FIR Related To Cyber Fraud Allegations Can’t Be Quashed Solely Based On Compromise Or Settlement: Punjab & Haryana High Court
The Punjab and Haryana High Court emphasised that in adjudicating Petitions seeking quashing of criminal proceedings on the basis of a purported compromise between the parties, the Court must transcend the immediate assertions of harmony.
Justice Sumeet Goel, Punjab and Haryana High Court
The Punjab and Haryana High Court held that an FIR (First Information Report) or a Criminal Complaint relating to the allegations of cyber fraud cannot be quashed solely on the basis of compromise or settlement.
The Court held thus in a Petition filed by the accused persons seeking quashing of an FIR registered under Sections 318(4), 336(3), 338, 340, and 61 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNS) and the subsequent proceedings thereto, based on a compromise deed.
A Single Bench of Justice Sumeet Goel observed, “The inherent jurisdiction vested in the High Court ought not be exercised for quashing of an FIR/Criminal Complaint, pertaining to the allegations of cyber fraud, solely on the basis of compromise/settlement. The pervasive public detriment and the systemic erosion of trust, irrevocably, supersedes, the purely private remedial adjustment, achieved between the complainant/victim and the accused.”
The Bench said that where a meticulous judicial appraisal of facts reflects that the cyber fraud allegations have been strategically invoked to lend unwarranted gravity and seriousness to otherwise simpliciter pecuniary transaction inter se the Complainant/victim and the accused, the Court must not permit the rigidity of law to defeat the ends of justice and may sanction the bona fide compromise/settlement to put an end to the lis.
Advocate Najar Singh represented the Petitioners, while AAG Gurmeet Singh represented the Respondents.
Facts of the Case
As per the FIR, the Complainant was employed as an Accountant in a private company and had an account with the HDFC Bank. In June 2025, allegedly a total of seven unauthorised transactions amounting to Rs. 14,83,696/- were carried out from the said account without the knowledge or consent of the Complainant. It was alleged that no OTP or transaction message was received at the time of such transactions.
Upon logging into net banking, the Complainant discovered the alleged fraudulent withdrawals. She later learned that the money had been transferred to fraudulent accounts opened using fake documents through a fake website. Hence, an online complaint was lodged at the Cyber Crime Helpline (1930) and a complaint was registered. Based on this complaint, the FIR was registered.
Reasoning
The High Court in view of the facts and circumstances of the case, remarked, “It is, thus, unequivocal that the plenary powers vested in a High Court, by virtue of its very constitution, are to be exercised with circumspection and in a manner befitting judicial propriety. The invocation of inherent jurisdiction must serve the ends of justice, necessitating a holistic evaluation of all the attendant circumstances. The criminal justice system is not merely a forum for resolving interpersonal disputes; it embodies the sovereign obligation of the State to safeguard the fundamental rights of its citizens, including the protection of life, liberty, and property.”
The Court emphasised that in adjudicating Petitions seeking quashing of criminal proceedings on the basis of a purported compromise between the parties, the Court must transcend the immediate assertions of harmony.
“While the absence of current grievances between parties may be a material consideration, it cannot be the determinative criterion. The court is duty-bound to scrutinize the gravity of the allegations, the nature of the offences, and their ramifications on the public order and societal welfare. This judicial responsibility is accentuated in cases involving heinous or egregious offences, where the broader societal interest outweighs private settlements”, it noted.
The Court added that compromising such cases on the ground of mutual accord risks undermining the public confidence in the justice delivery system and jeopardizing the larger interest of law enforcement and might also imply some kind of impunity being accorded to the erring party(s).
“The contemporary felony of cyber fraud presents a transgression sui generis that mandates its categorical exclusion from the judicial indulgence for quashing of criminal proceedings solely on the basis of a compromise/settlement having been arrived at between the complainant/victim and the accused. Digital economy is the unassailable locus of modern commerce, sustained entirely by the bedrock of public trust. Cyber Fraud acts as a corrosive insurgency, causing not merely an isolated pecuniary loss, but an aggravated systemic damage upon the public financial exchequer, thereby inflicting profound in rem detriment”, it observed.
The Court said that owing to the anonymity, trans-border expanse and a propensity of causing substantial adverse impact, a Court is compelled to look beyond the private settlement, lest it may tantamount to granting judicial imprimatur to an ongoing systemic threat.
“When such an offender escapes prosecution simply by offering post facto restitution, the penal measure is ipso facto converted into a mere calculus of profit and risk. The perpetrator of such an organized crime is emboldened to treat the compromise/settlement as a predictable expense, creating a deleterious lacuna in the law and gravely impacting the sanctity of criminal justice system. When a cyber fraud is perpetrated, the immediate and visible financial deceit/loss is only the tip of the spear; the real victim is the digital ecosystem itself”, it enunciated.
The Court was of the view that a private compromise/settlement between the rival private parties, i.e. the accused and the Complainant/victim, is merely an ineffectual repudiation of individual liability, lacking utterly in addressing the cascading and unquantifiable institutional injury.
“Pertinently, this Court is abundantly cognizant of the fact that the sine qua non behind a complainant/victim’s assent to a compromise/settlement in cases of financial fraud remains the assured restitution of the monies of which she has been duped/criminally divested. This assurance of monetary indemnification acts as a sole allurement motivating her to participate in compromise/settlement proceedings. Nevertheless, such a compromise/settlement, having been arrived under the allurement of monetary restitution, is inherently incapable of ameliorating the inherent gravity and egregious nature of the offence of cyber fraud, which has the propensity of causing extensive public detriment and imparting a pernicious impact on the foundational trust, underpinning any commercial activity”, it further said.
It reiterated that a Court in its transcendent duty to ensure complete justice, must unflinchingly be cognizant of practical exigencies and social verities.
Conclusion
The Court also observed that an Order passed by the Court, while exercising such discretion, must be a speaking Order clearly giving out reasons therein & must be in consonance with the basic canons of Justice, good conscience and equity.
“… the petition in hand has been filed for quashing of the impugned FIR (as also the proceeding emanating therefrom) on the basis of compromise deed(s) dated 20.09.2025. It is neither pleaded nor decipherable from the factual milieu of the case in hand that the rival private parties were known to each other before hand or that the offence is in the nature of a private dispute between them. On the contrary, a bare perusal of the contents of the FIR in question, as also the other factual aspects of the case in hand, it is abundantly deducible that the case in hand pertains to a cyber fraud simpliciter. Ergo, the petition in hand ought not to be entreated and deserves rejection”, it concluded.
Accordingly, the High Court dismissed the Petition and refused to quash the FIR and proceedings subsequent thereto.
Cause Title- Badri Mandal & Others v. State of Haryana and Another (Neutral Citation: 2025:PHHC:155780)
Appearance:
Petitioners: Advocates Najar Singh and Navmohit Singh.
Respondents: AAG Gurmeet Singh and Advocate Smit Kamboj.
