Punjab & Haryana High Court Sets Aside NI Act Conviction on Compromise; Permits Compounding Post-Conviction to Secure Ends of Justice
Case Name: Kamaljit Kaur v. The Khanna Primary Co-operative Agricultural Development Bank Ltd.
Date of Judgment: 5 January 2026
Citation: CRR-3139-2025
Bench: Hon’ble Mr. Justice Vikas Bahl
Held: The Punjab and Haryana High Court allowed the criminal revision and permitted compounding of the offence under Section 138 of the Negotiable Instruments Act, 1881, after conviction and dismissal of appeal, on the basis of a genuine and voluntary compromise between the parties. The Court held that in disputes of a predominantly private nature, continuation of criminal proceedings after full settlement would be unjust and that the High Court is empowered under Section 528 of the BNSS to set aside convictions to secure substantial justice.
Summary: The petitioner was convicted by the Sub-Divisional Judicial Magistrate, Khanna, for an offence under Section 138 of the Negotiable Instruments Act and sentenced to two years’ rigorous imprisonment with fine. The appeal filed against the conviction was dismissed by the Additional Sessions Judge, Ludhiana. During the pendency of the criminal revision before the High Court, the parties entered into an amicable settlement.
An application was filed seeking preponement of the hearing as well as permission to compound the offence. It was placed on record that the dispute arose out of default in a loan account and had civil overtones. The son of the petitioner, on her behalf, paid an amount of ₹10,25,644 towards full and final settlement of all claims, including the cheque amount, interest and other dues. A No Due Certificate issued by the respondent-Bank and supporting bank statements were produced to evidence complete satisfaction of the liability.
The respondent-Bank categorically stated that it had no objection to the compounding of the offence and to the setting aside of the judgments of conviction and sentence. The Court noted that the compromise was voluntary, bona fide, and did not affect any public interest. Reliance was placed on settled principles that even post-conviction, criminal proceedings involving non-heinous and private disputes can be annulled to prevent abuse of process and to secure the ends of justice.
The Court also took into consideration that the petitioner was a 53-year-old woman, had already undergone custody, had cleared the entire outstanding amount, and was not involved in any other criminal case. It was held that continuation of the conviction would serve no useful purpose and would result in undue hardship.
Decision: The criminal revision and connected applications were allowed. The judgment of conviction and order of sentence passed by the trial court, as well as the appellate judgment, were set aside. The petitioner was acquitted of the charge under Section 138 of the Negotiable Instruments Act and directed to be released from custody, if not required in any other case.