NI Act conviction quashed at revision stage following settlement subject to payment of mandated costs.

The applicant was convicted by the 3rd Additional Chief Judicial Magistrate, Banaskantha at Palanpur, in Criminal Case No. 5375 of 2012 on July 7, 2015, for an offence under the Negotiable Instruments Act.

This conviction was subsequently upheld by the 6th Additional Sessions Judge, Banaskantha at Palanpur, in Criminal Appeal No. 41 of 2015 on March 17, 2016.

The applicant preferred the present revision application under Sections 397 and 401 of the Code of Criminal Procedure (CrPC).

During the pendency of this revision, the parties amicably resolved the dispute.

While the original cheque amount was Rs. 2,30,000/-, the settlement was reached for a sum of Rs. 1,50,000/-.

The complainant (Respondent No. 2) filed an affidavit confirming the settlement and stating he had no objection to the quashing of the conviction.

1. Whether the judgments of conviction and sentence passed by the lower courts should be quashed in light of a post-conviction settlement between the parties.

2. Whether the accused is liable to pay costs for settling the dispute at a belated stage during revisionary proceedings.

The court exercised its revisionary powers under Sections 397 and 401 of the CrPC to ensure the ends of justice in a compoundable-style offence.

It applied the principle that if a dispute is amicably resolved, continuing criminal proceedings for a commercial transaction serves no fruitful purpose.

Crucially, the court relied on the precedent set by the Hon’ble Supreme Court in Sanjabij Tari vs. Kishore S Boarcar Anr. (2025 INSC 1158), which mandates that an accused settling a matter at a belated stage must deposit a specific percentage of the settled amount as costs.

The court noted that the parties had voluntarily entered into a settlement and the complainant had explicitly withdrawn his grievance through a personal appearance and a formal affidavit.

Consequently, the court reasoned that the litigation had reached a natural conclusion and further proceedings would be redundant.

However, the court addressed the timing of the settlement; because the applicant waited until the revision stage to resolve the matter, the court applied the Supreme Court's guidelines regarding "belated settlements".

The court calculated that 7.5% of the settled amount (Rs. 1,50,000/-) amounted to Rs. 11,250/-, which the applicant was required to pay as a penalty for the delay in resolution.

The applicant was directed to deposit Rs. 11,250/- as costs with the Gujarat State Legal Services Authority within one week.

The court ordered the applicant’s immediate release from custody, if not required for other matters, and directed the Registry to transfer any deposited amounts directly to the complainant’s bank account.