Recently, while dealing with a Criminal Revision Petition filed by an accused in a cheque bounce case, the Punjab and Haryana High Court expounded that the discretion to waive the imposition of costs upon compounding a cheque bounce case at a later stage is not to be invoked as a matter of ordinary course.
Brief Facts:
The Petitioner/Accused was convicted by Judicial Magistrate 1st Class under Section 138 of the Negotiable Instruments Act, 1881. The appeal filed by the Petitioner against the conviction was dismissed by the Sessions Judge. Thereafter, the Petitioner filed a Criminal Revision Petition before the High Court, seeking the setting aside of the order passed by the Sessions Court.
Petitioner’s case:
The Petitioner submitted that during the pendency of the proceedings, the Petitioner has paid the full amount to the Complainant, and the matter has now been amicably settled.
It was further submitted that an application seeking permission to compound the offence and to set aside the impugned judgement and order passed by the Judicial Magistrate and the Sessions Judge.
The Respondent confirmed that the entire amount has been received and has no objection, in case the offence is permitted to be compounded.
High Court’s Observations:
The High Court referred to the Supreme Court Judgement in the case titled Sanjabij Tari v. Kishore S. Borcar and another (2025), in which the top court had laid down new guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence. The following Guidelines were laid down:
“(a) If the accused pays the cheque amount before recording of his evidence (namely defence evidence), then the Trial Court may allow compounding of the offence without imposing any cost or penalty on the accused.
(b) If the accused makes the payment of the cheque amount post the recording of his evidence but prior to the pronouncement of judgment by the Trial Court, the Magistrate may allow compounding of the offence on payment of additional 5% of the cheque amount with the Legal Services Authority or such other Authority as the Court deems fit.
(c) Similarly, if the payment of cheque amount is made before the Sessions Court or a High Court in Revision or Appeal, such Court may compound the offence on the condition that the accused pays 7.5% of the cheque amount by way of costs.
(d) Finally, if the cheque amount is tendered before this Court, the figure would increase to 10% of the cheque amount.”
Earlier, in Damodar S. Prabhu v. Sayed Babalal H., the Supreme Court had expounded that any cost imposed in accordance of compounding guidelines shall be deposited with the Legal Services Authority.
The High Court noted that Section 147 of the NI Act does not carry any guidance on how to proceed with compounding of offences under the Act, and Section 320 of the CrPC cannot be followed in a strict sense. Hence, these Guidelines fill the legal vacuum. However, the HC observed that, “Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent Court can, of course, reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance. Bona fide litigants should, of course, contest the proceedings to their logical end.”
The High Court further observed that, “It is, however, imperative to bear in mind that discretion to waive the imposition of costs is not to be invoked as a matter of ordinary course. The exercise of such discretion must be predicated upon exceptional, compelling and accentuating circumstances which, in the considered opinion of the concerned Court seized of the matter, warrant deviation from the general rule of imposition of cost. The Court, while invoking such discretion, must record clear, cogent and reasoned findings delineating the special factors that justify the waiver. This requirement is in consonance with the legislative intent and the underlying purpose sought to be achieved by the criminalization of the act of dishonor of cheque, i.e. to inculcate financial discipline and uphold the credibility and sanctity of negotiable instruments.”
Coming to the facts of the case, the HC noted that the Complainant had received full and final payment from the Petitioner and both parties have sought to resolve their dispute in toto. Thus, the HC held that the offences ought to be compounded, and the petitioner deserves to be acquitted.
In view of the fact that the Petitioner has faced the wrath of criminal litigation since 2011, the High Court did not deem it appropriate to saddle the Petitioner with costs.
Case Title: V.K. Singh and another v. Shree Nath Enterprises
Case Details: CRR 179 of 2018
Bench: Justice Sumeet Goel
Judgement Date: April 21, 2026
