Court Quashes Conviction Under Section 138 of the Negotiable Instruments Act Following Amicable Settlement
In a significant development, the Punjab and Haryana High Court has allowed the compounding of an offence under Section 138 of the Negotiable Instruments Act, 1881, in the case of Mukesh Sharma @ Mukesh v. State of Haryana, following an amicable settlement between the parties involved. The judgment, delivered by Justice Subhas Mehla on May 7, 2026, emphasizes the importance of resolving disputes through compromise, especially in cases arising from financial transactions.
The case revolved around a complaint filed by Sunil Kumar against Mukesh Sharma concerning the dishonour of a cheque. Initially, the trial court sentenced Mukesh Sharma, a decision upheld by the Additional Sessions Judge, Rewari. However, both parties subsequently reached a compromise on February 27, 2023, where the petitioner paid the full settlement amount to the complainant, resulting in the withdrawal of the execution petition by the complainant.
Justice Mehla highlighted that the legislative intent behind Section 147 of the Negotiable Instruments Act is to promote settlement and harmony by allowing the compounding of offences at any stage. The court recognized that forcing the continuation of proceedings despite a compromise would result in unnecessary oppression and injustice.
Moreover, the court exercised its inherent jurisdiction under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to quash the proceedings, emphasizing the need to secure the ends of justice and prevent abuse of the legal process. Justice Mehla noted that the offence under Section 138, though criminal in nature, primarily aims to compensate the victim rather than penalize the offender.
In light of the compromise, the court modified the sentence imposed on Mukesh Sharma to the period already undergone, directing the trial court to issue his release warrants forthwith. The decision underscores the court's commitment to promoting justice and finality in litigation, especially in cases with a commercial or financial nature.
Bottom line:-
Negotiable Instruments Act - Offence under Section 138 of the NI Act is compoundable under Section 147 of the NI Act, even at later stages of proceedings, where parties voluntarily resolve disputes through a compromise and the complainant is fully satisfied.
Statutory provision(s): Negotiable Instruments Act, 1881 Sections 138 and 147, Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528
Mukesh Sharma @ Mukesh v. State of Haryana, (Punjab And Haryana) : Law Finder Doc id # 2921902
