the notion that while the offence carries punitive measures, it primarily serves a regulatory purpose in commercial transactions.