Gian Chand Garg v. Harpal Singh & Another, 2025
Once the complainant signs a compromise deed and acknowledges receipt of the settlement amount in full, the conviction under Section 138 NI Act cannot be sustained.
Judgement Details
Court
Supreme Court of India
Date of Decision
2 September 2025
Judges
Justice Aravind Kumar & Justice Sandeep Mehta
Citation
Acts / Provisions
Facts of the Case
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The appellant-accused was convicted under Section 138 of the NI Act by the trial court.
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His revision petition challenging the conviction was dismissed by the High Court.
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After the dismissal, the accused and complainant entered into a compromise deed, where the complainant accepted full and final payment of the defaulted amount.
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Based on this settlement, the accused filed an application before the High Court seeking modification of the earlier order upholding his conviction.
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The High Court rejected the application, holding it not maintainable.
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The matter was brought before the Supreme Court in appeal.
Issues
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Whether the conviction under Section 138 NI Act can be sustained after the complainant accepts full and final settlement through a compromise deed?
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Whether a post-conviction compromise is sufficient ground for setting aside the conviction?
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Whether the High Court erred in rejecting the application for modification based on settlement?
Judgement
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The Supreme Court set aside the High Court's order and acquitted the appellant-accused.
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It held that once a complainant voluntarily enters into a settlement and acknowledges receipt of the full amount, then continuing with the proceedings under Section 138 is purposeless.
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It court was citing Section 147 NI Act, which makes offences under the NI Act compoundable, the Court found no legal bar to set aside the conviction even after dismissal of the revision petition.
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The Court relied on the principle laid down in Gimpex v. Manoj Goel (2021) — that parties cannot pursue both the original complaint and the settlement simultaneously.
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It concluded that the beneficial object of compounding offences under the NI Act must be upheld.
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Therefore, the conviction was quashed, and the appeal was allowed.
Held
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It was held that once the complainant signs a compromise deed and acknowledges receipt of the settlement amount in full, the conviction under Section 138 NI Act cannot be sustained.
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The Section 147 allows for compounding even at post-conviction stages.
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The High Court's rejection of the modification application was erroneous and is set aside.
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The conviction of the appellant is quashed, and he stands acquitted.
Analysis
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The judgment strengthens the principle of allowing amicable settlement in cheque bounce cases, especially in the commercial context.
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It confirms that the compounding of offences under NI Act can be done even after conviction, provided both parties agree.
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The Supreme Court ensured that procedural rigidity does not come in the way of settlement and justice.
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Rejecting hyper-technical objections, the Court advanced the beneficial intent of Section 147.
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The reliance on Gimpex reiterates that settlement agreements override continued prosecution, avoiding unnecessary burden on the judiciary.
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The judgment encourages settlements and promotes restorative justice.