Digital Economy Based On Public Trust, Cyber Fraud Offences Can't Be Quashed Merely On Compromise: Punjab & Haryana High Court

The Punjab and Haryana High Court has observed that cyber fraud constitutes a systemic offence against public trust and the digital economy, and therefore, such cases cannot be quashed merely on the basis of a compromise or settlement between the complainant and the accused.

Justice Sumeet Goel said, "The contemporary felony of cyber fraud presents a transgression sui generis that mandates its categorical exclusion from the judicial indulgence for quashing of criminal proceedings solely on the basis of a compromise/settlement having been arrived at between the complainant/victim and the accused. Digital economy is the unassailable locus of modern commerce, sustained entirely by the bedrock of public trust."

Cyber Fraud acts as a corrosive insurgency, causing not merely an isolated pecuniary loss, but an aggravated systemic damage upon the public financial exchequer, thereby inflicting profound in rem detriment. Owing to the anonymity, trans-border expanse and a propensity of causing substantial adverse impact, a court is compelled to look beyond the private settlement, lest it may tantamount to granting judicial imprimatur to an ongoing systemic threat, the judge added.

The Court further said, "When such an offender escapes prosecution simply by offering post facto restitution, the penal measure is ipso facto converted into a mere calculus of profit and risk. The perpetrator of such an organized crime is emboldened to treat the compromise/settlement as a predictable expense, creating a deleterious lacuna in the law and gravely impacting the sanctity of criminal justice system."

These observation were made while dismissing a petition filed under Section 528 of the BNSS, seeking quashing of FIR registered under Sections 318(4), 336(3), 338, 340, 61 of BNS at Police Station Cyber Sonipat, Haryana, on the ground that the matter had been amicably settled between the parties.

The FIR, lodged by one Divya, an accountant at a private institute, alleged that unauthorized online transactions worth ₹14.83 lakh were carried out from her HDFC Bank account without her consent. The complainant discovered the fraudulent withdrawals upon logging into her net banking account and lodged a cybercrime complaint, leading to the registration of the FIR.

The petitioners sought quashing of the FIR on the basis of a compromise deed, claiming that the matter had been resolved amicably. The complainant also filed an affidavit stating she had no objection to the quashing of the FIR.

The State, however, opposed the plea, submitting that cyber fraud cases affect not only the complainant but also undermine public confidence in the digital financial system and cannot be treated as mere private disputes.

After hearing the submissions, the Court undertook a detailed examination of the scope of inherent powers of the High Court under Section 528 of the BNSS (analogous to Section 482 CrPC), reiterating that such powers are to be exercised sparingly and only to secure the ends of justice.

The Court emphasized that cyber fraud is a “corrosive insurgency” that causes not merely an isolated pecuniary loss but an aggravated systemic damage upon the public financial exchequer, thereby inflicting profound in rem detriment. The judgment noted that permitting offenders to escape prosecution by offering post-facto restitution would convert punishment into a “calculus of profit and risk”, emboldening perpetrators and undermining the integrity of the justice system.

"When such an offender escapes prosecution simply by offering post facto restitution, the penal measure is ipso facto converted into a mere calculus of profit and risk. The perpetrator of such an organized crime is emboldened to treat the compromise/settlement as a predictable expense, creating a deleterious lacuna in the law and gravely impacting the sanctity of criminal justice system," the Court observed.

The Court, however, clarified that in cases where allegations of cyber fraud are artificially invoked to lend gravity to an otherwise private pecuniary dispute, the High Court retains discretion to permit compromise in the interest of justice.

In the facts of the present case, the Court found that the FIR was a case of “cyber fraud simpliciter” and not a private monetary dispute between parties. Accordingly, the petition seeking quashing of the FIR on the basis of compromise was dismissed.

Mr. Najar Singh, Advocate for Mr. Navmohit Singh, Advocate for the petitioners.

Mr. Gurmeet Singh, AAG Haryana.

Mr. Smit Kamboj, Advocate for respondent No.2.

Title: Badri Mandal & others v. State of Haryana and another

Citation: 2025 LiveLaw (PH) 441

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