Gujarat HC Quashes Section 138 Conviction After Settlement, Directs Accused To Pay 7.5% Costs

The petitioner was convicted under Section 138 of the Negotiable Instruments Act by the Principal Senior Civil Judge and Additional Judicial Magistrate First Class, Godhra, on 9 October 2023.

His conviction was subsequently before the Additional Sessions Judge, Godhra, in Criminal Appeal No. 103 of 2023.

The petitioner applied under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to quash the conviction and related proceedings.

The parties informed the Court that they had settled the dispute; the complainant appeared, gave no objection to quashing, and filed an affidavit in support.

Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, empowers the High Court to make orders necessary to secure the ends of justice and prevent abuse of the process of law.

The Court relied on Gian Singh v. State of Punjab, Madan Mohan Abbot v. State of Punjab, Nikhil Merchant v. Central Bureau of Investigation, Manoj Sharma v. State, Narinder Singh v. State of Punjab, and State of Haryana v. Bhajan Lal in considering quashing on the basis of settlement.

It also referred to Sanjabij Tari v. Kishore S. Borcar, which set out revised costs for compounding cheque-dishonour cases at different stages; where payment is made before a Sessions Court or High Court in appeal or revision, the stated cost is 7.5% of the cheque amount.

The Court accepted the parties’ submission that the dispute had been resolved and noted the complainant’s personal appearance, no-objection, and supporting affidavit.

In light of the settlement, it considered further criminal proceedings an unnecessary harassment and a futile exercise that would amount to an abuse of process, and found quashing necessary to secure the ends of justice under Section 528.

Because the matter had reached the High Court after conviction and appeal, the Court applied the 7.5% cost guideline referred to in Sanjabij Tari.

The trial court’s judgment and order dated 9 October 2023 and the appellate court’s judgment and order dated 21 January 2026 were quashed; the petitioner was to be released forthwith unless required in another case.

The petitioner was directed to deposit Rs. 77,475, representing 7.5% of the cheque amount, with the DLSA, Godhra, within two weeks.

Any remaining amount deposited before the trial or Sessions Court was to be disbursed to him.

Failure to pay the directed amount would result in recovery as a fine, including recovery as arrears of land revenue.