[Cites 12, Cited by 0]
Gujarat High Court
Jagdish S/O Khiyaldas Varadani vs State Of Gujarat on 7 May, 2026
NEUTRAL CITATION
R/CR.MA/10904/2026 ORDER DATED: 07/05/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION (FOR CONSENT QUASHING) NO.
10904 of 2026
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JAGDISH S/O KHIYALDAS VARADANI
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR. JAIDEEP A. DARWANI(19028) for the Applicant(s) No. 1
MS CM SHAH, APP for the Respondent(s) No. 1
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CORAM:HONOURABLE MS. JUSTICE S.V. PINTO
Date : 07/05/2026
ORAL ORDER
1. Rule. Learned APP Mr. Jaideep A. Darwani and
learned advocate Ms. Yukta Pandey 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 13.11.2025 passed by learned 9th Additional Chief
Judicial Magistrate, N.I.Act, Court No. 31, Ahmedabad City in
Criminal Case No. 64703 of 2022 under Section 138 of the
Negotiable Instruments Act, 1881, on the ground that during
pendency of the proceedings, the parties have amicably settled
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their dispute and the entire due amount has been paid by the
applicant to the respondent.
4. Heard learned advocate Mr.Jaideep. A. Darwani for
the applicant, learned APP Ms. C.M.Shah for the respondent
no.1 - State and learned advocate Ms.Yukta Pandey for the
respondent no.2 - original complainant.
5. Learned advocate Mr.Jaideep. A. Darwani 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 due amount and
does not with 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.
6. Learned advocate Mr. Jaideep A. Darwani for the
respondent no.2 - original complainant submits that the
respondent no.2 - original complainant is present before this
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Court and has produced a copy of affidavit of the respondent
no.2 - original complainant, which is taken on record.
7. Learned APP Ms.C.M.Shah 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 due 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
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, Mr. Brijesh S/o Rasikbhai Panchal (Partner and Karta,
Jay Ambe Finance Company). Age : 51, Occupation :
Business, residing at B-301, Shyam Residency, Opp.
Horizon, Science City, Sola, Near Manav Bungalows,
Sola, Ahmedabad - 380 060, do here by solemnly affirm
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and state as under:
1. I say that I am the original complainant -
respondent no. 2 in the presence
proceedings and the complainant in
Criminal Case No. CC/64703/2022, filed
under the provisions of the Negotiable
Instruments Act, 1881, before the Court of
9th Additional Chief Judicial Magistrate,
Court No. 31 (Negotiable Instruments Act,
1881) at Ahmedabad, wherein, the present
petitioner (original accused) is the
accused.
2. 1 say that the Learned Court was pleased to
convict the petitioner vide judgment and
order dated 13/11/2025 passed in the
aforesaid case.
3. 1 say that subsequently, owing to cordial
and familial relations and with the
intervention of mediators and well-wishers,
the dispute has been amicably resolved on
27/04/2026.
4. I say that the petitioner has paid a total sum
of Rs.3,75,000/-in cash (Rupees Three Lakh
Seventy-Five Thousand Only) to me in full
and final settlement of all disputes. I further
state that, with my free consent and owing
to cordial and familial relations, and with
the intervention of mediators and well-
wishers, I have voluntarily waived the
remaining amount of Rs.1,25,000/- (Rupees
One Lakh Twenty-Five Thousand Only),
along with all claims and liabilities arising
out of Criminal Case No. CC/64703/2022
and the underlying transaction.
5. I say that in view of the aforesaid
settlement, the matter stands fully and
finally resolved, and no grievance survives
on my part against the petitioner.
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(original complainant), have no objection if
this Hon'ble Court is pleased to:
* allow the present Criminal Miscellaneous
Application filed by the petitioner;
* permit compounding of the offence; and
* quash and set aside the judgment and
order dated 13/11/2025 passed in Criminal
Case No.CC/64703/2022 and all
consequential proceedings arising
therefrom.
7. I say that I shall remain present before this
Hon'ble Court as and when directed.
8. I say that this affidavit is executed
voluntarily, without any force, coercion or
undue influence.
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
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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
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;
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(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
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 Negotiable Instruments 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.
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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
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
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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.
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.
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14. In view of the 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.
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17. The complaint proceedings / judgment of conviction
and sentence dated 13.11.2025 passed by learned 9th
Additional Chief Judicial Magistrate, N.I.Act, Court No. 31,
Ahmedabad City in Criminal Case No. 64703 of 2022 under
Section 138 of the Negotiable Instruments 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 Negotiable Instruments
Act.
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20. Connected pending application, if any, shall stands
disposed of.
(S. V. PINTO,J)
F.S. KAZI
