Gujarat High Court
Vipulbhai (Lalabhai) Manekbhai Patel vs State Of Gujarat on 28 April, 2026
NEUTRAL CITATION
R/CR.MA/3937/2026 ORDER DATED: 28/04/2026
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR QUASHING & SET ASIDE
FIR/ORDER) NO. 3937 of 2026
With
CRIMINAL MISC.APPLICATION (FOR STAY) NO. 1 of 2026
In R/CRIMINAL MISC.APPLICATION NO. 3937 of 2026
========================================================
VIPULBHAI (LALABHAI) MANEKBHAI PATEL
Versus
STATE OF GUJARAT & ANR.
========================================================
Appearance:
MR NK MAJMUDAR(430) for the Applicant(s) No. 1
MR. ROHAN N MAJMUDAR(14000) for the Applicant(s) No. 1
HARSHRAJSINH S VAGHELA(8752) for the Respondent(s) No. 2
MR ADITYA JADEJA, APP for the Respondent(s) No. 1
========================================================
CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 28/04/2026
ORAL ORDER
1. Leave to amend is granted. To be carried out accordingly.
2. Rule. Learned APP Mr. Aditya Jadeja and learned advocate Mr. Harshrajsinh S. Vaghela waive service of notice of rule for the respective respondents.
3. By way of this application, the applicant has prayed for quashing of the complaint proceedings / conviction order dated 15.11.2025 passed by learned 2nd Additional Chief Judicial Page 1 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined Magistrate, Nadiad (District. Kheda) in Criminal Case No. 3452 of 2024 under Section 138 of the Negotiable Instruments Act, 1881, (hereinafter referred to as 'the N.I.Act) on the ground that during pendency of the proceedings, the parties have amicably settled their dispute and the entire cheque amount along with agreed settlement amount has been paid by the applicant to the respondent.
4. Heard learned advocate Mr.Rohan Majmudar for the applicant, learned APP Mr. Aditya Jadeja for the respondent no.1 - State and learned advocate Mr. Harshrajsinh S. Vaghela for the respondent no.2 - original complainant.
5. Learned advocate Mr. Rohan Majmudar for the applicant submits that the dispute between the parties has been amicably settled between the parties and the respondent no.2 - original complainant has received the entire settlement amount and does not wish to prosecute the matter further. The compromise has been entered into voluntarily, without any coercion, undue influence or pressure and, therefore, the respondent no.2 has no objection if the impugned judgment and Page 2 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined order of conviction as well as all other consequential proceedings arising pursuant thereto are quashed against the applicant - accused.
6. Learned advocate Mr. Harshrajsinh S. Vaghela for the respondent no.2 - original complainant submits that the respondent no.2 - original complainant is present before this Court and has produced a copy of affidavit of the respondent no.2 - original complainant, which is taken on record.
7. Learned APP Mr. Aditya Jadeja for the respondent no.1 - State submits that the impugned judgment and order of sentence is just and proper; however, considering the fact that the dispute between the parties is amicably settled, necessary order may be passed.
8. The respondent no.2 - original complainant is present in person before this Court, and on inquiry, submits that the dispute between them has been settled amicably and the entire settlement amount has been received and he does not wish to prosecute the matter further. He admits to the contents of Page 3 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined the affidavit and submits that the compromise has been entered into his own free will without any fear, threat and coercion.
9. The affidavit filed by the respondent no. 2 - original complainant reads as under:
"I, Sandipsinh Chudasama, son of Vijaysinh Chudasama, aged about 62 years, Hindu, Indian Inhabitant, residing at Khambhat, District: Anand, Gujarat, do hereby state on solemnly affirm that:
1. I am the sole proprietor of M/s. GM Patel & Sons who is original complainant in Criminal Case No. 3452 of 2024 which was filed before the Hon'ble Trial Court, Nadiad under Section 138 of the Negotiable Instruments Act, 1881.
2. The said Criminal Case No. 3452 of 2024 was to be allowed by the Hon'ble Trial Court vide order dated 15.11.2025 read with 17.11.2025, in which, warrant has been issued by the Hon'ble Trial Court, which is impugned in the present petition.
3. During the pendency of the present petition, the parties have arrived at settlement whereby petitioner has, through its relative, has paid an amount of Rs.2,50,000/- (Rupees Two Lakhs Fifty Thousand only) today as full and final settlement in respect of present proceedings, which amount is received by the respondent No. 2.
