1. Quashing of FIR arising from a commercial dispute where parties settled outstanding amounts. (Para 4 )
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2026 Supreme(Online)(Bom) 4931
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Milind N. Jadhav, J
Kaustubh Shivkumar Vibhute – Appellant
Versus
State of Maharashtra – Respondent
CRIMINAL APPLICATION (ST) NO. 18957 OF 2026
Important Points
High Courts may quash FIRs in commercial disputes settled by consent to prevent abuse of process, but may impose costs to deter the use of criminal machinery as a tool for private debt recovery and to compensate for wasted judicial resources.
Subject
Criminal Law - Quashing of FIR
Act Referred
Criminal Procedure Code, 1973: S.482
Bharatiya Nagarik Suraksha Sanhita: S.528
Bharatiya Nyaya Sanhita, 2023: S.318(4), S.316(4), S.336(3), S.340(2), S.335, S.344, S.319(2)
Information Technology Act, 2006: S.65, S.66C, S.66D
Society Registration Act, XXI of 1980
Public Trust Act, XXIX of 1950
Bharatiya Nagarik Suraksha Sanhita: S.528
Bharatiya Nyaya Sanhita, 2023: S.318(4), S.316(4), S.336(3), S.340(2), S.335, S.344, S.319(2)
Information Technology Act, 2006: S.65, S.66C, S.66D
Society Registration Act, XXI of 1980
Public Trust Act, XXIX of 1950
Headnote
(A) Inherent Powers of High Court - Quashing of FIR - Where parties have settled a private dispute arising from civil or commercial transactions and the offence is not heinous or impacting society at large, the Court may exercise its discretionary powers to quash criminal proceedings to secure the ends of justice. (Para 7, 9)
(B) Consent Quashing - Imposition of Costs - To deter the use of criminal law as a recovery mechanism or bargaining chip and to compensate for the wastage of public resources and judicial time, the Court may impose costs on parties seeking quashing by consent. (Para 10, 11)
(C) Quashing Guidelines - Non-compoundable offences - In line with established jurisprudence, non-compoundable offences can be quashed where the prosecution would be against the interest of justice, provided they do not involve societal implications like murder or rape. (Para 8)
Issues: Whether the criminal proceedings based on a commercial dispute, subsequently settled between the parties, should be quashed subject to the imposition of costs.
(B) Consent Quashing - Imposition of Costs - To deter the use of criminal law as a recovery mechanism or bargaining chip and to compensate for the wastage of public resources and judicial time, the Court may impose costs on parties seeking quashing by consent. (Para 10, 11)
(C) Quashing Guidelines - Non-compoundable offences - In line with established jurisprudence, non-compoundable offences can be quashed where the prosecution would be against the interest of justice, provided they do not involve societal implications like murder or rape. (Para 8)
Issues: Whether the criminal proceedings based on a commercial dispute, subsequently settled between the parties, should be quashed subject to the imposition of costs.
Legal Category Hierarchy
- crime and sentencing
- practice and procedure
Advocates:
For the Appellants/Petitioners: Dhanraj Lodha
For the Respondents: Shilpa G. Talhar, Siddharth Khandelwal
For the Appellants/Petitioners: Dhanraj Lodha
For the Respondents: Shilpa G. Talhar, Siddharth Khandelwal
Table of Contents
2. Parties jointly sought quashing of criminal prosecution as it hinders business prospects after full settlement. (Para 5 )
3. Imposition of costs in consent quashing is required to deter abuse of criminal law for private settlements. (Para 9 , 10 , 11 )
4. Courts can impose costs when criminal law is used as a bargaining tool for private settlements, wasting judicial resources. (Para 9 , 10 , 11 )
5. Application allowed subject to payment of costs; FIR and proceedings quashed. (Para 12 , 14 , 15 , 17 )
6. Can a High Court impose costs when quashing an FIR by consent of parties?
Yes, a High Court can impose costs in consent quashing matters to deter abuse of criminal law as a bargaining tool for private settlements. (Para 9 , 10 , 11 )
7. What are the reasons for imposing costs in consent quashing cases?
Costs are levied for three reasons: wastage of public resources, consumption of judicial time, and deterrence against vexatious litigation. (Para 10 )
8. Can non-compoundable offences be quashed under Section 482 CrPC?
Yes, the Supreme Court has held that even non-compoundable offences can be quashed where necessary in the interest of justice. (Para 8 )
P.C.:
1. Not on board. Mentioned by way of filing a praecipe dated 18.09.2026.
2. Heard learned Advocates appearing for the parties.
3. Present Application is filed seeking quashing and setting aside of the FIR and the consequential proceedings arising therefrom.
4. Parties had a relationship whereby substantial amounts were advanced with regard to the services provided on the basis of existing vendor invoices with regard to the relationship between them. Because of outstanding amounts running into a humongous sum, criminal prosecution was invoked for cheating. Parties have reconciled their disputes fully and the entire amount now stands fully deposited / repaid and received by Respondent No. 2 - Company.
5. I have interacted with the Director and authorized signatory of Respondent No. 2 - Company on video call with the able assistance of the learned Advocate for Respondent No. 2. The Terms of Settlement / Compromise are filed before the Court which are taken on record. The entire amount stands fully repaid. No further amounts are required to be received by the Complainant. Both the parties therefore, persuade the Court to quash the criminal prosecution because the same is a hindrance to their business prospects.
6. Considering the request made by the parties, I am inclined to accept the said request and allow the present Application.
7. Section 482 of the Criminal Procedure Code, 1973 conferred inherent powers on High Courts to pass such orders as are justified to give effect to any order in the Court, prevent abuse of process of any Court or secure the ends of justice. In the BNSS this provision stands incorporated with Section 528 which substantially reproduces the language and intent of Section 482 of the CrPC, 1973 High Courts invoke this provision to step in where cases have been instituted with malafide motives or to harass the accused person thereby avoiding procedural harassment. It empowers Court to dismiss FIRs or criminal proceedings if there is no prima facie case or evidence against the accused person/s or if orders are made in violation of the principles of natural justice. The exercise of such powers under Section 482 of CrPC and now Section 528 of BNSS remains discretionary and varies from case to case.
8. In State of Haryana vs Bhajan Lal , (1992 AIR 604) the Supreme Court laid down model categories and guidelines in paragraph No. 102 of the said judgment in which the FIRs can be quashed. The Supreme Court has furthered asserted that power under Section 482 is an acknowledgment of "powers inherent" and not the source of powers additional. It has held that even non compoundable offences can be quashed where necessary. It has held that High Courts have to decide whether the prosecution of an offence would further or be against the interest of justice. It is also held that grievous offences such as murder, rape, and dacoity cannot ordinarily be quashed even after settlement because they involve societal implication.
9. In the above context, when parties settle their private dispute or the lis between them is purely civil and commercial or matrimonial and the offence is not heinous or does not impact the society at large, the Court can consider such request. In such a case awarding costs for putting the criminal law into motion on the act of the accused persons and thereafter both parties seeking quashing of proceedings by consent, in my opinion, can be considered by Court which can impose costs on the parties, especially so in matters coming before the Court by "consent quashing".
10. For above levy of costs the legal principle rests on the logic that criminal law cannot be used as a bargaining chip or a tool for private settlements after draining the State and judicial resources. In simple words, Courts cannot be used as a recovery mechanism to settle scores and/or bring the parties into subjugation. I am of the firm opinion that imposition of costs in consent quashing matters is required to be levied for thre
