Criminal proceedings must be quashed once parties reach a mediated settlement and establish default implementation mechanisms.

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

The Respondent paid a total of Rs. 2 Crores, but the Petitioner allegedly failed to hand over possession or refund the money, leading the Respondent to file a complaint under Section 156(3) Cr.P.C.

The Metropolitan Magistrate directed the registration of an FIR on 27.11.2021, which was upheld by the Additional Sessions Judge (ASJ) on 07.12.2021

While the quashing petition was pending, the parties entered into a Mediated Settlement on 17.05.2022, where the Petitioner agreed to pay Rs. 2.80 Crores in installments

Despite several undertakings and partial payments, a balance (primarily interest) remained unpaid, leading the Respondent to file contempt petitions

Whether criminal proceedings and an order for registration of FIR should be quashed once parties have entered into a voluntary mediated settlement

Whether the breach of undertakings regarding payments under a court-recorded settlement constitutes "wilful disobedience" under the Contempt of Courts Act, 1971

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

It relied on the Division Bench judgment in Dayawanti v. Yogesh Kumar Gosain (2017), establishing that mediated settlements in criminal compoundable cases are binding and enforceable through execution (Sec 431/421 Cr.P.C.) or contempt proceedings

Regarding contempt, the court applied Section 2(b) of the Contempt of Courts Act, 1971, noting that disobedience must be "wilful and deliberate" as held in Kanwar Singh Saini v. High Court of Delhi (2012) and Viterra B.V. vs. Sharp Corp Limited (2024)

The Court observed that the parties voluntarily settled their dispute via mediation and reaffirmed the terms in court

Since the settlement agreement provided its own mechanism for defaults (12% interest) and the Petitioner had already paid the principal amount, the Court reasoned that continuing criminal proceedings would constitute an abuse of process

However, regarding the contempt petitions, the Court found that the Petitioner had given multiple undertakings to the Court which were breached.

While some payments were made, they appeared timed only to coincide with court hearings to avoid sanctions

The court determined that such conduct, specifically the long intervals between payments (e.g., March 2023 to March 2025), was contemptuous in nature and required a formal explanation

Regarding the contempt petitions (CONT.CAS(C) 809/2024 & 696/2025), the Court held the Petitioner’s conduct to be contemptuous and issued a Show Cause Notice

The Petitioner was directed 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 were listed for further hearing on 30.04.2026