In recent years, India has witnessed a significant surge in cyber frauds—ranging from phishing attacks and unauthorised digital transactions to sophisticated digital impersonation schemes. With the rising number of such offences, courts are increasingly confronted with petitions seeking quashing of FIRs based on compromise, filed under Section 482 of the Cr.P.C. or its counterpart under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, namely Section 528.
A recent judgment of the Punjab and Haryana High Court in Badri Mandal & Ors. v. State of Haryana & Anr. (12 November 2025) has once again stirred debate on whether offences of cyber fraud—though sometimes financially compensable—can be quashed merely because the complainant and the accused have reached a settlement.
The Court decisively held that cyber fraud is not merely a private dispute but a public wrong that impacts digital trust, and therefore, cannot ordinarily be quashed based solely on compromise.
Inherent Powers of High Courts under BNSS
Section 528 BNSS gives the High Court inherent power to pass any order necessary to:
“Nothing in this Sanhita shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary … to prevent abuse of the process of any Court or otherwise to secure the ends of justice.”
Thus, High Courts remain empowered to quash FIRs, even for non-compoundable offences, if justice so demands.
However, these powers are meant to be exercised sparingly, carefully, and judiciously, especially when offences affect public interest.
Supreme Court’s Stand on Quashing Based on Compromise
Several landmark judgments provide a roadmap for courts:
1. Gian Singh v. State of Punjab (2012)
The Supreme Court held that:
- High Courts may quash criminal proceedings where the dispute is primarily civil, commercial, or private.
- But heinous offences and offences involving mental depravity cannot be quashed on compromise.
2. Narinder Singh v. State of Punjab (2014)
The Court emphasised:
- Compromise may justify quashing only where continuation would be oppressive.
- But public-interest crimes cannot be quashed even if the victim pardons the accused.
3. Parbatbhai Aahir v. State of Gujarat (2017)
A three-judge bench reaffirmed:
- Quashing is permissible in disputes of a predominantly civil or personal nature.
- But economic offences involving large-scale public impact are an exception.
4. State of Madhya Pradesh v. Laxmi Narayan (2019)
The Court clarified:
- Crimes such as financial or economic fraud cannot be quashed by citing settlements.
These judgments create a clear judicial boundary:
If the offence affects society at large, the State’s interest overrides individual settlements.
Cyber Fraud: A New Category of Public Wrong
The advent of digital banking and online commerce has transformed cyber fraud into a systemic threat.
Courts increasingly recognise that:
- Cyber fraud is not merely a dispute between two individuals.
- It erodes public trust in digital financial systems.
- It may involve interstate and transnational networks, fake identities, and organised digital crime.
Thus, even when the victim receives monetary restitution, the crime’s impact extends far beyond the individual case.
Facts of the Case: Badri Mandal & Ors. v. State of Haryana (2025)
An accountant lodged an FIR alleging unauthorised online transactions worth ₹14.83 lakh from her HDFC bank account.
She had received no OTPs or alerts, and subsequent investigation revealed:
- The money was routed through fraudulent accounts
- Accounts were created via fake KYC documents
- Transactions were executed through a fake website
The accused later sought quashing under Section 528 BNSS, citing a compromise deed with the complainant.
Arguments of the Parties
1. Submissions on Behalf of the Petitioners
The petitioners contended that they had been falsely implicated in the impugned FIR relating to cyber fraud. It was argued that, after initial misunderstanding and with the intervention of respectable persons, the parties had amicably resolved their dispute. The complainant had executed a compromise deed dated 20.09.2025, unequivocally affirming that she wished to withdraw all allegations and had no subsisting grievance against the petitioners.
Counsel further pointed out that, pursuant to the High Court’s earlier directions, the statements of both parties were duly recorded before the Magistrate, who confirmed that the compromise was voluntary and free from coercion. It was thus argued that continuing criminal proceedings would serve no purpose and would instead amount to an abuse of the judicial process. The petitioners urged the Court to exercise its inherent powers under Section 528 BNSS to secure the ends of justice by quashing the FIR.
2. Submissions on Behalf of the State
The State opposed the petition and asserted that the allegations in the FIR involved serious cyber fraud, resulting in substantial unauthorised withdrawals from the complainant’s bank account. Such offences, the State argued, are not confined to private individuals—they undermine public confidence in digital transactions and compromise the integrity of financial systems.
