Criminal Law
A Section 138 cheque conviction can be set aside after a genuine settlement
What the Court held
In Gian Chand Garg v. Harpal Singh (Supreme Court of India, 11.08.2025; 2025 LiveLaw (SC) 865), the Court held that once a complainant has signed a compromise deed and accepted the amount in full and final settlement, a conviction under Section 138 of the Negotiable Instruments Act, 1881 cannot be sustained. It set aside the concurrent convictions, noting that cheque-dishonour offences are compoundable under Section 147 of the Act.
Why it matters
A Section 138 proceeding is, in substance, a means of recovering the cheque amount, and the law encourages settlement: the offence is expressly compoundable. The Court held that the High Court had been wrong to refuse to act on the compromise even after conviction. For both sides in a cheque-bounce matter, the decision confirms that a genuine, fully-paid settlement can bring the case to an end at any stage.
This note is general information on the law as at the date shown, not legal advice on any specific matter. The law changes; for advice on your facts, please speak to the firm.
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