Authority: High Court of Gujarat at Ahmedabad

Order Date: 23/10/2026

Case Overview

  • Parties: Applicant – Prakash Amaratbhai Aal, owner of Maa Corporation; Respondent No.1 – State of Gujarat; Respondent No.2 – Desai Dahyabhai Malabhai, Proprietor of Joitabhai Malabhai Co.
  • Nature of Proceeding: Criminal Revision Application (against conviction under Section 138 of the Negotiable Instruments Act) No. 2392 of 2026.
  • Background: The applicant was convicted by the Additional Sessions Judge, Banaskantha at Deesa (Criminal Appeal No. 30/2026 dated 28‑02‑2026) confirming the judgment of the Additional Chief Judicial Magistrate, Deesa (Criminal Case No. 4548/2021 dated 19‑01‑2026). The conviction imposed simple imprisonment for one year and a fine/compensation of Rs 31,63,570; default provision of three months’ imprisonment.
  • Settlement: Both parties submitted that the dispute was amicably settled. The complainant, Desai Dahyabhai Malabhai, affirmed receipt of the entire settlement amount and expressed no desire to pursue further prosecution. An affidavit supporting the settlement was filed and recorded.
  • Legal Basis for Compounding: The Court cited Section 147 of the NI Act, which makes offences under the Act compoundable. It referenced Supreme Court judgments – Damodar S. Prabhu v. Sayed Babalal H. (2010), Gian Chand Garg v. Harpal Singh (2025), Meters and 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) – establishing that post‑conviction compounding is permissible, subject to payment of prescribed costs.

Final Outcome

  • The judgment and order of conviction dated 19‑01‑2026 (Criminal Case No. 4548/2021) and its confirmation dated 28‑02‑2026 (Criminal Appeal No. 30/2026) are quashed and set aside on the ground of settlement.
  • The applicant must deposit costs equal to 7.5 % of the settlement amount with the District Service Legal Authority, Banaskantha, within six weeks from the date of his release, and furnish proof of such deposit.
  • Upon deposit of the stipulated costs, the offence is compounded and the applicant is acquitted of the charge under Section 138 of the NI Act.
  • The rule is made absolute; direct service is permitted.

Topics: Legal Compounding, Cheque Bounce Conviction, Settlement