A Compromise Before Court Is Not a Private Contract but a Solemn Undertaking: Punjab & Haryana High Court Cancels Anticipatory Bail

“Liberty Is Not a Bargaining Chip”, Punjab and Haryana High Court recalled and cancelled anticipatory bail earlier granted solely on the basis of a court-recorded compromise, after finding that the accused had deliberately violated the settlement terms.

The judgment sends an unambiguous message from the advocate’s perspective: “liberty obtained through deceptive compromises will not be protected.” The Court not only set aside the earlier bail order but also dismissed the anticipatory bail petition on merits, imposed exemplary costs of ₹25,000, and directed the petitioner to surrender within 15 days, with liberty to seek regular bail.

“When the Foundation of Bail Collapses, the Order Cannot Survive”

The dispute arose from FIR No.157 dated 10.07.2020, registered under Section 420 IPC at Police Station Division No.5, Ludhiana. The complainant alleged that the petitioner, a real estate developer and Director of JMS Investment Pvt. Ltd., induced him to purchase a flat in JMS Homes (Akmi Township) for ₹36 lakhs, collected substantial amounts, but failed to deliver possession or refund the money.

After rejection of anticipatory bail by the Sessions Court, the petitioner approached the High Court. During pendency, he expressed willingness to settle, leading the Court to refer parties to mediation. A detailed written compromise dated 25.11.2021 was executed before the Mediation and Conciliation Centre, wherein the petitioner undertook to hand over possession and execute a sale deed of an alternate flat on or before 25.12.2022.

Relying exclusively on this settlement, the High Court on 17.01.2022 granted anticipatory bail, expressly recording that “the parties shall remain abide by the terms and conditions of the settlement agreement.”

“Shopping for Liberty Through Hollow Undertakings Must Be Stopped”

When the petitioner failed to hand over the alternate flat or execute the sale deed, even after expiry of the stipulated date, the complainant moved for recall of bail. The petitioner’s defence was revealing: he argued that the complainant had an “alternative remedy” to enforce the compromise and that recall was barred by Section 362 CrPC / Section 403 BNSS.

Rejecting this stance, the Court held in emphatic terms that once a compromise is recorded by a Court and bail is granted on its basis, the settlement “ceases to be a mere private arrangement.” Justice Goel observed that the accused had converted a contractual promise into a judicial undertaking, and its breach amounted to “a direct affront to the dignity of the Court and a violation of judicial trust.”

The Court took judicial notice of a disturbing trend where accused secure liberty on the pretext of settlement and later resile, leaving complainants remediless. Such conduct, the Court warned, “reduces judicial orders to negotiable instruments.”

“Section 362 CrPC Is No Shield for Abuse of Process”

Addressing the objection under Section 362 CrPC / Section 403 BNSS, the Court drew a sharp distinction between impermissible review of a final judgment and cancellation of bail due to supervening misconduct.

Justice Goel clarified that cancellation of bail is a statutory and inherent corollary of the power to grant bail, and when the very basis of the bail order is destroyed by the accused’s conduct, the Court is fully competent to withdraw protection. Setting aside the earlier bail was not a review, but a consequence of the petitioner’s own breach.

Reliance was placed on Ramadhar Sahu v. State of Madhya Pradesh (2024) to reiterate that bail orders are dynamic and conduct-sensitive, unlike final judgments.

“Custodial Interrogation Is Not the Sole Test for Anticipatory Bail”

Having recalled the compromise-based bail, the Court proceeded to consider anticipatory bail on merits for the first time. The allegations disclosed cheating, fraud, and criminal breach of trust involving substantial monetary loss. The Court noted that the petitioner had multiple FIRs of similar nature, revealing a pattern of conduct, not a stray civil dispute.

Rejecting the argument that custodial interrogation was unnecessary, the Court relied on Sumitha Pradeep v. Arun Kumar C.K. (2022) to hold that absence of custodial interrogation “by itself is not a ground” for anticipatory bail. The prima facie case, gravity of offence, criminal antecedents, and societal impact were held decisive.

“Exemplary Costs Are Necessary So That There Is No Premium on Dishonesty”

In one of the most forceful portions of the judgment, the Court observed that the petitioner had “taken the process of law for a ride” and that judicial leniency had been manipulated through deception. To deter such conduct, exemplary costs of ₹25,000 were imposed, payable to the Punjab State Legal Services Authority, with coercive recovery directions in case of default.

The Punjab and Haryana High Court ultimately allowed the application for recall, set aside the anticipatory bail order dated 17.01.2022, dismissed the main anticipatory bail petition, and directed the petitioner to surrender within 15 days, while permitting him to apply for regular bail.

The ruling stands as a clear warning to accused persons and practitioners alike: compromises recorded before Court are not tactical tools for securing liberty, but binding judicial assurances. Any attempt to exploit them invites not indulgence, but swift and stern correction.

Date of Decision: 03 February 2026