Authority: High Court of Gujarat at Ahmedabad

Order Date: 23/10/2026

Case Overview

  • Parties: Applicant/Accused – Hirabhai Vagadbhai Vadhher; Respondent No.1 – State of Gujarat; Respondent No.2 – Original complainant Sureshbhai Mohanlal Devmurari, Recovery Officer of Shree Keshod Credit Co‑Operative Society Ltd, Keshod.
  • Nature of proceedings: Criminal Revision Application No. 2167 of 2025 filed against conviction under Section 138 of the Negotiable Instruments Act, 1881.
  • Background: The applicant obtained a loan of Rs 4,00,000 in 2015 with monthly instalments of Rs 14,460 for 36 months and executed a promissory note dated 19‑03‑2015. He issued Cheque No. 017840 dated 03‑02‑2022 from his account with Veraval Peoples Co‑operative Bank Ltd, Keshod, which was dishonoured with “Funds Insufficient” memo. A statutory notice dated 08‑02‑2022 was sent, but the applicant neither replied nor paid, leading to a criminal complaint under Section 138.
  • Trial history: Additional Chief Judicial Magistrate, Keshod convicted the applicant on 30‑12‑2024, sentencing him to six months simple imprisonment (Criminal Case No. 142 of 2022). The conviction was upheld by the 2nd Additional Sessions Judge, Keshod on 10‑10‑2025 (Criminal Appeal No. 46 of 2025). The applicant then filed the present revision application.
  • Settlement: The parties reached an amicable settlement outside court. The complainant received the full settlement amount of Rs 3,40,000 and issued a No‑Due Certificate dated 22‑06‑2026. An affidavit by the complainant (Annexure‑R/1) and the NOC (Annexure‑R/2) were placed on record.
  • Legal precedents cited: The order references Supreme Court judgments affirming that offences under Section 138 are compoundable under Section 147 of the NI Act, including Damodar S. Prabhu v. Sayed Babalal H. (2010), Gian Chand Garg v. Harpal Singh (2025), Meters & Instruments Pvt. Ltd. v. Kanchan Mehta (2018), P. Mohanraj & Ors. v. Shah Brothers Ispat Pvt. Ltd. (2021), Gimpex Pvt. Ltd. v. Manoj Goel (2021), B.V. Seshaiah v. State of Telangana (2023), and Sanjabij Tari v. Kishore S. Borcar (2025) which clarified compounding costs at 7.5% of the cheque amount.

Final Outcome

  • The conviction and judgment dated 30‑12‑2024 (Additional Chief Judicial Magistrate) and 10‑10‑2025 (2nd Additional Sessions Judge) are quashed and set aside on the basis of the compromise.
  • The applicant is acquitted of the charge under Section 138 of the NI Act, subject to the condition that he deposits costs equal to 7.5% of the cheque amount (approximately Rs 25,500) with the District Legal Services Authority, Junagadh, within six weeks and places proof of such deposit on record.
  • Upon deposit of the stipulated costs, the offence is deemed compounded and the applicant stands fully acquitted.

Topics: Legal Compounding, Negotiable Instruments Act, Criminal Revision