The Supreme Court of India has ruled that criminal proceedings predominantly bearing a civil and commercial flavour can be quashed under Section 482 of the Code of Criminal Procedure, 1973, when an amicable settlement is reached between the accused and the actual victim who suffered the loss, even if the complainant or informant refuses to consent. A Bench comprising Justice K. V. Viswanathan and Justice Arun Palli set aside an order of the Madhya Pradesh High Court that had refused to quash criminal proceedings against an accused on the ground that the complainant was not a signatory to the compromise entered into with the original landowner.
Background of the Case
The dispute originated from a private criminal complaint filed on October 18, 2011, by Subhash Chandra Lalwani before the Judicial Magistrate First Class, Bhopal, under Section 200 of the Code of Criminal Procedure against his brother Anand Kumar Sanjay Lalwani and three others. The complainant alleged that 54.48 acres of land situated in village Kanasaiya, Bhopal, belonged to Pradeep Singh Mehta, who had purportedly given 7.50 acres of it to the complainant.
The complaint alleged that the appellant and other co-accused conspired to usurp the entire property by forging a General Power of Attorney dated March 31, 1997, purportedly executed by Mehta. Using this document, a partnership firm named M/s Paradise Farms was constituted on March 16, 2000, wherein Mehta was shown as contributing the entire 54.48 acres as his capital share, followed by mutation of the land in the firm’s name.
The Magistrate took cognizance of offences punishable under Sections 466, 467, 468, 471, 420, 406, and 120B of the Indian Penal Code, 1860, and the case was committed to the Sessions Court as ST No. 459 of 2018.
In an earlier round of litigation, the High Court had declined to quash the proceedings on April 3, 2018, noting that the complainant had produced no documentary evidence or transfer deed establishing his right over the 7.50 acres. Subsequently, Mehta submitted an affidavit before the High Court stating that he had settled all disputes with the appellant, affirmed that the partnership and mutation were executed under his authorization, denied any subsisting grievance, and requested that the criminal proceedings be quashed.
The Madhya Pradesh High Court, however, dismissed the petition under Section 482 CrPC on September 19, 2024. The High Court held that under Section 320 CrPC, compounding could only take place between the accused and the complainant, and the case could not be quashed based on a settlement with a witness when the complainant was not a party to the compromise.
Arguments of the Parties
Senior Counsel R. Basant, appearing for the appellant, contended that the High Court conflated statutory compounding of offences under Section 320 CrPC with the inherent power of quashing under Section 482 CrPC. He argued that Mehta was the alleged victim of the purported forgery and fraud, and in view of his settlement affidavit, compelling the continuation of criminal proceedings was an abuse of judicial process.
Senior Counsel Meenakshi Arora, representing Mehta, supported the appellant and submitted that consent of the informant was unnecessary because the informant was not the victim, and no consideration or valid transfer had ever taken place regarding the claimed 7.50 acres.
Opposing the plea, counsel for the complainant Sankalp Kochar argued that Mehta’s compromise affidavit contradicted his earlier sworn statement recorded before the Magistrate and that the High Court was right in declining to quash the trial in the absence of the complainant’s consent. Counsel for the State of Madhya Pradesh supported the complainant.
Analysis and Legal Findings of the Court
The Supreme Court examined two fundamental legal aspects: the distinction between compounding and quashing, and the distinction between an “informant” and a “victim.”
Referring to the precedents in Gian Singh v. State of Punjab and Naushey Ali v. State of Uttar Pradesh, the Bench reiterated that the statutory power of compounding under Section 320 CrPC (now Section 359 of the Bharatiya Nagarik Suraksha Sanhita, 2023) is strictly circumscribed by statute, whereas the High Court’s inherent power to quash criminal proceedings under Section 482 CrPC is guided by whether the ends of justice would be served and whether continuation of proceedings would constitute an abuse of process.
Addressing the distinction between an informant and a victim as laid down in Jagjeet Singh v. Ashish Mishra, the Court noted that any person can set criminal law in motion as an informant under Section 39 CrPC (Section 33 BNSS), but only a person who suffered loss or injury qualifies as a victim under Section 2(wa) CrPC and Section 2(y) BNSS.
The Bench observed: “In our opinion, the answer is very plain and clear as daylight. It will only be the victim who can authorize a settlement.”
The Court held that allowing an informant who is not a victim to block a settlement arrived at by the actual victim would yield disastrous consequences. On analyzing the complaint, the Bench found that Mehta was the true victim of the alleged forgery and property dispute. Since Mehta had affirmed the partnership, confirmed his satisfaction with the firm’s accounts, and resolved all issues with the accused, the prosecution had no realistic prospect of resulting in a conviction.
Highlighting the civil nature of the controversy, the Supreme Court observed: “The offences alleged have a civil flavour with commercial overtones. In the face of settlement, chances of conviction are bleak. If not quashed, this will be one more case which will clog the judicial system and be a stumbling block for other important cases crying for justice. Ends of justice would be better served by weeding out these proceedings where the major protagonists in the drama who though originally were at daggers drawn, have buried their differences, shaken hands and moved on.”
Regarding the complainant’s claim, the Court observed that the complainant possessed no documentary title to the 7.50 acres and had not alleged that the appellant was aware of any internal arrangement between Mehta and the complainant. Consequently, no prima facie case survived against the accused.
Decision of the Court
The Supreme Court allowed the appeal, set aside the Madhya Pradesh High Court judgment dated September 19, 2024, and quashed the criminal proceedings in ST No. 459 of 2018 pending before the Second Additional Sessions Judge, Bhopal, against all the accused persons. Consequently, the complainant’s pending revision petition CRR No. 2747 of 2019 before the High Court was also dismissed.
Case Title: Anand Kumar Sanjay Lalwani v. The State of Madhya Pradesh And Ors.
Case No.: Criminal Appeal No. of 2026 (@Special Leave Petition (Crl.) No. 19051/2025)
Bench: Justice K. V. Viswanathan and Justice Arun Palli
Date: August 31, 2026
