Gujarat HC Quashes Cheque-Bounce Conviction After Complainant Receives Settlement, Orders Accused To Pay 7.5% Of Cheque Amount As Costs

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, by the 3rd Additional Chief Judicial Magistrate, Palanpur, in Criminal Case No. 6544 of 2024, by judgment dated 9 July 2026.

He petitioned under Articles 226 and 227 of the Constitution and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking quashing following an amicable settlement.

The complainant confirmed receipt of the settlement amount.

The Court exercised its jurisdiction under Section 528 of the BNSS, alongside Articles 226 and 227 of the Constitution, to quash criminal proceedings where settlement makes their continuation an abuse of process and quashing is required to secure the ends of justice.

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. Bhajanlal concerning quashing of criminal proceedings in appropriate cases.

It also referred to Sanjabij Tari v. Kishore S. Borcar, which provides for costs of 7.5% of the cheque amount when payment is made before a High Court in revision or appeal.

The complainant confirmed that the dispute had been amicably settled and the settlement amount received.

The Court concluded that, in these circumstances, continuing the criminal proceedings would cause unnecessary harassment, make the trial a futile exercise and amount to an abuse of process.

Applying the principles it cited and the Sanjabij Tari guidelines, the Court allowed the petition but required the petitioner to deposit 7.5% of the cheque amount with the Gujarat High Court Legal Aid Services Authority.

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

He was directed to deposit 7.5% of the cheque amount within two weeks; failure to do so would result in recovery as a fine and as arrears of land revenue.