After Complainant Receives Settlement, Gujarat HC Quashes Cheque-Bounce Conviction And Directs Accused To Pay 7.5% Of Cheque Amount To Legal Aid

In brief

The question

Whether the High Court should quash the petitioner’s conviction under Section 138 of the Negotiable Instruments Act in light of the parties’ amicable settlement and the complainant’s confirmation of payment.

The court held

The application was allowed, and the Magistrate’s judgment and order dated 13 February 2026 in Criminal Case No. 194521 of 2024 was quashed.

It also directed

The petitioner was directed to deposit 7.5% of the cheque amount with the Gujarat High Court Legal Aid Services Authority within four weeks; if unpaid, the amount was recoverable as a fine and as arrears of land revenue.

The petitioner was also ordered to be released forthwith if not required in another case.

01Facts

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, by the 7th Additional Chief Judicial Magistrate, Ahmedabad, in Criminal Case No. 194521 of 2024, by judgment dated 13 February 2026.

¶ 3-4

He sought to have that judgment set aside under Articles 226 of the Constitution and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, asserting that the dispute had been amicably settled.

¶ 3-4

The complainant confirmed the settlement and receipt of the settlement amount, and an affidavit to that effect was placed on record.

¶ 7

02Issues

i.Whether the High Court should quash the petitioner’s conviction under Section 138 of the Negotiable Instruments Act in light of the parties’ amicable settlement and the complainant’s confirmation of payment.

¶ 3-4, 7-8

ii.Whether the petitioner should be required to pay costs in accordance with the compounding guidelines considered by the Court.

¶ 9-11

03Law Applied

The Court invoked Articles 226 of the Constitution and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to quash proceedings where doing so would secure the ends of justice and prevent abuse of process.

¶ 3, 8

It 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 the effect of settlement on criminal proceedings.

¶ 5, 8

It also applied the revised compounding guidelines stated in Sanjabij Tari v. Kishore S. Borcar, under which payment made before a High Court in revision or appeal may attract costs of 7.5% of the cheque amount.

¶ 9

Provisions in the judgment · 2 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Negotiable Instruments Act, 1881 Section 138

04Reasoning

The Court accepted that the complainant had received the settlement amount and that the parties had resolved their dispute.

¶ 7-8

Considering the cited settlement authorities, it concluded that continuing the criminal proceedings would be unnecessary, would make the trial a futile exercise and would amount to an abuse of process; quashing was therefore appropriate to secure the ends of justice.

¶ 8

The Court also directed payment of 7.5% of the cheque amount to the Gujarat High Court Legal Aid Services Authority, consistent with the guideline it had cited for payment before a High Court.

¶ 9, 11