Case Note & Summary
The applicant, Sunil Narendrabhai Bhatt, filed a Criminal Revision Application under Sections 397 and 401 of the Code of Criminal Procedure, 1973, challenging his conviction under Section 138 of the Negotiable Instruments Act, 1881. The trial court (3rd Addl. Chief Judicial Magistrate, Banaskantha at Palanpur) convicted him in Criminal Case No. 5375 of 2012 vide judgment dated 7.7.2015, and the appellate court (6th Addl. Sessions Judge, Banaskantha at Palanpur) dismissed his appeal in Criminal Appeal No. 41 of 2015 on 17.3.2016. During the pendency of the revision before the High Court, the parties amicably resolved the dispute. The cheque in question was issued for a consideration of Rs. 2,30,000/-, but the settlement was reached for Rs. 1,50,000/-. The respondent No. 2, Narottambhai Shankarbhai Patel, remained personally present and filed an affidavit stating he had no objection if the application was allowed and admitted the factum of settlement. The learned advocate for the applicant submitted that in view of the settlement, the revision deserved to be allowed. The learned Additional Public Prosecutor opposed the application citing the seriousness of the offence. However, the High Court, considering the settlement and the complainant's no-objection, held that the matter had been amicably settled and allowed the revision application. The court quashed and set aside the judgments of the courts below and acquitted the applicant of the charges under Section 138 of the NI Act. The court also directed that the amount of Rs. 1,50,000/- be paid to the complainant as per the settlement. The judgment was delivered on 27th March 2026 by Justice Hasmukh D. Suthar.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Compounding of Offence - Section 138, 147 Negotiable Instruments Act, 1881 - Settlement between parties - The applicant was convicted under Section 138 NI Act and the appeal was dismissed. During revision, parties settled the dispute for a reduced amount. The complainant filed an affidavit stating no objection. The High Court allowed the revision, quashed the conviction and sentence, and permitted compounding in view of the settlement. Held that the offence under Section 138 NI Act is compoundable under Section 147, and the settlement deserves to be accepted to promote amicable resolution. (Paras 1-5)
Issue of Consideration
Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 can be quashed on the basis of an amicable settlement between the parties during the pendency of a revision application.
Final Decision
The High Court allowed the revision application, quashed and set aside the judgments of the trial court and appellate court, and acquitted the applicant of the charges under Section 138 of the Negotiable Instruments Act, 1881. The court directed that the settlement amount of Rs. 1,50,000/- be paid to the complainant as per the settlement.
Law Points
- Compounding of offence under Section 138 NI Act is permissible even after conviction
- subject to settlement between parties
- Settlement in cheque bounce cases is encouraged to reduce litigation
- Section 147 NI Act allows compounding of offences
Case Details
2026 LawText (GUJ) (03) 1086
R/Criminal Revision Application (Against Conviction - Negotiable Instrument Act) No. 279 of 2016
Mr. Divyom Lawale on behalf of Mr. Vicky B. Mehta for the Applicant, Mr. Tanmay B. Karia for Respondent No. 2, Mr. Rohan Raval, APP for Respondent No. 1
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Nature of Litigation
Criminal Revision Application against conviction under Section 138 of the Negotiable Instruments Act, 1881.
Remedy Sought
The applicant sought to quash and set aside the judgment and order dated 17.3.2016 passed by the 6th Addl. Sessions Judge, Banaskantha at Palanpur in Criminal Appeal No.41 of 2015 and the judgment and order dated 7.7.2015 passed by the 3rd Addl. Chief Judicial Magistrate, Banaskantha at Palanpur in Criminal Case no.5375 of 2012.
Filing Reason
The applicant was convicted under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of cheque, and his appeal was dismissed.
Previous Decisions
The trial court convicted the applicant on 7.7.2015 in Criminal Case No. 5375 of 2012. The appellate court dismissed the appeal on 17.3.2016 in Criminal Appeal No. 41 of 2015.
Issues
Whether the conviction under Section 138 of the Negotiable Instruments Act, 1881 can be quashed on the basis of an amicable settlement between the parties during the pendency of a revision application.
Submissions/Arguments
Learned advocate for the applicant submitted that the parties have amicably resolved the dispute and the application deserves to be considered.
Learned Additional Public Prosecutor opposed the application citing the seriousness of the offence.
Respondent No. 2 remained present and filed an affidavit stating no objection to the application being allowed and admitted the settlement.
Ratio Decidendi
An offence under Section 138 of the Negotiable Instruments Act, 1881 is compoundable under Section 147 of the Act. When the parties have amicably settled the dispute and the complainant has no objection, the conviction can be quashed and the accused acquitted, even after conviction, to promote amicable resolution and reduce litigation.
Judgment Excerpts
By way of the present revision application filed under Sections 397 and 401 of the Code of Criminal Procedure, the applicant has sought the following relief:
Learned advocate for the applicant has taken this Court through the factual matrix of the present application. At the outset, it is submitted that the parties have amicably resolved the dispute.
In view of the above, it appears that during the pendency of the present application the matter has been amicably settled between the parties.
Procedural History
The applicant was convicted by the 3rd Addl. Chief Judicial Magistrate, Banaskantha at Palanpur in Criminal Case No. 5375 of 2012 on 7.7.2015. He appealed to the 6th Addl. Sessions Judge, Banaskantha at Palanpur in Criminal Appeal No. 41 of 2015, which was dismissed on 17.3.2016. He then filed the present Criminal Revision Application before the High Court of Gujarat. During the pendency of the revision, the parties settled the dispute, and the High Court allowed the revision on 27.3.2026.
Acts & Sections
- Negotiable Instruments Act, 1881: 138, 147
- Code of Criminal Procedure, 1973: 397, 401
