The court may quash proceedings under Section 138 of the Negotiable Instruments Act upon amicable settlement and payment of the cheque amount, exercising judicial discretion to waive the 15% cost deposit if the complainant consents and circumstances warrant.

ANOOP CHITKARA, J.

Criminal CIS No.:NACT/7538/2019

Complaint CNR No.:HRFB030320512019

Date of decision: 19.11.2024

Criminal CIS No.CRA-02-2025

Appeal CNR No.HRFB01-000062-2025

Date of decision: 23.03.2026

1. The petitioner, who stands convicted for the commission of offence punishable under Section 138 of the Negotiable Instruments Act, 1881, (NIA), after dismissal of his appeal by the Appellate Court, has come up before this Court under Section 442 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 for setting aside of impugned judgments and orders passed by the trial Court and the appellate Court, mentioned above, based on compromise between the parties.

2. The petitioner faced criminal prosecution at the hands of the private respondent, because of dishonour of the cheque(s) in question. Thus, the State is not a necessary party in this revision petition.

3. During the course of arguments, counsel for the petitioner submitted that the matter has been amicably settled between the parties and the entire outstanding amount has been paid to the respondent-complainant and now, nothing remains due or payable. It was also contended that the petitioner is 84 years of age, suffering from various ailments, and is incurring substantial medical expenses; therefore, he is not in a position to deposit 15% of the cheque amount, as directed in Damodar S. Prabhu v. Sayed Babalal H. (2010) 5 SCC 663.

4. On the other hand, counsel for respondent no.2-complainant submitted that she has instructions to submit that respondent no.2-complainant has no objection if the amount of costs/compensation, as directed in Damodar S. Prabhu (Supra), is waived off.

5. The jurisprudence underlying the Negotiable Instruments Act, 1881 is that commercial transactions must be honoured. The legislative intent is not to subject persons to incarceration merely because their cheques have been dishonoured. The object of such proceedings is primarily to secure recovery of the cheque amount by invoking the deterrent effect of a penal provision. In view of the judgment of the Hon’ble Supreme Court in Damodar S. Prabhu v. Sayed Babalal H. , (2010) 5 SCC 663, it is well settled that where the entire amount has been paid, the complainant ordinarily cannot object to compounding of the offence, though 15% of the cheque amount is to be deposited by the accused with the concerned State Legal Services Authority. The relevant extract from the said judgment reads as under:

[17]. “…Even though the imposition of costs by the competent court is a matter of discretion, the scale of costs has been suggested in the interest of uniformity. The competent Court can of course reduce the costs with regard to the specific facts and circumstances of a case, while recording reasons in writing for such variance.”

6. Given above, because of the compromise, this is a fit case where the inherent jurisdiction of the High Court under Section 442 of the BNSS supported by Section 147 of the NIA is invoked to disrupt the prosecution and quash the proceedings mentioned above.

The complaint, notice of accusation, and the proceedings captioned above are quashed a