Delhi High Court Quashes Copyright and Trademark FIR After Settlement: IP Offences Though Non-Compoundable Can Be Quashed in Commercial Disputes

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Date: 07.10.2026

Delhi High Court Quashes Copyright and Trademark FIR After Settlement: IP Offences Though Non-Compoundable Can Be Quashed in Commercial Disputes

In an important order concerning the intersection of criminal prosecution, intellectual property rights and settlement between private parties, the Delhi High Court has quashed an FIR registered for alleged offences under the Copyright Act, 1957 and Trade Marks Act, 1999, despite the offences being non-compoundable.

Justice Sachin Datta held that the offences in question were, in substance, offences against the rights of the proprietors of the intellectual property and that the underlying dispute possessed a commercial/civil flavour. Since the affected IP proprietors had settled the dispute with the accused persons, the Court found no impediment to quashing the criminal proceedings.

The order was passed on 25 September 2026 in Sh. Shashi Bhushan & Ors. v. State of Delhi & Ors., involving ten petitioners who sought quashing of FIR No. 0896/2022 registered at Police Station Sadar Bazar, Delhi.

Background of the Case

The proceedings arose from FIR No. 0896/2022, which had been registered against Shashi Bhushan and nine other petitioners under:

• Section 63 of the Copyright Act, 1957; and
• Sections 103 and 104 of the Trade Marks Act, 1999.

According to the order, the FIR was registered on a complaint made by respondent nos. 2 and 3, who were proprietors of certain trademarks and artistic works.

The allegation was that the petitioners were stocking and selling unlicensed products consisting of counterfeit material and bearing infringing marks.

Thus, the criminal case arose directly from allegations of infringement of privately held intellectual property rights.

Chargesheet Had Already Been Filed

• The case had progressed beyond the stage of registration and investigation of the FIR.
• The Delhi High Court recorded that the chargesheet had been filed on 15 July 2024.
• This fact is significant because the parties arrived at their settlement after criminal proceedings had already substantially progressed.
• Nevertheless, the filing of the chargesheet did not prevent the High Court from considering whether continuation of the prosecution remained justified after the underlying dispute had been amicably resolved.

Parties Enter Into Compromise Deed

• During the pendency of the criminal proceedings, the petitioners and the intellectual property proprietors resolved their dispute.
• The parties entered into a Compromise Deed dated 27 July 2026.
• The Delhi High Court recorded that the compromise deed had been signed by the petitioners as well as the authorised representatives of respondent nos. 2 and 3, who were also present before the Court.
• The authorised representatives had executed the settlement on the basis of special powers of attorney, which had been placed on record with the petition.
• The Court therefore had before it a settlement accepted by the persons whose intellectual property rights were allegedly infringed.

Key Question: Can Non-Compoundable IP Offences Be Quashed After Settlement?

• The central legal significance of the order lies in the distinction between compounding an offence and the High Court exercising its power to quash criminal proceedings in an appropriate case.
• The Delhi High Court expressly recognised that the offences involved were non-compoundable.
• Ordinarily, this means that the parties cannot simply compound the offences through the regular statutory compounding mechanism.
• However, the Court considered the substantive nature of the dispute rather than stopping at the formal classification of the offences.

It observed:

• “The concerned offenses, though non-compoundable, are in substance, offences against the rights of the proprietor of the intellectual property, who is the person aggrieved.”
• This observation formed the foundation of the Court’s decision.
• Intellectual Property Dispute Had a Commercial/Civil Flavour

The Court further characterised the dispute as one having a:

“commercial / civil flavor”

• The allegations involved counterfeit material, infringing marks and the proprietary rights of trademark and artistic-work owners.
• Once those proprietors themselves had entered into a settlement with the accused persons, the Court considered whether continuation of the criminal proceedings would still serve a meaningful purpose.
• The High Court concluded that the nature of the dispute brought it within the category of cases contemplated by the Supreme Court’s ruling in Gian Singh v. State of Punjab, (2012) 10 SCC 303.

Delhi HC Relies on Gian Singh v. State of Punjab

• The Supreme Court’s decision in Gian Singh v. State of Punjab formed the principal judicial basis expressly referred to in the order.
• Applying that principle to the facts before it, the Delhi High Court found that the offences were essentially connected with infringement of proprietary intellectual property rights and that the persons directly aggrieved had resolved the dispute.

The Court therefore held:

• “there is no impediment in quashing the FIR No. 0896/2022 based on the aforesaid compromise deed entered into between the parties.”
• The ruling is noteworthy because it demonstrates that the mere fact that an offence is non-compoundable does not, by itself, make settlement irrelevant when the High Court examines whether criminal proceedings should be quashed in an appropriate commercial/private dispute.

Difference Between Compounding and Quashing

• The distinction is important from a criminal-law perspective.
• A settlement between parties does not automatically mean that every non-compoundable offence becomes compoundable.
• Rather, the High Court examines the nature and gravity of the offence, the identity of the person actually aggrieved, the character of the dispute and the effect of the settlement before deciding whether continuation of criminal proceedings is warranted.
• In the present case, the Court’s reasoning was specifically tied to the fact that the offences were, in substance, directed against the proprietary rights of the intellectual property owners and the dispute was commercial/civil in character.
• Accordingly, the decision should not be read as laying down a blanket proposition that every criminal case under the Copyright Act or Trade Marks Act must be quashed whenever the parties settle.
• The Court’s order turns on the nature of the dispute and the compromise reached by the affected parties.

