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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
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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
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VIPULBHAI (LALABHAI) MANEKBHAI PATEL
Versus
STATE OF GUJARAT & ANR.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
