This is a case of cheques, issued pursuant to a deed of compromise, being dishonoured.

The dishonour of cheques, issued subsequent to a settlement agreement, would give rise to a fresh cause of action attracting liability under Section 138 and other remedies under civil law and criminal law. A contrary interpretation would lead to contradictory results. The complainant cannot pursue two parallel prosecutions for same underlying transaction. Once a settlement agreement has been entered into by parties, proceedings in original complaint cannot be sustained and a fresh cause of action accrues to complainant under terms of settlement deed.

If compromise deed is found to be void ab initio on account of coercion, very basis for quashing of first complaint is removed since settlement agreement is deemed to have never existed. Competent Court must be approached for reinstatement of original complaint.

– Hon’ble Justice Dr. D.Y. Chandrachud, M/s. Gimpex Private Ltd. v. Manoj Goel, [Criminal Appeal No. 1068 of 2021].