When parties file a criminal case over a money dispute, settle it, and then jointly ask the court to quash the FIR, should the court simply oblige? The Bombay High Court quashed the FIR, but made the applicant pay costs, holding that criminal law cannot be a bargaining chip or a recovery tool, and that setting the State’s criminal machinery in motion, only to seek ‘consent quashing’ later, wastes public money and judicial time.
Mumbai: The Bombay High Court has quashed a First Information Report in a cheating case that the parties had amicably settled, while imposing costs of Rs 25,000 on the applicant, holding that criminal law cannot be used as a bargaining chip or as a recovery mechanism to settle private disputes [Kaustubh Shivkumar Vibhute v. State of Maharashtra and Another].
Justice Milind N. Jadhav, allowing the quashing application, directed that the costs be paid to the corpus of a charitable trust that runs medical centres, vocational-training centres and a special school for children with intellectual disabilities.
The case
The dispute arose from a commercial relationship in which substantial amounts had been advanced against vendor invoices for services, and, over outstanding dues running into a large sum, a criminal prosecution for cheating was invoked. An FIR had been registered at a Pune police station under provisions of the Bharatiya Nyaya Sanhita, 2023 and the Information Technology Act, 2000. The parties subsequently reconciled their disputes fully, the entire amount was repaid to and received by the complainant company, and the terms of settlement were placed on record; the Court also interacted with the company’s director and authorised signatory over video call to confirm the settlement.
The power to quash on settlement
The Court noted that Section 482 of the CrPC, now substantially reproduced in Section 528 of the BNSS, preserves the inherent power of the High Court to pass orders to prevent the abuse of the process of any court or to secure the ends of justice, and that this power can be invoked to quash an FIR where there is no prima facie case, or where proceedings are instituted with mala fide motives to harass the accused. Relying on State of Haryana v. Bhajan Lal, the Court reiterated that even non-compoundable offences can be quashed where necessary, that the High Court must ask whether the prosecution would further or defeat the interests of justice, and that grievous offences such as murder, rape and dacoity cannot ordinarily be quashed even on settlement, because they carry societal implications.
Where, however, the parties settle a purely private dispute that is civil, commercial or matrimonial in nature, and the offence is neither heinous nor one that impacts society at large, the Court held, a request for quashing on settlement can be considered, and, in appropriate cases, allowed subject to costs.
Why costs in ‘consent quashing’
The Court’s substantive contribution lay in explaining why costs should ordinarily accompany consent quashing. The legal principle, it held, rests on the logic that criminal law cannot be used as a bargaining chip or a tool for private settlements after draining the State and judicial resources; courts cannot be used as a recovery mechanism to settle scores or to bring parties into subjugation. It identified three reasons for imposing costs: the wastage of public resources, the consumption of valuable judicial time, and deterrence against vexatious litigation.
Once the criminal machinery is set in motion, the Court observed, the police must register the case, investigate, deploy personnel, collect evidence and file a charge-sheet, all from the public exchequer, while the trial and sessions courts expend substantial judicial time on summons, scheduling, prosecutors and hearings; if the matter then ends in consent quashing, that time, which could have gone to genuine litigation, stands wasted, adding to pendency. Costs, the Court held, also curb the growing trend of filing strategically exaggerated criminal complaints, particularly in matrimonial and commercial disputes, simply to force financial and legal settlements.
The Court was careful to add that costs are not to be imposed blindly or mechanically: depending on the facts, a complainant who has given a civil dispute the flavour of criminality may be put to costs, and, in strong cases, even the State machinery may be, where a purely civil dispute has been registered as a criminal case; equally, no costs need be imposed where a party is not at fault. On the facts, holding that it was the applicant’s actions that had led the complainant to invoke the criminal process, the Court directed the applicant to bear the Rs 25,000 costs, to be paid to the charity within two weeks.
Why it matters
Quashing an FIR on the basis of a settlement is a well-established use of the High Court’s inherent power, most often in disputes that are essentially private, a soured commercial deal, a family quarrel, where continuing the prosecution serves no public purpose once the parties have made peace. The significance of this order lies in coupling that relief with a cost, and in articulating why: the criminal justice system is a public resource, and using it to apply pressure in what is really a money dispute imposes real costs on the State and the courts, even when the parties later walk away friends.
The order sits within a wider judicial concern about the criminalisation of civil and commercial disputes, the tendency to dress up a recovery claim as cheating to gain leverage. By signalling that consent quashing may carry a price, and that in appropriate cases the complainant, or even the State, may bear it, the Court seeks to deter the strategic use of criminal complaints as settlement pressure, while preserving the flexibility not to penalise a party who is not at fault. The direction that the costs go to a charity for children with disabilities, rather than to the other side, reinforces that the levy is about accountability to the system, not a transfer between the litigants.
For litigants, the practical message is twofold: genuine private settlements can still secure quashing of a non-heinous offence, but those who set the criminal law in motion over what is at heart a civil dispute should expect that the convenience of a later consent quashing may come with a cost. The FIR here stands quashed, and the freeze on the applicant’s bank accounts lifted, subject to payment of the costs, compliance with which the Court will verify on the next date.
Case Title: Kaustubh Shivkumar Vibhute v. State of Maharashtra and Another [Criminal Application (ST) No. 18957 of 2026]
Bench: Justice Milind N. Jadhav, High Court of Judicature at Bombay | Neutral Citation: 2026:BHC-AS:38279
Date of Order: September 18, 2026
Status: FIR quashed on settlement; applicant directed to pay Rs 25,000 costs to a charitable trust; account freeze to be lifted. Consent quashing to ordinarily carry costs to deter misuse of criminal law for private settlements. Listed October 9 for compliance.