Srinagar: In a ruling clarifying the limits of a criminal court’s jurisdiction in cheque dishonour cases, the High Court of J&K and Ladakh has held that once a complaint under the Negotiable Instruments Act is disposed of on the basis of a compromise and the accused is acquitted, the Magistrate becomes functus officio and cannot later enforce the terms of the settlement through execution proceedings unless the final order itself contains an executable judicial direction.
Justice Wasim Sadiq Nargal delivered the judgment while allowing a petition filed by Gulla Ganaie alias Gulzar Ahmad Ganaie, setting aside the orders of the Chief Judicial Magistrate (CJM), Budgam, dated November 17, 2025 and May 6, 2026, which had initiated execution proceedings and directed steps for attachment of the petitioner’s property.
The case originated from a complaint under Section 138 of the Negotiable Instruments Act relating to cheque dishonour. During the pendency of the proceedings, the parties entered into a compromise on July 26, 2024, under which the petitioner agreed to pay Rs 6.60 lakh to the complainant, while the complainant agreed to provide a patch of land to the petitioner.
Recording the settlement, the CJM dismissed the complaint and acquitted the accused.
Later, alleging that the petitioner had failed to honour the compromise, the complainant approached the same court seeking execution of the settlement.
The CJM entertained the application and subsequently directed the complainant to furnish details of the petitioner’s properties for attachment.
Assailing these proceedings before the High Court, the petitioner contended that the criminal case had already attained finality upon his acquittal and that the Magistrate lacked jurisdiction to reopen the matter or execute the compromise after the disposal of the complaint.
Accepting the contention, Justice Nargal observed that once the complaint was disposed of and the accused acquitted, the criminal proceedings came to an end and the Magistrate became functus officio, leaving the court with no continuing jurisdiction unless expressly authorised by law.
“The criminal proceedings stood concluded and the learned Magistrate became functus officio. Thereafter, the criminal court ceased to possess any continuing jurisdiction over the complaint,” the court observed.
The High Court further noted that while the order dated July 26, 2024 recorded the compromise, it neither incorporated the terms of the settlement into its operative portion nor directed that the agreed amount could be recovered under Sections 421 and 431 of the Code of Criminal Procedure.
The court held that coercive recovery mechanisms available under criminal procedure can be invoked only where there is an executable judicial direction passed by the court and not merely because the parties have entered into a private settlement.
Relying on the Supreme Court’s judgment in M/s Gimpex Private Limited v. Manoj Goel, Justice Nargal observed that a compromise creates independent contractual rights and obligations between the parties.
Any breach of such a settlement may give rise to an independent legal remedy, but it does not revive the jurisdiction of the criminal court after the complaint has been finally disposed of.
The High Court also referred to the Delhi High Court’s decision in Dayawati v. Yogesh Kumar Gosain, which held that a settlement in a cheque bounce case can be enforced through criminal recovery provisions only if the court expressly incorporates the settlement terms into its final order and provides for recovery in the event of default.
Finding that no such executable direction formed part of the July 26, 2024 order, the High Court held that the execution proceedings initiated by the CJM and the consequential attachment order were “wholly without the authority of law.”
Accordingly, the High Court quashed the execution proceedings as well as the attachment order passed by the Chief Judicial Magistrate, Budgam.
However, it clarified that it had not expressed any opinion on the validity of the compromise or the alleged breach thereof, leaving it open to the complainant to pursue any other remedy available under law before the competent forum.
