Ruled in favour of Hirabhai Vagadabhai Vadher (Applicant)
In Short
A borrower took a loan from a co-operative society, but his repayment cheque bounced because his account did not have enough funds. This led to a criminal case and a six-month jail sentence, which was later upheld by an appeals court. However, after the borrower and the credit society reached a friendly settlement and the dues were fully paid, the High Court accepted the compromise and wiped out the conviction.
The Parties
Party A: Hirabhai Vagadabhai Vadher
Party B: State of Gujarat & Sureshbhai Mohanlal Devmurari (Recovery Manager, Shree Keshod Credit Co-Operative Society Ltd.)
Advocates & Judges
For Party A: Learned Advocate Mr. Salman S. Khan
For Party B: Learned Advocate Mr. Vishvesh M. Chaubey, Learned Advocate Mr. Manan S. Mehta
Judge(s): Hon'ble Justice S.V. Pinto
What the Case Was About
In 2015, Hirabhai Vagadabhai Vadher took a loan of Rs. 4,00,000 from Shree Keshod Credit Co-Operative Society Ltd. and promised to repay it in monthly installments. To secure the payment, he gave a cheque which bounced when the bank presented it due to a lack of funds. The credit society sent a notice, but when no payment was made, they filed a criminal case under the law dealing with bounced cheques. A magistrate court found him guilty and sentenced him to six months in simple prison, a decision that a sessions court later confirmed. Desperate to resolve the matter, the borrower challenged those orders in the High Court while simultaneously negotiating a settlement with the society.
Judgment Date
23/10/2026
The Outcome
The High Court accepted the friendly settlement between the borrower and the credit society. The court set aside the previous judgments and orders of conviction, effectively acquitting the applicant of all charges.
What the Court Looked At
- The court noted that the borrower and the credit society had settled their dispute amicably outside the court.
- The recovery manager of the credit society confirmed that the society received the full settlement amount of Rs. 3,40,000.
- The credit society issued a formal "No Due Certificate" to the borrower and stated they had no objection to wiping out the conviction.
- The court observed that the original complainant appeared in person and voluntarily agreed to the compromise without any fear or pressure.
"The primary object of proceedings under Section 138 N.I. Act is compensatory in nature and encouraged compounding even at later stages."
What This Means For You
Getting convicted and sentenced to jail over a bounced cheque does not mean the door is permanently closed to finding a way out. In this case, the applicant managed to clear his name by working things out directly with the lender, paying the agreed settlement amount, and getting a clear "No Due Certificate." If you find yourself facing criminal pressure over a bounced loan cheque, stepping up to negotiate a fair settlement and clearing your dues can help you convince the court to close the matter entirely. Setback Solutions is here to help you understand your choices and coordinate your next steps in plain language, so you never have to face a confusing banking dispute alone.
You Still Have Options
If you are dealing with a bounced cheque notice, facing a court conviction, or wondering what to do after a bitter financial dispute, remember that it is not the end of the road. You can still explore options such as seeking a second opinion, evaluating a settlement outside the courtroom, or getting non-judicial guidance on how to talk to your creditors. Reach out to Setback Solutions for help understanding your options and coordinating the next step. Please note that Setback Solutions is not a law firm and does not provide formal legal advice or guarantee specific court outcomes, but we are ready to offer practical, plain-language guidance when you need it most.