M/S Bear Bull Share Brokers And Another vs State Of Punjab And Another

CRM-M-48959-2026 (O&M) -1-



IN THE HIGH COURT FOR THE STATES OF PUNJAB AND
HARYANA AT CHANDIGARH
296


CRM-M-48959-2026 (O&M)
Date of decision : 14.09.2026


M/s Bear Bull Share Brokers and another ...Petitioners


Versus

State of Punjab and another ...Respondents


CORAM: HON'BLE MRS. JUSTICE MANISHA BATRA

Present:- Mr. Pranav Handa, Advocate
for the petitioner.

Mr. Durgesh Garg, AAG, Punjab.

Mr. Amit Dhawan, Advocate
for respondent No. 2.

MANISHA BATRA, J. (Oral)
1. Prayer in this petition, filed under Section 528 of the Bharatiya
Nagarik Suraksha Sanhita, 2023 read with Section 147 of the Negotiable
Instruments Act, 1881 (for short ‘N.I. Act’) , is for quashing of order dated
16.05.2026 (Annexure P-6), passed by the Court of learned Additional
Sessions Judge, Jalandhar in Criminal Appeal No. CRA-614-2025, titled as
M/s Bear Bull Share Brokers v. Gurpreet Singh , whereby an application
dated 17.03.2026 (Annexure P-4), filed by the petitioners for compounding of
the offence under Section 138 of the N. I. Act, has been dismissed.
2. Brief facts relevant for the purpose of disposal of the present
petition are that respondent No.2/complainant had filed a complaint under
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Section 138 of the N.I. Act against the petitioners in respect of cheque bearing
No.380118 dated 20.03.2020 for an amount of Rs.4,00,000/-, drawn on HDFC
Bank Limited. The said cheque was dishonoured with the remarks ‘KYC
awaited and funds insufficient’. The complainant had served a legal notice
dated 20.04.2020 upon the petitioners calling upon them to make the aforesaid
payment. However, despite issuance of legal notice, the petitioners did not
make payment of the cheque amount, thereby compelling the complainant to
file the aforesaid complaint.
3. As discernible from the record, after completion of the
proceedings, the learned Judicial Magistrate First Class, Jalandhar, vide
judgment dated 30.10.2025, convicted petitioner No.2 under Section 138 of the
N.I. Act and sentenced him to undergo rigorous imprisonment for a period of
one year and to pay compensation of Rs.4,00,000/- along with interest at the
rate of 9% per annum. The petitioner thereafter preferred Criminal Appeal No.
CRA-614-2025 before the learned appellate Court, which is pending
adjudication. During the pendency of the aforesaid appeal, the petitioners
moved an application dated 17.03.2026 before the learned appellate Court
seeking compounding of the offence. It was pleaded that the petitioners were
ready and willing to pay the entire cheque amount along with the costs
prescribed in the judgment of the Hon’ble Supreme Court in Sanjabij Tari v.
Kishore S. Borcar and another, 2025 INSC 1158 . The petitioners principally
relied upon paragraph 38(c) of the said judgment, submitting that where
payment of the cheque amount is made before the Sessions Court in appeal,
the offence may be compounded subject to payment of 7.5% of the cheque
amount as costs.
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4. The aforesaid application was opposed by respondent No.2. In his
reply, respondent No.2 categorically stated that he was not willing to
compound the offence. It was pleaded that the petitioners had been adopting
delaying tactics and had subjected him to harassment by filing various
applications and proceedings. It was further pleaded that the petitioners had
earlier entered into settlement arrangements but had not honoured the same.
Respondent No.2 also referred to the conduct of the petitioners in the
proceedings and submitted that the present application was another attempt to
delay the disposal of the appeal.
5. The learned appellate Court, after hearing both sides and perusing
the record, noticed that there was a clear and unequivocal refusal on the part of
respondent No.2 to compound the offence. The learned appellate Court
observed that compounding under Section 147 of the N.I. Act partakes the
character of a bilateral settlement and that the free consent of both the parties is
a sine qua non for permitting compounding. It was further observed that the
Court could not compel or coerce the complainant to enter into a compromise
merely because the drawer of the cheque was willing to pay the cheque
amount. Consequently, the application for compounding was declined vide
impugned order dated 16.05.2026. Feeling aggrieved from the aforementioned
order, the petitioners have filed the present petition.
6. It is argued by learned counsel for the petitioners that the
impugned order is not sustainable in the eyes of law. Learned counsel submits
that the petitioners are ready and willing to pay the entire cheque amount along
with 7.5% of the cheque amount as costs in terms of paragraph 38(c) of the
judgment of the Hon’ble Supreme Court in Sanjabij Tari’s case (supra) . It is
