Panaji | 01 Dec, 2020 (2 years, 2 months ago)

Criminal Law

settlement in sec 138 of Negotiable instruments act

Facts of the case: I have filed a criminal suit under section 138 of the Negotiable instruments act for cheque bounced. The cheque amount is 21 lakhs. The suit is filed against the Pvt. Ltd. company, and the 5 directors. The cheque is signed by director 1 and 2. The summons has been received by directors 2,3,4 and 5. Director 1 has refused service. Director 2 has come forward with an offer to pay his one fifth part of 21 lakhs. Director 2 has a condition, that after payment of 4.2 lakhs he should be released from the criminal suit. Director 3 and 5 are also likely to pay their share of 4.2 lakhs. Please note I have not filed the civil suit as yet. Question: How is it possible to release the directors who pay their one fifth share from prosecution in the criminal suit. Please provide me a draft agreement to do so. Please provide me with precedent case history to support the agreement.
05 Dec, 2020 | 14:19

You can execute a settlement agreement with all of the concerned directors who are willing to pay their share and the agreement will record the amounts which each of the director shall be paying/has paid. Once the agreement is executed, an application can be filed before the concerned criminal court by all the directors for bringing on record the settlement agreement executed between them and you and requesting to have themselves released from the criminal complaint filed by you. Normally, such application is filed by the accused persons and not the person who has filed the complaint because it is primarily the accused person's concern to get themselves freed of criminal prosecution. Once the directors file such an application, the court will seek your reply also on the same and if you then give a statement before court that you have received the money, the court may pass an order releasing them from the criminal proceeding which is called "compounding of the offence". While compounding the offence, the court may also require the directors to deposit some amount with the local district legal services authority of your State which is in accordance with guidelines issued by Supreme Court of India.

Please email me at in case you wish to discuss this case further with me.


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