Non-compoundable financial offences arising from private business disputes may be quashed upon full settlement.

FIR No. 292/2025 was registered at Police Station Preet Vihar under Section 316(4) of the Bharatiya Nyaya Sanhita, 2023, alleging that petitioner no. 1, an accountant, diverted funds from a private business concern through accounting entries and related transfers, and that petitioners nos. 2–4 received or handled the funds.

The petitioners sought quashing under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, relying on a compromise deed dated 6 September 2026; the alleged diverted amount had been restored under the deed.

Whether the High Court should exercise its inherent jurisdiction under Section 528 BNSS to quash the FIR and consequential proceedings on the basis of the parties’ compromise.

Whether the petitioners’ frozen bank accounts should be de-frozen following the quashing of the FIR.

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 any court; the judgment treats it as pari materia with Section 482 of the Code of Criminal Procedure, 1973.

Under Gian Singh v. State of Punjab, (2012) 10 SCC 303, quashing on the basis of settlement is distinct from statutory compounding and may be appropriate for non-compoundable offences that predominantly bear a civil, commercial, or financial character, where the dispute is private, the parties have settled, and the nature and gravity of the offence and the interests of justice support quashing. Serious offences affecting society, and offences under special statutes or committed by public servants in that capacity, ordinarily cannot be quashed merely because of a settlement.

The Court found that the FIR concerned loss to a private business concern and that no public money was involved.

It also noted that the compromise deed addressed the alleged diversion and that the relevant amount had been restored.

Applying the principles in Gian Singh, the Court considered the dispute sufficiently private and financial in character to allow the parties’ joint request to quash the proceedings.

It further directed that any bank accounts of the petitioners that had been frozen be de-frozen; the pending application was also disposed of.