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further argued that the petitioners have made an unconditional offer to satisfy
the monetary component of the claim and that the said offer has been made
only with a view to buy peace, bring the prolonged litigation to an end and
avoid continuing uncertainty attached to the criminal proceedings. It is
submitted that the offer is without prejudice to the grounds raised in the
statutory appeal and does not amount to an admission of the alleged legally
enforceable liability or abandonment of the defence of the petitioners.
7. It is further argued that the learned appellate Court has noticed the
judgment in Sanjabij Tari’s case (supra) but has failed to give effect to the
modified guidelines contained therein. Learned counsel has particularly relied
upon paragraph 39 of the said judgment, wherein it has been observed that if
the accused is willing to pay in accordance with the guidelines, the Court may
suggest to the parties to go for compounding. It is urged that the refusal of
respondent No.2 ought not to have been treated as conclusive and that the
learned appellate Court ought to have considered the offer of the petitioners in
the spirit and object of the modified framework laid down by the Hon’ble
Supreme Court. With these broad submissions, it is urged that the impugned
order is liable to be quashed and the offence deserves to be compounded, or
the matter be remitted to the learned appellate Court for fresh consideration.
8. On the other hand, learned counsel for respondent No.2 has
argued that there is no illegality or infirmity in the impugned order. It is argued
that respondent No.2 has categorically declined to compound the offence and
that the petitioners cannot claim compounding as a matter of right merely by
expressing their willingness to pay the cheque amount. It is further argued that
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the petitioners have throughout adopted delaying tactics and have filed
numerous applications and proceedings, thereby causing harassment to
respondent No.2. Reference has been made to the reply filed before the learned
appellate Court wherein the conduct of the petitioners and their failure to
comply with earlier directions regarding deposit of 20% of the cheque amount
have also been pointed out. It is further argued that the judgment in Sanjabij
Tari’s case (supra) does not dispense with the requirement of consent of the
complainant. Learned counsel submits that the judgment itself uses the
expression that the Court “may suggest” the parties to go for compounding and
does not confer an absolute right upon the accused to have the offence
compounded unilaterally. Hence, it is urged that the present petition deserves
to be dismissed.
9. This Court has heard the rival submissions of learned counsel for
the parties.
10. The principal issue which arises for determination before this
Court is whether an offence under Section 138 of the N.I. Act can be permitted
to be compounded at the instance of the accused in the absence of consent of
the complainant merely because the accused is ready and willing to pay the
cheque amount along with the prescribed costs? The aforesaid issue is no
longer res integra . The said issue stands conclusively settled by the Hon’ble
Supreme Court in A.S. Pharma Pvt. Ltd. v. Nayati Medical Pvt. Ltd. and
others, 2024 SCC Online SC 2539, wherein it has been held that compounding
of an offence under Section 138 of the N.I. Act, though permissible at any
stage in view of Section 147 of the N. I. Act, however, the same cannot be
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permitted to be done without the consent of the complainant, even if he has
been duly compensated. It was held that the consent of the complainant is a
sine qua non for such compounding and the attempt made by the accused to
seek compounding on the basis of his unilateral willingness to pay the cheque
amount, even with additional compensation, cannot be countenanced in law.
The Hon’ble Supreme Court, while considering similar contentions, has
categorically held that equitable compensation or readiness to pay does not
dispense with the requirement of consent of the complainant. Reliance can also
be placed upon the judgments in JIK Industries Ltd. v. Amarlal V. Jumani ,
(2012) 3 SCC 255 and K.M. Ibrahim v. K.P. Mohammed, (2010) 1 SCC 798 ,
wherein it has been consistently held by the Hon’ble Supreme Court that
compounding is fundamentally premised on mutual agreement between the
parties and cannot be imposed by the Court. Similar view has been taken by
this Court in M/s Nidhi Knitwears (P) Ltd. and another v. Honey Hosiery
Mills, 2022(3) RCR (Criminal) 304 and Surinder Kumar Bindal and another
v. Satinder Nath Radhey Shyam and sons, CRM-M-22823-2024, decided on
18.05.2024 .
11. It is also significant to note that the scope of inherent powers
under Section 528 of BNSS (which corresponds to Section 482 of Cr.P.C.)
