The Punjab and Haryana High Court has clarified that registering an FIR under Section 174-A of the Indian Penal Code solely because a person was declared a proclaimed offender in a dishonoured cheque case under Section 138 of the Negotiable Instruments Act constitutes an abuse of process when the underlying complaint is later withdrawn by mutual settlement. This ruling reinforces the principle that ancillary criminal proceedings cannot persist when the primary civil-commercial dispute has been resolved.
Background & Facts
The Dispute
The petitioner, Navneet, issued a cheque No. 000625 for Rs. 15,519/- in discharge of a legal liability in favour of a complainant. The cheque was dishonoured, prompting the complainant to file a complaint under Section 138 of the Negotiable Instruments Act, 1881. The petitioner failed to appear before the Trial Court, leading the Judicial Magistrate First Class, Panipat, to declare him a proclaimed person by order dated 09.01.2025 (Annexure P-1). Subsequently, on 05.02.2025, an FIR No. 120 was registered at Police Station Panipat City under Section 174-A of the IPC, 1860, based on this declaration.
Key Facts
- Cheque No. 000625 for Rs. 15,519/- issued by petitioner on an unspecified date, dishonoured on or before 05.02.2025
- Complaint under Section 138 NI Act filed in the Court of Judicial Magistrate First Class, Panipat
- Petitioner declared a proclaimed person by order dated 09.01.2025
- FIR No. 120 registered under Section 174-A IPC on 05.02.2025
- Parties reached a compromise, and the complainant filed a statement on 19.12.2025 expressing desire to withdraw the complaint
- Complaint under Section 138 NI Act was dismissed as withdrawn by order dated 19.12.2025 (Annexure P-4)
Procedural History
- 09.01.2025: Judicial Magistrate First Class, Panipat, declared petitioner a proclaimed person in the Section 138 NI Act case
- 05.02.2025: FIR No. 120 registered under Section 174-A IPC at Police Station Panipat City
- 19.12.2025: Complaint under Section 138 NI Act dismissed as withdrawn based on compromise
- 16.03.2026: Petition under Section 528 of BNSS read with Section 482 Cr.P.C. filed before the High Court seeking quashing of FIR and all proceedings
The Parties' Positions
For the Petitioner: The FIR under Section 174-A IPC was registered solely as a consequence of the petitioner’s non-appearance in the Section 138 NI Act case. Since the underlying complaint has been withdrawn by mutual settlement, the continuation of criminal proceedings under Section 174-A IPC is unjustified, oppressive, and an abuse of the process of law. Reliance was placed on Baldev Chand Bansal v. State of Haryana, Ashok Madan v. State of Haryana, and other co-ordinate Bench judgments.
For the Respondent (State): The offence under Section 174-A IPC is independent of the Section 138 NI Act proceeding. The declaration as a proclaimed person and the subsequent FIR are valid legal consequences of non-appearance, regardless of the withdrawal of the civil complaint.
Relief Sought
The petitioner sought quashing of FIR No. 120 dated 05.02.2025 registered under Section 174-A IPC, along with all consequential proceedings, on the ground that they were rendered infructuous by the withdrawal of the underlying complaint.
The Legal Issue
Can an FIR registered under Section 174-A of the IPC, premised solely on a person being declared a proclaimed offender in a Section 138 NI Act case, be quashed when the underlying complaint is withdrawn by mutual settlement?
Arguments Presented
For the Petitioner
The petitioner’s counsel argued that Section 174-A IPC is a procedural mechanism to enforce appearance in court and is not a substantive offence. Its invocation must be tied to the necessity of securing presence in the original proceeding. Once the original proceeding under Section 138 NI Act is withdrawn by consent, the legal basis for the proclamation and the FIR vanishes. Reliance was placed on Baldev Chand Bansal v. State of Haryana (2019) and Ashok Madan v. State of Haryana (2020), where this Court held that continuation of proceedings under Section 174-A IPC after withdrawal of the main complaint amounts to abuse of process. The petitioner had no intention to evade justice; he cooperated upon learning of the proclamation and resolved the dispute.
For the Respondent
The State contended that Section 174-A IPC creates an independent offence of failure to appear before a court after being ordered to do so. The withdrawal of the civil complaint under Section 138 NI Act does not nullify the criminal liability incurred for non-appearance. The State argued that allowing such petitions would undermine judicial authority and encourage litigants to delay proceedings and later withdraw complaints to escape consequences.
The Court's Analysis
The Court examined the nature and purpose of Section 174-A IPC, which criminalises the failure of a person to appear before a court after being ordered to do so. The Court observed that this provision is not intended to punish mere absence but to ensure compliance with judicial process. However, when the very proceeding that triggered the order to appear is terminated by withdrawal, the justification for the ancillary criminal proceedings disappears.
"In view of the same, I find merit in the present petition and accordingly, present petition is allowed and the impugned order dated 24.10.2016 passed by Judicial Magistrate, 1st Class, Panchkula as well as FIR No.64 dated 15.02.2017 registered under Section 174-A of the Indian Penal Code at Police Station Sector-5, Panchkula and all other subsequent proceedings arising thereof, are hereby quashed."
The Court relied on its own co-ordinate Bench decisions in Baldev Chand Bansal and Ashok Madan, both of which held that where the main complaint under Section 138 NI Act is withdrawn due to settlement, the FIR under Section 174-A IPC, which was registered solely on account of non-appearance in that proceeding, becomes redundant and an abuse of process. The Court noted that the petitioner had not acted with mala fide intent; he had appeared before the court upon learning of the proclamation and had resolved the dispute. The continuation of criminal proceedings under Section 174-A IPC in such circumstances serves no legitimate public interest and violates the principle of proportionality.
The Court further distinguished cases where the withdrawal was not voluntary or where the accused had deliberately evaded service. Here, the withdrawal was consensual, recorded in open court, and followed by full cooperation.
The Verdict
The petition succeeded. The High Court quashed FIR No. 120 dated 05.02.2025 registered under Section 174-A of the IPC at Police Station Panipat City, along with all subsequent proceedings arising therefrom. The petitioner was directed to deposit Rs. 20,000/- as costs with the Spinal Rehab Centre, Chandigarh, Plot No.1, Madhya Marg, Sector 28-A, Chandigarh.
What This Means For Similar Cases
Withdrawal of NI Act Complaint Nullifies Ancillary IPC Proceedings
- Practitioners may now file Section 482 Cr.P.C. petitions to quash Section 174-A IPC FIRs when the underlying Section 138 NI Act complaint is withdrawn by settlement
- Courts are likely to treat Section 174-A proceedings as ancillary and not independent where the triggering event (non-appearance in NI Act case) is rendered void
- The burden shifts to the prosecution to show that the accused acted with mala fide intent to evade justice, beyond mere non-appearance
Settlements Must Be Recorded to Strengthen Quashing Petitions
- Always ensure that the withdrawal of the Section 138 complaint is recorded in writing before the Magistrate, with a clear statement of consent
- Obtain a certified copy of the order dismissing the complaint as withdrawn - this becomes the key documentary evidence in quashing petitions
- Avoid relying on informal compromises; judicial record of withdrawal is essential for success
Procedural Prudence Over Punitive Measures
- Courts are increasingly reluctant to permit criminalisation of civil-commercial defaults once resolved
- This judgment reinforces that the criminal justice system should not be used as a tool for coercing settlement or punishing procedural lapses where the substantive dispute is settled
- Lawyers should advise clients to resolve NI Act disputes early and formally to prevent escalation into ancillary criminal proceedings
