Compromise in cheque dishonour disputes can bar continued prosecution when the settlement has been acted upon.

Where a cheque dishonour complaint under Section 138 of the Negotiable Instruments Act was covered by a duly executed compromise, and the petitioner had acted on that settlement by foregoing connected proceedings, the High Court held that the complainant could not resile from the compromise and continue the complaint. The compromise recorded receipt of the cheque amount to the complainant's entire satisfaction and an undertaking to withdraw the complaint. Allowing the complainant to back out in those circumstances would confer an undue benefit and amount to abuse of process. The complaint, the summoning order, and consequential proceedings were therefore quashed.

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Issues: Whether a complaint under Section 138 of the Negotiable Instruments Act, 1881 and the summoning order could be quashed on the basis of a duly executed compromise deed when the complainant backed out from the settlement.

Analysis: The parties had reduced their settlement into writing and the compromise was signed by both sides and witnesses. The petitioner acted upon the compromise by not pursuing the connected FIR, which was followed by cancellation proceedings. The compromise recorded that the cheque amount had been received to the complainant's entire satisfaction, nothing remained due, and the complainant undertook to withdraw the complaint under Section 138. In these circumstances, the Court found that the complainant could not resile from the settlement and continue the complaint, as such conduct would amount to taking undue benefit contrary to the compromise and would abuse the process of law.

Conclusion: The complaint under Section 138 of the Negotiable Instruments Act, 1881 and all consequential proceedings were quashed, and the summoning order was set aside, in favour of the petitioner.

Ratio Decidendi: Where parties have entered into a duly executed compromise and one party has acted upon it, the other party cannot lawfully back out and continue criminal proceedings founded on the settled claim; such continuation is liable to be quashed as an abuse of process.

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