After Complainant Receives Full Payment, Gujarat HC Quashes Cheque-Bounce Conviction, Orders 7.5% Compounding Costs

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, by the Additional Chief Judicial Magistrate, Bayad, in Criminal Case No. 313 of 2024.

On 2 May 2026, he was sentenced to one year’s simple imprisonment and ordered to pay Rs. 2,00,000 as compensation to the complainant.

After the judgment, the parties settled the dispute; the complainant confirmed that he had received the entire amount, consented to compounding, and stated that the settlement was voluntary and without coercion.

The petitioner sought compounding and the setting aside of the conviction and consequential proceedings.

Section 147 of the Negotiable Instruments Act makes offences under the Act compoundable.

Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 preserves the High Court’s inherent powers to make orders necessary to secure the ends of justice or prevent abuse of process.

The Court relied on Gian Singh v. State of Punjab, Madan Mohan Abbot v. State of Punjab, Nikhil Merchant v. CBI, Manoj Sharma v. State, Narinder Singh v. State of Punjab and State of Haryana v. Bhajan Lal in considering quashing following settlement.

It also applied the compounding-cost guidelines stated in Sanjabij Tari v. Kishore S. Borcar, under which compounding before a High Court in revision or appeal may be permitted on payment of costs equal to 7.5% of the cheque amount.

The Court accepted the complainant’s confirmation that the settlement was voluntary and that the full amount had been received, and noted his consent to compounding and to the setting aside of the conviction.

In light of the settlement, it considered further proceedings unnecessary and a futile exercise that would amount to an abuse of process; it therefore found quashing appropriate to secure the ends of justice.

Applying the Sanjabij Tari guideline for compounding before a High Court, the Court required the petitioner to pay costs of 7.5% of the cheque amount.

The judgment and order dated 2 May 2026, and all consequential proceedings against the petitioner, were quashed and set aside; the petitioner was to be released forthwith unless required in another case.

The petitioner was directed to deposit 7.5% of the cheque amount with the Gujarat High Court Legal Aid Services Authority within two weeks of receiving the order. If he failed to do so, the amount would be recovered as a fine and as arrears of land revenue.