On Friday, the High Court of Jammu & Kashmir and Ladakh stepped in to examine whether a trial Magistrate can continue exercising control after a compromise has been lawfully recorded between parties. The case raised serious questions about judicial overreach, with the Court scrutinising whether criminal courts can transform themselves into recovery forums once a settlement under the Negotiable Instruments Act (NI Act) is placed on record, an issue with wide implications for cheque bounce litigation across trial courts.
The controversy began when a complaint under Section 138 of the NI Act was filed over dishonour of a cheque worth Rs. 17.18 lakh. During the pendency of the proceedings, the complainant and the accused entered into a written compromise under which the accused agreed to make staggered payments. The trial Magistrate recorded the statements of both sides in support of the settlement. However, instead of closing the complaint in terms of the compromise, the Magistrate continued to monitor compliance with the settlement and, upon alleged default, issued warrants against the accused.
Aggrieved, the accused approached the High Court, arguing that once a compromise is accepted, the Magistrate becomes functus officio and cannot assume the role of an executing court to enforce payment terms.
Justice Sanjay Dhar was unequivocal in disapproving of the course adopted by the trial court. The Court noted that “instead of disposing of the complaint in terms of the compromise, the learned trial Magistrate has proceeded to monitor adherence of terms of the compromise by the petitioner by acting as an executing court.”
The Court clarified that the only lawful course after recording a compromise is to dispose of the complaint. If the terms of settlement are later breached, the aggrieved party must be relegated to execution proceedings, where coercive steps can be taken strictly in accordance with the law.
The Court Observed that "The proper course for the learned trial Magistrate should have been to dispose of the complaint in terms of the compromise and thereafter if the petitioner would not have adhered to terms of the compromise, the respondent should have been given liberty to file execution petition on which the learned trial Magistrate could have proceeded against the petitioner by taking resort to provisions contained in Section 421 of Cr.PC."
Consequently, the Court disposed of the petition and directed the Magistrate to proceed strictly in line with the correct legal framework.
Case Title: Sajad Ahmad Malik v. Gulzar Ahmad Wani
Case No.: CRM(M) No. 2086/2025
Coram: Hon’ble Mr. Justice Sanjay Dhar
Advocate for the Petitioner: Adv. Mir Umar
Advocate for the Respondent: None
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