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Gujarat High Court
Aveshbhai Isubbhai Kaladiya vs State Of Gujarat on 29 April, 2026
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R/CR.MA/9951/2026 ORDER DATED: 29/04/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR CONSENT QUASHING)
NO. 9951 of 2026
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AVESHBHAI ISUBBHAI KALADIYA
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MUNJAL V ACHARYA(10678) for the Applicant(s) No. 1
MR.ADITYA JADEJA, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 29/04/2026
ORAL ORDER
Learned advocate Ms. Chetna Joshi submits that she has
received instructions to appear on behalf of the respondent No. 2 -
Orignal complainant as also seeks permission to file her
appearance on behalf of the respondent No.2. Registry to accept
the same.
1. Rule. Learned APP Mr. Aditya Jadeja and learned
advocate Ms. Chetna Joshi waive service of notice of rule for the
respective respondents.
2. By way of this application, the applicant has prayed for
quashing of the complaint proceedings / conviction order dated
19-09-2025 passed by learned Chief Judicial Magistrate,
Surendranagar in Criminal Case No. 2178 of 2023 under
Section 138 of the Negotiable Instruments Act, 1881, (hereinafter
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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.
3. Heard learned advocate Mr. Munjal Acharya for the
applicant, learned APP Mr. Aditya Jadeja for the respondent no.1 -
State and learned advocate Ms. Chetna Joshi for the respondent
no.2 - original complainant.
4. Learned advocate Mr. Munjal Acharya 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 order of conviction as well
as all other consequential proceedings arising pursuant thereto are
quashed against the applicant - accused.
5. Learned advocate Ms.Chetna Joshi for the respondent
no.2 - original complainant submits that the respondent no.2 -
original complainant is present before this Court and has produced
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a copy of affidavit of the respondent no.2 - original complainant,
which is taken on record.
6. 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.
7. 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 the
affidavit and submits that the compromise has been entered into of
his own free will without any fear, threat and coercion.
8. The affidavit filed by the respondent no. 2 - original
complainant reads as under:
I, Mohsin Kasambhai Padharshi, ged : 35 yrs., male,
residing at : Block NO. 167 Old Housing Board, Nr.Pagal
Bapuni Dargah, Surendranagar, the ori. Complainant -
res. no.2 herein do hereby solemnly affirm and state on
oath that:
1. I am filing this affidavit and fully conversant with the
facts and circumstances of the case and I am duly
competent to file this affidavit.
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2. I say that I and the petitioner have settled the dispute
and the respondent No.2 herein does not want to pursue
any proceeding against the petitioner and therefore, this
is a fit case, wherein, this Hon'ble Court may be pleased
to exercise the powers under Section-528 of the Bharatiya
Nagarik Suraksha Sanhita, 2023 to quash and set aside
the complaint and impugned order.
3. I say and submit that I have gone through the memo of
the petition and the facts and grounds stated in the memo
of petition are not disputed by me. At the outset, I say and
submit that dispute and grievance of both the side have
been amicably settled and I have no grievance against the
applicant."
9. 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
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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
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
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(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 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."
10. 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.
11. 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 to
facilitate smooth functioning of business transactions. The
provision is necessary as in many transactions' cheques
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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 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.
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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."
12. 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
compounding may be permitted on payment of 7.5% of the cheque
amount by way of costs.
13. In view of the settled proposition of law in the case of
Parbatbhai Aahir Alias Parbatbhai Bhimsinhbhai
Karmur (Supra) and particularly, the proposition (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
settlement arrived at between the parties and considering that
continuation of proceedings would serve no useful purpose, this
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Court is satisfied that the matter deserves to be brought to an end
by exercising inherent jurisdiction.
14. 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.
15. Accordingly, the present petition is allowed.
16. The complaint proceedings / judgment of conviction
and sentence dated 19-09-2025 passed by learned Chief
Judicial Magistrate, Surendranagar in Criminal Case No.
2178 of 2023 under Section 138 of the N.I.Act as well as all other
consequential proceedings arising pursuant thereto, if any, are
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hereby quashed and set aside on the basis of compromise between
the parties.
17. 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.
18. 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.
19. Connected pending application, if any, shall stands
disposed of.
(S. V. PINTO,J)
VISHAL MISHRA
