Criminal proceedings must be quashed once parties reach a mediated settlement and commence performance of payment obligations.

The Petitioner (Accused) entered into an Agreement to Sell with Respondent No. 2 (Complainant) on 20.06.2019 for a property in Noida for Rs. 7.85 Crores.

Respondent No. 2 paid Rs. 2 Crores, but the Petitioner allegedly failed to hand over possession or refund the money, leading to the property being auctioned by a bank due to an existing mortgage.

A Metropolitan Magistrate (MM) directed the registration of an FIR under Section 156(3) Cr.P.C., which was upheld by the Additional Sessions Judge (ASJ).

During the pendency of the quashing petition before the High Court, the parties entered into a Mediated Settlement on 17.05.2022, where the Petitioner agreed to pay Rs. 2.80 Crores in installments.

While the principal amount was largely paid, disputes remained regarding interest components, leading to two contempt petitions for breach of undertakings.

1. Whether criminal proceedings/FIR directions should be quashed following a voluntary mediated settlement between the parties where the implementation mechanism is provided within the agreement.

2. Whether the breach of undertakings given to the Court regarding payment schedules constitutes "wilful disobedience" under Section 2(b) of the Contempt of Courts Act, 1971.

The court applied the principle from Gimpex Private Limited v. Manoj Goel (2022), stating that once a compromise is reached, the original complaint should be quashed and parties must seek remedies under the settlement.

It followed Dayawanti v. Yogesh Kumar Gosain (2017), which holds that mediated settlements in criminal compoundable cases are binding and enforceable through execution (Sec. 421/431 Cr.P.C.) or contempt proceedings.

Regarding contempt, the court relied on Kanwar Singh Saini v. High Court of Delhi (2012) and Debabrata Bandhopadhyaya v. State of W.B. (1969), establishing that contempt requires "wilful and deliberate" defiance, not just inability to pay, and demands a standard of proof akin to criminal cases.

The Court observed that the parties voluntarily entered a settlement and incorporated interest penalties for defaults, signifying an internal mechanism for breach.

Since the Petitioner showed an intent to honor the agreement by paying the principal amount (leaving primarily interest unpaid), the Court determined that continuing the criminal FIR proceedings would constitute an abuse of process.

However, regarding the contempt petitions, the Court found the Petitioner’s conduct—making payments only when the matter was listed in court and breaching multiple specific undertakings given to the bench—to be "contemptuous".

The court noted a pattern of delays that suggested more than mere financial constraint, necessitating a formal show-cause notice.

Regarding the Contempt Petitions, the Court held the Petitioner’s conduct to be prima facie contemptuous and issued a Show Cause Notice directing him to pay the balance amount within six weeks or explain why he should not be punished under the Contempt of Courts Act.

The contempt matters are listed for further hearing on 30.04.2026.