4. In view thereof, entire dispute is settled between the parties and there are no other pending dues from the petitioner and said amount of settlement is full and final payment so the respondent no.2 has no objection if the order of conviction dated Page 4 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined 15.11.2025 read with order dated 17.11.2025 passed in Criminal Case No. 3452 of 2024 passed by the Hon'ble Trial Court, Nadiad, is quashed and set aside."
10. So far as Section 482 of the Cr.P.C. is concerned, the Apex Court in the case of Parbatbhai Aahir Alias Parbatbhai Bhimsinhbhai Karmur Vs. State of Gujarat reported in AIR 2017 SC 4843, has observed in Para-15 as under:
"15. The broad principles which emerge from the precedents on the subject, may be summarised in the following propositions:
(i) Section 482 preserves the inherent powers of the High Court to prevent an abuse of the process of any court or to secure the ends of justice. The provision does not confer new powers. It only recognizes and preserves powers which inherent the High Court;
(ii) The invocation of the jurisdiction of the High Court to quash a First Information Report or a criminal proceeding on the ground that a settlement has been arrived at between the offender and the victim is not the same as the invocation of jurisdiction for the purpose of compounding an offence. While compounding an offence, the power of the court is governed by the provisions of Section 320 of the Code of Criminal Procedure, 1973. The power to quash under Section 482 is attracted even if the offence is non-
compoundable.
(iii) In forming an opinion whether a criminal proceeding or complaint should be quashed in exercise of its jurisdiction under Section 482, the High Court must evaluate whether the ends of justice would justify the exercise of the inherent power,
(iv) While the inherent power of the High Court has a wide ambit and plenitude it has to be exercised; (i) to secure Page 5 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined the ends of justice or (ii) to prevent an abuse of the process of any court;
(v) The decision as to whether a complaint or First Information Report should be quashed on the ground that the offender and victim have settled the dispute, revolves ultimately on the facts and circumstances of each case and no exhaustive elaboration of principles can be formulated;
(vi) In the exercise of the power under Section 482 and while dealing with a plea that the dispute has been settled, the High Court must have due regard to the nature and gravity of the offence. Heinous and serious offences involving mental depravity or offences such as murder, rape and dacoity cannot appropriately be quashed though the victim or the family of the victim have settled the dispute. Such offences are, truly speaking, not private in nature but have a serious impact upon society. The decision to continue with the trial in such cases is founded on the overriding element of public interest in punishing persons for serious offences;
(vii) As distinguished from serious offences, there may be criminal cases which have an overwhelming or predominant element of a civil dispute. They stand on a distinct footing insofar as the exercise of the inherent power to quash is concerned;
(viii) Criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations fall for quashing where parties have settled the dispute;
(ix) In such a case, the High Court may quash the criminal proceeding if in view of the compromise between the disputants, the possibility of a conviction is remote and the continuation of a criminal proceeding would cause oppression and prejudice; and
(x) There is yet an exception to the principle set out in propositions (viii) and (ix) above. Economic offences involving the financial and economic well-being of the State have implications which lie beyond the domain of Page 6 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined a mere dispute between private disputants. The High Court would be justified in declining to quash where the offender is involved in an activity akin to a financial or economic fraud or misdemeanour. The consequences of the act complained of upon the financial or economic system will weigh in the balance."
11. Section 147 of the N.I.Act makes offences under the Act compoundable notwithstanding anything contained in the Code of Criminal Procedure. The Hon'ble Supreme Court in Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, recognized that the primary object of proceedings under Section 138 N.I. Act is compensatory in nature and encouraged compounding even at later stages subject to payment of appropriate costs.
12. Recently, in Gian Chand Garg v. Harpal Singh and Another, 2025 SCC OnLine SC 2317, the Hon'ble Supreme Court has observed in Para Nos. 6 to 10 as under :
"6. This court in M/s. Meters and Instruments Private Limited & Anr. v. Kanchan Mehta, 2018 (1) SCC 560 held that the nature of offence under section 138 of the N.I.Act is a mainly a civil wrong and has been made specifically compoundable by section 147 of the N.I.Act which was inserted by the 2002 amendment to the said Act. The relevant observations have been extracted for reference:
"This Court has noted that the object of the statute was Page 7 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions' cheques were issued merely as a device to defraud the creditors. Dishonor of cheque causes incalculable loss, injury and inconvenience to the Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 payee and credibility of business transactions suffers a setback. At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 amendment specifically made it compoundable."
