Court Rejects Delay Condonation Plea and Double Jeopardy Defense, Affirms Continued Criminal Prosecution under Section 138 NI Act Despite Civil Settlement
In a significant judgment dated July 10, 2026, the Delhi High Court, presided over by Justice Dr. Swarana Kanta Sharma, upheld the conviction of Sh. Rajpal Naurang Yadav and others in seven complaint cases filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complaints arose from the dishonour of post-dated cheques amounting to approximately Rs. 11.10 crores issued pursuant to a series of agreements between the complainant M/s Murli Projects Pvt. Ltd. and the petitioners dating back to 2010.
The petitioners had contended that a subsequent Consent Agreement dated April 21, 2013, which restructured the liability to Rs. 10.40 crores with fresh post-dated cheques and culminated in a consent decree by the Delhi High Court in 2016, extinguished the earlier complaints related to the original cheques. They argued that continuation of prosecution on the original complaints was impermissible and amounted to double jeopardy since civil execution proceedings, including civil imprisonment, had already taken place.
Rejecting these contentions, the High Court held that the Consent Agreement expressly provided, particularly in Clause 6, that the pending complaints under Section 138 NI Act would continue unless the full settlement amount was paid as per the agreed schedule. Since the petitioners failed to comply with the payment terms, the complainant was entitled to proceed with the original complaints. The Court distinguished the Supreme Court’s decision in Gimpex (P) Ltd. v. Manoj Goel, 2022, noting that unlike that case, no fresh complaints were filed on the settlement cheques here, and thus no parallel prosecutions existed.
On the issue of delay in filing revision petitions challenging the conviction, the Court observed an inordinate delay of over five years, attributing it primarily to alleged incorrect legal advice by earlier counsel. However, the Court found this explanation to lack bona fides, especially since the petitioners were represented by multiple senior advocates and had actively pursued litigation over the years. Accordingly, the application for condonation of delay was dismissed, and the revision petitions were rejected.
Regarding the double jeopardy plea, the Court clarified that civil imprisonment in execution of a money decree is not punishment for a criminal offence. It emphasized that civil and criminal proceedings operate on different causes of action and can proceed simultaneously. The Court upheld the concurrent findings of the lower courts rejecting the plea of double jeopardy. However, in recognition of the civil imprisonment already undergone by petitioner no. 1, the Court reduced his sentence from six months to three months imprisonment in each case, with all sentences running concurrently.
The Court also examined the quantum of fine imposed. It noted that the Sessions Court had already adjusted the fine amount considering payments made by the petitioners towards the civil decree. Further, since an additional Rs. 2.25 crores was deposited during the pendency of the appeal, the Court ordered appropriate adjustment in the fine. Petitioner no. 2 was sentenced to pay fines in each case with default imprisonment as per the earlier order.
Importantly, the Court refused to grant probation to petitioner no. 1, citing his failure to honour undertakings and his conduct during the proceedings. The Court admonished the non-operational petitioner company, Shree Naurang Godavari Entertainment Pvt. Ltd., observing that adequate compensation had already been awarded through the criminal proceedings.
The Court's final order dismissed the revision petitions challenging the conviction and upheld the criminal complaints, while partially modifying the sentence and fine amounts to reflect payments made. The sentences shall remain suspended for two months to allow the petitioners to avail legal remedies before enforcement.
This judgment reinforces the principle that a subsequent settlement or consent decree does not automatically extinguish earlier complaints under Section 138 NI Act unless the agreed payments are fully honoured. Failure to comply with settlement terms permits continuation of original complaints without constituting an abuse of process or double jeopardy.
Bottom line:-
A subsequent consent agreement and decree do not automatically extinguish earlier complaints under Section 138 of the Negotiable Instruments Act unless the agreed payments under the settlement are fully made; failure to comply permits continuation of original complaints without amounting to double jeopardy.
Statutory provision(s):
Section 138 Negotiable Instruments Act, 1881; Section 397 Criminal Procedure Code; Section 482 Criminal Procedure Code; Article 20(2) Constitution of India; Section 300 Criminal Procedure Code; Sections 3 and 4 Probation of Offenders Act, 1958; Section 58(2) Code of Civil Procedure, 1908
Sh. Rajpal Naurang Yadav v. M/s. Murli Projects Pvt. Ltd, (Delhi) : Law Finder Doc id # 2938054
