Gurugram: Twelve years after two cheque-bounce offences and seven years after he was convicted for them, a Sonipat businessman has walked free. On Monday, the Punjab and Haryana High Court set aside both a trial court judgement from 2019 and a Sessions Court order from November 2025 dismissing his appeals, after the parties reached a full settlement at the local mediation centre.
The legal question before the high court was straightforward yet significant: Can an offence under Section 138 of the Negotiable Instruments (NI) Act still be compounded after the accused has been convicted by the Magistrate, and that conviction has been affirmed by the Sessions Court? Justice Sumeet Goel answered in the affirmative.
The court was hearing two criminal revision petitions filed by one Subhash Chander against businessman Sunil Kumar. In 2014, the complainant had initiated two separate cases for dishonour of cheques. The Judicial Magistrate First Class, Sonipat, convicted Chander in March 2019, sentencing him to one-and-a-half years’ rigorous imprisonment in each matter, with compensation of Rs 5.10 lakh in one case and Rs 1.55 lakh in the other. The Additional Sessions Judge dismissed his appeals in November 2025.
By the time the revisions reached the High Court, the parties had already settled the matter. On 22 May this year, they signed a compromise deed before the Mediation and Conciliation Centre at Sonipat. Both sides confirmed the settlement in court. The complainant’s counsel stated he had no objection to the offences being compounded and the accused being acquitted.
Justice Goel examined the statutory framework, Section 147 of the NI Act read with Section 359 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) and the High Court’s inherent powers under Section 528 BNSS, against the backdrop of three key Supreme Court rulings: Damodar S. Prabhu (2010), M/s New Win Export (2024) and Sanjabij Tari (2025).
The consistent thread running through these decisions, the judge noted, is that the compensatory aspect of Section 138 must take precedence over the punitive one, and that compounding is permissible at every stage of the litigation.
The court acknowledged the graded costs scheme evolved by the Supreme Court to discourage belated settlements, but exercised its discretion to waive costs altogether. Chander, the judge observed, had already faced the criminal process for nearly twelve years. Continuing the proceedings after a genuine compromise would serve neither the parties nor the justice system.
Accordingly, the High Court set aside both the 2019 convictions and the 2025 appellate orders, acquitted the petitioner, directed the release of the Rs 1.55 lakh demand draft already deposited with the Registry, and bound the parties to the terms of their mediation settlement. In a system still burdened by a mountain of cheque-bounce cases, the judgment reiterates a simple principle: once the parties have resolved their dispute, the courts need not insist on completing a process that has lost its purpose.
(Edited by Nivedita Patil)
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