Gujarat HC Quashes Cheque-Bounce Conviction After Complainant Confirms Settlement, Orders 7.5% Cheque-Amount Deposit To Legal Aid

In brief

The question

1. Whether the High Court should set aside the petitioner’s Section 138 conviction following the parties’ amicable settlement and the complainant’s confirmation that the settlement amount had been received.

The court held

The petition was allowed, and the judgment and order dated 13 April 2026 in Criminal Case No. 212 of 2025 were quashed; the Court also directed the petitioner’s release, if not required in another case.

It also directed

The petitioner was ordered to deposit 7.5% of the cheque amount with the Gujarat High Court Legal Aid Services Authority within two weeks. If unpaid, the amount was to be recovered as a fine and as arrears of land revenue.

Rule was made absolute.

01Facts

The petitioner was convicted under Section 138 of the Negotiable Instruments Act by the Additional Chief Judicial Magistrate, Bayad, in Criminal Case No. 212 of 2025, by judgment dated 13 April 2026.

¶ 2–5

He petitioned under Articles 226 and 227 of the Constitution, Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, and Section 147 of the Negotiable Instruments Act, seeking to set aside the conviction.

¶ 2–5

The parties reported an amicable settlement; the complainant appeared in person and confirmed receipt of the settlement amount.

¶ 2–5

The judgment also refers to quashing the FIR and consequential proceedings, although the stated procedural history concerns a Section 138 complaint.

¶ 6, 8

02Issues

i.1. Whether the High Court should set aside the petitioner’s Section 138 conviction following the parties’ amicable settlement and the complainant’s confirmation that the settlement amount had been received.

¶ 3, 5–8

ii.2. Whether the petitioner should be required to pay costs for compounding the offence at the High Court stage.

¶ 7, 9

03Law Applied

Section 147 of the Negotiable Instruments Act permits compounding of offences under that Act, while Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 provides the High Court’s inherent power to make orders necessary to secure the ends of justice.

¶ 2, 6

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.

¶ 6

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

¶ 7

Provisions in the judgment · 3 · Linked ones open on LawLens

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528

Negotiable Instruments Act, 1881 Section 147 Section 138

04Reasoning

The Court accepted the parties’ submissions that the dispute had been settled and relied on the complainant’s confirmation that he had received the settlement amount.

¶ 3, 5

In light of the settlement and the authorities cited, it considered continued criminal proceedings an unnecessary harassment and a futile exercise amounting to an abuse of process.

¶ 6

Applying the Sanjabij Tari guideline for settlement at the High Court stage, it directed the petitioner to deposit 7.5% of the cheque amount with the Gujarat High Court Legal Aid Services Authority.

¶ 7, 9