FIR and All Consequential Proceedings Quashed

After recording the settlement and considering the nature of the offences, the Delhi High Court allowed the request for quashing.

The Court ordered:

“Accordingly, the FIR No. 0896/2022 and the proceedings emanating therefrom, stands quashed.”

The Court further directed that the parties would remain bound by the terms and conditions of the Compromise Deed dated 27 July 2026.

The criminal miscellaneous petition and the pending application were accordingly disposed of.

Thus, the relief extended not merely to the FIR itself but also to the proceedings emanating from the FIR, notwithstanding that a chargesheet had already been filed.

Why the Judgment Matters for Trademark and Copyright Disputes

• The order has practical significance for businesses, brand owners, traders, manufacturers and persons accused in criminal IP-enforcement proceedings.
• Trademark and copyright disputes frequently involve parallel remedies.
• A rights holder may pursue civil remedies such as injunction, damages, rendition of accounts, delivery-up and destruction of infringing goods, while certain forms of infringement may simultaneously attract criminal liability under the Copyright Act or Trade Marks Act.
• Consequently, parties may sometimes settle the commercial dispute after registration of an FIR or even after filing of a chargesheet.
• The present order demonstrates that in an appropriate case, the High Court may examine the substance of the dispute and the settlement rather than treating the non-compoundable character of the offences as an absolute bar to quashing.

Settlement After Chargesheet Can Still Be Relevant

• Another important feature of the case is its procedural stage.
• The chargesheet had already been filed on 15 July 2024, whereas the compromise deed was executed on 27 July 2026.
• Yet the High Court quashed both the FIR and the proceedings arising from it.
• The order therefore illustrates that the mere filing of a chargesheet does not necessarily make a subsequent genuine settlement legally irrelevant for the purpose of a quashing petition.
• What remains critical is whether, considering the nature of the allegations and the settlement, the case is one in which the High Court considers continuation of criminal proceedings unnecessary or inappropriate.

Key Legal Takeaways

• The Delhi High Court’s order brings out several useful principles.
• Non-compoundable does not necessarily mean non-quashable. The Court expressly recognised that the offences were non-compoundable but nevertheless quashed the proceedings after examining their substantive nature and the settlement.
• Nature of the offence is crucial. The Court viewed the alleged offences as essentially involving infringement of the proprietary rights of the intellectual property owners.
• Commercial or civil character matters. The dispute was characterised as having a commercial/civil flavour, bringing it within the principles recognised in Gian Singh.
• The position of the aggrieved rights holder is important. Here, the proprietors of the trademarks and artistic works—the persons whose IP rights were allegedly infringed—had themselves entered into the compromise.
• Filing of a chargesheet is not necessarily the end of the road for settlement-based quashing. The High Court quashed the proceedings despite the chargesheet having been filed approximately two years before the compromise.
• Parties remain bound by the settlement. While terminating the criminal proceedings, the Court expressly directed the parties to remain bound by the terms and conditions of their compromise deed.

Significance for Brand Owners

• For trademark and copyright proprietors, the ruling highlights the strategic significance of settlement in enforcement disputes.
• Criminal enforcement can be an important mechanism against counterfeiting and piracy. However, circumstances may arise in which the rights holder considers the commercial dispute satisfactorily resolved through undertakings, payments, cessation of infringement or other agreed terms.
• Where the dispute is essentially private and commercial in nature, this order illustrates that an appropriate settlement may become relevant to a petition seeking quashing of the resulting criminal proceedings.
• At the same time, brand owners should ensure that any compromise deed is clear, comprehensive and properly authorised, particularly where representatives sign on behalf of proprietors or corporate entities.
• In the present case, the Court specifically noted that the representatives who executed the compromise had done so pursuant to special powers of attorney placed on record.

Significance for Accused Persons in IP Cases

• For persons facing criminal prosecution for alleged trademark or copyright infringement, the order similarly demonstrates that settlement with the rights holder may have consequences beyond the civil dispute.
• However, settlement by itself should not be treated as automatically terminating criminal proceedings.
• Where offences are non-compoundable, a party seeking termination of the prosecution may still need to approach the competent High Court and demonstrate why, having regard to the character of the dispute and the settlement, continuation of the criminal case is unwarranted.
• The Shashi Bhushan order therefore offers a useful precedent in cases where the allegations essentially concern private intellectual property rights and the aggrieved proprietors have voluntarily resolved the dispute.

Conclusion

The Delhi High Court’s order in Sh. Shashi Bhushan & Ors. v. State of Delhi & Ors. is an important development concerning settlement-based quashing of criminal proceedings arising from alleged intellectual property infringement.

Despite the offences under Section 63 of the Copyright Act and Sections 103/104 of the Trade Marks Act being non-compoundable, the Court looked at the substance of the dispute.

It found that the offences were essentially against the rights of the intellectual property proprietors and that the controversy had a commercial/civil flavour. Since the proprietors and the accused had entered into a valid compromise, the Court found no impediment to quashing the FIR by applying the principles recognised in Gian Singh v. State of Punjab.

The decision reinforces an important distinction in criminal jurisprudence: an offence being non-compoundable does not necessarily prevent the High Court from quashing the proceedings in an appropriate case where a predominantly private or commercial dispute has been genuinely settled. Accordingly, FIR No. 0896/2022 and all proceedings emanating from it were quashed, while the parties were directed to remain bound by their compromise.

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Source: Delhi High Court

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi