The Supreme Court on Thursday referred the cheque bounce case against Bollywood actor Rajpal Yadav to mediation after he deposited ₹2 crore with the Court as part payment of the dues owed by him.

A Bench of Chief Justice of India (CJI) Surya Kant and Justice Joymalya Bagchi noted that Yadav had earlier agreed to sell off his ancestral property to make the remaining payment.

However, the Court found it fit to direct parties to resort to mediation to explore an amicable settlement as regards the remaining amount yet to be paid.

"What we are saying is that you have been brought to the verge of selling your ancestral property only to get rid of this case. Of course, we will hear on merits also, if the occasion arises. But at this stage, after losing before different courts, the scope of interference is known very well. We want that you amicably settle," the Court remarked.

Both Yadav and counsel for Murli Projects Private Limited, the respondents, agreed.

Hence, the Court passed the following direction:

"Going by the issues briefly raised on behalf of the parties, it seems that the matter can be amicably resolved through mediation. Consequently, the parties have agreed to mediation before the Supreme Court Mediation Centre."

The Court asked both sides to approach mediation with an open mind and explore an amicable settlement.

The Court also permitted Yadav to seek release of his passport for professional travel abroad, subject to conditions imposed by the trial court.

The Court had earlier accepted a proposal by Yadav to sell off his ancestral property to pay his dues arising from the cheque bounce case connected to a loan taken for a 2012 movie.

At the last hearing on October 7, Yadav had appeared personally and produced demand drafts totalling ₹1.15 crore. His counsel had informed the Court that a prospective buyer of his property would deposit another ₹85 lakh. Thus, a total of ₹2 crore would be deposited, he had stated.

The remaining amount would be procured through the sale of the property, he had submitted.

The Court on that day noted the same in its order and also said that it will lay down a schedule for paying the balance amount.

However, the bench today asked the parties to explore settlement of the dispute over the remaining amount after Yadav made the payment of ₹2 crore as undertaken by him on October 7.

The Court was hearing Yadav’s appeal in a long-running cheque bounce case arising from a loan taken for his 2012 film Ata Pata Laapata.

The case concerns a ₹5 crore amount received by Yadav and wife from a private entity named Murli Projects in connection with a film being produced by Yadav.

The parties entered into four agreements as the film could not be completed within the agreed timelines.

Under the third agreement, Yadav gave eight security cheques to Murli Projects. The third agreement was subsequently replaced by a fourth agreement, described as a consent agreement dated April 21, 2013. According to Yadav’s plea, the consent agreement provided for the return of the eight security cheques and issuance of four fresh cheques of ₹10 crore each.

Yadav has alleged that Murli Projects did not return the eight security cheques and instead presented seven of them, which were dishonoured. This led to the criminal complaints against Yadav and his wife.

In May 2024, a sessions court convicted Yadav and sentenced him to six months' jail.

The Delhi High Court later suspended his sentence after his counsel assured the Court that the dispute would be settled. The matter was even referred to the Delhi High Court Mediation Centre.

However, the High Court later observed that despite repeated assurances and several adjournments sought for settlement, the actor failed to make the promised payments. The High Court noted that Yadav had not deposited amounts he had assured the Court he would pay, including ₹2.5 crore that he had sought permission to pay in instalments.

In February 2026, the High Court directed Yadav to surrender before jail authorities for failing to comply with its earlier orders. His subsequent plea seeking an extension of time to surrender was also rejected. Yadav ultimately surrendered on February 5 and remained in jail until the High Court later granted him an interim suspension of sentence after he deposited ₹1.5 crore with the complainant.

However, since he failed to deposit the remaining amount despite several undertakings, the Court sentenced him to imprisonment for three months.

This has now been challenged before the Supreme Court.

According to Yadav's plea, the subsequent consent agreement made the earlier cheques invalid and the complaints based on those cheques were, therefore, not maintainable under Section 138 of the Negotiable Instruments Act.

The Court had on September 8 exempted him from surrendering subject to his depositing the money by September 9.

On September 15, the Court granted him extension of two more weeks and asked him to deposit the money by October 5.

Yadav later came up with a proposal as per which he would pay ₹2 crore immediately and the balance would be paid from the money he gets after selling his property.

After Yadav paid ₹2 crore, the Court today referred the issue to mediation to settle the dispute over the remaining amount.

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