cannot be expanded to override an express statutory requirement. The Hon’ble
Supreme Court in State of Haryana v. Bhajan Lal, AIR 1992 SC 604 has held
that inherent powers are to be exercised sparingly and only to prevent abuse of
process or to secure ends of justice and not in contravention of specific
statutory provisions. In the present case, permitting compounding in the
absence of consent would amount to doing precisely what is impermissible,
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i.e., bypassing the statutory mandate embedded in Section 147 of the N.I. Act.
This Court further finds that the distinction between “quashing” and
“compounding” has been clearly delineated by the Hon’ble Supreme Court in
JIK Industries’ s case (supra), wherein it has been held that quashing of a case
is different from compounding as in quashing, the Court applies it but in
compounding, it is primarily based on consent of the injured party. Therefore,
the two cannot be equated.
12. Learned counsel for the petitioners has placed considerable
reliance upon Sanjabij Tari’s case (supra) . There is no dispute with regard to
the proposition that the Hon’ble Supreme Court has modified the guidelines
relating to compounding in proceedings under Section 138 of the N.I. Act and
has prescribed different costs depending upon the stage at which the cheque
amount is paid. Paragraph 38(c) of the said judgment deals with a situation
where payment of the cheque amount is made before the Sessions Court or a
High Court in revision or appeal and provides for compounding subject to
payment of 7.5% of the cheque amount by way of costs. However, the said
guidelines cannot be read in isolation so as to confer an absolute right upon the
accused to have the offence compounded without the consent of the
complainant. Paragraph 39 of Sanjabij Tari’s case (supra) itself states that
where the accused is willing to pay in accordance with the guidelines, the
Court “may suggest” the parties to go for compounding. The expression used
by the Hon’ble Supreme Court does not amount to a direction that an unwilling
complainant must be compelled to compound the offence. The distinction
between “quashing” and “compounding” is also material. In JIK Industries
Ltd. (supra) , the Hon’ble Supreme Court has clearly delineated the distinction
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between the two. Quashing and compounding operate in different fields. While
the inherent jurisdiction of the High Court can, in appropriate cases, be
exercised to secure the ends of justice or prevent abuse of process,
compounding is essentially founded upon the consent of the person who is the
victim/injured party. Therefore, the two concepts cannot be equated.
13. In the present case, it is an admitted position that respondent No.2
has expressly declined to compound the offence. His refusal is clear and
unequivocal. The fact that the petitioners are willing to pay the entire cheque
amount of Rs.4,00,000/- along with 7.5% costs may have relevance while
considering an application for compounding where the complainant is
agreeable to the settlement, but such willingness by itself cannot substitute the
consent of respondent No.2. The present petition, therefore, essentially seeks
to convert the petitioners’ willingness to make payment into a right to have the
offence compounded. Such a course is not permissible in law. Payment of the
cheque amount, even along with the costs prescribed by the Hon’ble Supreme
Court, may facilitate a consensual settlement, but it cannot compel the
complainant to consent to compounding. The learned appellate Court has
correctly appreciated this aspect and has rightly declined the application for
compounding on account of the specific refusal of respondent No.2.
14. In view of the aforesaid discussion and the authoritative
pronouncements of the Hon’ble Supreme Court, this Court finds no illegality,
infirmity or perversity in the impugned order dated 16.05.2026 passed by the
learned appellate Court. The refusal of respondent No.2 to compound the
offence could not have been overridden by the learned appellate Court merely
because the petitioners expressed their willingness to pay the cheque amount
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CRM-M-48959-2026 (O&M) -9-



along with the prescribed costs. Accordingly, this Court finds no merit in the
present petition. The same is, therefore, dismissed.
15. It is, however, clarified that dismissal of the present petition shall
not prejudice the rights of the petitioners in the pending statutory appeal,
which shall be decided by the learned appellate Court on its own merits and in

accordance with law.

14.09.2026 (MANISHA BATRA)
Waseem Waseem R. Waseem Waseem R. R. Ansari R. Ansari Ansari Ansari
JUDGE


Whether speaking/reasoned Yes/No

Whether reportable Yes/No
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