Section 147 NI Act Overrides CrPC To Permit Offence Compounding: Uttarakhand HC

Extinguishing a long-standing criminal prosecution following an amicable settlement, the High Court of Uttarakhand quashed a conviction in a cheque bounce case, reaffirming that the statutory mandate under Section 147 of the Negotiable Instruments Act, 1881 permits compounding of offences regardless of general procedural bars. The decision underscores that post-conviction settlements, when voluntarily arrived at, serve the primary statutory goal of financial restitution over punitive incarceration.

A single-judge bench of Justice Alok Mahra heard the criminal revision challenging the concurrent judgments of the lower courts convicting the revisionist under Section 138 of the Negotiable Instruments Act, 1881.

Analyzing the statutory scope of settlements under Section 147 of the Negotiable Instruments Act, 1881, the Court held that maintaining a conviction serves no purpose once the parties settle the underlying dispute.

The Court, in its reasoning, observed: "Considering the facts and circumstances of the case, particularly the fact that the dispute between the parties has been amicably settled; the revisionist has paid the settled amount to respondent no. 2/complainant; the complainant has received the amount and has categorically stated that he has no further grievance against the revisionist; and the offence under Section 138 of the N.I. Act is compoundable in view of Section 147 thereof, this Court is of the considered view that no useful purpose would be served in maintaining the conviction and sentence against the revisionist."

The Court has following directions:

"Accordingly, the compounding application is allowed and the offence is permitted to be compounded. Consequently, the judgment and order dated 07.09.2021 passed by the learned Judicial Magistrate, Nainital in Criminal Complaint Case No. 3003 of 2018 and the judgment and order dated 21.07.2025 passed by the learned 2nd Additional Sessions Judge, Nainital in Criminal Appeal No. 45 of 2021 are hereby set aside. The revisionist is acquitted of the offence punishable under Section 138 of the N.I. Act.

Consequently, the present criminal revision is allowed in the aforesaid terms.

The revisionist is presently in custody in connection with the present matter. Since the dispute between the parties has now been amicably settled and the impugned judgment and order have been set aside, the revisionist shall be released forthwith, if not required in any other case, subject to compliance with the requisite formalities, if any, in accordance with law.

Respondent no. 2/complainant shall be permitted to withdraw a sum of ₹17,000/- from the amount of ₹22,000/- already deposited before the learned Court below, and the remaining sum of ₹5,000/- shall be deposited in the Government Exchequer in accordance with the judgment and order dated 07.09.2021."

Background

The revisionist was initially convicted by the Judicial Magistrate, Nainital, under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to undergo one year of simple imprisonment along with a fine of ₹1,10,000/-. The 2nd Additional Sessions Judge, Nainital subsequently dismissed the revisionist's appeal and affirmed the conviction order.

Challenging the orders, the revisionist filed a criminal revision before the High Court along with a delay condonation application for a delay of 294 days. The High Court condoned the delay after finding sufficient cause, as the prayer was not seriously opposed. During the pendency of the revision, the parties amicably settled the matter. The revisionist paid the mutually agreed amount of ₹88,000/- directly to the complainant, in addition to ₹22,000/- already deposited before the lower court. The parties filed a compounding application, and the complainant confirmed receiving the full settlement amount without further grievance. Consequently, the High Court allowed the compounding application, set aside the judgments of conviction, acquitted the revisionist, and ordered his immediate release.

Case Details:
Case No.: Criminal Revision No. 618 of 2026
Neutral Citation: 2026:UHC:7176
Case Title: Naresh Negi Alias Naresh Singh v. State Of Uttarakhand and another
Appearances:
For the Petitioner(s): Mr. Abhishek Joshi, learned counsel
For the Respondent(s): Mr. Akshay Latwal, learned A.G.A. along with Mr. Manoj Bhatt, learned Brief Holder for the State; Mr. Ajay Singh Bisht, learned counsel for respondent no.2

Source: 2026 CaseBase(UTT) 36