Emphasising the systemic harm caused by cybercrime, the State submitted that a compromise between the parties cannot dilute the gravity of such offences. It was argued that the inherent powers under Section 528 BNSS must be exercised sparingly and certainly not in cases that involve public interest, digital financial security, or widespread societal implications. Accordingly, the State prayed for dismissal of the petition.
High Court’s Reasoning
1. Cyber Fraud is Inherently a Public Wrong
The Court held that cyber fraud:
- Causes systemic damage to public trust in digital banking.
- Has cascading effects on the financial ecosystem.
- Cannot be neutralised by a private compromise.
It stated:
“The real victim is the digital ecosystem itself … A private compromise is incapable of repairing the institutional injury.”
2. Settlements May Be Driven by the Allurement of Restitution
The Court observed that victims may agree to a compromise only because they are assured a monetary refund.
But:
- Restitution does not erase the crime.
- Permitting quashing would convert criminal law into a profit–risk calculation for fraudsters.
3. High Courts Must Distinguish Between Genuine Civil Disputes and Cyber Fraud
The Court acknowledged a nuanced exception:
If allegations of “cyber fraud” are made merely to escalate pressure in a private monetary dispute, the High Court may consider quashing after factual scrutiny.
However, in genuine cyber fraud:
- The offence has no private background.
- Victim and accused had no prior relationship.
- The fraud was part of a digital financial crime.
Thus, quashing was impermissible.
4. No Straightjacket Formula Can Be Applied
The Court emphasised:
- Each case must be examined independently.
- However, cyber fraud generally falls in the category of non-quashable offences due to public interest.
5. Application to the Present Case
Upon evaluating the FIR, the Court held:
- This was a pure case of cyber fraud, not a civil or private dispute.
- The parties were strangers.
- Fraud was executed through fake accounts and a fake digital portal.
- It affected not only the complainant but the entire digital system.
Therefore, quashing was refused, and the petition was dismissed.
Case Laws Referred
1. Gian Singh v. State of Punjab, (2012) 10 SCC 303
The Supreme Court held that the High Court’s inherent power to quash proceedings under Section 482 CrPC is distinct from the power to compound offences. Quashing on compromise is permissible only in cases of predominantly civil or personal disputes, such as commercial, financial, or matrimonial matters. However, heinous offences, offences involving mental depravity, or offences affecting society at large, cannot be quashed even if the parties settle. The Court stressed that the nature and gravity of the offence must always guide the decision.
2. Narinder Singh v. State of Punjab, (2014) 6 SCC 466
This judgment laid down detailed guidelines for quashing criminal cases based on settlement. The Court reiterated that quashing should aim to (i) secure the ends of justice, or (ii) prevent abuse of process. It cautioned that such power must be exercised sparingly, especially not in cases involving serious crimes, offences under special statutes, or offences committed by public servants. However, cases with a predominantly civil or matrimonial character may be quashed if the chances of conviction are remote and continuation would cause unnecessary oppression.
3. Parbatbhai Aahir v. State of Gujarat, AIR 2017 SC 4843
A three-judge bench summarised the broad principles governing quashing on the basis of compromise. The Court held that inherent powers exist to secure justice or prevent abuse of process, but the High Court must consider the nature and societal impact of the offence.
Importantly, the Court carved out an exception: economic offences or financial frauds impacting the State’s economic system should not be quashed, as they have consequences far beyond a private dispute.
Conclusion
The jurisprudence on quashing of FIRs makes one principle unmistakably clear: a private settlement cannot erase a crime that harms public systems, economic stability, or societal trust. Cyber fraud is one such offence. It strikes not only at an individual victim but at the very foundation of India’s digital economy, financial architecture, and public confidence in online transactions.
While the BNSS continues to vest High Courts with wide inherent powers under Section 528, this discretion is not unbounded. Courts are expected to exercise such power in a manner that protects public interest, reinforces deterrence, and upholds the integrity of the criminal justice system.
The decision in Badri Mandal v. State of Haryana reinforces a crucial judicial stance: economic and technology-driven offences cannot be trivialised as private disputes for the sake of convenience or restitution.
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