Gujarat HC Quashes Cheque-Bounce Conviction After Settlement, Orders Accused To Pay ₹1.24 Lakh To Legal Aid

In brief

The question

Whether the High Court could exercise its inherent jurisdiction under Section 528 of the BNSS to quash the conviction and related proceedings under Section 138 of the NI Act following the parties’ settlement.

The court held

The Court allowed the application and quashed the trial court’s judgment dated 9 October 2023 and the appellate judgment dated 21 January 2026.

It also directed

It directed the petitioner to deposit ₹1,24,125—stated to be 7.5% of the cheque amount—with the Gujarat High Court Legal Aid Services Authority within two weeks. If unpaid, the amount is recoverable as a fine, including as arrears of land revenue.

The petitioner was ordered to be released forthwith if not required in another case, and the Rule was made absolute.

01Facts

The petitioner was convicted under Section 138 of the Negotiable Instruments Act, 1881, by the Additional Judicial Magistrate First Class, Godhra, in Criminal Case No. 527 of 2021.

p. 1

The conviction was challenged in Criminal Appeal No. 102 of 2023, and the appellate judgment was delivered on 21 January 2026. The petitioner then applied under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to quash the judgments.

p. 1

The parties had settled their dispute; the complainant appeared before the Court, was identified by counsel, filed an affidavit supporting the application, and stated that there was no objection to quashing the conviction.

pp. 1–2 · ¶ 2–3

02Issues

i.Whether the High Court could exercise its inherent jurisdiction under Section 528 of the BNSS to quash the conviction and related proceedings under Section 138 of the NI Act following the parties’ settlement.

pp. 2–3 · ¶ 3–4

ii.Whether the quashing should be conditioned on payment of costs under the guidelines stated in Sanjabij Tari v. Kishore S. Borcar & Anr.

pp. 3–4 · ¶ 5, 7

03Law Applied

Section 528 of the BNSS preserves the High Court’s inherent power to make orders necessary to secure the ends of justice or prevent abuse of the process of a court; Section 138 of the NI Act criminalises dishonour of a cheque, while its offence may be compounded in accordance with law.

p. 2 · ¶ 4

In considering quashing following settlement, 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 and Narinder Singh v. State of Punjab, as well as the abuse-of-process principles in State of Haryana v. Bhajan Lal.

p. 2 · ¶ 4

It also applied the modified compounding-cost guidelines stated in Sanjabij Tari v. Kishore S. Borcar & Anr.: where payment is made before a Sessions Court or a High Court exercising revisional or appellate jurisdiction, the court may allow compounding on payment of 7.5% of the cheque amount as costs; where payment is tendered before the Supreme Court, the stated figure is 10%.

pp. 3–4 · ¶ 5

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 complainant’s appearance, supporting affidavit and express lack of objection established that the dispute had been amicably resolved.

p. 2 · ¶ 3

In light of the settlement and the authorities on quashing criminal proceedings, the Court considered continuation of the proceedings unnecessary, likely to cause harassment and an abuse of process.

p. 2 · ¶ 4

It therefore allowed the application, while directing payment of 7.5% of the cheque amount, applying the cost guideline it had reproduced from Sanjabij Tari.

pp. 3–4 · ¶ 5–7