7. It is also apposite to reiterate the observations in P. Mohanraj & Ors. v. M/s. Shah Brothers Ispat Pvt. Ltd. (2021) 6 SCC 258 wherein this court referred the offence under section 138 N.I.Act as a "Civil Sheep" in "Criminal Wolf's Clothing" which meant issues agitated by the parties under the said provision are of private nature which are brought within the sweep of criminality jurisdiction in order to strengthen the credibility of the negotiable instruments.
8. Further in M/s. Gimpex Private Limited v. Manoj Goel (2021) SCC OnLine SC 925 this court took into consideration the effect of settlement arrived between the parties and observed that:
"38. When a complainant party enters into a compromise agreement with the accused, it may be for a multitude of reasons - Higher Compensation, faster recovery of money, uncertainty of trial and strength of complaint, among others. A complainant enters into a settlement with open eyes and undertakes the risk of the accused failing to honour the cheques issued pursuant to the settlement, based on certain benefits that the settlement agreement postulates. Once parties voluntarily entered into such an agreement and agree to abide by the consequence of non-compliance of the settlement agreement, they cannot be allowed to reverse the effects of the agreement by pursuing both the original complaint and the subsequent complaint arising from such non-compliance. The Settlement agreement subsumes the original complaint......"
9. In B.V. Seshaiah v. State of Telangana & Anr. (2023) SCC OnLine SC 96 this court was of the view that when parties enter into an agreement and compound the offence, they do Page 8 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined so to save themselves from the process of litigation and when such a step is taken by the parties, the law very well allows them to do so. Hence, the courts cannot override such compounding and impose its will.
10. Therefore, it is very clear that although dishonour of cheque entails criminal consequence, the legislature by virtue of section 147 of the N.I.Act has made it compoundable notwithstanding the provisions of the Code of Criminal Procedure, 1973 and the same can be compounded at any stage of the proceedings especially when the parties have themselves arrived at a voluntary compromise."
13. Further, in Sanjabij Tari v. Kishore S. Borcar and Another (Criminal Appeal No. 1755 of 2010, decided on 25.09.2025), the Hon'ble Supreme Court modified the earlier guidelines relating to compounding costs and observed that where payment is made before the Sessions Court or High Court in revision/appeal, compounding may be permitted on payment of 7.5% of the cheque amount by way of costs.
14. In view of the settled proposition of law in the case of Parbatbhai Aahir Alias Parbatbhai Bhimsinhbhai Karmur (Supra), the proposition (v) to (viii) where Criminal cases involving offences which arise from commercial, financial, mercantile, partnership or similar transactions with an essentially civil flavour may in appropriate situations fall for quashing where parties have settled the dispute. In view of the Page 9 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined settlement arrived at between the parties and considering that continuation of proceedings would serve no useful purpose, this Court is satisfied that the matter deserves to be brought to an end by exercising inherent jurisdiction.
15. So far as the objection that post-conviction compromise may dilute the rigour of criminal process is concerned, the same does not survive in view of the law laid down in Gian Chand Garg (supra), wherein the Hon'ble Supreme Court specifically held that compounding under Section 138 N.I. Act can be permitted even after conviction and that such exercise does not violate the statutory scheme but rather advances the object of ensuring payment and reducing unnecessary litigation. Thus, permitting the present compromise does not offend the principles laid down in Damodar S. Prabhu (Supra); rather, the same is subject to payment of costs in terms of the modified guidelines.
16. Accordingly, the present petition is allowed.
17. The complaint proceedings / judgment of conviction and sentence dated 15.11.2025 passed by learned 2 nd Additional Page 10 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026 NEUTRAL CITATION R/CR.MA/3937/2026 ORDER DATED: 28/04/2026 undefined Chief Judicial Magistrate, Nadiad (District. Kheda) in Criminal Case No. 3452 of 2024 under Section 138 of the N.I.Act as well as all other consequential proceedings arising pursuant thereto, if any, are hereby quashed and set aside on the basis of compromise between the parties.
18. However, as the settlement has been arrived at at the stage of proceedings before this Court, the applicant shall deposit costs equivalent to 7.5% of the cheque amount with the Gujarat High Court Legal Services Committee within a period of four weeks from today and shall place proof of such deposit on record.
19. Subject to deposit of the aforesaid costs, the offence shall stand compounded and the applicant shall stand acquitted of the charge under Section 138 of the N.I.Act.
20. Connected pending application, if any, shall stands disposed of.
(S. V. PINTO,J) F.S. KAZI Page 11 of 11 Uploaded by F.S. KAZI(HC01075) on Thu Apr 30 2026 Downloaded on : Thu Apr 30 21:18:32 IST 2026