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by sayum
07 July 2026 3:12 PM
“Once a party receives the full and final settlement, they cannot approbate and reprobate — the law does not permit blowing hot and cold” – In a powerful reaffirmation of contractual finality and procedural fairness, the Madras High Court ruled that filing successive criminal complaints on a dispute that has already been settled with full payment amounts to gross abuse of judicial process. The Court set aside the Trial Court’s refusal to discharge the accused and made it emphatically clear that litigants cannot suppress prior settlements and invoke criminal law to reopen closed chapters.
“The Trial Court Mechanically Took Cognizance Ignoring the Binding Settlement”
The case stems from a long-standing commercial transaction gone sour. The petitioners were accused of defrauding a UK-based complainant of ₹4 crores, under the pretext of helping him invest in properties around Chennai. The complainant alleged that the petitioners, while acting as real estate brokers, misappropriated funds and misused blank signed documents to their advantage.
Though an FIR was initially registered in Crime No.355 of 2008 under Sections 406, 420, and 120B IPC, the matter did not proceed to trial at that point. Instead, the parties entered into a detailed Memorandum of Understanding on 14.06.2008, under which:
“The accused agreed to pay ₹5 crores as full and final settlement, and both sides agreed to withdraw all pending criminal and civil litigation, promising not to initiate any future proceedings on the same matter.”
Despite the express terms of this MOU and actual payment being made, the complainant lodged another criminal complaint in 2009, alleging the same set of facts, without disclosing the existence of the prior settlement or the quashed FIR
“A Party Cannot Blow Hot and Cold: Once Settlement is Accepted, Litigation Must End”
The Court took strong exception to this conduct, observing: “When the defacto complainant accepted the benefits of the Memorandum of Understanding, he is estopped to deny its validity or binding effect.”
The Court was particularly critical of the failure of the prosecution to consider the MOU during further investigation and charge sheet filing. Noting that a closure report had already been accepted based on the civil nature of the allegations, the Court stated:
“The Trial Court ought to have seen the earlier closure report and the subsequent report conjointly. The cumulative effect of both should have guided the decision whether there existed grounds to proceed. The answer was clearly in the negative.”
Justice Ilanthiraiyan emphasized that superior courts have a duty to prevent harassment through “repetitive complaints and mechanical cognizance”.
“Reinvestigation Without New Evidence Is Impermissible”
The High Court also noted that the complainant filed protest petitions seeking reinvestigation, which resulted in a new charge sheet in 2023, long after the original dispute had been closed. The Judge held that such a process was untenable in law unless supported by fresh material, which was absent in this case:
“The investigating agency acted mechanically. There was no fresh oral or documentary evidence unearthed. The final report was filed merely by reassessing old material already settled.”
Citing the Supreme Court’s ruling in Vinay Tyagi v. Irshad Ali (2013) 5 SCC 762, the Court observed:
“Both the earlier closure report and the new report must be read conjointly, and if their cumulative effect does not support the case, the accused must be discharged under Section 227 CrPC.”
It also invoked the principle of estoppel, holding that: “The defacto complainant cannot approbate and reprobate. One who receives the benefit of a settlement cannot later deny it. Litigation must not become a tool for coercion after accepting contractual finality.”
“Closure of FIR Was Valid; Repeated Petitions are Malicious Prosecution”
The Court extensively detailed the timeline of multiple complaints filed by the defacto complainant despite the 2008 MOU. It noted that the complainant:
Suppressed earlier settlement while filing fresh FIR in 2009
Filed protest petitions despite accepting ₹5 crores as full and final payment
Obtained further investigation orders without disclosing the original MOU
Waited several years before initiating fresh proceedings based on same facts
All of this, the Court held, clearly reflected a deliberate attempt to misuse criminal machinery. It said:
“Reinvestigation without new material, and ignoring the previous acceptance of closure, reflects serious non-application of mind by the Magistrate.”
Trial Court Order Set Aside, Accused Discharged
The Madras High Court found that the Magistrate erred in refusing to discharge the accused, especially when the prior settlement, the accepted closure report, and the long delay in lodging subsequent complaints were all on record. It ruled:
“The learned Magistrate acted mechanically and failed to appreciate the legal effect of a binding MOU supported by monetary settlement.”
In conclusion, the Court declared: “Successive criminal complaints arising out of the same facts, once settled and closed, cannot be entertained. The very object of the judicial process would be defeated if such misuse is allowed.”
Accordingly, the Court:
Set aside the Trial Court’s order dated 22.11.2024, rejecting the discharge petition.
Allowed Criminal Revision Petition No. 2304 of 2024, discharging the accused.
Closed all connected miscellaneous petitions.
“Litigants Cannot Suppress Settlements and Reopen Criminal Prosecution on Identical Facts”
The judgment strongly reinforces the principle that settlement through a valid MOU, if fully acted upon, bars subsequent criminal proceedings on the same facts. It sends a message that harassment under the guise of criminal litigation will not be tolerated, and procedural fairness must be upheld even in matters involving alleged large-scale cheating or fraud.
Date of Judgment: 21 August 2025
